-----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, C3FYJsHXOksgPud1V6zoiZPLac65EQp9CsgQ1R2mxkpsWYAWrmCChK/e19pobANK MUMoeX8mMja5oTxtL9pclQ== 0001047469-97-003591.txt : 19971114 0001047469-97-003591.hdr.sgml : 19971114 ACCESSION NUMBER: 0001047469-97-003591 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19971112 EFFECTIVENESS DATE: 19971112 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DRESSER INDUSTRIES INC /DE/ CENTRAL INDEX KEY: 0000030099 STANDARD INDUSTRIAL CLASSIFICATION: ENGINES & TURBINES [3510] IRS NUMBER: 750813641 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-39931 FILM NUMBER: 97712441 BUSINESS ADDRESS: STREET 1: 2001 ROSS AVE CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2147406000 MAIL ADDRESS: STREET 1: P O BOX 718 CITY: DALLAS STATE: TX ZIP: 75221 S-8 1 FORM S-8 - -------------------------------------------------------------------------------- Registration No. _______ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------- DRESSER INDUSTRIES, INC. (Exact name of Registrant as specified in its Charter) Delaware 75-0813641 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2001 Ross Avenue Dallas, Texas 75201 (Address principal executive offices including zip code) ------------- Dresser Industries, Inc. Retirement Savings Plan - A Dresser Industries, Inc. Retirement Savings Plan - B Dresser Industries, Inc. Union Plan Savings Plan for Bargaining Unit Employees of Texsteam Operations of Dresser Industries, Inc. Dresser Industries, Inc. Deferred Savings Plan (Full title of the plan) ------------- Rebecca R. Morris Vice President-Corporate Counsel and Secretary Dresser Industries, Inc. 2001 Ross Avenue Dallas, Texas 75201 (Name and address of agent for service) (214) 740-6000 (Telephone number, including area code, of agent for service) ------------- - ------------------------------------------------------------------------------------------------------------ Title of securities to be Amount to be Proposed maximum Proposed maximum Amount of registered registered (6) offering price aggregate offering registration fee per share (7) price (7) (6) - ------------------------------------------------------------------------------------------------------------ Common Stock ($.25 par value)(1) 1 $44.1563 $44.1563 $0.01 - ------------------------------------------------------------------------------------------------------------ Common Stock ($.25 par value)(2) 1 $44.1563 $44.1563 $0.01 - ------------------------------------------------------------------------------------------------------------ Common Stock ($.25 par value)(3) 1 $44.1563 $44.1563 $0.01 - ------------------------------------------------------------------------------------------------------------ Common Stock ($.25 par value)(4) 1 $44.1563 $44.1563 $0.01 - ------------------------------------------------------------------------------------------------------------ Common Stock ($.25 par value)(5) 1 $44.1563 $44.1563 $0.01 - ------------------------------------------------------------------------------------------------------------
(1) This registration statement covers shares of Common Stock of Dresser Industries, Inc. which may be offered or sold pursuant to Dresser Industries, Inc. Retirement Savings Plan - A. In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this registration statement also covers an indeterminate amount of interests to be offered or sold pursuant to the employee benefit plans described herein. Pursuant to Rule 457(h)(2), no separate registration fee is required with respect to the interests in the plans. This registration statement also relates to an indeterminate number of shares of Common Stock that may be issued upon stock splits, stock dividends or similar transactions in accordance with Rule 416. (2) This registration statement covers shares of Common Stock of Dresser Industries, Inc. which may be offered or sold pursuant to Dresser Industries, Inc. Retirement Savings Plan - B. In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this registration statement also covers an indeterminate amount of interests to be offered or sold pursuant to the employee benefit plans described herein. Pursuant to Rule 457(h)(2), no separate registration fee is required with respect to the interests in the plans. This registration statement also relates to an indeterminate number of shares of Common Stock that may be issued upon stock splits, stock dividends or similar transactions in accordance with Rule 416. (3) This registration statement covers shares of Common Stock of Dresser Industries, Inc. which may be offered or sold pursuant to Dresser Industries, Inc. Union Plan. In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this registration statement also covers an indeterminate amount of interests to be offered or sold pursuant to the employee benefit plans described herein. Pursuant to Rule 457(h)(2), no separate registration fee is required with respect to the interests in the plans. This registration statement also relates to an indeterminate number of shares of Common Stock that may be issued upon stock splits, stock dividends or similar transactions in accordance with Rule 416. (4) This registration statement covers shares of Common Stock of Dresser Industries, Inc. which may be offered or sold pursuant to Savings Plan for Bargaining Unit Employees of Texsteam Operations of Dresser Industries, Inc. In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this registration statement also covers an indeterminate amount of interests to be offered or sold pursuant to the employee benefit plans described herein. Pursuant to Rule 457(h)(2), no separate registration fee is required with respect to the interests in the plans. This registration statement also relates to an indeterminate number of shares of Common Stock that may be issued upon stock splits, stock dividends or similar transactions in accordance with Rule 416. (5) This registration statement covers shares of Common Stock of Dresser Industries, Inc. which may be offered or sold pursuant to Dresser Industries, Inc. Deferred Savings Plan. In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this registration statement also covers an indeterminate amount of interests to be offered or sold pursuant to the employee benefit plans described herein. Pursuant to Rule 457(h)(2), no separate registration fee is required with respect to the interests in the plans. This registration statement also relates to an indeterminate number of shares of Common Stock that may be issued upon stock splits, stock dividends or similar transactions in accordance with Rule 416. (6) This registration statement is also deemed, pursuant to Instruction E to Form S-8, to relate to 550,000 shares previously registered on Form S-8 (No. 2-81536) in connection with the Dresser Industries Inc. Stock Purchase Plan, with respect to which a registration fee of $2,268.75 has been paid. (7) Computed on the basis of the average of the high and low prices for Common Stock on November 5, 1997, which is used as the estimated offering price solely for the purpose of determining the registration fee in accordance with Rule 457(c) under the Securities Act of 1933. EXPLANATORY STATEMENT A total of 2,000,000 shares of common stock of Dresser Industries, Inc. (the "Company") were registered by Registration Statement on Form S-8, file No. 2-81536, to be issued in connection with the Dresser Industries, Inc. Stock Purchase Plan (the "SPP"). On September 18, 1997, the Board of Directors of the Company approved the merger of the SPP into the Dresser Industries, Inc. Retirement Savings Plan -A, the Dresser Industries, Inc. Retirement Savings Plan- B and the Dresser Industries, Inc. Deferred Savings Plan. Additionally, the Board of Directors approved offering an investment option for investing in the Company's stock to the participants of (a) The Dresser Industries, Inc. Retirement Savings Plan - A, (b) Dresser Industries, Inc. Retirement Savings Plan - B, (c) The Dresser Industries, Inc., Union Plan, (d) The Savings Plan for Bargaining Unit Employees of Texsteam Operations of Dresser Industries, Inc. and (e) The Dresser Industries, Inc. Deferred Savings Plan (collectively, the "QUALIFIED PLANS"). The SPP is intended to qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code of 1986 while the QUALIFIED PLANS are intended to qualify as employee savings plan under Section 401(k) of the Internal Revenue Code of 1986, as amended from time to time. Approximately one million five hundred thousand (1,500,000) shares of common stock of the Company which were registered in connection with the SPP have not been issued under the SPP and, pursuant to Instruction E to Form S-8 and the telephonic interpretation of the Securities and Exchange Commission set forth at answers no. 89 and 90 in Section G- Securities Act Forms of the Division of Corporation Finance's Manual of Publicly Available Telephone Interpretations (July 1997), 550,000 are carried forward to, and deemed covered by, the Registration Statement of Form S-8 filed on or about the date hereof in connection with the QUALIFIED PLANS. PART II Item 3. Incorporation of Documents by Reference. The following documents, which have been filed by the Company (File No. 1-4003) with the Commission, are incorporated herein by reference: 1. The Company's Annual Report on Form 10-K for its fiscal year ended October 31, 1996; 2. The Company's Quarterly Reports on Form 10-Q for the periods ended January 31, 1997, April 30, 1997 and July 31, 1997; 3. The description of the Common Stock contained in Exhibit 1 to the Registration Statement on Form 8-A filed by the Company with the Commission August 30, 1990, as amended by Amendment No. 1 on Form 8 filed with the Commission on October 3, 1990; and 4. The description of the Dresser Stock Purchase Rights contained in Exhibit 1 to the Registration Statement on Form 8-A filed by the Company with the Commission August 30, 1990, as amended by Amendment No. 1 on Form 8 filed with the Commission on October 3, 1990. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this registration statement and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated herein by reference and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes hereof to the extent that a statement contained herein (or in any other subsequently filed document which also is incorporated by reference herein) modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed to constitute a part hereof except as so modified or superseded. Item 4. Description of Securities Not Applicable. Item 5. Interests of Named Experts and Counsel The validity of the Securities offered hereby will be passed upon by Rebecca R. Morris, Vice President - Corporate Counsel and Secretary of the Company (who owns 10,740 shares of Common Stock and holds options to purchase an additional 21,650 shares of Common Stock coupled with 4,278 restrictive incentive stock awards). Item 6. Indemnification of Directors and Officers Pursuant to Section 145 of the Delaware General Corporation Law (the "DGCL"), a corporation may indemnify any person who is or was a party or is threatened to be made a party to any action, suit, or proceeding (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement, actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal proceeding, had no reasonable cause to believe his conduct was unlawful. In an action by or in the right of the Company, a corporation may indemnify any such person against expenses actually and reasonably incurred by him in connection with the defense or settlement of such action if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made in respect of any claim or issue as to which such person is adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action was brought shall determine that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses, which the court shall deem proper. Indemnification, unless ordered by the court, shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of such person is proper in the circumstances because he has met the applicable standard of conduct. Such determination is made: (i) by the board of directors by a majority vote of a quorum consisting of disinterested directors; (ii) by independent legal counsel in a written opinion; (iii) by the stockholders. To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any such matter, Section 145 requires that the corporation indemnify him against expenses actually and reasonably incurred by him in his defense. Further, expenses may be paid by the corporation in advance of final disposition of the matter upon receipt of an undertaking by or on behalf of such director, officer, employee or agent to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified. Such indemnification and advancement of expenses is not deemed exclusive of any other right to which a director or officer might be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise. Section 145 also empowers a corporation to purchase and maintain insurance on behalf of any person who might be indemnified thereunder whether or not the corporation would have the power to indemnify him against such liability under such Section. The Company's Restated Certificate of Incorporation, as amended, provides for indemnification of certain persons including directors and officers to the fullest extent permitted under Section 145 of the DGCL. Insurance is maintained by the Company covering certain expenses, liability or losses which may be incurred by reason of his being a director or officer of the Company or a subsidiary corporation, partnership, joint venture, trust or other enterprise. Item 7. Exemption from Registration Claimed Not Applicable. Item 8. Exhibits(1) 4.1 Restated Certificate of Incorporation of Registrant and amendments thereto. (Incorporated by reference to Exhibit 3(i) to Registrant's Form 10-Q/A for the Quarter ended April 30, 1996). 4.2 By-Laws, as amended of Registrant. (Incorporated by reference to Exhibit 3.2 to Registrant's Form 10-K for the year ended 1996). 4.3 Rights Agreement dated August 16, 1990, between Registrant and Harris Trust Company of New York as Rights Agent. (Incorporated by reference to Exhibit 1 to Registration Statement on Form 8-A filed on August 30, 1990 as amended by Amendment No. 1 on Form 8 filed on October 3, 1990). 4.4 Form of Dresser Industries, Inc. Retirement Savings Plan - A. (Incorporated by Reference to Exhibit 10.24 to Registrant's Form 10-K for the year ended October 31, 1995). * 4.5 Form of Dresser Industries, Inc. Retirement Savings Plan - B. * 4.6 Form of Dresser Industries, Inc. Union Plan. * 4.7 Form of Savings Plan for Bargaining Unit Employees of Texsteam Operations of Dresser Industries, Inc. 4.8 Form of Dresser Industries, Inc. Deferred Savings Plan. (Incorporated by reference to Exhibit 10(z) to Registrant's Form 10-K for the year ended October 31, 1992). * 4.9 Form of First and Second Amendment to Dresser Industries, Inc. Deferred Savings Plan. * 4.10 Form of First and Second Amendment to Dresser Industries, Inc. Retirement Savings Plan-A. * 5.1 Form of opinion of Rebecca R. Morris as to the legality of the securities being registered. 23.1 Consent of Rebecca R. Morris is contained in her opinion attached as Exhibit 5.1. * 23.2 Consent of Price Waterhouse LLP. * 24 Power of Attorney. - ----------------- * Filed Herewith (1) In lieu of an opinion of counsel concerning compliance with the requirements of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and an Internal Revenue Service ("IRS") determination letter that the Plans are qualified under Section 401 of the Internal Revenue Code of 1986, as amended, the Registrant hereby undertakes to submit the Qualified Plans and any amendments thereto to the IRS in a timely manner and will make all changes required by the IRS in order to maintain the qualified status of the Qualified Plans. Item 9. Undertakings (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made of the securities registered hereby, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To 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) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, 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 which 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 of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the 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 of 1933 may be permitted to directors, officers or 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 by the Securities Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, 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 Dallas, State of Texas, on the 10th day of November, 1997. DRESSER INDUSTRIES, INC. By: /s/ KENNETH J. KOTARA ------------------------------- Kenneth J. Kotara, Controller Pursuant to the requirements of the Securities Exchange Act of 1933, this registration statement has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on November 10, 1997. SIGNATURE TITLE *WILLIAM E. BRADFORD Chairman of the Board, Chief ----------------------------------- Executive Officer and Director (William E. Bradford, Director) (Principal Executive Officer) /s/ GEORGE H. JUETTEN Senior Vice President and Chief ----------------------------------- Financial Officer (George H. Juetten) (Principal Financial Officer) /s/ KENNETH J. KOTARA Controller ----------------------------------- (Principal Accounting Officer) (Kenneth J. Kotara) *SAMUEL B. CASEY, JR *J. LANDIS MARTIN ----------------------------------- ------------------------------------- (Samuel B. Casey, Jr., Director) (J. Landis Martin, Director) *LAWRENCE S. EAGLEBURGER *LIONEL H. OLMER ----------------------------------- ------------------------------------- (Lawrence S. Eagleburger, Director) (Lionel H. Olmer, Director) *SYLVIA A. EARLE, PH.D. *JAY A. PRECOURT ----------------------------------- ------------------------------------- (Sylvia A. Earle, Ph.D., Director) (Jay A. Precourt, Director) *RAWLES FULGHAM *DONALD C. VAUGHN ----------------------------------- ------------------------------------- (Rawles Fulgham, Director) (Donald C. Vaughn, Director) *JOHN A. GAVIN *RICHARD W. VIESER ----------------------------------- ------------------------------------- (John A. Gavin, Director) (Richard W. Vieser, Director) *RAY L. HUNT ----------------------------------- (Ray L. Hunt, Director) *By: /s/Alice (Ande) Hinds ----------------------------------- Alice (Ande) Hinds (Attorney-In-Fact) INDEX TO EXHIBITS(1) Exhibit No. Description - ------- ----------- 4.1 Restated Certificate of Incorporation of Registrant and amendments thereto. (Incorporated by reference to Exhibit 3(i) to Registrant's Form 10-Q/A for the Quarter ended April 30, 1996). 4.2 By-Laws, as amended of Registrant. (Incorporated by reference to Exhibit 3.2 to Registrant's Form 10-K for the year ended 1996). 4.3 Rights Agreement dated August 16, 1990, between Registrant and Harris Trust Company of New York as Rights Agent. (Incorporated by reference to Exhibit 1 to Registration Statement on Form 8-A filed on August 30, 1990 as amended by Amendment No. 1 on Form 8 filed on October 3, 1990). 4.4 Form of Dresser Industries, Inc. Retirement Savings Plan - A. (Incorporated by Reference to Exhibit 10.24 to Registrant's Form 10-K for the year ended October 31, 1995). * 4.5 Form of Dresser Industries, Inc. Retirement Savings Plan - B and the First and Second Amendments thereto. * 4.6 Form of Dresser Industries, Inc. Union Plan. * 4.7 Form of Savings Plan for Bargaining Unit Employees of Texsteam Operations of Dresser Industries, Inc. 4.8 Form of Dresser Industries, Inc. Deferred Savings Plan. (Incorporated by reference to Exhibit 10(z) to Registrant's Form 10-K for the year ended October 31, 1992). * 4.9 Form of First and Second Amendment to Dresser Industries, Inc. Deferred Savings Plan. * 4.10 Form of First and Second Amendment to Dresser Industries, Inc. Retirement Savings Plan-A. * 5.1 Form of opinion of Rebecca R. Morris as to the legality of the securities being registered. 23.1 Consent of Rebecca R. Morris is contained in her opinion attached as Exhibit 5.1. * 23.2 Consent of Price Waterhouse LLP. * 24 Power of Attorney. - ----------------- * Filed Herewith (1) In lieu of an opinion of counsel concerning compliance with the requirements of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and an Internal Revenue Service ("IRS") determination letter that the Plans are qualified under Section 401 of the Internal Revenue Code of 1986, as amended, the Registrant hereby undertakes to submit the Qualified Plans and any amendments thereto to the IRS in a timely manner and will make all changes required by the IRS in order to maintain the qualified status of the Qualified Plans. EX-4.5 2 RETIREMENT SAVINGS PLAN - B Plan #195 DRESSER INDUSTRIES, INC. RETIREMENT SAVINGS PLAN - B EFFECTIVE MAY 31, 1995 TABLE OF CONTENTS PAGE ---- ARTICLE 1 - INTRODUCTION AND MERGER PROVISIONS . . . . . . . . . . . . 1 Section 1.1. Establishment of Plan. . . . . . . . . . . . . . . 1 Section 1.2. Rules for Merger . . . . . . . . . . . . . . . . . 1 ARTICLE 2 - JOINING THE PLAN . . . . . . . . . . . . . . . . . . . . . 2 Section 2.1. Employees Eligible to Participate. . . . . . . . . 2 Section 2.2. Initial Enrollment and Membership. . . . . . . . . 3 Section 2.3. Transfers. . . . . . . . . . . . . . . . . . . . . 4 Section 2.4. Recommencement by Former Employee. . . . . . . . . 5 Section 2.5. Leased Employees . . . . . . . . . . . . . . . . . 5 Section 2.6. Spinoff. . . . . . . . . . . . . . . . . . . . . . 5 ARTICLE 3 - CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . 6 Section 3.1. Employee Contributions . . . . . . . . . . . . . . 6 Section 3.2. Company Contributions. . . . . . . . . . . . . . . 7 Section 3.3. Rollover Contributions . . . . . . . . . . . . . . 9 Section 3.4. Employee Contribution Elections. . . . . . . . . . 9 Section 3.5. Payment of Contributions to Trust. . . . . . . . . 10 Section 3.6. Statutory Limitations and Disposition of Excess. . . . . . . . . . . . . . . . . . . . . 11 Section 3.7. Reemployed Veterans. . . . . . . . . . . . . . . . 14 ARTICLE 4 - ACCOUNTS OF MEMBERS. . . . . . . . . . . . . . . . . . . . 16 Section 4.1. Individual Account for Each Member . . . . . . . . 16 Section 4.2. Separate Accounting. . . . . . . . . . . . . . . . 17 Section 4.3. Benefits Not Assignable. . . . . . . . . . . . . . 17 ARTICLE 5 - INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . . 19 Section 5.1. In General . . . . . . . . . . . . . . . . . . . . 19 Section 5.2. Allocation of Contributions to Investment Options . . . . . . . . . . . . . . . . 19 Section 5.3. Transfer of Investments. . . . . . . . . . . . . . 19 Section 5.4. Loans. . . . . . . . . . . . . . . . . . . . . . . 20 Section 5.5. Named Fiduciary. . . . . . . . . . . . . . . . . . 20 ARTICLE 6 - DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . 21 Section 6.1. When Distribution May Be Made. . . . . . . . . . . 21 Section 6.2. Forms of Distribution. . . . . . . . . . . . . . . 21 Section 6.3. Elections Regarding Distribution . . . . . . . . . 22 Section 6.4. Required Time for Distribution . . . . . . . . . . 23 i TABLE OF CONTENTS (Continued) PAGE ---- Section 6.5. Statutory Requirements Regarding Distribution. . . 25 Section 6.6. Distribution upon Death. . . . . . . . . . . . . . 25 Section 6.7. Direct Rollover of Distribution. . . . . . . . . . 26 Section 6.8. Facility of Payment. . . . . . . . . . . . . . . . 28 Section 6.9. Forfeitures. . . . . . . . . . . . . . . . . . . . 28 Section 6.10. Recovery of Payments Made by Mistake . . . . . . . 29 ARTICLE 7 - WITHDRAWALS. . . . . . . . . . . . . . . . . . . . . . . . 30 Section 7.1. Withdrawals from After-tax Account . . . . . . . . 30 Section 7.2. Hardship Withdrawals . . . . . . . . . . . . . . . 30 ARTICLE 8 - LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Section 8.1. Eligibility for Loan . . . . . . . . . . . . . . . 33 Section 8.2. Terms of Loan. . . . . . . . . . . . . . . . . . . 33 Section 8.3. Accounting for Loans . . . . . . . . . . . . . . . 35 Section 8.4. Administration of Loans. . . . . . . . . . . . . . 35 Section 8.5. Preemption of Usury Laws . . . . . . . . . . . . . 36 Section 8.6. Loans to Military Personnel. . . . . . . . . . . . 36 Section 8.7. Disputes . . . . . . . . . . . . . . . . . . . . . 36 ARTICLE 9 - VESTING AND SERVICE. . . . . . . . . . . . . . . . . . . . 37 Section 9.1. Vesting. . . . . . . . . . . . . . . . . . . . . . 37 Section 9.2. Service. . . . . . . . . . . . . . . . . . . . . . 37 ARTICLE 10 - ADMINISTRATION OF THE PLAN. . . . . . . . . . . . . . . . 40 Section 10.1. Appointment of the Committee . . . . . . . . . . . 40 Section 10.2. Conduct of Committee Business. . . . . . . . . . . 40 Section 10.3. Records and Reports of the Committee . . . . . . . 40 Section 10.4. Fiduciary Duties . . . . . . . . . . . . . . . . . 41 Section 10.5. Investment Responsibilities. . . . . . . . . . . . 41 Section 10.6. Responsibilities of the Board, the Committee, and the Trustee . . . . . . . . . . . . 42 Section 10.7. Allocation or Delegation of Duties and Responsibilities . . . . . . . . . . . . . . . . . 44 Section 10.8. Procedure for the Allocation or Delegation of Fiduciary Duties . . . . . . . . . . 44 Section 10.9. Expenses . . . . . . . . . . . . . . . . . . . . . 45 Section 10.10. Indemnification. . . . . . . . . . . . . . . . . . 45 Section 10.11. Disputes . . . . . . . . . . . . . . . . . . . . . 45 Section 10.12. Claims Procedure . . . . . . . . . . . . . . . . . 46 Section 10.13. Appeal Procedure . . . . . . . . . . . . . . . . . 47 Section 10.14. Exhaustion of Administrative Remedies. . . . . . . 49 Section 10.15. Limitation on Actions. . . . . . . . . . . . . . . 49 ii TABLE OF CONTENTS (Continued) PAGE ---- Section 10.16. Federal Preemption . . . . . . . . . . . . . . . . 49 Section 10.17. No Right to Jury Trial; Evidence . . . . . . . . . 50 Section 10.18. Scope of Review. . . . . . . . . . . . . . . . . . 50 Section 10.19. Limitation on Damages. . . . . . . . . . . . . . . 50 Section 10.20. Member Plan Data . . . . . . . . . . . . . . . . . 51 Section 10.21. Advisors Not Fiduciaries . . . . . . . . . . . . . 51 ARTICLE 11 - AMENDMENT, TERMINATION OR MERGER. . . . . . . . . . . . . 52 Section 11.1. Amendment. . . . . . . . . . . . . . . . . . . . . 52 Section 11.2. Termination. . . . . . . . . . . . . . . . . . . . 52 Section 11.3. Merger . . . . . . . . . . . . . . . . . . . . . . 53 Section 11.4. Representations Contrary to Plan . . . . . . . . . 53 ARTICLE 12 - ESTABLISHMENT OF TRUST. . . . . . . . . . . . . . . . . . 54 Section 12.1. Agreements of Trust. . . . . . . . . . . . . . . . 54 Section 12.2. The Trustee. . . . . . . . . . . . . . . . . . . . 54 Section 12.3. Trust Fund for Exclusive Benefit of Members of the Plan and Their Beneficiaries. . . . 55 Section 12.4. Refund of Certain Company Contributions. . . . . . 55 ARTICLE 13 - TOP-HEAVY REQUIREMENTS. . . . . . . . . . . . . . . . . . 57 Section 13.1. Top-Heaviness Determination. . . . . . . . . . . . 57 Section 13.2. Effect of Top-Heaviness. . . . . . . . . . . . . . 57 ARTICLE 14 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 59 Section 14.1. Employment Rights. . . . . . . . . . . . . . . . . 59 Section 14.2. Headings . . . . . . . . . . . . . . . . . . . . . 59 Section 14.3. Number and Gender. . . . . . . . . . . . . . . . . 59 Section 14.4. Construction . . . . . . . . . . . . . . . . . . . 59 Section 14.5. Adoption of Plan Contingent upon IRS Approval . . . . . . . . . . . . . . . . . . . . . 59 ARTICLE 15 - GLOSSARY. . . . . . . . . . . . . . . . . . . . . . . . . 61 Section 15.1. Account. . . . . . . . . . . . . . . . . . . . . . 61 Section 15.2. Affiliated Company . . . . . . . . . . . . . . . . 61 Section 15.3. After-tax Contribution . . . . . . . . . . . . . . 62 Section 15.4. Basic Contribution . . . . . . . . . . . . . . . . 62 Section 15.5. Beneficiary. . . . . . . . . . . . . . . . . . . . 62 Section 15.6. Board. . . . . . . . . . . . . . . . . . . . . . . 63 Section 15.7. Break in Service . . . . . . . . . . . . . . . . . 63 Section 15.8. Code . . . . . . . . . . . . . . . . . . . . . . . 63 Section 15.9. Committee. . . . . . . . . . . . . . . . . . . . . 63 Section 15.10. Company. . . . . . . . . . . . . . . . . . . . . . 63 iii TABLE OF CONTENTS (Continued) PAGE ---- Section 15.11. Date of Employment . . . . . . . . . . . . . . . . 63 Section 15.12. Date of Separation . . . . . . . . . . . . . . . . 63 Section 15.13. Disability . . . . . . . . . . . . . . . . . . . . 64 Section 15.14. Earnings . . . . . . . . . . . . . . . . . . . . . 64 Section 15.15. Effective Date . . . . . . . . . . . . . . . . . . 65 Section 15.16. Employee . . . . . . . . . . . . . . . . . . . . . 65 Section 15.17. ERISA. . . . . . . . . . . . . . . . . . . . . . . 65 Section 15.18. Former Member. . . . . . . . . . . . . . . . . . . 65 Section 15.19. Highly Compensated . . . . . . . . . . . . . . . . 66 Section 15.20. Investment Manager . . . . . . . . . . . . . . . . 68 Section 15.21. Investment Option. . . . . . . . . . . . . . . . . 68 Section 15.22. Limitation Year. . . . . . . . . . . . . . . . . . 68 Section 15.23. Matching Contribution. . . . . . . . . . . . . . . 68 Section 15.24. Member . . . . . . . . . . . . . . . . . . . . . . 68 Section 15.25. Non-grandfathered Member . . . . . . . . . . . . . 68 Section 15.26. Pension Equalizer Contribution . . . . . . . . . . 69 Section 15.27. Period of Service. . . . . . . . . . . . . . . . . 69 Section 15.28. Plan . . . . . . . . . . . . . . . . . . . . . . . 69 Section 15.29. Plan Year. . . . . . . . . . . . . . . . . . . . . 69 Section 15.30. Predecessor Plan . . . . . . . . . . . . . . . . . 69 Section 15.31. Pretax Contribution. . . . . . . . . . . . . . . . 69 Section 15.32. Test Compensation. . . . . . . . . . . . . . . . . 69 Section 15.33. Trust Agreement. . . . . . . . . . . . . . . . . . 70 Section 15.34. Trust Fund . . . . . . . . . . . . . . . . . . . . 70 Section 15.35. Trustee. . . . . . . . . . . . . . . . . . . . . . 70 APPENDIX A - CALCULATION OF PENSION EQUALIZER PERCENTAGE . . . . . . . A-1 APPENDIX B - CALCULATION OF MEDISAVE CONTRIBUTIONS . . . . . . . . . . B-1 APPENDIX C - TK VALVE & MANUFACTURING PLAN MERGER. . . . . . . . . . . C-1 APPENDIX D - MERGER OF SAVINGS PLAN FOR EMPLOYEES OF BAROID CORPORATION WITH AND INTO THE DRESSER INDUSTRIES, INC. RETIREMENT SAVINGS PLANS . . . . . . . . . . . . . . D-1 APPENDIX E - MERGER OF WHEATLEY TXT CORP. EMPLOYEES' SAVINGS PLAN WITH AND INTO THE DRESSER INDUSTRIES, INC. RETIREMENT SAVINGS PLANS. . . . . . . . . . . . . . . . . E-1 APPENDIX F - MERGER OF AVA INTERNATIONAL CORP. 401K PLAN WITH AND INTO THE DRESSER INDUSTRIES, INC. RETIREMENT SAVINGS PLANS. . . . . . . . . . . . . . . . . F-1 iv ARTICLE 1 INTRODUCTION AND MERGER PROVISIONS SECTION 1.1. ESTABLISHMENT OF PLAN. Effective at midnight, May 31, 1995 ("Effective Date"), Dresser Industries, Inc. establishes the Dresser Industries, Inc. Retirement Savings Plan-B ("Plan-B" or "Plan"). Plan-B is a spinoff of the Dresser Industries, Inc. Deferred Savings Plan, also known as Plan 145. As of the Effective Date and periodically thereafter, plans or portions of plans shall be folded into Plan-B, as more particularly described in Appendices D through F. The Plan is intended to be a profit-sharing plan. SECTION 1.2. RULES FOR MERGER. The Dresser Industries, Inc. Employee Benefits Committee may make rules consistent with the Code and regulations thereunder, governing the transactions described in Section 1.1, including rules which specify when and in what manner assets are to be transferred to Plan-B, how they shall be invested initially, and how and when assets transferred to Plan-B subsequently may be invested in Investment Options in accordance with the Members' instructions. 1 Section 1.2 ARTICLE 2 JOINING THE PLAN Section 2.1. EMPLOYEES ELIGIBLE TO PARTICIPATE. An individual shall be eligible to participate in the Plan, if he is an Employee as defined by this Plan. For purposes of this Plan, an Employee is any person employed by the Company who is compensated on an hourly basis and who is not: (a) in a unit of employees covered by a collective bargaining agreement, unless such collective bargaining agreement specifically provides for participation in this Plan; (b) a nonresident alien; (c) employed by an operation located in Puerto Rico; (d) a leased employee within the meaning of Code section 414(n); or (e) covered under any other 401(k) plan or active defined benefit plan sponsored by the Company or an Affiliated Company, until such time as the individual is no longer working in covered employment as described in the other plan. The Committee shall have the discretion to determine whether an individual is compensated on an hourly basis and is an Employee described in this Plan. In the event that accounts are transferred from a Predecessor Plan to this Plan, only accounts of individuals who are Employees as described above, or former Predecessor Plan participants who, in 2 Section 2.1 the judgment of the Committee, would have participated in the Plan had they not terminated employment before the transfer, shall be transferred to this Plan. SECTION 2.2. INITIAL ENROLLMENT AND MEMBERSHIP. An Employee shall be eligible to become a Member after completing three (3) months of Service (as defined in Section 9.2). The Employee shall join the Plan on the first day of the month coincident with or next following the date the Employee completes this Service. An Employee may enroll in the Plan by completing and delivering to the Committee an enrollment and beneficiary designation form and by making the initial investment and contribution elections in such manner as the Committee may permit. This information may be gathered electronically. An Employee who fails to complete these forms shall become a Member, and receive Basic and Pension Equalizer Contributions (if applicable). Such Member's Beneficiary shall be determined as provided in Section 15.5, and such Member's Account shall be invested in Investment Options, as provided in the default procedure adopted by the Committee in accordance with Section 5.1. A participant in a Predecessor Plan who is an Employee shall become a Member on the date the Predecessor Plan is merged into this Plan. The Committee shall determine which Investment Option under this Plan most closely resembles an investment option under a Predecessor Plan, and a Member's Account shall be invested accordingly, until the Company receives different investment directions from the Member. 3 Section 2.2 SECTION 2.3. TRANSFERS. (a) A person employed by the Company or an Affiliated Company who transfers from an ineligible job classification to an eligible job classification shall join the Plan on the date the person becomes an Employee, unless the individual has earned less than three months of Service at the time of the transfer. A person with less than three months of Service who is so transferred shall join the Plan as provided in Section 2.2. (b) Any person employed by the Company who transfers to a position which makes that person ineligible to participate in the Plan shall cease participation and become a Former Member, but shall not be considered to have terminated employment. (c) If a Member transfers to a position which makes that Member ineligible to participate in this Plan but eligible under a similar plan (as determined by the Committee) maintained by the Company or an Affiliated Company, such Member's Account under this Plan shall be transferred to the similar plan in a trust-to-trust transfer. (d) Likewise, if an individual becomes a Member of this Plan in accordance with Section 2.3(a), and was participating previously in a similar plan (as determined by the Committee) maintained by the Company or an Affiliated Company, this Plan shall accept a trust-to-trust transfer of his account from that Plan. However, this Plan will not accept this transfer if the account is subject to the survivor benefit requirements of Code section 417, unless 4 Section 2.3 such requirements only apply to the portion of the account that is derived from contributions made to a Predecessor Plan. SECTION 2.4. RECOMMENCEMENT BY FORMER EMPLOYEE. Any Employee who terminates employment and at a later date again becomes an Employee shall join the Plan on the Employee's reemployment date or, if later, the first day of the month coincident with or next following the date the Employee's Service totals three months. SECTION 2.5. LEASED EMPLOYEES. Leased employees (within the meaning of Code section 414(n)) may not become Members. However, leased employees (within the meaning of Code section 414(n)) who become common-law employees shall be credited with Service for their periods of service as leased employees, as if they had been common-law employees during the time that they performed services for the Affiliated Companies. SECTION 2.6. SPINOFF. If a Member is employed by a portion of the Company that is sold to another entity, divested, or transferred to a joint venture, that Member shall become a Former Member as of the date of the transaction. The Accounts of all Members so affected by this type of transaction shall be transferred in a trust-to-trust transfer to a qualified retirement plan sponsored by the successor employer, if the successor employer agrees to the transfer. If the successor employer does not agree to the transfer, then the provisions of Section 6.1 apply. 5 Section 2.6 ARTICLE 3 CONTRIBUTIONS SECTION 3.1. EMPLOYEE CONTRIBUTIONS. (a) PRETAX CONTRIBUTIONS. A Member who is not Highly Compensated on the last day of the preceding Plan Year may defer any whole percentage of Earnings up to 12% for the Plan Year as a Pretax Contribution. A Member who is Highly Compensated as of the last day of the preceding Plan Year may defer up to 10% of Earnings as a Pretax Contribution. A Member's pay shall be reduced for each pay period by the percentage of the elected Pretax Contribution, and this Pretax Contribution shall be paid to the Trustee as provided in Section 3.5. (b) AFTER-TAX CONTRIBUTIONS. A Member who is not Highly Compensated on the last day of the preceding Plan Year may elect to contribute to the Member's Account for a Plan Year a whole percentage of Earnings up to 12%, as an After-tax Contribution. A Member who is Highly Compensated on the last day of the preceding Plan Year may elect to contribute a whole percentage of Earnings up to 10%. Contributions shall be withheld from the Member's paycheck each pay period and shall be paid to the Trustee as provided in Section 3.5. (c) LIMIT ON TOTAL EMPLOYEE CONTRIBUTIONS. The sum of a non-Highly Compensated Member's Pretax Contributions and After-tax Contributions shall not exceed 12% of Earnings. For a Member who 6 Section 3.1 is Highly Compensated on the last day of the preceding Plan Year, such sum shall not exceed 10% of Earnings. SECTION 3.2. COMPANY CONTRIBUTIONS. (a) BASIC CONTRIBUTIONS. The Company shall contribute, on behalf of each Member, 3% of Earnings. This contribution shall be made semimonthly to the Basic Account of each Member. (b) MATCHING CONTRIBUTIONS. (1) The Company shall contribute, on behalf of each Member, a Matching Contribution equal to: (A) 100% of the Pretax Contributions or After-tax Contributions of the Member, to the extent such employee contributions do not exceed 2% of Earnings; (B) 50% of the Pretax Contributions or After-tax Contributions of the Member, to the extent such employee contributions exceed 2% of Earnings, but do not exceed 6% of Earnings. (2) Matching Contributions shall be made semimonthly to the Matching Account of each Member who has made Employee contributions during the semimonthly period. (c) MEDISAVE CONTRIBUTIONS. The Company shall make a Medisave Contribution to each eligible Member specified in Appendix B. The amount and timing of this contribution shall be in accordance with the provisions of Appendix B. (d) PENSION EQUALIZER CONTRIBUTIONS. The Company shall contribute, on behalf of each eligible Member, the Equalizer Percentage of the Member's Earnings. This contribution shall be 7 Section 3.2 made semimonthly to the Pension Equalizer Account of each eligible Member. The Equalizer Percentage for a Member shall be determined under the formula described in Appendix A. A Member who was an active participant in a defined benefit plan sponsored by the Company that was frozen on the Effective Date shall be eligible for Pension Equalizer Contributions, unless such Member was not employed by the Company on such date, and was an active participant merely because such Member was totally disabled. As soon as administratively feasible following the date a Member attains age 65, that Member's Pension Equalizer Account balance (plus any hypothetical pension equalizer account balance under a nonqualified plan) shall be compared to the single-sum value, calculated as of the Member's Equalizer Age, of the Shortfall Amount determined under the Fourth Step of Appendix A. This single-sum value shall be determined by the Actuary for the defined benefit plan which covered the Member, using the conversion factor described in the Third Step of Appendix A. If the balance determined under the preceding paragraph is equal to or greater than the single-sum value of the Shortfall Amount, then the Member's Pension Equalizer Contribution shall cease permanently. However, if the Member's balance determined under the preceding paragraph is less than the single-sum value of the Shortfall Amount, then the minimum number of additional semimonthly Pension Equalizer Contributions that are necessary to cause such balance to equal or exceed the single-sum value of the Shortfall Amount shall be estimated. The Member's Pension 8 Section 3.2 Equalizer Account shall continue to receive Pension Equalizer Contributions until the earlier of (i) the date the Member retires or otherwise terminates employment, or (ii) the date the Member receives the estimated number of Pension Equalizer Contributions, after which date the Member's Pension Equalizer Contributions shall cease permanently. SECTION 3.3. ROLLOVER CONTRIBUTIONS. The Plan shall accept cash Rollover Contributions (within the meaning of Code section 402(c), including optional direct transfers under Code 401(a)(31)) on behalf of a Member from any plan qualified under section 401(a) of the Code. Rollover Contributions may be made at such time and in such manner as the Committee may prescribe. A Rollover Contribution shall be forwarded to the Trustee as provided in Section 3.5, if it is not paid directly to the Trustee. SECTION 3.4. EMPLOYEE CONTRIBUTION ELECTIONS. A Member shall designate the level of Pretax Contributions and the level of After-tax Contributions at the time the Member enrolls in the Plan. These elections shall remain in effect until changed by the Member, unless the Member's elections are suspended as a consequence of a hardship withdrawal or any other in-service withdrawal. A Member may change the rate of employee contributions at any time, and the most recent change will be implemented semimonthly. Elections under this Section shall be made at such time, in such manner and in such form as the Committee may prescribe through uniform and nondiscriminatory rules. 9 Section 3.4 Additionally, a Member may elect to suspend all employee contributions at any time. Such suspension shall take effect with the next available pay period following the date of the suspension request. If a Member suspends all employee contributions, that Member shall not be permitted to share in Matching Contributions during the suspension or to resume employee contributions until four (4) months after the effective date of the suspension. The Committee may reduce, suspend, or refund a Highly Compensated Member's contributions, if the Committee finds that it is necessary to ensure compliance with any of the nondiscrimination tests set forth in Section 3.6. Unless a Member has changed or revoked elections in the meantime, such Member's elections may be restored as of the first day of the Plan Year following such an action by the Committee, or such earlier date as the Committee deems appropriate. SECTION 3.5. PAYMENT OF CONTRIBUTIONS TO TRUST. The Company shall forward contributions made by Employees to the Trustee on the earliest date the contributions reasonably may be segregated from the Company's general assets. Pretax Contributions and After-tax Contributions shall be forwarded no later than 90 days after the date these contributions are withheld from the contributing Member's pay. If a Rollover Contribution is not paid directly to the Trustee, the contribution shall be forwarded no later than 90 days after the date the Company receives the contribution. 10 Section 3.6 SECTION 3.6. STATUTORY LIMITATIONS AND DISPOSITION OF EXCESS. (a) The maximum Pretax Contribution that a Member may make to this Plan (when combined with any other plan containing a cash or deferred arrangement sponsored by the Company or an Affiliated Company) is specified in Code section 402(g)(1). The limit is $9,240 for 1995 and is adjusted for cost-of-living by the Secretary of the Treasury. If a Member elects a rate of Pretax Contributions that, in the judgment of the Committee, would cause the Code section 402(g)(1) limit to be violated, then the contributions that are elected by the Member that are in excess of the limit shall be made as After-tax Contributions. If the Committee discovers after the close of a calendar year that Pretax Contributions in excess of the 402(g)(1) limit have been made for that calendar year, the Committee shall implement the procedures described in Section 3.6(b)(1). (b) As of the end of a Plan Year, the Committee shall determine if the limitations imposed by this Article 3 are sufficient or if contributions must be forfeited, distributed to the Employee, or allocated to a suspense account, in the order provided below: (1) First, the Committee shall determine if Pretax Contributions in excess of the Code section 402(g)(1) limit have been made to the Plan. If so, the excess deferral shall be returned to the Member who made it. This distribution shall 11 Section 3.6 include earnings allocable to the contribution and shall be reduced by any allocable losses. The Committee shall endeavor to make a distribution to the Member by the April 15 following the year in which the excess deferral was made. (2) Second, the Committee shall determine whether contributions to the Plan have been made which exceed the limitations of sections 415(c) and (e) of the Code. The Committee shall use W-2 compensation (as defined in Treas. Reg. Section 1.415-2(d)(11)(i)) in making this determination. If, as a result of the allocation of forfeitures, a reasonable error in determining the Member's W-2 compensation, or a reasonable error in determining the amount of Pretax Contributions that may be made with respect to a Member, the annual addition to a Member's Account exceeds that which may be allocated, Company contributions which constitute excess annual additions (and any gains on such contributions) shall be forfeited, and used to reduce the Company's contributions for the next succeeding Plan Year. Removal of excess annual additions shall be made first from the Member's Basic Account, then from the Member's Pension Equalizer Account, then from the Member's Medisave Account, and finally from the Member's Matching Account. If further corrective measures are required, excess annual additions resulting from employee contributions (and any gains thereon) shall be distributed first from the Member's After-tax Account and then from the Member's Pretax Account. (3) Third, the Committee shall determine whether the actual deferral percentage ("ADP") test set forth in Treas. Reg. 12 Section 3.6 Section 1.401(k)-1(b) has been met for the Plan Year. If the test is not met, the Committee shall return the excess Pretax Contributions of Highly Compensated Members, beginning with the Member with the highest actual deferral percentage, until the maximum deferral percentage permitted under the test is reached. Excess amounts, increased by any gains or reduced by any losses attributable to the excess, shall be distributed within two and one-half months after the close of the Plan Year, or as soon thereafter as is practicable. (4) Fourth, the Committee shall determine whether the actual contribution percentage ("ACP") test set forth in Treas. Reg. Section 1.401(m)- 1(b) has been met for the Plan Year. If the test is not met, the Committee shall return excess contributions of Highly Compensated Members, beginning with the excess contributions of the Member with the highest actual contribution percentage, until the maximum contribution percentage permitted under the test is reached. Excess contributions may be purged by any consistently applied method, including the forfeiture of non-vested excess Medisave or Matching Contributions, if the method is not discriminatory. Excess contributions, increased by any gains or reduced by any losses attributable to the excess, shall be distributed or forfeited within two and one-half months of the close of the Plan Year, or as soon thereafter as is practicable. (5) Fifth, the Committee shall determine whether the multiple use test ("MUT") set forth in Treas. Reg. Section 1.401(m)-2(b) is met for the Plan Year. If the test is not met, the Committee 13 Section 3.6 shall reduce the actual contribution percentage of the group of Highly Compensated Members in accordance with the provisions of Section 3.6(b)(4). (6) Sixth, any Medisave or Matching Contribution of a Member based on an employee contribution returned to a Member, and not distributed or forfeited in accordance with Section 3.6(b)(4) or (5), shall be forfeited and applied to reduce Company contributions under the Plan. SECTION 3.7. REEMPLOYED VETERANS. If a Member terminates employment to serve in a uniformed service (as defined in the Uniformed Services Employment and Reemployment Rights Act of 1994) and returns to the employ of the Company before the date the Member's reemployment rights under such statute expire, then: (a) The Member shall receive the Basic and Pension Equalizer Contributions such Member would have received except for the fact that the Member was in a uniformed service; (b) The Member shall be permitted to make the Pretax Contributions and the After-tax Contributions the Member would have been able to make, except for the fact that the Member was in a uniformed service; (c) The Company shall match the Member's make-up contributions in the manner that such contributions would have been matched had they been made during the Member's stint in a uniformed service. This Section 3.7 shall apply only if such application would not cause the Plan to violate the qualification requirements of 14 Section 3.7 section 401(a) of the Code, as interpreted by the Secretary of the Treasury. 15 Section 3.7 ARTICLE 4 ACCOUNTS OF MEMBERS Section 4.1. INDIVIDUAL ACCOUNT FOR EACH MEMBER. The Committee or, if the Committee so determines, an agent of the Committee, shall maintain an Account for each Member and Former Member having an amount credited in the Trust Fund. Each Account shall be divided into separate subaccounts: (a) a Pretax Account to accept Pretax Contributions pursuant to Section 3.1(a), (b) an After-tax Account to accept After-tax Contributions pursuant to Section 3.1(b), (c) a Basic Account to accept Basic Contributions pursuant to Section 3.2(a), (d) a Matching Account to accept Matching Contributions pursuant to Section 3.2(b), (e) a Medisave Account to accept Medisave Contributions under Section 3.2(c). (f) a Pension Equalizer Account to accept Pension Equalizer Contributions pursuant to Section 3.2(d), (g) a Rollover Account to accept Rollover Contributions pursuant to Section 3.3, and (h) such additional subaccounts as the Committee deems necessary to keep track of a Member's interest in the Trust Fund. 16 Section 4.1 SECTION 4.2. SEPARATE ACCOUNTING. The amounts in a Member's Pretax Account, After-tax Account, Matching Account, Basic Account, Medisave Account, Pension Equalizer Account, and Rollover Account (to the extent that a Member has such subaccounts) shall at all times be separately accounted for. Withdrawals, distributions, and other credits or charges shall be separately allocated among such subaccounts on a reasonable and consistent basis. Cash dividends on shares held in a subaccount on any record date applicable to such shares shall be credited to such subaccount on the date the dividend is paid and reinvested in the security with respect to which the dividends were paid. Stock dividends and stock splits with respect to shares held in a subaccount will be credited to that subaccount. Other distributions of securities and rights to subscribe with respect to shares held in a subaccount shall be sold and the net proceeds handled as a cash dividend. SECTION 4.3. BENEFITS NOT ASSIGNABLE. An interest in a Member's Account may not be assigned, transferred or alienated in any manner whatsoever by any Member or Beneficiary, except to secure a loan under the provisions of Article 8. The preceding sentence also shall apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a Member pursuant to a domestic relations order, unless such order is determined to be a qualified domestic relations order, as defined in section 414(p) of the Code. If a qualified domestic relations order so provides, benefits may be paid to an alternate payee even if there has not been a separation from service by the Member whose 17 Section 4.3 benefits are the subject of such order. Written consent of the alternate payee to receive amounts in excess of $3,500 prior to the time the Member attains age 65 shall not be necessary, unless the qualified domestic relations order so provides. The Committee shall adopt written procedures for processing domestic relations orders. 18 Section 4.3 ARTICLE 5 INVESTMENTS SECTION 5.1. IN GENERAL. A Member may elect to have amounts credited to the Member's Account invested in one or more Investment Options. A Member who fails to make this election shall have his Account invested by the Committee in one or more Investment Options in accordance with a uniform and nondiscriminatory default procedure adopted by the Committee. The Investment Options available to a Member shall be selected by the Committee, and may be changed by the Committee at any time. Such Investment Options shall be valued as soon as administratively practicable following each business day. SECTION 5.2. ALLOCATION OF CONTRIBUTIONS TO INVESTMENT OPTIONS. Semimonthly, a Member may elect how contributions to the Member's subaccounts described in Section 4.1 shall be allocated among the Investment Options. These elections shall become effective for the first available payroll period following the date in which the elections are made. Elections under this Section shall be made at such time, in such manner, and in such form as the Committee may prescribe through uniform and nondiscriminatory rules. The contributions to a Member's various subaccounts may be allocated among the Investment Options in any proportion, as long as whole percentages are used. SECTION 5.3. TRANSFER OF INVESTMENTS. A Member may elect to transfer the amounts in such Member's subaccounts among the 19 Section 5.3 Investment Options in any whole percentages. Elections under this Section shall be made at such time, in such manner, and on such forms or electronic media as the Committee may prescribe through uniform and nondiscriminatory rules. Investment in an Investment Option may be subject to a condition that funds be held in the Investment Option for a specified length of time. If such a restriction is imposed on an Investment Option held by the Member, a Member's right to transfer funds from or into such Investment Option shall be subject to this restriction. SECTION 5.4. LOANS. Members may receive loans from their Account, to the extent permitted in Article 8. A loan to a Member shall be considered an earmarked investment of such Member's Account and proportionately shall reduce the amounts invested in the Investment Options. Repayments of a loan shall reduce the amount of the loan investment and shall be invested in Investment Options in accordance with the Member's then current investment direction. SECTION 5.5. NAMED FIDUCIARY. The Committee shall be the Plan fiduciary that is obligated to comply with Members' investment instructions under this Article, but may delegate this duty to an agent in accordance with Section 10.7. 20 Section 5.5 ARTICLE 6 DISTRIBUTION SECTION 6.1. WHEN DISTRIBUTION MAY BE MADE. A Member may receive a distribution from the vested portion of the Member's Account under the following circumstances: (a) Termination of active employment, including retirement (or, if later, termination of an authorized leave of absence, or the commencement of an unauthorized leave of absence); (b) Termination of employment on account of Disability; or (c) Termination of employment with the Company, because of a joint venture creation, sale, transfer, or other disposition involving all or part of the Company's business, but only if the Member's Account is not transferred, as provided in Section 2.6, to a plan of the Member's new employer. SECTION 6.2. FORMS OF DISTRIBUTION. A Member may elect that the Member's vested Account be paid in any one of the following forms: (a) An immediate or deferred single sum in cash. (b) Periodic installments, paid monthly, quarterly, or annually over five years, ten years, fifteen years, or the life expectancy of the Member. (c) Periodic installments, paid monthly, quarterly, or annually, which are equal to a specified dollar amount chosen by the Member. 21 Section 6.2 Installment payments shall not be made over a period exceeding the Member's life expectancy. A Member whose vested Account balance does not exceed $3,500, and has not exceeded $3,500 at the time of any prior distribution or withdrawal, shall receive the vested Account balance in a single sum as soon as administratively practicable after the end of the calendar month in which he terminates employment. SECTION 6.3. ELECTIONS REGARDING DISTRIBUTION. A Member eligible to receive a distribution shall designate the time he will receive the distribution and the form of the distribution, if his vested Account is not cashed out as described in Section 6.2. A Member who fails to make this election shall have the vested Account distributed as described in Section 6.4(a). Not earlier than 90 days, but not later than 30 days before the date the vested portion of the Member's Account is scheduled to be distributed, the Committee shall provide a benefit notice to a Member who is eligible to make an election under this Section 6.3. The benefit notice shall contain a general explanation of the features of the optional forms of payment available under the Plan and explain the Member's right to defer distribution until age 65. Notwithstanding anything in the preceding paragraph to the contrary, distribution may begin less than 30 days after the notice required in the preceding paragraph is given, as long as: (a) The benefit notice clearly informs the Member that the Member has a right to a period of at least 30 days after receiving 22 Section 6.3 the notice to consider the decision of whether or not to elect a distribution; and (b) The Member, after receiving the notice, affirmatively elects a distribution. SECTION 6.4. REQUIRED TIME FOR DISTRIBUTION. (a) A Member, who terminates employment before attaining age 65 and defers or does not designate the time of distribution in accordance with Section 6.3, shall receive his Account balance as soon as administratively practicable after the end of the calendar month in which the Member attains age 65. A Member who terminates employment upon or after attaining age 65, shall receive his Account balance as soon as administratively practicable after the end of the calendar month in which the Member retires or otherwise terminates employment. However, distribution shall be delayed, if necessary, to comply with the direct rollover notice and election rules described in Section 6.6. If the Member has not elected a form of payment by the time distribution must begin under this Section 6.4(a), the vested portion of the Member's Account shall be paid to that Member in a single sum in cash. (b) If a Member is employed on the April 1 of the calendar year following the calendar year in which the Member attains age 70-1/2, that Member shall receive a minimum distribution on such April 1, and shall receive a minimum distribution on each following December 31, until the Member retires or terminates active employment. 23 Section 6.4 The amount of the initial minimum distribution shall be equal to the value of the vested portion of the Member's Account as of the December 31 preceding the Member's attainment of age 70-1/2, divided by the applicable divisor. The amount of any subsequent minimum distribution is equal to the value of the Member's vested Account as of the December 31 preceding the minimum distribution date, divided by the applicable divisor. "Applicable divisor" means the amount in (2), if the Member's Beneficiary is his spouse, and, in any other case, the lesser of: (1) The applicable divisor determined in accordance with Prop. Reg. Section 1.401(a)(9)-2, Q&A-4; or (2) The joint life expectancy of the Member and Beneficiary, as determined under Prop. Reg. Section 1.401(a)(9)-1, Q&A E1 - E4, using the expected return multiples in Tables V and VI of Treas. Reg. Section 1.72-9. (c) If a Member is required to receive a distribution, but the Committee is unable to locate the Member (or the Member's Beneficiary) within five years, the Member's Account shall be forfeited, and the forfeiture shall be applied to reduce the Company's contribution for the Plan Year. Such forfeited Account shall be restored and distributed to the Member or Beneficiary, if a claim for such Account is made by such Member or Beneficiary, or if the Committee is able to locate the Member or Beneficiary. Payment of such a restored Account shall be made approximately 60 days after the date the Committee locates the Member or Beneficiary, or, if earlier, the date a claim is filed. 24 Section 6.4 SECTION 6.5. STATUTORY REQUIREMENTS REGARDING DISTRIBUTION. (a) Regardless of any contrary provision of the Plan, a distribution from the Plan to a Member shall begin no later than the 60th day after the close of the Plan Year in which the latest of the following occurs: (1) the date on which a Member attains age 65, (2) the 10th anniversary of the year in which a Member commenced participation under the Plan, or (3) the Member's termination of employment with the Affiliated Companies. (b) Notwithstanding anything herein to the contrary, any distribution hereunder shall be determined in accordance with Code section 401(a)(9) and the proposed regulations thereunder, including the "minimum distribution incidental benefit requirement" of Section 1.401(a)(9)-2 of the proposed regulations. SECTION 6.6. DISTRIBUTION UPON DEATH. If the Member dies before distribution of the Member's vested Account begins, the Member's benefit shall be distributed in a single sum to the Member's Beneficiary. Generally, distribution shall occur as soon as administratively practicable after the end of the calendar month in which the Committee receives satisfactory evidence of the death of the Member. However, the Beneficiary may elect to delay distribution to the earlier of: (a) the fifth anniversary of the Member's death; or (b) the date the Member would have reached age 65. 25 Section 6.6 SECTION 6.7. DIRECT ROLLOVER OF DISTRIBUTION. A distributee may elect to have an eligible rollover distribution paid directly to at most one eligible retirement plan specified by the distributee. However, this election may not be made if the total eligible rollover distributions paid to the distributee will be less than $200. A distributee may elect to divide an eligible rollover distribution so that part is paid directly to an eligible retirement plan and part is paid to the distributee. However, the part paid directly to the eligible retirement plan must total at least $500. A distributee may elect a direct rollover after having received a written notice that complies with the rules of section 402(f) of the Code. In general, payment to a distributee shall not begin until 30 days after the section 402(f) notice is given. However, payment may be made sooner if the notice clearly informs the distributee of the right to a period of at least 30 days to consider the decision of whether or not to make a direct rollover, and the distributee, after receiving the notice, makes an affirmative election. A distributee who fails to make an election in the thirty-day period shall receive the eligible rollover distribution immediately after the 30-day period expires. For purposes of this Section, the following terms have the meanings set forth below: (a) An "eligible rollover distribution" is any distribution or withdrawal payable under the terms of this Plan to a Member, 26 Section 6.7 which is described in section 402(c)(4) of the Code. In general, this term includes any single-sum distribution, and any distribution that is one in a series of substantially equal periodic payments made over a period that is less than ten (10) years, and is less than the distributee's life expectancy. However, an eligible rollover distribution does not include the portion of any distribution which constitutes a minimum required distribution under section 401(a)(9) of the Code, or the portion of any distribution which is a return of the After-tax Contributions of a Member. Such term also does not include a distribution to the Member's Beneficiary, unless the Beneficiary is the Member's spouse. (b) "Eligible retirement plan" means: (1) An individual retirement account described in section 408(a) of the Code; (2) An individual retirement annuity described in section 408(b) of the Code; (3) An annuity plan described in section 403(a) of the Code; and (4) A retirement plan qualified under section 401(a) of the Code, but only if the terms of such plan permit the acceptance of rollover distributions. However, in the case of an eligible rollover distribution to a distributee who is a surviving spouse, an eligible retirement plan is an individual retirement account or an individual retirement annuity. 27 Section 6.7 (c) "Distributee" means a Member, Former Member, the spouse of a deceased Member, or a spouse who is an alternate payee under a qualified domestic relations order. SECTION 6.8. FACILITY OF PAYMENT. If the Committee deems any person entitled to receive any amount under the provisions of this Plan incapable of receiving or disbursing the same by reason of minority, illness or infirmity, mental incompetency, or incapacity of any kind, the Committee may, in its discretion, direct the Trustee to take any one or more of the following actions: (a) To apply such amount directly for the comfort, support and maintenance of such person; (b) To reimburse any person for any such support previously supplied to the person entitled to receive any such payment; (c) To pay such amount to a court appointed legal representative or guardian selected by the Committee to disburse it for such comfort, support and maintenance. SECTION 6.9. FORFEITURES. A Member who terminates employment and who, as a result, receives a distribution of the vested portion of an Account, shall forfeit all non-vested amounts in the Account. A Member who is not vested in the portion of the Account derived from employer contributions shall be deemed to have received a distribution of the entire vested Account upon termination of employment. Forfeitures under this Section shall reduce Company contributions under Section 3.5. 28 Section 6.9 If the Member later returns to the employ of the Company or an Affiliated Company before incurring a Break in Service, that Member's non-vested Account shall be restored, and the Member may repay the amount of the distribution. SECTION 6.10. RECOVERY OF PAYMENTS MADE BY MISTAKE. Notwithstanding anything to the contrary, a Member or Beneficiary is entitled to only those benefits provided by the Plan and promptly shall return any payment, or portion thereof, made by mistake of fact or law. Further notwithstanding anything to the contrary, an alternate payee under a qualified domestic relations order is entitled to only those benefits from the Plan as are designated by the order and promptly shall return any payment, or portion thereof, made by mistake of fact or law. The Committee may offset the future benefits of any recipient who refuses to return an erroneous payment, in addition to pursuing any other remedies provided by law. 29 Section 6.10 ARTICLE 7 WITHDRAWALS SECTION 7.1. WITHDRAWALS FROM AFTER-TAX ACCOUNT. A Member may make a single-sum withdrawal from the Member's After-tax Account at any time. However, there are three conditions on this right: (a) A withdrawal must total at least $500; (b) A Member may make only one withdrawal in a Plan Year; and (c) A Member must have made contributions to this Plan (or a Predecessor Plan), for at least one year. SECTION 7.2. HARDSHIP WITHDRAWALS. (a) ELIGIBILITY. A Member may request a hardship distribution, if: (1) That Member has received all distributions available under this Plan, including After-tax Account distributions described in Section 7.1, and any in-service distribution available to a Member from a subaccount derived from a Predecessor Plan; (2) That Member has received the maximum loan available under this Plan; (3) That Member has received all in-service distributions and loans available under any other plan of the Company or an Affiliated Company, and (4) That Member is requesting the distribution in order to: 30 Section 7.2 (A) pay medical expenses for the Member, the Member's spouse, or dependents; (B) purchase the Member's principal residence; (C) pay tuition, related educational fees, or room and board for next twelve months of post-secondary education for the Member, the Member's spouse, or dependents; (D) prevent the Member's eviction from the Member's principal residence; or (E) prevent foreclosure on the mortgage on the Member's principal residence. (b) AMOUNT. In general, the Committee shall permit the Member to designate the amount to be withdrawn. However, the withdrawal amount shall not be more than the amount necessary to both meet the Member's financial need and pay any reasonably anticipated federal, state, and local income taxes or penalties that may result from the distribution. The amount that may be withdrawn is further limited to the amount held in the Member's Pretax, Rollover, and After-tax Accounts, as of the date of the withdrawal, minus any income earned on the Member's Pretax Account after December 31, 1988, as specified in Treas. Reg. Section 1.401(k)-1(d)(2)(ii). (c) CONSEQUENCES. A Member who makes a hardship withdrawal shall not be eligible to make Pretax Contributions or After-tax Contributions to this Plan, or any other plan sponsored by the Company or an Affiliated Company, for the 12- month period beginning on the date of the withdrawal. 31 Section 7.2 In addition, in the calendar year following the date of the withdrawal, the Member's Pretax Contribution shall be limited to the limit applied to these contributions by Section 3.1(a), minus the Member's Pretax Contributions for the year in which he received the hardship distribution. (d) ADMINISTRATION. The Committee shall determine whether a Member is eligible to make a hardship withdrawal, as soon as possible following receipt of an application for such a withdrawal. If it approves the application, the Committee shall direct the Trustee to pay to the Member the amount requested by the Member (or any lesser amount dictated by subsection (b)) in a single sum. If all or part of the distribution is an eligible rollover distribution, the rules of Section 6.6 shall apply. A hardship withdrawal shall be made first from the Member's After-tax Account, then from the Member's Rollover Account, and then from the Member's Pretax Account. 32 Section 7.2 ARTICLE 8 LOANS SECTION 8.1. ELIGIBILITY FOR LOAN. A Member may borrow from the Member's Account in accordance with this Article 8 and the loan procedure which the Committee shall establish, provided: (a) The Member has not received a loan during the Plan Year in which the loan request is made; and (b) The Member has repaid all loans made from this Plan or any Predecessor Plan. SECTION 8.2. TERMS OF LOAN. The terms of each loan shall be set by the Committee in accordance with its loan procedure, and the following provisions of this Section 8.2: (a) The minimum loan amount shall be $1,000. (b) The maximum loan amount shall be the least of: (1) $50,000, minus the highest outstanding balance of loans from the Plan, any Predecessor Plan, and any plan of an Affiliated Company during the one-year and one-day period ending on the date the loan is granted; (2) 50% of the Member's vested Account balance under the Plan, valued as of the date the loan is processed; or (3) The aggregate balance of the Member's subaccounts which do not contain Basic Contributions or Pension Equalizer Contributions. (c) The interest rate charged on the unpaid balance of the loan shall be equal to the prime rate charged for loans, as 33 Section 8.2 published in the Wall Street Journal on the first business day of the month in which the loan is made. (d) All loans shall be repaid within 5 years, except for a loan used to purchase the Member's principal residence. (e) Loans shall be repaid by payroll deduction, as described in the loan procedure established by the Committee. In the event the Member is on an approved leave of absence and not receiving paychecks from the Company, the Member shall make regular repayments to the Trust Fund, with payments made not less frequently than quarterly. These payments shall be made at the time and in the manner described in the Committee's loan procedure. All loan repayments shall be invested in accordance with the Member's current investment election. (f) Early payment of a loan may be made without penalty. However, a single-sum repayment of a loan by an active Employee may not be made unless normal payroll deduction payments have been made for a period of six (6) months. Loans and loan repayments shall not be treated as elections of allocations or transfers under Sections 5.2 and 5.3. (g) Upon the termination of active employment (or, if later, the termination of an approved leave of absence) of a Member, the loan shall become immediately due and payable. Any loan balance remaining at such time shall be repaid by direct payment to the Plan. If the Member does not make such payment, the Member's Account shall be reduced by the amount necessary to pay off the loan. If the termination is due to the sale of a business unit by 34 Section 8.2 the Company, the foregoing provisions shall apply unless negotiated otherwise with the purchaser. SECTION 8.3. ACCOUNTING FOR LOANS. (a) Loan funds for a Member shall be taken first from any subaccount holding pretax deferrals made by a Member to a Predecessor Plan, then from the Member's Pretax Account, then from the vested portion of any subaccount holding matching contributions made on behalf of a Member under a Predecessor Plan (other than the Savings Plan for Employees of Baroid Corporation), then from any subaccount holding rollover contributions made by a Member to a Predecessor Plan, then from the Member's Rollover Account, then from the Member's Matching Account (if vested), then from the vested portion of the subaccount holding matching contributions made on behalf of a Member from the Savings Plan for Employees of Baroid Corporation, then from any subaccount holding voluntary after-tax contributions made by a Member to a Predecessor Plan, then from the Member's After-tax Account. (b) A subaccount, equal to the amount of the outstanding loan, shall be established for the Member, and shall be maintained until the loan has been repaid. The loan shall be the sole, directed investment of such subaccount. SECTION 8.4. ADMINISTRATION OF LOANS. The loan program under the Plan shall be administered by the Committee in a uniform and nondiscriminatory manner in accordance with the loan procedures it establishes and the provisions of this Article 8. 35 Section 8.4 Loans granted under the terms of a Predecessor Plan shall be administered by the Committee in accordance with this Article 8, to the extent that any change in prior administrative practices would not violate the terms of the note governing such a loan. A note negotiated under the terms of a Predecessor Plan which is extended or modified after the date the Predecessor Plan is merged into this Plan shall meet the requirements of this Article and the Committee's loan procedures. SECTION 8.5. PREEMPTION OF USURY LAWS. In any action to collect payments due under a Plan loan or to foreclose a security interest for such a loan, no party may interpose state usury laws as a defense to nonpayment or foreclosure. All such laws shall be deemed preempted by section 514 of ERISA, to the extent they purport to relate to the Plan and loans thereunder. SECTION 8.6. LOANS TO MILITARY PERSONNEL. Notwithstanding anything in these loan provisions to the contrary, the interest rate charged to a Member in military service, on a loan taken out prior to the Member's entry into such service, shall not exceed six percent (6%) per annum, during any part of the period of military service, as limited by the Soldiers' and Sailors' Civil Relief Act of 1940. SECTION 8.7. DISPUTES. All disputes over loans shall be resolved through the Plan's claims and appeal procedures. 36 Section 8.7 ARTICLE 9 VESTING AND SERVICE SECTION 9.1. VESTING. (a) A Member's interest in the Member's Pretax Account, After-tax Account, and Rollover Account at all times shall be fully vested and nonforfeitable. (b) A Member's interest in the Member's Matching Account, Basic Account, Medisave Account, and Pension Equalizer Account shall become fully vested and nonforfeitable upon the Member's completion of 5 years of Service (as defined in Section 9.2); upon the later of the attainment of age 65 or the 5th anniversary of the Member's participation in the Plan; or upon death or Disability. SECTION 9.2. SERVICE. In general, Service is the total time of an Employee's employment with the Company, counted in years and months. In determining the length of an Employee's Service, all of the Employee's Periods of Service shall be counted, unless cancelled or excluded under subsection (b). (a) The following periods constitute Service, even if they would not constitute Service under the first paragraph of this Section: (1) Service credited under the terms of a Predecessor Plan, and any additional service credited under the terms of a merger agreement involving the Predecessor Plan; (2) Periods of employment with an Affiliated Company for the period that such an entity is an Affiliated Company; 37 Section 9.2 (3) Periods of employment with a predecessor to the Company or an Affiliated Company, if: (A) The period is credited under the terms of a plan of the predecessor which is maintained by the Company or an Affiliated Company; or (B) The Committee, by resolution, agrees to count such periods as Service under the Plan for all Employees who are or may be covered under the Plan; (4) Service with a joint venture of the Company, an entity which has ceased to be an Affiliated Company, or an entity spun off from the Company, if the Committee, by resolution, agrees to count such periods as Service under the Plan; (5) A leave of absence approved by the Company (or an Affiliated Company) in writing; provided, however, if an individual does not return from the leave, that individual's Service shall include only the first year of the leave; (6) A period of employment in a uniformed service (as defined in the Uniformed Services Employment and Reemployment Rights Act of 1994), if the Employee was an Employee before the Employee's employment in the uniformed service and the Employee returns to the Company before the Employee's reemployment rights under the statute expire; and (7) Service following the date an Employee's active employment with the Company or an Affiliated Company terminates, if the Employee resumes active employment within 12 months. 38 Section 9.2 (b) The following periods do not constitute Service, regardless of any provision in this Section to the contrary: (1) Service prior to a Break in Service, unless the Employee was vested in any portion of the Employee's Account derived from Company contributions at the time of the Break in Service; and (2) The interim maternity or paternity leave period between the first and second anniversaries of absence, as described in Section 15.12(d). 39 Section 9.2 ARTICLE 10 ADMINISTRATION OF THE PLAN SECTION 10.1. APPOINTMENT OF THE COMMITTEE. The administration of the Plan, including the payment of all benefits to Members or their Beneficiaries, shall be the responsibility of the Dresser Industries, Inc. Employee Benefits Committee, which is the administrator of the Plan. In addition, the Committee and each Committee member shall be named fiduciaries of the Plan. The Committee shall consist of at least three persons appointed from time to time by the Board, who shall serve at the pleasure of the Board. SECTION 10.2. CONDUCT OF COMMITTEE BUSINESS. The Committee shall elect a Chairman who shall be a member of the Committee and a Secretary who may or may not be a member of the Committee. The Committee may appoint such subcommittees as it shall deem necessary and appropriate. The Committee shall conduct its business according to the provisions of this Article 10 and shall hold meetings in any convenient location. A majority of all of the members of the Committee shall have power to act with or without a meeting, and the concurrence or dissent of any member may be by telephone, e-mail, fax, wire, cablegram or letter. SECTION 10.3. RECORDS AND REPORTS OF THE COMMITTEE. The Committee shall keep such written records as it shall deem necessary or proper, which records shall be open to inspection by the Company. The Committee shall obtain from the Trustee regular 40 Section 10.3 reports with respect to the current value of the assets held in the Trust Fund, in such form as is acceptable to the Committee. SECTION 10.4. FIDUCIARY DUTIES. In performing their duties, all fiduciaries with respect to the Plan shall act solely in the interest of the Members and their Beneficiaries and: (a) For the exclusive purpose of providing benefits to the Members and their Beneficiaries; (b) With the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; (c) To the extent a fiduciary possesses and exercises investment responsibilities, by diversifying the investments of the Trust Fund so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and (d) In accordance with the documents and instruments governing the Plan, insofar as such documents and instruments are consistent with the provisions of Title I and Title IV of ERISA. SECTION 10.5. INVESTMENT RESPONSIBILITIES. The Committee shall possess the authority to appoint an Investment Manager or Managers (as defined in ERISA section 3(38)) to manage (including the power to acquire and dispose of) all or any of the assets of the Trust Fund. In the event of any such appointment, the Committee shall establish the portion of the assets of the Trust Fund which shall be subject to the management of the Investment Manager and shall so notify the Trustee in writing. Likewise, the Committee may 41 Section 10.5 establish that all or a portion of the assets of the Trust Fund shall be subject to the investment jurisdiction of the Committee itself and shall advise the Trustee of such determination. With respect to such assets over which either an Investment Manager or the Committee has investment responsibility, the Investment Manager or the Committee shall possess all of the investment powers and responsibilities granted to the Trustee under the Trust Agreement, and the Trustee shall invest and reinvest such assets pursuant to the written directions of the Investment Manager or the Committee, as the case may be. If the Committee so directs, an Investment Manager shall have the power to acquire and dispose of assets in the name of the Trust Fund. The investment jurisdiction of the Committee may be exercised in any manner consistent with its duties as a fiduciary, including: (a) directing the Investment Manager or the Trustee that certain investments or types of investments be made or liquidated; (b) directing the Investment Manager or the Trustee that certain investments or types of investments not be made; (c) requiring that the Trustee or the Investment Manager obtain approval prior to acquiring or disposing of any asset. SECTION 10.6. RESPONSIBILITIES OF THE BOARD, THE COMMITTEE, AND THE TRUSTEE. The Board, the Company, the Committee, and the Trustee possess certain specified powers, duties, responsibilities and obligations under the Plan and the Trust Agreement. It is intended under this Plan and the Trust Agreement that each be responsible solely for the proper exercise of its own functions and 42 Section 10.6 that each shall not be responsible for any act or failure to act of another, unless otherwise responsible as a breach of its fiduciary duty or for breach of duty by another fiduciary under the rules of co-fiduciary responsibility. In general, (a) the Board is responsible: (1) for appointing and removing the Committee, (2) for making any amendments that would increase or decrease the Company's contributions to the Plan, and (3) for terminating the Plan; (b) the Committee is responsible: (1) for administering the Plan, (2) for construing and interpreting the Plan, as provided in Section 10.18, (3) for amending the Plan, except to the extent provided in Sections 10.6(a)(2) and (3), (4) for adopting such rules and regulations as in the opinion of the Committee are necessary or advisable to implement and administer the Plan and to transact its business, (5) for providing a procedure for carrying out a funding policy and method consistent with the objectives of the Plan and the requirements of Title I of ERISA, (6) for complying with Member investment instructions under Article 5, (7) and for exercising certain investment responsibilities as described in this Article 10; and 43 Section 10.6 (c) the Trustee is responsible for the management and control of the Plan assets, to the extent provided in the Trust Agreement. The Committee periodically shall review the performance of the Trustee and all other persons to whom fiduciary duties have been delegated or allocated pursuant to the provisions of Sections 10.7 and 10.8. SECTION 10.7. ALLOCATION OR DELEGATION OF DUTIES AND RESPONSIBILITIES. In furtherance of its duties and responsibilities under the Plan, the Committee may, subject always to the requirements of Section 10.4, (a) Employ agents to carry out nonfiduciary responsibilities; (b) Employ agents to carry out fiduciary responsibilities (other than trustee responsibilities as defined in section 405(c)(3) of ERISA); (c) Consult with counsel and advisors, who may be counsel and advisors to the Company; and (d) Provide for the allocation of fiduciary responsibilities (other than trustee responsibilities as defined in section 405(c)(3) of ERISA) among Committee members. SECTION 10.8. PROCEDURE FOR THE ALLOCATION OR DELEGATION OF FIDUCIARY DUTIES. Any action described in subsections (b) or (d) of Section 10.7 may be taken by the Committee in accordance with the following procedure: (a) Such action shall be taken by a majority of the Committee in a meeting or by unanimous action by way of consent resolutions; 44 Section 10.8 (b) Any delegation of fiduciary duties or any allocation of fiduciary duties among members of the Committee may be modified or rescinded by the Committee according to the procedure set forth in subsection (a) of this Section 10.8. SECTION 10.9. EXPENSES. The expenses of administering the Plan and the compensation of all employees, agents, counsel, or advisors of the Committee, including the Trustee's fees, shall be paid from the Trust Fund, unless paid by the Company. In determining whether to pay Plan expenses, the Company acts in a corporate and not a fiduciary capacity. SECTION 10.10. INDEMNIFICATION. The Company agrees to indemnify and reimburse members of the Committee and employees acting for the Company, and all such Former Members and former employees, for any and all expenses, liabilities, or losses arising out of any act or omission relating to the rendition of services for, or the management and administration of, the Plan. Indemnification and reimbursement shall be made to the fullest extent permitted by law, Dresser Industries, Inc.'s Certificate of Incorporation, and any indemnification policy purchased by the Company. SECTION 10.11. DISPUTES. Any dispute over the interpretation or application of this Plan or any Predecessor Plan shall be resolved through the claims and appeal procedures set forth in Sections 10.11 - 10.20. For purposes of Sections 10.11 - 10.20, "Plan" includes this Plan and any Predecessor Plan. 45 Section 10.11 The purpose of these claims and appeal provisions is to secure the speedy, inexpensive resolution of all disputes over Plan benefits and rights granted by the Plan. These provisions shall be liberally construed so as to avoid litigation and its attendant expenses. SECTION 10.12. CLAIMS PROCEDURE. Each person who claims entitlement to any right or benefit under the Plan ("claimant") may submit a claim with respect to that benefit or right. All claims shall be submitted in writing to the Committee and shall be accompanied by such information and documentation as the Committee determines are required to make a ruling on the claim. Upon receipt of a claim, the Committee shall consider the claim and shall render a decision and communicate the same to the claimant. The Committee shall render a decision within 90 days after receipt of the claim, unless special circumstances require an extension of time for processing the claim. If such an extension of time for processing is required, written notice of the extension shall be furnished to the claimant prior to the termination of the initial 90-day period. In no event shall such extension exceed a period of 90 days from the end of such initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Committee expects to render a decision. In the event that the claim is denied in whole or in part, the claimant shall be given notice in writing, which shall set forth 46 Section 10.12 the following in a manner reasonably calculated to be understood by the claimant: (a) the specific reason(s) for the denial; (b) specific reference to pertinent Plan provisions on which the denial is based; (c) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary. (d) an explanation of the Plan's appeal procedure. The failure of the Committee to render a decision on a claim within the time specified shall be deemed to be a denial of such claim. Any claim under this claims procedure must be submitted within 12 months from the earlier of (i) the date on which the claimant learned of facts sufficient to enable the claimant to formulate such claim, or (ii) the date on which the claimant reasonably should have been expected to learn of facts sufficient to enable the claimant to formulate such claim. SECTION 10.13. APPEAL PROCEDURE. When a claim has been or is deemed denied, the claimant (hereinafter referred to as appellant) shall have the right within 60 days after receipt of written notice thereof or the date the claim is deemed denied to file an appeal with Committee and to go through the appeal procedure herein set forth. All appeals shall be in writing, and shall set forth the reasons why the appellant believes the decision denying the claim is erroneous. The appellant may be represented by counsel, or by 47 Section 10.13 other representative authorized in writing by appellant in a manner specified by the Committee, and appellant or appellant's counsel or duly authorized representative may review pertinent documents and may submit issues and comments in writing to the Committee. The expense of a paid representative shall be borne by the appellant. Within 60 days after such written appeal is received, the Committee shall conduct a full and fair review of the entire claim. The Committee shall render a decision on the appeal in writing not later than 60 days after receipt of the written appeal, unless special circumstances (such as the need to hold a hearing, which shall be determined by the Committee) require an extension of time for processing, in which case a decision shall be rendered as soon as possible, but not later than 120 days after receipt of a written appeal. If special circumstances require an extension of time for processing, the Committee shall so notify the appellant prior to the commencement of the extension. If the Committee does not render a decision within 60 days (120 days if special circumstances arise), the appeal shall be deemed denied. The decision shall include specific references to provisions of this Plan and of law and shall be written in a manner reasonably calculated to be understood by the appellant. The decision of the Committee shall be final and shall be binding upon the appellant, the appellant's Beneficiaries, heirs, and assigns and all other persons claiming by, through or under the appellant. A failure to file a claim and an appeal in the manner and within the time limits set forth herein shall be deemed a failure 48 Section 10.13 by the aggrieved party to exhaust that party's administrative remedies and shall constitute a waiver of the rights or benefits sought to be established under the Plan. SECTION 10.14. EXHAUSTION OF ADMINISTRATIVE REMEDIES. No legal action to recover Plan benefits or to enforce or to clarify rights under the Plan shall be commenced under section 502(a)(1)(B) of ERISA, or under any other provisions of law, whether or not statutory, unless and until the claimant first shall have exhausted the claims and appeal procedures available to the claimant hereunder in Sections 10.12 - 10.13. A claimant must raise all issues and present all theories relating to his claim to the Committee at one time. Otherwise, the claimant shall be deemed to have abandoned forever all issues and theories not raised and presented to the Committee. SECTION 10.15. LIMITATION ON ACTIONS. Any suit brought to contest a decision of the Committee shall be filed in a court of competent jurisdiction within one (1) year from receipt of written notice of the Committee's final decision or from the date the appeal is deemed denied, and any suit not filed within this one-year limitation period shall be dismissed by the court. Service of legal process shall be made upon the Plan by service upon the Committee. SECTION 10.16. FEDERAL PREEMPTION. All state law causes of action that arise out of or relate to this Plan or to entitlement to rights or benefits under the Plan shall be deemed to have been preempted by section 514 of ERISA. 49 Section 10.16 SECTION 10.17. NO RIGHT TO JURY TRIAL; EVIDENCE. In any suit contesting a decision of the Committee, all issues of fact shall be tried by the court and not by a jury. No evidence may be introduced in court which was not previously presented to the Committee and no evidence may be introduced to modify or contradict the terms of the Plan document. SECTION 10.18. SCOPE OF REVIEW. The Committee shall have full discretionary authority to interpret and apply the terms of the Plan document and other relevant documents and relevant provisions of law, and deference shall be afforded the Committee's decisions. This grant of authority shall be broadly construed and shall include the authority to find facts, to reach conclusions of law, to interpret and apply ambiguous terms, and to supply missing terms reasonably necessary to resolution of claims and appeals. No finding of fact by the Committee shall be set aside by a court unless the party contesting the finding shall prove by clear and convincing evidence that the finding is arbitrary and capricious. No conclusion of law reached by the Committee shall be reversed by a court unless the party contesting the conclusion shall demonstrate that the Committee is guilty of manifest disregard of law. SECTION 10.19. LIMITATION ON DAMAGES. In any suit over Plan benefits or rights, recovery shall be limited to the amount of benefits found due, without interest, or to specific enforcement of rights established under the Plan, and shall not include any other 50 Section 10.19 damages whether denominated incidental, special, consequential, collateral, compensatory, exemplary, punitive or whatever. SECTION 10.20. MEMBER PLAN DATA. The Committee may issue, or cause to be issued, from time to time, statements to Employees, Members, Former Members, and Beneficiaries, indicating eligibility, Service or other data regarding their Plan benefits. If any such person wishes to challenge the accuracy of such data or of any information issued in response to a request within the terms of sections 105(a) or 209(a)(1) of ERISA, the person shall do so in the manner and within the time limits set forth above in Sections 10.11 - 10.19. SECTION 10.21. ADVISORS NOT FIDUCIARIES. The Committee and other Plan fiduciaries may solicit the advice of attorneys, actuaries, accountants, consultants and other professionals and may rely upon their advice in the performance of duties under the Plan. No such advisor shall be considered a fiduciary by virtue of having advised a fiduciary but shall be a fiduciary only to the extent he expressly accepts that role. 51 Section 10.21 ARTICLE 11 AMENDMENT, TERMINATION OR MERGER SECTION 11.1. AMENDMENT. Dresser Industries, Inc. shall have the right to amend the Plan in writing at any time and in any respect whatsoever, provided that no amendment shall be made which would deprive any Member retroactively of the vested portion of the Member's Account or make it possible for any part of the Trust Fund to be used for or diverted to purposes other than for the exclusive benefit of the Members and their Beneficiaries (except for refunds as provided in Section 12.4). When making decisions regarding Plan amendments, the Committee, the Board, and their agents act in a corporate and not a fiduciary capacity. A plan merger agreement between Dresser Industries, Inc. and any entity which sponsors a Predecessor Plan shall serve as a formal amendment to this Plan, to the extent that the merger agreement relates to this Plan. SECTION 11.2. TERMINATION. Although Dresser Industries, Inc. intends to continue the Plan, the Plan may be terminated by written action of the Board at any time and for any reason. In the event of the termination or partial termination of the Plan or upon the complete discontinuance of contributions under the Plan, the rights of each affected Member to the Member's Account on the date of such termination or discontinuance shall be nonforfeitable and fully vested. Subject to the distribution requirements of Article 6, payment of such amounts to each Member or Beneficiary, upon the 52 Section 11.2 termination of the Plan or upon the complete discontinuance of contributions under the Plan, shall be made by the Trustee at such time and in such manner as is directed by the Committee, provided, however, that all Members and Beneficiaries similarly situated shall be treated in a nondiscriminatory manner. Distribution of Pretax Accounts shall commence only if a successor defined contribution plan, as defined in Treas. Reg. Section 1.401(k)-1(d)(3), has not been established by the Company. SECTION 11.3. MERGER. In the case of any merger or consolidation of this Plan and/or the Trust Fund with, or any transfer of the assets or liabilities of the Plan and/or Trust Fund to, any other plan, or the transfer of assets or liabilities of another plan to the Plan, the terms of such merger, consolidation or transfer shall be such that each Member would receive (in the event of termination of the other plan or this Plan or its successor immediately thereafter) a benefit which is no less than the Member would have received in the event of termination of the Plan immediately before such merger, consolidation or transfer. SECTION 11.4. REPRESENTATIONS CONTRARY TO PLAN. No employee, supervisor, officer or director of the Company has authority to alter, vary or modify the terms of the Plan, except in writing through the Plan's formal amendment procedures set forth in Section 11.1. No representation contrary to the terms of the Plan and the formal amendments thereto shall be binding on the Plan, the Trustee, the Committee, or the Company. 53 Section 11.4 ARTICLE 12 ESTABLISHMENT OF TRUST SECTION 12.1. AGREEMENTS OF TRUST. In order to implement the Plan, Dresser Industries, Inc. has entered or will enter into one or more Trust Agreements, to the end that such funds as may be contributed from time to time for the payment of all or any part of the benefits under the Plan shall be segregated from the Company's own assets and held in trust by the Trustee for the exclusive benefit of the Members or their Beneficiaries (except for refunds as provided in Section 12.4) under the Plan who may, in accordance with the terms of the Plan and such Trust Agreements, be entitled to participation thereunder. SECTION 12.2. THE TRUSTEE. One or more banks or trust companies shall be appointed by the Board or by such other person or persons as shall be authorized by the Board, as Trustee of the Trust Fund. The primary duty of the Trustee is to hold, invest and reinvest the Trust Fund, and the powers and duties of the Trustee shall be as described in a Trust Agreement between the Company and the Trustee. The Trust Agreement shall be deemed to form a part of this Plan and any or all benefits which may accrue to any Member under this Plan shall be subject to the terms and conditions of said Trust Agreement. The Trust Agreement shall permit establishment of one or more separate investment funds within the Trust Fund, such separate investment funds to be invested solely in accordance with 54 Section 12.2 guidelines established by the Committee and communicated to the Members. SECTION 12.3. TRUST FUND FOR EXCLUSIVE BENEFIT OF MEMBERS OF THE PLAN AND THEIR BENEFICIARIES. Except as otherwise provided in Section 12.4, it shall be impossible under any circumstances at any time for any part of the corpus or income of the Trust Fund to be used for, or diverted to purposes other than for the exclusive benefit of Members and their Beneficiaries. SECTION 12.4. REFUND OF CERTAIN COMPANY CONTRIBUTIONS. Notwithstanding anything to the contrary: (a) any contribution made to the Plan by the Company by a mistake of fact shall be returned to the Company as soon as practicably possible following discovery of the mistake, but not later than one year after the payment of the contribution; (b) all contributions made to the Plan by the Company are conditioned upon initial qualification of the Plan under the Code and, if the Plan receives an adverse determination with respect to its initial qualification, then all contributions shall be returned to the Company within one year after such determination, but only if application for the determination is made by the time prescribed by law for filing the Company's return for the taxable year in which the Plan was adopted, or such later date as the Secretary of the Treasury may prescribe; and (c) each contribution made to the Plan by the Company is conditioned upon the deductibility of the contribution under section 404 of the Code and, to the extent the deduction is 55 Section 12.4 disallowed, the contribution shall be returned to the Company (to the extent disallowed), as soon as practicably possible following disallowance of the deduction, but not later than one year after disallowance. The maximum amount that may be returned to the Company under Section 12.4(a) or (c) is the excess of (d) the amount contributed by the Company, over, as relevant, (e) (1) the amount that would have been contributed had no mistake of fact occurred, or (2) the amount that would have been contributed had the contribution been limited to the amount that is deductible after any disallowance by the Internal Revenue Service. Earnings attributable to the excess contribution may not be returned to the Company under Section 12.4(a) or (c), but losses attributable thereto must reduce the amount to be so returned. Furthermore, if the withdrawal of the amount attributable to the mistaken or nondeductible contribution would cause the balance of the Account of any Member, Former Member, or Beneficiary to be reduced to less than the balance which would have been in the Account had the mistaken or nondeductible amount not been contributed, then the amount to be returned to the Company must be limited so as to avoid such reduction. In the case of a reversion Section 12.4(b), the entire assets of the Plan attributable to Company contributions shall be returned to the Company. 56 Section 12.4 ARTICLE 13 TOP-HEAVY REQUIREMENTS SECTION 13.1. TOP-HEAVINESS DETERMINATION. The Plan is Top-Heavy for a Plan Year if, as of the last day of the preceding Plan Year, based on valuations as of such date, the present value of the cumulative accrued benefits under any Company defined benefit plan and of Accounts under this Plan and any other defined contribution plan, and including any part of any accrued benefit or account value distributed from this Plan or any other Company (or Affiliated Company) plan within the 5-year period ending on the last business day of the Plan Year, of key employees (as defined in section 416(i) of the Code) exceeds 60% of a similar sum for all employees under each plan of the Company and any Affiliated Company in which a key employee participates and each other plan of the Company or any Affiliated Company, which enables any such plan to meet the requirements of section 401(a)(4) or 410 of the Code. Accounts and benefits shall not be taken into account with respect to any individual who has not performed any service for the Company or an Affiliated Company at any time during the 5-year period ending on the last business day of the Plan Year. SECTION 13.2. EFFECT OF TOP-HEAVINESS. If the Plan is Top-Heavy in a Plan Year, the following provisions apply: (a) A Member who is credited with Service in a Plan Year in which the Plan is Top-Heavy shall be 100% vested in the Member's 57 Section 13.2 Account under the Plan. This provision shall continue to apply to the Member even after the Plan ceases to be Top-Heavy. (b) A Member who is not a key employee shall receive a five percent Company contribution. Basic Contributions and Pension Equalizer Contributions shall be counted as Company contributions for this purpose. Matching Contributions, Medisave Contributions and Pretax Contributions shall be disregarded. (c) In determining whether the requirements of section 415(e) of the Code have been met, the 1.25 factor shall be replaced by 1.0. 58 Section 13.2 ARTICLE 14 MISCELLANEOUS SECTION 14.1. EMPLOYMENT RIGHTS. Participation in this Plan shall not give to any Member the right to be retained in the employ of the Affiliated Companies, nor, upon dismissal, to have any rights other than as described in this Plan. SECTION 14.2. HEADINGS. The headings are for reference only. In the event of a conflict between a heading and the content of a section, the content of the section shall control. SECTION 14.3. NUMBER AND GENDER. The masculine pronoun when used herein shall include the feminine pronoun, and the singular number shall include the plural number, unless the context of the Plan requires otherwise. SECTION 14.4. CONSTRUCTION. Except to the extent preempted by federal law, the provisions of the Plan shall be interpreted in accordance with the laws of the State of Texas. SECTION 14.5. ADOPTION OF PLAN CONTINGENT UPON IRS APPROVAL. Notwithstanding anything in this Plan to the contrary, the adoption of this Plan by Dresser Industries, Inc. is contingent upon a determination by the Internal Revenue Service that the Plan qualifies as a tax-exempt retirement program under sections 401(a) and 501(a) of the Internal Revenue Code of 1986. If the Internal Revenue Service fails to issue a favorable letter of determination, Dresser Industries, Inc., at its discretion, may treat the adoption of this Plan, the portion of any merger agreement which relates to 59 Section 14.5 this Plan, and any Plan merger which occurs on or after the Effective Date as null and void. Title I, Part 1 of ERISA shall not apply to this Plan unless and until the Internal Revenue Service issues a written determination that the Plan is qualified under sections 401(a) and 501(a) of the Code. 60 Section 14.5 ARTICLE 15 GLOSSARY Each word and phrase defined in this Article 15 shall have the following meaning whenever such word or phrase used herein unless a different meaning is clearly required by the context of the Plan. SECTION 15.1. ACCOUNT. The bookkeeping account of a Member kept pursuant to Section 4.1, used to keep track of a Member's interest in the Trust Fund. Some of the subaccounts kept on behalf of a Member are further defined in Section 4.1. SECTION 15.2. AFFILIATED COMPANY. A member of a controlled group of corporations (as defined in Code section 1563(a), determined without regard to Code section 1563(a)(4) and Code section 1563(e)(3)(C)), of which Dresser Industries, Inc. is a member, or (a) an unincorporated trade or business which is under common control with Dresser Industries, Inc., as determined under Code section 414(c) and regulations issued thereunder; or (b) an organization which is part of an affiliated service group with Dresser Industries, Inc., as determined under Code section 414(m) and the regulations thereunder; or (c) any other entity required to be aggregated with Dresser Industries, Inc., pursuant to the regulations published under Code section 414(o). For the purpose of determining the length of a Member's Service, the phrase "more than 50 percent" shall be substituted for 61 Section 15.2 the phrase "at least 80 percent", each time it appears in Code section 1563. SECTION 15.3. AFTER-TAX CONTRIBUTION. That portion of a Member's Earnings which the Member elects to contribute to the Member's Account on an after-tax basis under Section 3.1(b). SECTION 15.4. BASIC CONTRIBUTION. Contributions made by the Company under Section 3.2(a). SECTION 15.5. BENEFICIARY. The individual the Member designates to receive the sums credited to the Member's Account in the event of the Member's death. The term "Beneficiary" shall include a contingent beneficiary designated by the Member to receive said sums should the Member's primary Beneficiary predecease the Member. The Member shall designate a Beneficiary as provided in Section 2.2, upon initial enrollment in the Plan, and a Member may change a Beneficiary by filing a new designation form with the Committee. However, the designation by a married Member of a primary Beneficiary other than the Member's spouse shall not be valid unless the spouse consents to the designation of the alternate Beneficiary, the spouse's consent acknowledges the effect of the designation, and the designation is witnessed by a Plan representative or a notary public. A designation of a Beneficiary under a Predecessor Plan shall remain valid under this Plan, until revoked by the Member. In the event there is no valid Beneficiary designation in effect, or if the Member's Beneficiary has died and the Member has not made a new Beneficiary designation, the Member's Beneficiary 62 Section 15.5 shall be the Member's spouse, or if there is no spouse, the Member's estate. SECTION 15.6. BOARD. The Board of Directors of Dresser Industries, Inc. SECTION 15.7. BREAK IN SERVICE. A period of absence of 60 or more consecutive months, beginning with a Date of Separation and continuing until the next Date of Employment. SECTION 15.8. CODE. The Internal Revenue Code of 1986, as amended, or as it may be amended from time to time. SECTION 15.9. COMMITTEE. The Dresser Industries, Inc. Employee Benefits Committee as described in Article 10. SECTION 15.10. COMPANY. Dresser Industries, Inc., and any Affiliated Company which adopts this Plan. By adopting the Plan, an Affiliated Company shall authorize the Board and the Committee to act for it in all matters arising under or with respect to the Plan and shall comply with such other terms and conditions as may be imposed by the Board. SECTION 15.11. DATE OF EMPLOYMENT. The date on which an Employee first earns an hour of service with the Company or an Affiliated Company. SECTION 15.12. DATE OF SEPARATION. The earlier of: (a) the date on which an Employee (or Former Member) quits, retires, is discharged or dies, (b) the first anniversary of any period of absence from active employment with the Company or an Affiliated Company, for any reason other than those specified in Section 15.12(a), subject 63 Section 15.12 to the provisions of Sections 15.12(c), 9.2(a)(6), and 9.2(a)(7). Date of Separation shall not include the date on which an Employee transfers to an ineligible job classification or a non-participating Affiliated Company, or (c) the date of disposition of business unit, as described in Section 6.1(d). (d) In the case of an Employee (or Former Member) on maternity or paternity leave which continues beyond the first anniversary of the absence on account of such leave, the Employee's (or Former Member's) Date of Separation shall be the second anniversary of such absence. Maternity or paternity leave means an absence from work for any period-- (1) by reason of the pregnancy of the individual, (2) by reason of the birth of a child of the individual, (3) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement. SECTION 15.13. DISABILITY. Any physical or mental condition which renders a Member incapable of performing the work for which he was employed or similar work, as certified in writing by a doctor of medicine and as approved by the Committee. SECTION 15.14. EARNINGS. For any Plan Year, the sum of (a) and (b) minus (c), where: 64 Section 15.14 (a) is the Member's W-2 Compensation, as defined in Treas. Reg. Section 1.415-2(d)(11)(i); and (b) is elective contributions made on behalf of the Member by the Company that are not includible in gross income under sections 125 (relating to cafeteria plans) or 402(e)(3) (relating to 401(k) plans) of the Code; and (c) is reimbursements or other expense allowances, foreign service allowances, the exercise of any option under the Company Stock Option Plan, any amounts payable under a Company performance unit/share plan or incentive stock, fringe benefits (cash and non-cash), moving expenses, deferred compensation, and welfare benefits, to the extent such items are considered Earnings under Section 15.14(a). Earnings for any Plan Year shall be limited in accordance with Code section 401(a)(17). This limit shall be adjusted automatically as appropriate, in accordance with any statutory changes to the dollar figure and in accordance with any cost-of-living adjustments to that figure under the Code. SECTION 15.15. EFFECTIVE DATE. Midnight, May 31, 1995. SECTION 15.16. EMPLOYEE. An individual described in Section 2.1. SECTION 15.17. ERISA. The Employee Retirement Income Security Act of 1974, as amended, or as it may be amended. SECTION 15.18. FORMER MEMBER. Any person who was at one time a Member but who is no longer a Member and who has not yet received a complete distribution of the person's Account from the Plan. 65 Section 15.18 SECTION 15.19. HIGHLY COMPENSATED. An Employee is Highly Compensated if at any time during the twelve-month period preceding the first day of the current Plan Year (the "look-back year") he: (a) was a 5-percent owner of the Company or an Affiliated Company as defined in Code section 416(i); (b) earned more than $100,000 (as adjusted in accordance with section 414(q)(1) of the Code) in annual compensation from the Company and all Affiliated Companies; (c) earned more than $66,000 (as adjusted in accordance with section 414(q)(1) of the Code) in annual compensation from the Company and all Affiliated Companies and was a member of the "top paid group". The "top paid group" includes all actively employed individuals who are in the top 20 percent of the work force of the Company and Affiliated Companies on the basis of compensation, except individuals who have not completed 6 months of service, individuals who normally work less than 17-1/2 hours per week, or individuals who normally work not more than 6 months during any year; or (d) was an officer of the Company or an Affiliated Company and received compensation greater than 50% of the limit on annual benefits imposed by Code section 415(b), unless such officer was an individual who has not completed 6 months of service, an individual who normally works less than 17-1/2 hours per week, or an individual who normally works not more than 6 months during any year. 66 Section 15.19 An Employee who was not an Employee described in subsections (a),(b),(c), or (d) during the look-back year will be treated as Highly Compensated for the current Plan Year (the "determination year"), if he is described in subsections (b), (c), or (d) of this Section 15.19, for the determination year, and the Employee is one of the top 100 Employees by compensation during the determination year. The determination described above shall be made with reference to the definition of "highly compensated employee" found in Treas. Reg. Section 1.414(q)-1T, Q&A-2. In no event will the Company and Affiliated Companies have more than 50 officers (or, if lesser, the greater of 3 individuals or 10 percent of the employees) who are considered to be Highly Compensated merely by reason of their status as officers. Only those 50 officers with the highest compensation will be considered Highly Compensated. The determination of whether an Employee is Highly Compensated is made by taking into account compensation as defined in Code section 415(c)(3), plus salary deferral contributions or elective deferrals to a cafeteria arrangement or tax-sheltered annuity. Any compensation paid to family members of a Highly Compensated Employee shall be treated as paid to the Employee in accordance with Code section 414(q)(6). Family member, for this purpose, means the Employee's spouse, and the Employee's lineal ascendants or descendants and the spouses of such lineal ascendants or descendants. 67 Section 15.19 SECTION 15.20. INVESTMENT MANAGER. A person or organization who is appointed under Section 10.5 to direct the investment of all or part of the Trust Fund, and who is either: (a) registered in good standing as an Investment Adviser under the Investment Advisers Act of 1940; (b) a bank, as defined in that Act; (c) an insurance company qualified to perform investment management services under the laws of more than one state of the United States; or (d) a named fiduciary described in section 403(a)(1) of ERISA. SECTION 15.21. INVESTMENT OPTION. One of the options described in Article 5 or established by the Committee under Article 5, under which amounts credited to certain of a Member's subaccounts may be invested at the Member's direction (or absent Member direction, at the Committee's). SECTION 15.22. LIMITATION YEAR. The calendar year. SECTION 15.23. MATCHING CONTRIBUTION. Contributions made by the Company under Section 3.2(b), that match Pretax Contributions or After-tax Contributions. SECTION 15.24. MEMBER. An Employee who has joined in the Plan as provided in Article 2 and who has not transferred to an ineligible job classification. SECTION 15.25. NON-GRANDFATHERED MEMBER. A Member: (a) who, as of January 1, 1993, was not at least age 45 with 5 years of Service; 68 Section 15.25 (b) whose age and years of Service, as of January 1, 1993, did not total at least 65; and (c) who was employed by Dresser Industries, Inc. after January 1, 1993, but before June 1, 1995. SECTION 15.26. PENSION EQUALIZER CONTRIBUTION. Contributions made by the Company under Section 3.2(d). SECTION 15.27. PERIOD OF SERVICE. The period of time beginning on a Date of Employment and continuing until the next Date of Separation. SECTION 15.28. PLAN. The Dresser Industries, Inc. Retirement Savings Plan - - B as set forth herein or in any amendments hereto. SECTION 15.29. PLAN YEAR. The calendar year. SECTION 15.30. PREDECESSOR PLAN. Any plan or a portion of a plan which has been merged into this Plan as of the Effective Date, or may be merged into this Plan, on or after the Effective Date. SECTION 15.31. PRETAX CONTRIBUTION. That portion of a Member's Earnings which the Member elects to defer to the Member's Account on a pretax basis under Section 3.1(a). SECTION 15.32. TEST COMPENSATION. Compensation used for the purpose of determining whether the nondiscrimination tests of Sections 3.6(b)(3), (4), and (5) are met. The Committee shall have discretion to use any definition of Test Compensation that is reasonable and nondiscriminatory under Code section 414(s). However, Test Compensation for any Plan Year shall be limited in accordance with Code section 401(a)(17). This limit shall be 69 Section 15.32 adjusted upward and downward, as appropriate, in accordance with any statutory changes to the dollar figure in Code section 401(a)(17) and in accordance with any cost-of-living adjustments to that figure under the Code. SECTION 15.33. TRUST AGREEMENT. An agreement entered into by the Company and one or more Trustees to govern the Trust Fund, which agreement may also provide for holding funds under any other plan maintained by the Company or an Affiliated Company. SECTION 15.34. TRUST FUND. The sum of the contributions made to the Plan and held by the Trustee or Trustees in a trust or trusts, increased by any profits or income thereon and decreased by any losses or reasonable expenses incurred in the administration of the Trust Fund and any payments made therefrom. The Plan is an eligible individual account plan described in ERISA section 407(d)(3)(A) and may invest more than ten percent of its assets in qualifying employer securities. SECTION 15.35. TRUSTEE. The one or more banks, trust companies or other financial institutions which are employed to hold and manage the Trust Fund. DRESSER INDUSTRIES, INC. By: -------------------------------------- Title: ----------------------------------- 70 Section 15.35 APPENDIX A CALCULATION OF PENSION EQUALIZER PERCENTAGE Each Member who was an active participant in a defined benefit plan sponsored by the Company on May 31, 1995, whose participation was frozen as of May 31, 1995 may receive a Pension Equalizer Contribution, unless such Member was not employed by the Company on such date and was an active participant merely because such Member was totally disabled. A Member's Pension Equalizer Contribution is the product of the Member's Equalizer Percentage as determined below and the Member's Earnings as determined in this Plan. The Member's Equalizer Percentage is determined according to the following steps: FIRST STEP - The first step is to determine the Member's Equalizer Age in accordance with the following table: - ------------------------------------------------------------------ - ------------------------------------------------------------------ If the Member's Exact Age Then the Member's as of June 1, 1995, is: Equalizer Age is: - ------------------------------------------------------------------ Less than or equal to age 57 Age 62 Greater than age 57, but less Exact age as of than or equal to age 60 June 1, 1995, plus 5 years Greater than age 60, but less Age 65 than or equal to age 65 Greater than age 65 None - ------------------------------------------------------------------ - ------------------------------------------------------------------ SECOND STEP - The Actuary for the applicable pension plan shall calculate the amount of monthly retirement income the Member would have received as a life annuity beginning as of the Equalizer Age (including adjustment for early commencement, if applicable) under A-1 the pension plan's formula, assuming that the pension plan as in effect on May 31, 1995, had continued in effect to the Equalizer Age, assuming that the benefit formula under such plan remained unchanged, and assuming the Member continued in active employment until that age. THIRD STEP - The Actuary shall project to the Equalizer Age the hypothetical account balance that would accumulate from Company contributions of 7% of Earnings, if such contributions began on the Effective Date and were made monthly until the date the Member attains his Equalizer Age. The Actuary shall assume that the hypothetical account balance grows at the rate of 8% per annum, and that Earnings for any year are based on the Earnings in 1994 (which Earnings are annualized if they represent less than 12 months of Earnings) projected according to a 4.5% salary scale. The Actuary then shall convert the hypothetical account balance to a monthly retirement income payable as a life annuity, using the appropriate factor from the 1983 Group Annuity Mortality Table, weighted 90% male and 10% female, with an interest discount rate of 8%. FOURTH STEP - The Actuary shall subtract from the amount determined in Second Step above the amount determined in the Third Step above, plus the amount that would be received from the pension plan that formerly covered the Member, assuming that: (1) the form of payment is a life annuity, and (2) the Member retires as of the Member's Equalizer Age. The result shall be called the "Shortfall Amount". If such amount is less than zero, it will be deemed to equal zero. The Actuary shall then determine the Equalizer Percentage such A-2 that, if the Equalizer Percentage is multiplied by the Member's Earnings for years after June 1, 1995 (as projected in the Third Step above), and accumulated with investment return of 8% per annum to the Equalizer Age and divided by the same conversion factor from the Third Step above, then the result would equal the Shortfall Amount. The Equalizer Percentage is rounded to the nearest 1/10th of 1%. A-3 APPENDIX B CALCULATION OF MEDISAVE CONTRIBUTIONS SECTION B.1. MEDISAVE CONTRIBUTIONS. The following Members, who must be eligible to participate in the Dresser group medical plan, shall be eligible to receive Medisave Contributions if they were eligible to participate in this Plan (or a Predecessor Plan) for at least one year: (a) Non-grandfathered Members; (b) Members hired by Dresser Industries, Inc. after May 31, 1995, who are not employed by the Oilfield Services Group; (c) Members hired by Dresser Industries, Inc. before June 1, 1995, who are employed by the Security Division or the Guiberson-AVA Division of Dresser Industries, Inc.; and (d) Members who were participants in the Baroid Corporation Savings Plan on May 31, 1995. The Medisave Contribution on behalf of Members described in subsections (a), (b) or (c) shall be equal to 50% of the Pretax and After-tax Contributions of the Member, to the extent such Member's contributions do not exceed 4% of the Member's Earnings. These contributions shall be made semimonthly to the Medisave Account of each Member described in subsections (a), (b) or (c), who has made employee contributions during the semimonthly period. Medisave Contributions made in accordance with this Section may be forfeited or returned, in accordance with the provisions of Section 3.6(b). B-1 The Medisave Contribution on behalf of each Member described in subsection (d) shall be $400 each Plan Year, but shall be made at the discretion of Oilfield Services Group's management. If this contribution is authorized, it shall be paid out of the profits of the Oilfield Services Group, to each Member described in subsection (d) who is (i) employed on the last day of the Plan Year for which the contribution is made, or (ii) died, retired, or became disabled during the Plan Year. B-2 APPENDIX C TK VALVE & MANUFACTURING PLAN MERGER SECTION C.1. BACKGROUND. On March 31, 1993, the Company acquired all of the outstanding stock of TK Valve & Manufacturing, Incorporated ("TK"). Effective January 1, 1994, the Profit Sharing Plan of TK Valve & Manufacturing, Incorporated ("TK Plan") was merged into the Dresser Industries, Inc. Salary Deferral Plan. This Appendix contains special rules related to this merger, that continue to apply to the accounts of participants that were transferred to this Plan. SECTION C.2. SERVICE. The rules in this Section C.2 apply to individuals who were employed by TK at any time prior to January 1, 1994. (a) SERVICE FOR PERIODS BEFORE AUGUST 1, 1993. Years of service credited under the TK Plan as of July 31, 1993, will count as years of Service under this Plan. (b) SERVICE FOR PERIODS AFTER JULY 31, 1993. In general, Service for all periods of employment after July 31, 1993, will be determined in accordance with Article 9 of this Plan. However, any individual who is credited with at least 1,000 hours of service under the TK Plan during the period from August 1, 1993 to December 31, 1993, will be credited with a year of Service under this Plan on December 31, 1993. This year of Service will be the only Service credited to such an individual for the period from August 1, 1993 to July 31, 1994. C-1 (c) RELATIONSHIP TO BREAK IN SERVICE RULES CLARIFIED. Any Service that would otherwise be credited under this Section C.2 is subject to forfeiture under the regular Break in Service rules in Section 9.2(b)(1). SECTION C.3. TK SUBACCOUNTS. (a) IN GENERAL. A separate subaccount will be established for each individual for whom an amount was transferred to the Plan from the TK Plan ("TK subaccount"). The TK subaccount will consist of the amount transferred to the Plan, and will be credited with earnings and other investment gains and losses of the Trust Fund. An individual will be 100% vested in all the amounts in his TK subaccount. (b) EFFECT OF CERTAIN RULES LIMITED TO TK SUBACCOUNT. The rules in Sections C.4 to C.5 only apply to the TK subaccount. A withdrawal under Section C.4 will reduce the TK subaccount by the amount of the withdrawal. A distribution under Section C.5 will reduce the TK subaccount to zero. At any given time, the rules in Sections C.4 to C.5 apply only to the balance of the TK subaccount remaining after these reductions have been made. SECTION C.4. SPECIAL WITHDRAWAL RULES. A Member may withdraw the portion of his TK subaccount, if any, attributable to voluntary employee contributions under the TK Plan (after-tax contributions in excess of the 2% mandatory employee contribution required under that plan). Withdrawals under this Section may be made no more than once in any 12-month period. C-2 SECTION C.5. SPECIAL DISTRIBUTION RULES. An Employee who does not have an election in effect to make Pretax Contributions may elect to receive a distribution of his entire TK subaccount, regardless of the fact that he has not separated from service. An Employee electing to do so, however, will not be allowed to make any Pretax Contributions during the 12-month period following this election. Notwithstanding the previous sentence, no withdrawals of amounts attributable to pretax contributions shall be permitted if the distribution would violate the requirements of section 401(k)(2)(B) of the Code. C-3 APPENDIX D MERGER OF SAVINGS PLAN FOR EMPLOYEES OF BAROID CORPORATION WITH AND INTO THE DRESSER INDUSTRIES, INC. RETIREMENT SAVINGS PLANS WHEREAS, Baroid Corporation ("Baroid") has heretofore adopted the Savings Plan for Employees of Baroid Corporation (the "Baroid Plan"); and WHEREAS, Dresser Industries, Inc. ("Dresser") sponsors and maintains the Dresser Industries, Inc. Retirement Savings Plan-A (the "Dresser Plan-A"), the Dresser Industries, Inc. Retirement Savings Plan-B (the "Dresser Plan-B"), and the Dresser Industries, Inc. Deferred Savings Plan, (the "Savings Plan") (jointly, the "Dresser Plans"); and WHEREAS, Baroid was merged with Dresser and the parties hereto desire that the employees of Baroid become covered by the Dresser Plans; and WHEREAS, the parties hereto desire to provide simultaneously for a spin-off of the Baroid Plan into functional group components and for the mergers of the resulting group components of the Baroid Plan into the Dresser Plan-A, the Dresser Plan-B, and the Savings Plan effective as of June 1, 1995: NOW, THEREFORE, the parties hereto agree as follows: 1. Effective as of June 1, 1995, the accounts under the Baroid Plan of Baroid employees eligible to participate in the Dresser Plan-A, the accounts under the Baroid Plan of Baroid D-1 employees eligible to participate in the Dresser Plan-B, and the accounts under the Baroid Plan of Baroid employees eligible to participate in the Savings Plan are hereby transferred to and merged with and into, respectively, the Dresser Plan-A, the Dresser Plan-B, and the Savings Plan with the result that the provisions of the Dresser Plans replace the provisions of the Baroid Plan in their entirety except as otherwise herein provided. Former employees with account balances in the Baroid Plan will be transferred to the Dresser Plans in accordance with their eligibility status immediately prior to termination of employment. Pursuant to such merger, the assets held under the Baroid Plan shall be transferred as soon as practicable as provided in Item 2 hereof to the Dresser Plans to be held under the existing trusts maintained under said Dresser Plans. Such transfers shall be in cash or in kind as directed by the Dresser Plans' administrative committee (the "Committee") except that in accordance with the provisions of Item 6 hereof shares of Dresser Industries, Inc. common stock, shares of NL Industries common stock, shares of Tremont Corporation common stock, as well as temporary Investment Funds under the Baroid Plan which were established in connection with such merger pursuant to Item 6 hereof, and including outstanding participant loans, shall be transferred in kind. 2. Immediately after the merger of the relevant group component of the Baroid Plan with and into the Dresser Plan-A, each Member of the Dresser Plan-A shall, if the Dresser Plan-A were then terminated, be entitled to a benefit which is at least equal to the D-2 benefit such Member would have been entitled to immediately prior to the merger if the Baroid Plan and the Dresser Plan-A had then terminated. Immediately after the merger of the group component of the Baroid Plan with and into the Dresser Plan-B, each Member of the Dresser Plan-B shall, if the Dresser Plan-B were then terminated, be entitled to a benefit which is at least equal to the benefit such Member would have been entitled to immediately prior to the merger if the Baroid Plan and Dresser Plan-B had then terminated. Immediately after the merger of the group component of the Baroid Plan with and into the Savings Plan, each Member of the Savings Plan shall, if the Savings Plan were then terminated, be entitled to a benefit which is at least equal to the benefit such Member would have been entitled to immediately prior to the merger if the Baroid Plan and the Savings Plan had then terminated. The provisions of this instrument shall be construed under and in accordance with section 208 of the Employee Retirement Income Security Act of 1974, as amended, and sections 401(a)(12) and 414(1) of the Internal Revenue Code of 1986, as amended, and federal regulations promulgated thereunder. 3. As soon as practicable after the merger of the Baroid Plan with and into the Dresser Plans, the appropriate officers of Dresser and Baroid shall determine if Baroid is projected to attain (or if such determination cannot be made until the end of 1995, in fact attained) the profit objectives established for 1995 as a condition for 1995 Employer Contributions to the Baroid Plan (based D-3 upon the corporate performance of Baroid for the period of January 1, 1995 through May 31, 1995 if such determination is made prior to the close of 1995). If it is determined that Baroid attained or is projected to attain, as applicable, such profit objectives, Dresser shall make Employer Contributions to the applicable Dresser Plan (as successor to the portion of the Baroid Plan which was merged into it) pursuant to Section 5.1 of the Baroid Plan for the period of January 1, 1995 through May 31, 1995 on a prorated basis as determined by the appropriate officers of Dresser and Baroid. Any such pro-rata Employer Contributions for such period shall be made as soon as practicable after the determination of the amount thereof to and shall be allocated as of May 31, 1995 to the Plan Accounts of the Baroid Plan Participants in accordance with the provisions of Article V of the Baroid Plan but based upon Pre-Tax and After-tax Contributions made and Compensation earned during the period of January 1, 1995 through May 31, 1995 and based upon May 31, 1995 as the Plan Year end for the Baroid Plan for 1995. If the pro-rata Employer Contributions for to Baroid Plan for the period of January 1, 1995 through May 31, 1995 are determined and made prior to the close of 1995 then, at the end of 1995, the appropriate officers of Dresser shall determine if Baroid attained the profit objectives established for 1995 as a condition for 1995 Employer Contributions to the Baroid Plan and, if so, whether the pro-rata Employer Contributions made for the Baroid Plan Participants as of May 31, 1995 were sufficient to constitute pro-rata Employer Contributions for such short D-4 period. If it is determined that such contributions were not sufficient to constitute pro-rata Employer Contributions for such short period, Dresser may, as directed by the appropriate officers of Dresser, contribute to the Dresser Plans on behalf of the Baroid Plan Participants such Employer Contributions as are determined to be appropriate. Any such additional 1995 pro-rata Employer Contributions for the Baroid Plan Participants shall be allocated in the same way and to the same persons as if they had been contributed as a part of the 1995 pro-rata Employer Contributions made for the Baroid Plan Participants earlier in 1995. All contributions made in accordance with this Item 3 shall be treated as having been made to the Baroid Plan as of May 31, 1995, provided such contributions are made no later than 30 days after the end of the period described in Code 404(a)(6) applicable to the taxable year of Dresser in which the 1995 Plan year for the Baroid Plan ends. 4. The provisions of Items 5 through 8 of this instrument shall be applicable to the accounts (the "Baroid Plan Accounts") transferred to the Dresser Plans pursuant to the merger of the Baroid Plan with and into the Dresser Plans of an individual ("Baroid Participant") who was a participant in the Baroid Plan prior to such mergers. 5. Except as provided specifically herein, Baroid Plan Accounts shall be governed by the provisions of the Dresser Plans in the same manner as any other account under the Dresser Plans as follows: D-5 (a) The portion of a Baroid Plan Account which is attributable to Pretax Contributions made to the Baroid Plan shall be treated in the same manner as a Pretax Account; (b) The portion of a Baroid Plan Account which is attributable to Employer Contributions made to the Baroid Plan shall be treated in the same manner as a Matching Account; (c) The portion of a Baroid Plan Account which is attributable to After-tax Contributions made to the Baroid Plan shall be treated in the same manner as an After-tax Account; (d) The portion of a Baroid Plan Account which was attributable to a rollover into the Baroid Plan shall be treated in the same manner as a Rollover Account; and (e) The portion of a Baroid Plan Account which was attributable to a Medisave Contributions made to the Baroid Plan shall be treated in the same manner as a Medisave Account. 6. Incident to the transfer to the Dresser Plans of the Baroid Plan Accounts, the Investment Funds of the Baroid Plan shall be liquidated and the proceeds invested in the investment funds of the Dresser Plans with the proceeds from the liquidation of the Baroid Plan Investment Fund being invested by the Employee Benefits Committee in the investment fund of the applicable Dresser Plan which is most comparable thereto in terms of type of investments and nature of investment goals except that: (a) Baroid Plan outstanding Participant loans shall be continued as outstanding participant loans subject, however, to D-6 such adjustments as may be appropriate or necessary to conform to the Dresser Plans' loan procedures and administration; (b) The common stock of Dresser Industries, Inc., Tremont Corporation and NL Corporation shall be invested in separate frozen investment funds established under the Dresser Plans for such assets. The assets of such frozen funds shall continue to be invested in such assets unless and until a Baroid Participant directs sale and reinvestment into any of the regular investment funds under the Dresser Plans in accordance with the standard investment change provisions of the Dresser Plans. Any such sale and reinvestment elections must be made on or before December 1, 1996 and, from and after such date, the remaining common stock of Tremont Corporation and NL Corporation in the frozen investment funds established pursuant to this subitem (b) shall be liquidated on or about December 1, 1996 and will initially be invested in the equity index funds of the Dresser Plans. All amounts distributable from the Tremont Stock Fund and/or the NL Fund prior to December 1, 1996 shall be paid entirely in cash, or entirely in whole shares of the applicable stock and in cash to the extent of any fractional shares (to 1/1,000th of a share), as the Participant shall elect. Absent such an election, amounts distributable from the Tremont Stock Fund and/or the NL Fund shall be paid in whole shares of Employer Stock (and fractional shares to 1/1,000th of a share paid in cash). No amounts may be invested in the frozen investment funds established pursuant to this subitem (b) other than the common D-7 stock of Dresser Industries, Inc., Tremont Corporation and NL Corporation transferred in kind from the Baroid Plan to the Dresser Plans; and (c) The funds under the Baroid Plan assigned to the Merrill Lynch Retirement Preservation Trust shall remain invested in this fund and shall become a frozen investment fund under the Dresser Plans. The assets of such frozen funds shall continue to be invested in such assets unless and until a Baroid Participant directs sale and reinvestment into a "noncompeting" fund under the Dresser Plans in accordance with the standard investment change provisions of the Dresser Plans. From and after such initial transfer and subject to the provisions of this Item 6, Baroid Plan Participants may direct as to the investment of their Baroid Plan Accounts in accordance with the then applicable provisions of the Dresser Plans. Notwithstanding the foregoing and in order to more efficiently effectuate the merger of the Baroid Plan with and into the Dresser Plans, the Investment Funds of the Baroid Plan (other than the Investment Funds which are to be maintained as frozen funds pursuant to items (a), (b) and (c) of this Item 6 following merger of the Baroid Plan with and into the Dresser Plans) may, as directed by the Committee, be liquidated during a reasonable period prior to the merger of the Baroid Plan with and into the Dresser Plans (rather than coincident with such mergers) and the proceeds invested under the Baroid Plan in temporary Investment Funds established thereunder which are identical to the investment funds D-8 of the Dresser Plans with the proceeds from the liquidation of an original Baroid Plan Investment Fund being invested in the temporary Investment Fund under the Baroid Plan which is most comparable thereto in terms of type of investments and nature of investment goals. In the event that such liquidation and reinvestment in temporary Investment Funds which are identical to the investment funds of the Dresser Plans is effected, such temporary Investment Funds shall be transferred in kind to the Dresser Plans upon the merger of the Baroid Plan with and into the Dresser Plans and thereupon merged into the respective parallel investment funds of the Dresser Plans. 7. From and after transfer to the Dresser Plans, each Baroid Plan Participant shall have a vested and nonforfeitable interest in the portion of his Baroid Plan Account attributable to Employer Contributions in accordance with the following schedule: VESTED INTEREST YEARS OF SERVICE --------------- ---------------- Less than 3 0% 3 50% 4 75% 5 or more 100% For purposes of the foregoing schedule, a Baroid Plan Participant's "Years of Service" shall be calculated in accordance with the provisions of the Dresser Plans (with respect to service completed both before and after June 1, 1995) but for the period prior to December 31, 1995 shall not be less than the amount computed as follows: D-9 (a) the number of years equal to the number of years credited to him under the Baroid Plan for vesting purposes as of December 31, 1994; plus (b) the greater of (1) the period of service that would be credited to him for vesting purposes under the Dresser Plans, whichever is applicable to him, for his service during the period of January 1, 1995 through December 31, 1995 or (2) the service credited as of June 1, 1995 for vesting purposes under the Baroid Plan for the 1995 computation period. Provisions of the Dresser Plans notwithstanding, the nonforfeitable percentage in the Dresser Plans of any Baroid Plan Participant who had completed at least three years of service as of June 1, 1995 shall not be less than the percentage determined in accordance with the foregoing schedule if application of such schedule would result in a greater nonforfeitable percentage than would otherwise be applicable under the Dresser Plans. 8. Distribution and withdrawal provisions of the Dresser Plan to the contrary notwithstanding, this Item 8 shall govern as to distributions and withdrawals from the Dresser Plans by the Baroid Plan Participants: (a) In addition to the other in-service withdrawal rights available pursuant to the Dresser Plan, a Baroid Plan Participant may at any time withdraw any portion of the then value of his Baroid Plan Account which is attributable to After-Tax Contributions, Rollover Contributions and ESOP Contributions. D-10 (b) In addition to the other in-service withdrawal rights available pursuant to the Dresser Plan, a Baroid Plan Participant who has attained the age of 59 1/2 may withdraw any portion of the then value of his Baroid Plan Account which is attributable to Pre-Tax Contributions. (c) In addition to the other in-service withdrawal rights available pursuant to the Dresser Plan, a Baroid Plan Participant may withdraw any portion of the then value of the vested portion of his Baroid Plan Account which is attributable to Employer Contributions which were made to the Baroid Plan at least 24 months prior to the date of such withdrawal. (d) In addition to the other in-service withdrawal rights available pursuant to the Dresser Plan, a Baroid Plan Participant who has a combined period of participation in the Baroid Plan and the applicable Dresser Plan of at least 60 months may withdraw any portion of the then value of his Baroid Plan Account which is attributable to Employer Contributions made to the Baroid Plan. (e) In addition to other benefit forms available pursuant to the Dresser Plan upon termination of employment, a Baroid Plan Participant may elect to have his Baroid Plan Account distributed in equal annual installments over a fixed number of years not to exceed the lesser of fifteen years or his life expectancy. (f) The vested portion of a Baroid Plan Participant's Baroid Plan Account may be withdrawn on account of hardship, in accordance with the procedures and restrictions set forth in the Dresser Plans' hardship withdrawal provisions. D-11 (g) In addition and as an elective alternative to the normal benefit payment form available under the Dresser Plans upon termination of employment, a Baroid Plan Participant who terminates employment by reason of Disability or Retirement may elect to receive his Baroid Plan Account in the form of a commercial annuity contract providing payments for the life of the Baroid Plan Participant if he is not married or a joint and survivor annuity providing payments for his life and a fifty percent surviving spouse annuity for the life of his surviving spouse if he is married. In lieu of the foregoing forms of annuity contract payments for his Baroid Plan Account under this subitem (g), a Baroid Plan Participant may elect a commercial annuity contract providing alternate forms of annuity payments. The terms of any commercial annuity contract distributed to a Baroid Plan Participant shall provide that payments under such annuity will commence immediately, subject to the Baroid Plan Participant's rights to defer commencement of payments in accordance with applicable provisions of the Dresser Plans. The procedure for a Baroid Plan Participant to elect the commercial annuity contract form of distribution will be to deliver to the Committee a written notice of his interest in an annuity form of distribution. Upon receipt of such notice, the Committee will give the Baroid Plan Participant a written explanation in non-technical language of: (i) the terms and conditions of the annuity contract distribution form in general and of the normal annuity contract form of payment of the qualified joint and fifty percent surviving spouse form of D-12 annuity or, as applicable, the single life form of annuity, (ii) the Baroid Plan Participant's right to make, and to revoke, an election waiving the joint and fifty percent surviving spouse form of annuity or, as applicable, single life form of annuity, (iii) the financial effect upon his benefit (in terms of dollars per benefit payment) of his making or revoking an election to waive the qualified joint and fifty percent surviving spouse form of annuity, or, as applicable, single life form of annuity, (iv) the rights of his spouse with respect to his elections and (v) sufficient additional information to explain the relative values of alternative forms of payment under the annuity contract distribution option. The Committee will either mail or personally deliver the written explanation to the Baroid Plan Participant by such time as to reasonably assure that it will be received on or about the later of: (1) No more than ninety days prior to his entry date into the annuity contract: and (2) No less than thirty days prior to his entry date into the annuity contract. If an additional written explanation is due because of the Baroid Plan Participant's written request for additional information, such explanation may be personally delivered or mailed (first class, postage prepaid) within thirty days from the date of the Baroid Plan Participant's written request. The period within which the Baroid Plan Participant must make his election shall be the ninety-day period ending on his annuity starting date (as such D-13 term is defined in Code 417(f)(2)). The Baroid Plan Participant may revoke any election made (or make a new election) at any time during such election period. If, during such election period, the Baroid Plan Participant makes a written request to the Committee for additional information, the election period will be extended to the extent necessary, to include the ninety calendar days immediately following the furnishing of all the additional information to him. Once an insurance company has issued the form of annuity contract elected, the election period shall cease and the Baroid Plan Participant's annuity election shall be irrevocable. If a married Baroid Plan Participant whose benefits, in the absence of an election otherwise, would be paid in the joint and fifty percent surviving spouse form of annuity elects a different annuity form, such election must be in the form of a qualified election. A qualified election is a benefit election accompanied by a written waiver of the joint and fifty percent surviving spouse form of annuity which waiver along with, where applicable, the designation of a specific beneficiary other than the spouse and his specific form of benefit is consented to by his spouse in a writing which is witnessed by a representative of the Dresser Plan-A or the Dresser Plan-B, as applicable, or a notary public, which acknowledges the effect of the election and which may not be changed without the consent of the Baroid Plan Participant's spouse, except to elect a joint and fifty percent surviving spouse form annuity. Upon receipt of the executed forms wherein a Baroid Plan Participant elects the annuity contract distribution form and D-14 the type of annuity he desires to receive, the portion of his Accounts under the Dresser Plans which are governed by this subitem (g) shall be converted into cash and used to purchase a commercial annuity contract providing the annuity form of payment selected by the Baroid Plan Participant. (h) If a Baroid Plan Participant who is married and who has elected an annuity contract form of distribution pursuant to subitem (g) above (regardless of the form of payment he elected under such contract) dies prior to the purchase of such contract, 50% of his Baroid Plan Account shall be distributed to his surviving spouse (and any beneficiary designation or other election to the contrary shall be null and void) in the form of an annuity contract providing a single life annuity for the life of such spouse unless such spouse elects a lump sum payment or an alternate form of benefit provided in this subitem 8 or in the Dresser Plan-A, Dresser Plan-B or the Savings Plan, as applicable. If a Baroid Plan Participant who is married has elected an annuity contract form of distribution pursuant to subitem (g) above (regardless of the form of payment he elected under such contract), any withdrawals from or loans made from his Baroid Plan Account prior to the purchase of such contract shall be subject to the election and spousal consent rules described in subitem (g) above in the same manner as the Baroid Plan Participant's elections to take an annuity form of payment other than the joint and fifty percent surviving spouse annuity. D-15 (i) This Item 8 is intended to preserve with respect to the account balances transferred to the Dresser Plans from the Baroid Plan Accounts all forms of benefits required to be preserved pursuant to section 411 of the Code and Treasury Regulations promulgated thereunder and is to be interpreted and construed to effectuate such purpose. To the extent that any form of benefit provided with respect to the Baroid Plan Accounts pursuant to this Item 8 is generally available under the Dresser Plans, a Baroid Plan Participant shall not have a separate benefit form election with respect to his Baroid Plan Account by virtue of this Item 8. 9. For purposes of this instrument, capitalized terms shall have the meanings ascribed to them in the Dresser Plans or the Baroid Plan, as applicable, unless otherwise defined herein. 10. As amended hereby, the Dresser Plans are specifically ratified and reaffirmed. D-16 APPENDIX E MERGER OF WHEATLEY TXT CORP. EMPLOYEES' SAVINGS PLAN WITH AND INTO THE DRESSER INDUSTRIES, INC. RETIREMENT SAVINGS PLANS WHEREAS, Wheatley TXT Corp. ("Wheatley") has heretofore adopted the Wheatley TXT Corp. Employees' Savings Plan (the "Wheatley Plan") and merged the Axelson Inc. Retirement Savings Plan (the "Axelson Plan") into the Wheatley Plan; and WHEREAS, Dresser Industries, Inc. ("Dresser") sponsors and maintains the Dresser Industries, Inc. Retirement Savings Plan-A (the "Dresser Plan-A") and the Dresser Industries, Inc. Retirement Savings Plan-B (the "Dresser Plan-B") (jointly, the "Dresser Plans"); WHEREAS, Wheatley TXT, was merged with Dresser and the parties hereto desire that the employees of Wheatley TXT become covered by the Dresser Plans; and WHEREAS, the parties hereto desire to provide simultaneously for a spin-off of the Wheatley Plan into functional group components and for the mergers of the resulting group components of the Wheatley Plan into, respectively, the Dresser Plan-A and the Dresser Plan-B, effective as of June 1, 1995; NOW, THEREFORE, the parties hereto agree as follows: 1. Effective as of June 1, 1995, the accounts under the Wheatley Plan of Wheatley employees eligible to participate in the Dresser Plan-A, and the accounts under the Wheatley Plan of E-1 Wheatley employees eligible to participate in the Dresser Plan-B, are hereby transferred to and merged with and into, respectively, the Dresser Plan-A and the Dresser Plan-B, with the result that the provisions of the Dresser Plans replace the provisions of the Wheatley Plan in their entirety except as otherwise herein provided. Former employees of Wheatley and Axelson, Inc., with account balances in the Wheatley Plan will be transferred to the Dresser Plans in accordance with their eligibility status immediately prior to termination of employment. Pursuant to such merger, the assets held under the Wheatley Plan shall be transferred as soon as practicable to the Dresser Plans to be held under the existing trusts maintained under said Dresser Plans. Such transfers shall be in cash or in kind as directed by the Dresser Plans' administrative committee (the "Committee") except that shares of Dresser Industries, Inc. common stock, and shares of Hanson Corporation common stock shall be transferred in kind. 2. Immediately after the merger of the group component of the Wheatley Plan with and into the Dresser Plan-A, each Member of the Dresser Plan-A who was a Participant in the Wheatley Plan shall, if the Dresser Plan-A were then terminated, be entitled to a benefit which is at least equal to the benefit such Member would have been entitled to immediately prior to the merger if the Wheatley Plan had then terminated. Immediately after the merger of the group component of the Wheatley Plan with and into the Dresser E-2 Plan-B, each Member of the Dresser Plan-B who was a Participant in the Wheatley Plan shall, if the Dresser Plan-B were then terminated, be entitled to a benefit which is at least equal to the benefit such Member would have been entitled to immediately prior to the merger if the Wheatley Plan had then terminated. The provisions of this instrument shall be construed under and in accordance with section 208 of the Employee Retirement Income Security Act of 1974, as amended, and sections 401 (a)(12) and 414(1) of the Internal Revenue Code of 1986, as amended, and federal regulations promulgated thereunder. 3. After the merger of the Wheatley Plan with and into the Dresser Plans, the appropriate officers of Dresser and Wheatley shall determine a matching percentage level of Employer Matching Contributions to make on behalf of the Wheatley Plan Participants (based upon such factors as they deem appropriate) for the period of March 1, 1995 through May 31, 1995. Such Employer Matching Contributions for such period shall be made to the Dresser Plans as soon as practicable following the merger of the Wheatley Plan into the Dresser Plans and shall be allocated as of May 31, 1995 in accordance with the provisions of Wheatley Plan based upon Wheatley Plan Participants' eligible contributions to the Wheatley Plan which were made during the period of March 1, 1995 through May 31, 1995. All contributions made in accordance with this Item 3 shall be treated as having been made to the Wheatley Plan as of May 31, 1995. E-3 4. The provisions of Items 5 through 8 of this instrument shall be applicable to the benefits (the "Wheatley Plan Accounts") transferred to the Dresser Plans pursuant to the merger of the Wheatley Plan into the Dresser Plans of an individual ("Wheatley Participant") who was a participant in the Wheatley Plan prior to such merger. 5. Except as provided specifically herein, a Wheatley Participant's Wheatley Plan Account shall be governed by the provisions of the Dresser Plan-A or the Dresser Plan-B, as applicable, in the same manner as any other account thereunder as follows: (a) The portion of a Wheatley Participant's Wheatley Plan Account which is attributable to elective salary deferral contributions made on his behalf to the Wheatley Plan shall be treated in the same manner as a Pretax Account; (b) The portion of a Wheatley Participant's Wheatley Plan Account which is attributable to employer contributions made on his behalf to the Wheatley Plan shall be treated in the same manner as a Matching Account; and (c) The portion of a Wheatley Participant's Wheatley Plan Account which was attributable to a rollover into the Wheatley Plan shall be treated in the same manner as a Rollover Account. 6. Incident to the transfer to the Dresser Plans of the Wheatley Plan Accounts, the Investment Funds of the Wheatley Plan shall be liquidated and the proceeds invested in the investment funds of the Dresser Plans with the proceeds from the liquidation E-4 of the Wheatley Plan Fund being invested by the Employee Benefits Committee in the investment fund of the applicable Dresser Plan which is most comparable thereto in terms of type of investments and nature of investment goals, except that the common stock of Dresser Industries, Inc. and Hanson Corporation shall be invested in separate frozen investment funds established under the Dresser Plans for such assets. The assets of such frozen funds shall continue to be invested in such assets unless and until a Wheatley Participant directs sale and reinvestment into any of the regular investment funds under the Dresser Plans in accordance with the standard investment change provisions of the Dresser Plans. Any such sale and reinvestment elections must be made on or about December 1, 1996 and, from and after such date, the remaining common stock of Hanson Corporation in the frozen investment funds established pursuant to this item 6 shall be liquidated on December 1, 1996 and initially invested in the equity index funds of the Dresser Plans. No amounts may be invested in the frozen investment funds established pursuant to this item 6 other than the common stock of Dresser Industries, Inc. and Hanson Corporation transferred in kind from the Wheatley Plan to the Dresser Plans. All amounts distributable from the Hanson Stock Fund prior to December 1, 1996 shall be distributed entirely in cash. After such initial transfer, Wheatley Participants may direct as to the investment of their Wheatley Plan Accounts in accordance with the then applicable provisions of the Dresser Plans. E-5 7. From and after transfer to the Dresser Plan, each Wheatley Plan Participant shall have a vested and nonforfeitable interest in the portion of his Wheatley Plan Account attributable to employer contributions made on his behalf to the Wheatley Plan in accordance with the vesting provisions of the Dresser Plans except that for those employees with greater than 3 years service as of June 1, 1995 whose Employer Matching Contributions will continue to be vested at 100% and except that in determining his service which is credited for vesting purposes to determine such vested and nonforfeitable interest, a Wheatley Plan Participant's Service shall be calculated in accordance with the Dresser Plans (with respect to Service completed both before and after June 1, 1995) but for the period prior to December 31, 1995 such Service shall not be less than the amount computed as follows: (a) the number of years equal to the number of years credited to him under the Wheatley Plan for vesting purposes as of December 31, 1994; plus (b) the greater of (1) the period of Service that would be credited to him for vesting purposes under the Dresser Plans, whichever is applicable to him, for his Service during the period of January 1, 1995 through December 31, 1995 or (2) the Service credited as of June 1, 1995 for vesting purposes under the Wheatley Plan for the 1995 computation period. 8. Distribution and withdrawal provisions of the Dresser Plan to the contrary notwithstanding, this Item 8 shall govern as to distributions and withdrawals from the Wheatley Plan Accounts: (a) In addition to the other in-service withdrawal rights available pursuant to the Dresser Plans, a Wheatley Plan E-6 Participant who has attained the age of 65 may withdraw at any time any portion of the then value of his Wheatley Plan Account. (b) In addition to the other in-service withdrawal rights available pursuant to the Dresser Plans, a Wheatley Plan Participant who has attained the age of 59 1/2 may withdraw at any time any portion of the then value of his Wheatley Plan Account which is attributable to elective salary deferral contributions and qualified employer non-elective contributions to the Wheatley Plan and Compensation Deferral Contributions and Employer Matching Contributions to the Axelson Plan. (c) In addition to other benefit forms available pursuant to the Dresser Plan upon termination of employment, a Wheatley Plan Participant may elect to have his Wheatley Plan account distributed in the form of a lump sum, in the form of installment payments (annually, quarterly or monthly) over a specified period of time not exceeding his life expectancy or the joint life expectancy of him and his designated beneficiary or in a combination thereof. (d) In addition and as an elective alternative to the normal benefit payment form pursuant to the Dresser Plans upon termination of employment, a Wheatley Plan Participant who was a Member of the Axelson Plan ("Axelson Member") who terminates employment other than by reason of death may elect to receive his Wheatley Plan Account in the form of a commercial annuity contract providing payments for the life of the Axelson Member if he is not married or a joint and survivor annuity providing payments for his life and a fifty percent surviving spouse annuity for the life of his E-7 surviving spouse if he is married. In lieu of the foregoing normal forms of annuity contract payments for his Wheatley Plan Account under this subitem (d), an Axelson Member may elect a commercial annuity contract providing alternate forms of annuity payments. The terms of any commercial annuity contract distributed to an Axelson Member shall provide that payments under such annuity will commence immediately, subject to the Axelson Member's rights to defer commencement of payments in accordance with applicable provisions of the Dresser Plans. The procedure for an Axelson Member to elect the commercial annuity contract form of distribution will be to deliver to the Committee a written notice of his interest in an annuity form of distribution. Upon receipt of such notice, the Committee will give the Axelson Member a written explanation in non-technical language of: (i) the terms and conditions of the annuity contract distribution form in general and of the normal annuity contract form of payment of the qualified joint and fifty percent surviving spouse form of annuity or, as applicable, the single life form of annuity, (ii) the Axelson Member's right to make, and to revoke, an election waiving the joint and fifty percent surviving spouse form of annuity or, as applicable, single life form of annuity, (iii) the financial effect upon his benefit (in terms of dollars per benefit payment) of his making or revoking an election to waive the qualified joint and fifty percent surviving spouse form of annuity, or, as applicable, single life form of annuity, (iv) the rights of his spouse with respect to his elections and (v) sufficient additional information to explain the E-8 relative values of alternative forms of payment under the annuity contract distribution option. The Committee will either mail or personally deliver the written explanation to the Axelson Member by such time as to reasonably assure that it will be received on or about the later of: (1) No more than ninety days prior to his entry date into the annuity contract: and (2) No less than thirty days prior to his entry date into the annuity contract If an additional written explanation is due because of the Axelson Member's written request for additional information, such explanation may be personally delivered or mailed (first class, postage prepaid) within thirty days from the date of the Axelson Member's written request. The period within which the Axelson Member must make his election shall be the ninety-day period ending on his annuity starting date (as such term is defined in Code 417(f)(2)). The Axelson Member may revoke any election made (or make a new election) at any time during such election period. If, during such election period, the Axelson Member makes a written request to the Committee for additional information, the election period will be extended to the extent necessary, to include the ninety calendar days immediately following the furnishing of all the additional information to him. Once an insurance company has issued the form of annuity contract elected, the election period shall cease and the Axelson Member's annuity election shall be irrevocable. If a married Axelson Member whose benefits, in the E-9 absence of an election otherwise, would be paid in the joint and fifty percent surviving spouse form of annuity elects a different annuity form, such election must be in the form of a qualified election. A qualified election is a benefit election accompanied by a written waiver of the joint and fifty percent surviving spouse form of annuity which waiver along with, where applicable, the designation of a specific beneficiary other than the spouse and his specific form of benefit is consented to by his spouse in a writing which is witnessed by a representative of the Dresser Plan-A or the Dresser Plan-B, as applicable, or a notary public, which acknowledges the effect of the election and which may not be changed without the consent of the Axelson Member's spouse, except to elect a joint and fifty percent surviving spouse form of annuity. Upon receipt of the executed forms wherein the Axelson Member elects the annuity contract distribution form and the type of annuity he desires to receive, the portion of his Accounts under the Dresser Plans which are governed by this subitem (d) shall be converted into cash and used to purchase a commercial annuity contract providing the annuity form of payment selected by the Axelson Member. (e) If an Axelson Member who is married and who has elected an annuity contract form of distribution pursuant to subitem (d) above (regardless of the form of payment he elected under such contract) dies prior to the purchase of such contract, 50% of his Wheatley Plan Account shall be distributed to his surviving spouse (and any beneficiary designation or other election to the contrary E-10 shall be null and void) in the form of an annuity contract providing a single life annuity for the life of such spouse unless such spouse elects a lump sum payment or an alternate form of benefit provided in this subitem 8 or in the Dresser Plan-A or Dresser Plan-B as applicable. If an Axelson Member who is married has elected an annuity contract form of distribution pursuant to subitem (d) above (regardless of the form of payment he elected under such contract), any withdrawals from his Wheatley Plan Account prior to the purchase of such contract shall be subject to the election and spousal consent rules described in subitem (d) above in the same manner as the Axelson Member's elections to take an annuity form of payment other than the joint and fifty percent surviving spouse annuity. (f) This item 8 is intended to preserve with respect to the Wheatley Plan Accounts all forms of benefits required to be preserved pursuant to section 411 of the Code and Treasury Regulations promulgated thereunder and is to be interpreted and construed to effectuate such purpose. Nothing in this item 8 is intended to provide a separate distribution or withdrawal election with respect to a Wheatley Participant's Wheatley Plan Account to the extent that such withdrawal or distribution is generally available under the Dresser Plan. 9. For purposes of this instrument, capitalized terms shall have the meanings ascribed to them in the Dresser Plan, the E-11 Wheatley Plan or the Axelson Plan, as applicable, unless otherwise defined herein. 10. As amended hereby, the Dresser Plan is specifically ratified and reaffirmed. E-12 APPENDIX F MERGER OF AVA INTERNATIONAL CORP. 401K PLAN WITH AND INTO THE DRESSER INDUSTRIES, INC. RETIREMENT SAVINGS PLANS WHEREAS, AVA International Corp. ("AVA") has heretofore adopted the AVA International Corp. 401k Plan (the "AVA Plan"); and WHEREAS, Dresser Industries, Inc. ("Dresser") sponsors and maintains the Dresser Industries, Inc. Retirement Savings Plan-A (the "Dresser Plan-A") and the Dresser Industries, Inc. Retirement Savings Plan-B (the "Dresser Plan-B") (jointly, the "Dresser Plans"); and WHEREAS, AVA was acquired by Dresser and the parties hereto desire that the employees of AVA become covered by the Dresser Plans, and WHEREAS, the parties hereto desire to provide simultaneously for a spinoff of the AVA Plan into functional group components and for the mergers of the resulting group components of the AVA Plan into, respectively, the Dresser Plan-A and the Dresser Plan-B, effective as of June 1, 1995; NOW, THEREFORE, the parties hereto agree as follows: 1. Effective as of June 1, 1995, the accounts under the AVA Plan of AVA employees eligible to participate in the Dresser Plan-A and the accounts under the AVA Plan of AVA employees eligible to participate in the Dresser Plan-B are hereby transferred to and merged with and into, respectively, the Dresser Plan-A and the F-1 Dresser Plan-B, with the result that the provisions of the Dresser Plans replace the provisions of the AVA Plan in their entirety except as otherwise herein provided. Pursuant to such merger, the assets held under the AVA Plan shall be transferred as soon as practicable to the Dresser Plans to be held under the existing trusts maintained under said Dresser Plans. Such transfers shall be in cash except that outstanding participant loans shall be transferred in kind. Former employees with account balances in the AVA Plan will be transferred to the Dresser Plans in accordance with their eligibility status immediately prior to termination of employment. 2. Immediately after the merger of the relevant group component of the AVA Plan with and into the Dresser Plan-A, each Member of the Dresser Plan-A shall, if the Dresser Plan-A were then terminated, be entitled to a benefit which is at least equal to the benefit such Member would have been entitled to immediately prior to the merger if the AVA Plan and the Dresser Plan-A had then terminated. Immediately after the merger of the group component of the AVA Plan with and into the Dresser Plan-B, each Member of the Dresser Plan-B shall, if the Dresser Plan-B were then terminated, be entitled to a benefit which is at least equal to the benefit such Member would have been entitled to immediately prior to the merger if the AVA Plan and Dresser Plan-B had then terminated. The provisions of this instrument shall be construed under and in accordance with section 208 of the Employee Retirement Income Security Act of 1974, as amended, and sections 401 (a)(12) and F-2 414(1) of the Internal Revenue Code of 1986, as amended, and federal regulations promulgated thereunder. 3. The provisions of Items 4 through 7 of this instrument shall be applicable to the accounts (the "AVA Plan Accounts") transferred to the Dresser Plans pursuant to the merger of the AVA Plan with and into the Dresser Plans of an individual ("AVA Participant") who was a participant in the AVA Plan prior to such mergers. 4. Except as provided specifically herein, AVA Plan Accounts shall be governed by the provisions of the Dresser Plan-A or the Dresser Plan-B, as applicable, in the same manner as any other account thereunder as follows: (a) The portion of an AVA Plan Account which is attributable to "deferred contributions" made to the AVA Plan shall be treated in the same manner as a Pretax Account; (b) The portion of an AVA Plan Account which is attributable to Employer "matching contributions" and "discretionary contributions" made by AVA to the AVA Plan shall be treated in the same manner as, respectively, a Matching Account and an After-tax Account; and (c) The portion of an AVA Plan Account which was attributable to a rollover into the AVA Plan shall be treated in the same manner as a Rollover Account. 5. Incident to the transfer to the Dresser Plans of the AVA Plan Accounts, the Investment Funds of the AVA Plan shall be liquidated and the proceeds invested in the investment funds of the F-3 Dresser Plans with the proceeds from the liquidation of the AVA Plan Fund being invested by the Employee Benefits Committee in the investment fund of the applicable Dresser Plan which is most comparable thereto in terms of type of investments and nature of investment goals, except that AVA Plan outstanding Participant loans shall be continued as outstanding participant loans subject, however, to such adjustments as may be appropriate or necessary to conform to the Dresser Plans' loan procedures and administration. After such initial transfer, AVA Plan Participants may direct as to the investment of their AVA Plan Accounts in accordance with the then applicable provisions of the Dresser Plans. 6. From and after transfer to the Dresser Plans, each AVA Plan Participant shall have a vested and nonforfeitable interest in the portion of his AVA Plan Account attributable to Employer "matching contributions" and "discretionary contributions" made by AVA to the AVA Plan in accordance with the following schedule: YEARS OF SERVICE VESTED INTEREST ---------------- --------------- Less than 3 0% 3 20% 4 40% 5 60% 6 80% 7 or more 100% For purposes of the foregoing schedule, an AVA Plan Participant's "Years of Service" shall be calculated in accordance with the Dresser Plans (with respect to service completed both before and after June 1, 1995) but for the period prior to December 31, 1995 shall not be less than the amount computed as follows: F-4 (a) the number of years equal to the number of years credited to him under the AVA Plan for vesting purposes as of December 31, 1994; plus (b) the greater of (i) the period of service that would be credited to him for vesting purposes under the Dresser Plans, whichever is applicable to him, for his service during the period of January 1, 1995 through December 31, 1995 or (2) the service credited as of June 1, 1995 for vesting purposes under the AVA Plan for the 1995 computation period. The nonforfeitable percentage in the Dresser Plans of any AVA Plan Participant who had completed at least three years of service as of June 1, 1995 shall not be less that the percentage determined in accordance with foregoing schedule if application of such schedule would result in a greater nonforfeitable percentage than would otherwise be applicable under the Dresser Plans. 7. Distribution and withdrawal provisions of the Dresser Plan to the contrary notwithstanding, this Item 7 shall govern as to distributions and withdrawals from the Dresser Plans by the AVA Plan Participants: (a) In addition to the other benefit forms available pursuant to the Dresser Plans upon termination of employment, an AVA Plan Participant may elect to have his AVA Plan Account distributed in the form of a lump sum, in the form of equal monthly, quarterly or annual installments over a fixed number of years not to exceed his life expectancy or the joint life and last survivor expectancy of him and his beneficiary, or any combination thereof. F-5 (b) In addition to the other in service withdrawal rights available pursuant to the Dresser Plans, an AVA Plan Participant who has attained the age of fifty-nine and one-half (59 1/2) may at any time withdraw any portion of the then value of his AVA Plan Account which is attributable to "deferred contributions" and qualified matching and non-elective contributions made by AVA to the AVA Plan. (c) This Item 7 is intended to preserve with respect to the account balances transferred to the Dresser Plans from the AVA Plan all forms of benefits required to be preserved pursuant to section 411 of the Code and Treasury Regulations promulgated thereunder and is to be interpreted and construed to effectuate such purpose. To the extent that any form of benefit provided with respect to the AVA Plan Accounts pursuant to this Item 7 is generally available under the Dresser Plans, an AVA Plan Participant shall not have a separate benefit form election with respect to his AVA Plan Account by virtue of this Item 7. 8. For purposes of this instrument, capitalized terms shall have the meanings ascribed to them in the Dresser Plans or the AVA Plan, as applicable, unless otherwise defined herein. 9. As amended hereby, the Dresser Plans are specifically ratified and reaffirmed. F-6 FIRST AMENDMENT TO DRESSER INDUSTRIES, INC. RETIREMENT SAVINGS PLAN - B WHEREAS, DRESSER INDUSTRIES, INC. ("Dresser") and certain Affiliated Companies have heretofore adopted the DRESSER INDUSTRIES, INC. RETIREMENT SAVINGS PLAN - B (the "Plan"); and WHEREAS, Dresser Industries, Inc. desires to amend the Plan on behalf of itself and all Affiliated Companies; NOW, THEREFORE, the Plan shall be amended as follows: 1. Effective as of May 31, 1995, the following shall be added to Paragraph (a) of Section 2.3: "A person employed by an Affiliated Company which has not adopted the Plan who transfers to employment with the Company shall join the Plan on the date of such transfer, unless the individual has earned less than three months of Service at the time of the transfer. A person with less than three months of Service who is so transferred shall join the Plan as provided in Section 2.2." 2. Effective as of May 31, 1995, the first sentence of Section 3.3 shall be deleted and the following shall be substituted therefor: "The Plan shall accept cash Rollover Contributions (within the meaning of Code section 402(c), including optional direct transfers under Code section 401(a)(31) and transfers of Rollover Contributions which were originally deposited in conduit individual retirement accounts pending rollover) on behalf of a Member from any plan qualified under section 401(a) of the Code." 3. Effective as of May 31, 1995, the third sentence of item (1) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "This distribution of excess deferrals shall be adjusted for income or loss allocated thereto in the manner determined by the Committee in accordance with any method permissible under applicable Treasury regulations." 4. Effective as of May 31, 1995, the following shall be added to item (2) of Paragraph (b) of Section 3.6: "For purposes of determining whether the annual additions under this Plan exceed the limitations of section 415 of the Code, all defined contribution plans of the Company and the Affiliated Companies are to be treated as one defined contribution plan. For purposes of this Section only, an "Affiliated Company" (other than an affiliated service group member within the meaning of section 414(m) of the Code) shall be determined by application of a more than 50% control standard in lieu of an 80% control standard. If the annual additions credited to a Member's Account for any Limitation Year under this Plan plus the additions credited on his behalf under other defined contribution plans required to be aggregated pursuant to the foregoing would exceed the maximum annual additions permitted for such Limitation Year under section 415 of the Code for such Member for such Limitation Year, the annual additions under this Plan and the additions under such other plans shall be reduced and allocated, reallocated, or returned in accordance with applicable plan provisions regarding excess additions. Such reductions shall be effected first from this Plan, second, from the Dresser Industries, Inc. Retirement Savings Plan-A and, finally, from any other such defined contribution plans. In the case of a Member who also participated in a defined benefit plan of the Company or an Affiliated Company (as defined above), the Company shall reduce the annual additions credited to the Account of such Member under this Plan to the extent necessary to prevent the limitation set forth in section 415(e) of the Code from being exceeded. Notwithstanding the foregoing, the provisions of the preceding sentence shall apply only if such defined benefit plan does not provide for a reduction of benefits thereunder to ensure that the limitation set forth in section 415(e) of the Code is not exceeded." 5. Effective as of May 31, 1995, the last sentence of item (3) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "Such excess deferral amounts shall be distributed within two and one- half months after the close of the Plan Year or as soon thereafter as is practicable. Such distribution of excess deferral amounts shall be adjusted for income or loss allocated thereto in the manner determined by the Committee in accordance with any method permissible under applicable Treasury regulations." 6. Effective as of May 31, 1995, the last sentence of item (4) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "Such excess contributions shall be distributed or forfeited, as applicable, within two and one-half months after the close of the Plan Year or as soon thereafter as is practicable. Such distribution or forfeiture of excess contributions shall be adjusted for income or loss allocated thereto in the manner determined by the Committee in accordance with any method permissible under applicable Treasury regulations." 7. Effective as of May 31, 1995, the following shall be added to item (6) of Paragraph (b) of Section 3.6 of the Plan: -2- "Such forfeitures of excess contributions shall be adjusted for income or loss allocated thereto in the manner determined by the Committee in accordance with any method permissible under applicable Treasury regulations." 8. Effective as of June 1, 1996, reference in Paragraph (b) of Section 6.4 to "on such April 1" shall be deleted and reference to "on or before such April 1" shall be substituted therefor. 9. Effective as of June 1, 1996, item (2) of Paragraph (b) of Section 6.4 of the Plan shall be deleted and the following shall be substituted therefor: "(2) The life expectancy of the Member as determined under applicable Treasury regulations." 10. Effective as of June 1, 1996, Section 15.25 of the Plan shall be deleted and the following shall be substituted therefor: "SECTION 15.25. NON-GRANDFATHERED MEMBER. For purposes of determining eligibility for Medisave Contributions pursuant to Section 3.2.(c) and Appendix B for a Plan Year, a Member is an employee who is not at any time during a semi-monthly payroll period eligible for coverage under a Dresser retiree medical plan. A Member shall be deemed to be eligible for coverage under a Dresser retiree medical plan if either: (a) he or she would qualify for subsidized coverage under a Dresser retiree medical plan upon his or her retirement or other termination of employment without the need for completion of any age, service or other conditions imposed as a condition for such coverage; or (b) he or she would qualify for subsidized coverage under a Dresser retiree medical plan upon his or her retirement or other termination of employment provided that he or she has, as of the date of such retirement or other termination of employment, completed applicable age, service or other conditions imposed as a condition for such coverage." 11. Effective as of June 1, 1996, the existing Appendix B to the Plan shall be deleted and the following new Appendix B shall be substituted therefor: -3- "APPENDIX B MEDISAVE CONTRIBUTIONS SECTION B.1. GENERAL MEDISAVE CONTRIBUTION ELIGIBILITY. In order to qualify to receive Medisave Contributions for all or a portion of a Plan Year, a Member must satisfy all of the following criteria: (a) the Member must be a Non-grandfathered Member; (b) the Member must be eligible to participate in the Dresser group medical plan, or be an eligible U.S. Expatriate; and (c) the Member must have been employed by Dresser Industries, Inc. or an Affiliated Company for at least one year. For purposes of the criteria described in item (c) above, eligibility to participate in a Predecessor Plan or the Dresser Industries, Inc. Retirement Savings Plan A shall count toward the one year participation eligibility requirement for qualification to receive Medisave Contributions. SECTION B.2. STANDARD FLAT MEDISAVE CONTRIBUTION FORMULA. A Member who has satisfied the general Medisave Contribution eligibility requirements of Section B.1. above and who is not described in Section B.3. below shall be eligible to receive Medisave Contributions pursuant to the standard flat Medisave Contribution formula described in this Section B.2 for each semi- monthly payroll period during a Plan Year during which such Member is eligible to participate in the Plan. The standard flat Medisave Contribution for a Member for a semi-monthly period in a Plan Year shall be $400 divided by the number of semi-monthly payroll periods during such Plan Year. If at the end of a Plan Year, the aggregate Medisave Contributions made on behalf of a Member who is eligible for such Medisave Contributions pursuant to Section 3.2 for all semi-monthly payroll periods in such Plan Year are less than $400, then a final Medisave Contribution shall be made on behalf of such Member so that the Medisave Contributions on his behalf for such Plan Year shall be equal to $400. In the event that the Medisave Contributions made on a Member's behalf during a Plan Year should equal $400 at a time prior to the end of such Plan Year, no further semi-monthly payroll period contributions of Medisave Contributions shall be made on behalf of such Member for such Plan Year. A Member who was initially entitled to Medisave Contributions pursuant to the standard flat Medisave Contribution formula described in this Section B.2. and who, as a result of an employment transfer within the Company, becomes a Member who is described in Section B.3. below shall continue to receive Medisave Contributions pursuant to this Section B.2. SECTION B.3. MATCH CONTRIBUTION MEDISAVE CONTRIBUTION AMOUNTS. A Member who has satisfied the general Medisave Contribution eligibility requirements of Section B.1. above shall be eligible to receive Medisave Contributions pursuant to the match contribution Medisave Contribution formula described in this Section B.3 for each semi-monthly payroll -4- period during such Plan Year that such Member makes Pretax or After-Tax Contributions to the Plan pursuant to Section 3.1 if: (a) such Member was hired on or before May 31, 1996 and works for a non-Dresser Drilling and Production or Energy Valve Operation: (b) such Member was hired on or before May 31, 1995 and worked for either Security or Guiberson/AVA Operations or such Member was hired on or before April 1, 1994 and worked for TK Valve Operations; or (c) such Member was, prior to an employment transfer or reorganization within the Company, entitled to Medisave Contributions pursuant to the matching contribution Medisave Contribution formula described in this Section B.3. The matching contribution Medisave Contribution amount for a semi-monthly payroll period within a Plan Year for a Member pursuant to this Section B.3. shall be equal to 50% of the Pretax and After-tax Contributions of the Member for such semi-monthly payroll period which are not in excess of 4% of the Member's Earnings for such semi-monthly payroll period. SECTION B.4. ALLOCATIONS AND FORFEITURES. Medisave Contributions made to the Plan for a Plan Year on behalf of a Member shall be allocated upon receipt by the Trustee to such Member's Medisave Account. Medisave Contributions allocated to a Member's Medisave Account shall be forfeited or returned, whichever may be applicable, in accordance with the provisions of Section 3.6(b) and Section 9.1." 12. Effective as of December 31, 1995, the instrument providing for the merger of a portion of the Grove Employees' Savings and Incentive Plan into the Plan, a copy of which instrument is labeled as Appendix G and is attached hereto, is hereby added to the Plan as Appendix G. 13. As amended hereby, the Plan is specifically ratified and reaffirmed. IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed this ______ day of _____________________________, 1996. DRESSER INDUSTRIES, INC. By --------------------------------------------- -5- APPENDIX G MERGER OF GROVE EMPLOYEES' SAVINGS AND INCENTIVE PLAN WITH AND INTO THE DRESSER INDUSTRIES, INC. RETIREMENT SAVINGS PLANS WHEREAS, Grove Valve and Regulator Company ("Grove") has heretofore adopted the Grove Employees' Savings and Incentive Plan (the "Grove Plan"); and WHEREAS, Dresser Industries, Inc. ("Dresser") sponsors and maintains the Dresser Industries Inc. Retirement Savings Plan-A (the "Dresser Plan-A") and the Dresser Industries, Inc. Retirement Savings Plan-B (the "Dresser Plan-B") (jointly, the "Dresser Plans"); and WHEREAS, Grove was acquired by Dresser and the parties hereto desire that the employees of Grove become covered by the Dresser Plans; and WHEREAS, the Board of Directors of Grove has approved and the Employee Benefits Committee of Dresser Industries, Inc. (the "Committee") hereby provides for a simultaneous split-up of the Grove Plan into functional group components and for the mergers of the resulting group components of the Grove Plan into the Dresser Plan-A and the Dresser Plan-B: NOW, THEREFORE, the parties hereto agree as follows: 1. Effective as of December 31, 1995, the accounts under the Grove Plan of Grove employees eligible to participate in the Dresser Plan-A and the accounts under the Grove Plan of Grove employees eligible to participate in the Dresser Plan-B are hereby transferred to and merged with and into, respectively, the Dresser Plan-A and the Dresser Plan-B with the result that the provisions of the Dresser Plans replace the provisions of the Grove Plan in their entirety except as otherwise herein provided. Former employees with account balances in the Grove Plan will be transferred to the Dresser Plans in accordance with their eligibility status immediately prior to termination. Pursuant to such merger, the Grove Plan Trustee is instructed hereby that assets held under the Grove Plan shall be transferred as soon as practicable after December 31, 1995 to the Dresser Plans to be held under the existing trusts maintained under said Dresser Plans. Such transfers shall be in cash except that outstanding participant loans shall be transferred in kind. 2. Immediately after the merger of the relevant group component of the Grove Plan with and into the Dresser Plan-A, each Member of the Dresser Plan-A shall, if the Dresser Plan-A were then terminated, be entitled to a benefit which is at least equal to the benefit such Member -1- would have been entitled to immediately prior to the merger if the Grove Plan and the Dresser Plan-A had then terminated. Immediately after the merger of the group component of the Grove Plan with and into the Dresser Plan-B, each member of the Dresser Plan-B shall, if the Dresser Plan-B were then terminated, be entitled to a benefit which is at least equal to the benefit such Member would have been entitled to immediately prior to the merger if the Grove Plan and Dresser Plan-B had then terminated. The provisions of this instrument shall be construed under and in accordance with section 208 of the Employee Retirement Income Security Act of 1974, as amended, and sections 401(a)(12) and 414(1) of the Internal Revenue Code of 1986, as amended, and federal regulations promulgated thereunder. 3. As soon as practicable after the merger of the Grove Plan with and into the Dresser Plans, the appropriate officers of Dresser and Grove shall determine if Grove had or is projected to have Net Profits for the period of November 1, 1994 through October 31, 1995. If it is determined that Grove had or is projected to have, as applicable, net profits for such period, Dresser shall make a Profit-Sharing Contribution to the applicable Dresser Plan (as successor to the portion of the Grove Plan which was merged into it) pursuant to Section 4.3 of the Grove Plan for the period of January 1, 1995 through December 31, 1995 as determined by the appropriate officers of Dresser and Grove. Any such Profit-Sharing Contributions shall be made as soon as practicable after the determination of the amount thereof to and shall be allocated as of December 31, 1995 to the Grove Plan Accounts of the Grove Plan Participants in accordance with the provisions of Section 5.2 of the Grove Plan based upon Compensation earned by the Grove Plan Participants during 1995. All Profit Sharing Contributions made in accordance with this Item 3 shall be treated as having been made to the Grove Plan as of December 31, 1995. 4. The provisions if Items 5 through 8 of this instrument shall be applicable to the accounts (the "Grove Plan Accounts") transferred to the Dresser Plans pursuant to the merger of the Grove Plan with and into the Dresser Plans of an individual ("Grove Participant") who was a participant in the Grove Plan prior to such mergers. 5. Except as provided specifically herein, Grove Plan Accounts shall be governed by the provisions of the Dresser Plans in the same manner as any other account under the Dresser Plans as follows: (a) The portion of a Grove Plan Account which is attributable to Salary Deferrals made to the Grove Plan shall be treated in the same manner as a Pre-Tax Account; (b) The portion of a Grove Plan Account which is attributable to Employer Matching Contributions made to the Grove Plan shall be treated in the same manner as a Matching Account; (c) The portion of a Grove Plan Account which is attributable to Employer Basic Contributions and Employer Profit-Sharing Contributions made to the Grove Plan shall be treated in the same manner as a Basic Account; and (d) The portion of a Grove Plan Account which was attributable to a rollover into the Grove Plan shall be treated in the same manner as a Rollover Account. -2- 6. Incident to the transfer to the Dresser Plans of the Grove Plan Accounts, the Investment Funds of the Grove Plan shall be liquidated and the proceeds invested in the investment funds of the Dresser Plans with the proceeds from the liquidation of a Grove Plan Investment Fund being invested by the Committee in the investment fund of the applicable Dresser Plan which is most comparable thereto in terms of type of investments and nature of investment goals except that Grove Plan outstanding Participant loans shall be continued as outstanding participant loans subject, however, to such adjustments as may be appropriate or necessary to conform to the Dresser Plans' loan procedures and administration. From and after such initial transfer and subject to the provision of this Item 5, Grove Plan Participants may direct as to the investment of their Grove Plan Accounts in accordance with the then applicable provisions of the Dresser Plans. 7. Provisions of the Dresser Plans notwithstanding the nonforfeitable percentage in the Dresser plans of any Grove Plan Participant in his Grove Plan Account shall be 100%. The non-forfeitable percentage in the Dresser Plans of any Grove Plan Participant who had completed at least three years of service as of December 31, 1995 shall be 100% as to all of his accounts in the Dresser Plans. 8. Distribution and withdrawal provisions of the Dresser Plan to the contrary notwithstanding and in addition to the other in-service withdrawal rights available pursuant to the Dresser Plan, a Grove Plan Participant who has attained the age of 59 1/2 may withdraw any portion of the then value of his Grove Plan Account which is attributable to Salary Deferral Contributions. 9. For purposes of this instrument, capitalized terms shall have the meanings ascribed to them in the Dresser Plans or the Grove Plan, as applicable, unless otherwise defined herein. 10. As amended hereby, the Dresser Plans are specifically ratified and reaffirmed. -3- SECOND AMENDMENT TO DRESSER INDUSTRIES, INC. RETIREMENT SAVINGS PLAN - B WHEREAS, DRESSER INDUSTRIES, INC. ("Dresser") and certain Affiliated Companies have heretofore adopted the DRESSER INDUSTRIES, INC. RETIREMENT SAVINGS PLAN - B (the "Plan"); and WHEREAS, Dresser Industries, Inc. desires to amend the Plan on behalf of itself and all Affiliated Companies; NOW, THEREFORE, the Plan shall be amended as follows, effective as of May 31, 1995 except as otherwise specifically provided herein: 1. The second sentence of Item (3) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "If the test is not met, the Committee shall determine the amount of excess Pretax Contributions of Highly Compensated Members in accordance with the leveling method described in Treas. Reg. Section 1.401(k)-1(f)(2) and shall return the excess Pretax Contributions of Highly Compensated Members until the maximum deferral percentage permitted under the test is reached. In the case of any Highly Compensated Member whose actual deferral percentage for purposes of such ADP test is determined under the family aggregation rules of Treas. Reg. Section 1.401(k)-1(g)(1)(ii)(C), the determination and correction of such excess Pretax Contributions shall be accomplished by reducing the ADP test deferral percentage in accordance with the preceding sentence and allocating the excess aggregate Pretax Contributions for the family group among the family members in proportion to the Pretax Contribution of each family member that is combined to determine the ADP test actual deferral percentage." 2. The next-to-last sentence of Item (3) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "Such excess deferral amounts shall be distributed within two and one-half months after the close of the Plan Year or as soon thereafter as is practicable in accordance with the provisions of Code section 401(k)(8)(A) and Treasury Regulations promulgated thereunder." 3. The second sentence of Item (4) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "If the test is not met, the Committee shall determine the amount of excess After-Tax Contributions, Medisave Contributions and Matching Contributions of Highly Compensated Members in accordance with the leveling method described in Treas. Reg. Section 1.401(m)-1(e)(2) and shall return the excess After-Tax Contributions, Medisave Contributions and Matching Contributions of Highly Compensated Members until the maximum contribution percentage permitted under the test is reached. In the case of any Highly Compensated Member whose actual contribution percentage for purposes of such ACP test is determined under the family aggregation rules of Treas. Reg. Section 1.401(m)-1(f)(1)(ii)(C), the determination and correction of such excess After-Tax Contributions, Medisave Contributions and Matching Contributions shall be accomplished by reducing the ACP test actual contribution percentage in accordance with the preceding sentence and allocating the excess aggregate After-Tax Contributions, Medisave Contributions and Matching Contributions for the family group among the family members in proportion to the After-Tax Contributions, Medisave Contributions and Matching Contributions of each family member that are combined to determine the ACP test actual contribution percentage." 4. The next-to-last sentence of Item (4) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "Such excess contributions shall be distributed or forfeited, as applicable, within two and one-half months after the close of the Plan Year or as soon thereafter as is practicable in accordance with the provisions of Code section 401(m)(6)(A) and Treasury Regulations promulgated thereunder." 5. The following shall be added to Item (c) of Section 6.1 of the Plan: "Notwithstanding the foregoing, a Member's Pretax Account may only be distributed pursuant to this item (c) if the transaction satisfies the criteria described in Code section 401(k)(10)(A)(i) or (ii) and the Treasury Regulations promulgated thereunder, as determined by the Committee, and the Member's distribution is paid in the form of a lump sum distribution no later than the end of the second calendar year after the calendar year in which such transaction occurred." 6. The following shall be added to Section 6.1 of the Plan: "The provisions of this Section 6.1 of the Plan and any other provision of the Plan notwithstanding, a Member's Pretax Account may not be distributed at a time when such distribution would violate the distribution restrictions of Code section 401(k)(2)(B) and the Treasury Regulations promulgated thereunder." 7. The last paragraph of Section 15.14 of the Plan shall be deleted and the following shall be substituted therefor: -2- "The Earnings of any Member taken into account for purposes of the Plan shall be limited to $150,000 for any Plan Year with such limitation to be: (1) adjusted automatically to reflect any amendments to Code section 401(a)(17) and any cost-of-living increases authorized by Code section 401(a)(17); (2) prorated for a Plan Year of less than twelve months and to the extent otherwise required by applicable law; and (3) in the case of a Member who is either a five-percent owner of the Company (within the meaning of Code section 416(i)(1)(A)(iii)) or is one of the ten most Highly Compensated Employees for the Plan Year and who has a spouse and/or lineal descendants who are under the age of nineteen as of the end of a Plan Year who receive Earnings during such Plan Year, prorated and allocated among such Member, his spouse, and/or lineal descendants under the age of nineteen based on the Earnings for such Plan Year of each such individual." 8. The last two sentences of Section 15.32 of the Plan shall be deleted and the following shall be substituted therefor: "However, the Test Compensation of any Member taken into account for purposes of the Plan shall be limited to $150,000 for any Plan Year with such limitation to be: (1) adjusted automatically to reflect any amendments to Code section 401(a)(17) and any cost-of-living increases authorized by Code section 401(a)(17); (2) prorated for a Plan Year of less than twelve months and to the extent otherwise required by applicable law; and (3) in the case of a Member who is either a five-percent owner of the Company (within the meaning of Code section 416(i)(1)(A)(iii)) or is one of the ten most Highly Compensated Employees for the Plan Year and who has a spouse and/or lineal descendants who are under the age of nineteen as of the end of a Plan Year who receive Test Compensation during such Plan Year, prorated and allocated among such Member, his spouse, and/or lineal descendants under the age of nineteen based on the Test Compensation for such Plan Year of each such individual." 9. Each of the instrument providing for the merger of the Savings Plan for Employees of Baroid Corporation with and into the Dresser Industries, Inc. Retirement Savings Plans and Appendix D to the Plan shall be amended by redenominating Subitem "(i)" of Item 8 thereof as Subitem "(j)" and inserting the following new Subitem (i) into such Item 8: "(i) A Baroid Plan Participant who has terminated employment may elect to leave his Baroid Plan Account in the Dresser Plans for so long as and to the extent that such distribution deferral election does contravene the required -3- distribution requirements of Code section 401(a)(9) and Treasury Regulations promulgated thereunder." 10. As amended hereby, the Plan is specifically ratified and reaffirmed. IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed this _____ day of _____________________, 1996. DRESSER INDUSTRIES, INC. By ---------------------------------------------- -4- EX-4.6 3 FORM OF DRESSER UNION PLAN DRESSER INDUSTRIES, INC. UNION PLAN (PLAN #196) As Amended and Restated Effective November 1, 1997 DRESSER INDUSTRIES, INC. UNION PLAN W I T N E S S E T H : WHEREAS, the Company has heretofore adopted the DRESSER INDUSTRIES, INC. UNION PLAN, hereinafter referred to as the "PLAN," for the benefit of certain of its employees; and WHEREAS, the Company desires to restate the Plan and to amend the Plan in several respects, intending thereby to provide an uninterrupted and continuing program of benefits; NOW THEREFORE, the Plan is hereby restated in its entirety as follows with no interruption in time, effective as of November 1, 1997, except as otherwise indicated herein: (i) TABLE OF CONTENTS PAGE ---- ARTICLE I DEFINITIONS AND CONSTRUCTION . . . . . . . . . . . . . I-1 ARTICLE II PARTICIPATION. . . . . . . . . . . . . . . . . . . . . II-1 ARTICLE III CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . III-1 ARTICLE IV ALLOCATIONS AND LIMITATIONS. . . . . . . . . . . . . . IV-1 ARTICLE V INVESTMENT FUNDS . . . . . . . . . . . . . . . . . . . V-1 ARTICLE VI RETIREMENT BENEFITS. . . . . . . . . . . . . . . . . . VI-1 ARTICLE VII DISABILITY BENEFITS. . . . . . . . . . . . . . . . . . VII-1 ARTICLE VIII SEVERANCE BENEFITS AND DETERMINATION OF VESTED INTEREST . . . . . . . . . . . . . . . . . . VIII-1 ARTICLE IX DEATH BENEFITS . . . . . . . . . . . . . . . . . . . . IX-1 ARTICLE X TIME AND FORM OF PAYMENT OF BENEFITS . . . . . . . . . X-1 ARTICLE XI IN-SERVICE WITHDRAWALS . . . . . . . . . . . . . . . . XI-1 ARTICLE XII LOANS. . . . . . . . . . . . . . . . . . . . . . . . . XII-1 ARTICLE XIII ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . XIII-1 ARTICLE XIV TRUSTEE AND ADMINISTRATION OF TRUST FUND . . . . . . . XIV-1 ARTICLE XV FIDUCIARY PROVISIONS . . . . . . . . . . . . . . . . . XV-1 ARTICLE XVI AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . XVI-1 ARTICLE XVII DISCONTINUANCE OF CONTRIBUTIONS, TERMINATION, PARTIAL TERMINATION, AND MERGER OR CONSOLIDATION. . . . . . . . . . . . . . XVII-1 ARTICLE XVIII PARTICIPATING EMPLOYERS. . . . . . . . . . . . . . . . XVIII-1 ARTICLE XIX MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . XIX-1 (ii) I. DEFINITIONS AND CONSTRUCTION 1.1 DEFINITIONS. Where the following words and phrases appear in the Plan, they shall have the respective meanings set forth below, unless their context clearly indicates to the contrary. (1) ACCOUNT(S): A Member's Employee Contribution Account, Employer Contribution Account and Rollover Account, including the amounts credited thereto or debited therefrom. (2) ACT: The Employee Retirement Income Security Act of 1974, as amended. (3) ADDENDUM: An addendum to this Plan which shall constitute a part of this Plan and which describes specific provisions which are applicable to Members who are covered by a specific Union Contract. An Addendum may vary or supplement any provision of the Plan with respect to the Member covered by a specific Union Contract and, in such event, the variance or supplement shall control. (4) BASE COMPENSATION: The portion of a Member's Compensation which is not Bonus Compensation. (5) EMPLOYEE PRE-TAX CONTRIBUTIONS: Contributions made to the Plan by the Employer on a Member's behalf in accordance with the Member's elections to defer Base Compensation under the Plan's qualified cash or deferred arrangement as described in Section 3.1. (6) EMPLOYEE BONUS CONTRIBUTIONS: Contributions made to the Plan by the Employer on a Member's behalf in accordance with the Member's elections to defer Bonus Compensation under the Plan's qualified cash or deferred arrangement as described in Section 3.2. (7) BENEFICIARY: The person(s) designated in accordance with Section 9.2 by a Member to receive benefits payable from the Plan as a result of such Member's death. (8) BENEFIT COMMENCEMENT DATE: With respect to each Member or Beneficiary, the date such Member's or Beneficiary's benefit is paid to him from the Trust Fund. (9) BONUS COMPENSATION: The portion of a Member's Compensation which consists of annual bonus payments. (10) CODE: The Internal Revenue Code of 1986, as amended. (11) COMMITTEE: The Hourly Employee Benefits Committee of the Company. (12) COMPANY: Dresser Industries, Inc. I-1 (13) COMPENSATION: The total of all cash wages received by a Member for services actually rendered or labor performed for the Employer while a Member, subject to the following adjustments and limitations: (A) The following shall be excluded: (i) commissions and non-regular payments paid prior to November 1, 1997; (ii) reimbursements and other expense allowances; (iii) cash and noncash fringe benefits; (iv) moving expenses; and (v) Employer contributions to or payments from this or any other deferred compensation program, whether such program is qualified under section 401(a) of the Code or nonqualified. (B) Elective contributions made on a Member's behalf by the Employer that are not includable in income under section 125, section 402(e)(3), section 402(h), or section 403(b) of the Code shall be included. (C) The Compensation of any Member taken into account for purposes of the Plan shall be limited to $160,000 for any Plan Year with such limitation to be: (i) adjusted automatically to reflect any amendments to section 401(a)(17) of the Code and any cost-of-living increases authorized by section 401(a)(17) of the Code; and (ii) prorated for a Plan Year of less than twelve months and to the extent otherwise required by applicable law. (14) CONTROLLED ENTITY: Each corporation that is a member of a controlled group of corporations, within the meaning of section 1563(a) (determined without regard to sections 1563(a)(4) and 1563(e)(3)(C)) of the Code, of which the Employer is a member, each trade or business (whether or not incorporated) with which the Employer is under common control, and each member of an affiliated service group, within the meaning of section 414(m) of the Code, of which the Employer is a member. (15) DIRECT ROLLOVER: A payment by the Plan to an Eligible Retirement Plan designated by a Distributee. (16) DIRECTORS: The Board of Directors of the Company. (17) DISTRIBUTEE: Each (A) Member entitled to an Eligible Rollover Distribution, (B) Member's surviving spouse with respect to the interest of such surviving spouse in an Eligible Rollover I-2 Distribution, and (C) former spouse of a Member who is an alternate payee under a qualified domestic relations order, as defined in section 414(p) of the Code, with regard to the interest of such former spouse in an Eligible Rollover Distribution. (18) EFFECTIVE DATE: November 1, 1997, as to this restatement of the Plan, except that those provisions of the Plan which are required to have an earlier effective date by applicable statute or regulation shall be effective as of such earlier date. (19) ELIGIBLE RETIREMENT PLAN: (A) With respect to a Distributee other than a surviving spouse, an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified plan described in section 401(a) of the Code, which under its provisions accepts such Distributee's Eligible Rollover Distribution and (B) with respect to a Distributee who is a surviving spouse, an individual retirement account described in section 408(a) of the Code or an individual retirement annuity described in section 408(b) of the Code. (20) ELIGIBLE ROLLOVER DISTRIBUTION: Any distribution of all or any portion of the Accounts of a Distributee other than (A) a 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, (B) a distribution to the extent such distribution is required under section 401(a)(9) of the Code, (C) the portion of a distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities), (D) a loan treated as a distribution under section 72(p) of the Code and not excepted by section 72(p)(2), (E) a loan in default that is a deemed distribution, (F) any corrective distribution provided in Sections 3.8 and 4.5(b), and (G) any other distribution so designated by the Internal Revenue Service in revenue rulings, notices, and other guidance of general applicability. (21) EMPLOYEE: Each individual employed by the Employer. (22) EMPLOYEE CONTRIBUTION ACCOUNT: An individual account for each Member, which is credited with the Employee Pre-tax Contributions and Employee Bonus Contributions made by the Employer on such Member's behalf and which is credited with (or debited for) such account's allocation of net income (or net loss) and changes in value of the Trust Fund and debited for such account's share of Plan expenses (including any Plan expense directly charged to such account as an expense specifically incurred for the benefit of such Member). (23) EMPLOYER: The Company and each entity that has Employees who are eligible to participate in the Plan. (24) EMPLOYER CONTRIBUTION ACCOUNT: An individual account for each Member, which is credited with the Employer Contributions made pursuant to a negotiated collective bargaining agreement on such Member's behalf and which is credited with (or debited for) such I-3 account's allocation of net income (or net loss) and changes in value of the Trust Fund and debited for such account's share of Plan expenses (including any Plan expense directly charged to such account as an expense specifically incurred for the benefit of such Member). (25) EMPLOYER CONTRIBUTIONS: Contributions made to the Plan by the Employer pursuant to Section 3.4. (26) EMPLOYMENT COMMENCEMENT DATE: The date on which an individual first performs an Hour of Service. (27) HIGHLY COMPENSATED EMPLOYEE: Each Employee who performs services during the Plan Year for which the determination of who is highly compensated is being made (the "Determination Year") and who: (A) is a five-percent owner of the Employer (within the meaning of section 416(i)(1)(A)(iii) of the Code) at any time during the Determination Year or the twelve-month period immediately preceding the Determination Year (the "Look-Back Year"); or (B) For the Look-Back Year (i) receives compensation (within the meaning of section 414(q)(4) of the Code; "compensation" for purposes of this Paragraph) in excess of $80,000 (with such amount to be adjusted automatically to reflect any cost-of-living adjustments authorized by section 414(q)(1) of the Code) during the Look-Back Year; and (ii) if the Committee elects the application of this clause in such Look-Back Year, is a member of the top 20% of Employees for the Look-Back Year (other than Employees described in section 414(q)(5) of the Code) ranked on the basis of compensation received during the year. For purposes of the preceding sentence, (i) all employers aggregated with the Employer under section 414(b), (c), (m), or (o) of the Code shall be treated as a single employer, (ii) a former Employee who had a separation year (generally, the Determination Year such Employee separates from service) prior to the Determination Year and who was an active Highly Compensated Employee for either such separation year or any Determination Year ending on or after such Employee's fifty-fifth birthday shall be deemed to be a Highly Compensated Employee, and (iii) the Committee may elect, in accordance with the provisions of applicable Treasury regulations, rulings and notices, to make the Look-Back Year calculation for a Determination Year on the basis of the calendar year ending with or within the applicable Determination Year (or, in the case of a Determination Year that is shorter than twelve months, the calendar year ending with or within the twelve-month period ending with the end of the applicable Determination Year). To the extent that the provisions of this Paragraph are inconsistent or conflict with the definition of a "highly compensated employee" set forth in section 414(q) of the Code and the Treasury regulations thereunder, the relevant terms and I-4 provisions of section 414(q) of the Code and the Treasury regulations thereunder shall govern and control. (28) HOUR OF SERVICE: Each hour for which an individual is directly or indirectly paid, or entitled to payment, by the Employer or a Controlled Entity for the performance of duties (29) INVESTMENT FUND: A portion of the Trust Fund that is invested in a specified manner as described in Section 5.1. (30) LEASED EMPLOYEE. Any individual who is not an Employee but who is considered an employee pursuant to section 414(n) of the Code. (31) MEMBER: Each individual who has met the eligibility requirements for participation in the Plan and elected to participate in the Plan. (32) NORMAL RETIREMENT DATE: The date a Member attains the age of sixty-five. (33) PERIOD OF SERVICE: Each period of an individual's Service commencing on his Employment Commencement Date or a Reemployment Commencement Date, if applicable, and ending on a Severance from Service Date. Notwithstanding the foregoing, a period during which an individual is absent from Service by reason of the individual's pregnancy, the birth of a child of the individual, the placement of a child with the individual in connection with the adoption of such child by the individual, or for the purposes of caring for such child for the period immediately following such birth or placement shall not constitute a Period of Service between the first and second anniversary of the first date of such absence. A Period of Service shall also include any period required to be credited as a Period of Service by federal law other than the Act or the Code, but only under the conditions and to the extent so required by such federal law. (34) PERIOD OF SEVERANCE: Each period of time commencing on an individual's Severance from Service Date and ending on a Reemployment Commencement Date. (35) PLAN: The Dresser Industries, Inc. Union Plan, as amended from time to time. (36) PLAN YEAR: The twelve-consecutive month period commencing January 1 of each year. (37) REEMPLOYMENT COMMENCEMENT DATE: The first date upon which an individual performs an Hour of Service following a Severance from Service Date. (38) ROLLOVER CONTRIBUTION ACCOUNT: An individual account for an Eligible Employee, which is credited with the Rollover Contributions of such Employee and which is credited with (or debited for) such account's allocation of net income (or net loss) and changes in value of the Trust Fund and debited for such account's share of Plan expenses (including any Plan expense directly charged to such account as an expense specifically incurred for the benefit of such Member). I-5 (39) ROLLOVER CONTRIBUTIONS: Contributions made by an Eligible Employee pursuant to Section 3.5. (40) SERVICE: The period of an individual's employment with the Employer or a Controlled Entity. (41) SEVERANCE FROM SERVICE DATE: The earlier of (A) the first date on which an individual terminates his Service following his Employment Commencement Date or a Reemployment Commencement Date, if applicable, or (B) the first anniversary of the first date of a period in which an Employee remains absent from Service (with or without pay) with the Employer for any reason other than resignation, retirement, discharge, or death, such as vacation, holiday, leave of absence, disability, or lay-off that is not classified by the Employer as a termination of Service. Notwithstanding the foregoing, the Severance from Service Date of an individual who is absent from Service by reason of the individual's pregnancy, the birth of a child of the individual, the placement of a child with the individual in connection with the adoption of such child by the individual, or for purposes of caring for such child for the period immediately following such birth or placement shall be the second anniversary of the first date of such absence. (42) TRUST: The trust established herein to hold and invest contributions made under the Plan, and income thereon, and from which the Plan benefits are distributed. (43) TRUST FUND: The funds and properties held pursuant to the provisions hereof for the use and benefit of the Members, together with all income, profits, and increments thereto. (44) TRUSTEE: The trustee or trustees qualified and acting hereunder at any time. (45) UNION CONTRACT: With respect to any Employee, a collective bargaining agreement governing the terms and conditions of such Employee's employment by the Employer. (46) VESTED INTEREST: The portion of a Member's Accounts which, pursuant to the Plan, is nonforfeitable. (47) VESTING SERVICE: The measure of service used in determining a Member's Vested Interest as determined pursuant to Section 8.4. 1.2 NUMBER AND GENDER. Wherever appropriate herein, words used in the singular shall be considered to include the plural and words used in the plural shall be considered to include the singular. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender. 1.3 HEADINGS. The headings of Articles and Sections herein are included solely for convenience, and if there is any conflict between such headings and the text of the Plan, the text shall control. I-6 1.4 CONSTRUCTION. It is intended that the Plan be qualified within the meaning of section 401(a) of the Code and that the Trust be tax exempt under section 501(a) of the Code, and all provisions herein shall be construed in accordance with such intent. I-7 II. PARTICIPATION 2.1 ELIGIBILITY. Each Employee whose employment with the Employer is subject to a Union Contract and whose collective bargaining unit has elected for its members to be eligible for coverage under the Plan shall be eligible to become a Member upon the first day of the first month coincident with or next following the later of the date on which such he completes one year of participation service or the date on which he attains the age of eighteen. Notwithstanding the foregoing: (a) An Employee who was a Member of the Plan, or who was eligible to become a Member of the Plan, prior to a termination of employment shall be eligible to remain or become a Member immediately upon his reemployment as an Employee who is eligible for coverage under the Plan; (b) An Employee who had completed one year of participation service but who had not attained the age of eighteen prior to a termination of his employment shall be eligible to become a Member immediately upon his reemployment as an Employee who is eligible for coverage under the Plan or his attainment of age eighteen, whichever is later; and (c) A Member who ceases to be an Employee who is eligible for coverage under the Plan but remains an Employee shall continue to be a Member but, on and after the date he ceases to be so eligible, he shall no longer be entitled to defer Base Compensation or Bonus Compensation hereunder or share in allocations of Employer Contributions unless and until he shall again become an Employee who is eligible for coverage under the Plan. (d) Leased Employees shall not be eligible to participate in the Plan. 2.2 PARTICIPATION SERVICE. (a) Subject to the remaining Paragraphs of this Section, an individual shall be credited with participation service for purposes of Section 2.1 in an amount equal to his aggregate Periods of Service whether or not such Periods of Service are completed consecutively. (b) Paragraph (a) above notwithstanding, if an individual terminates his Service (at a time other than during a leave of absence) and subsequently resumes his Service, if his Reemployment Commencement Date is within twelve months of his Severance from Service Date, such Period of Severance shall be treated as a Period of Service for purposes of Paragraph (a) above. (c) Paragraph (a) above notwithstanding, if an individual terminates his Service during a leave of absence and subsequently resumes his Service, if his Reemployment Commencement Date is within twelve months of the beginning of such leave of absence, such Period of Severance shall be treated as a Period of Service for purposes of Paragraph (a) above. II-1 (d) An individual who was employed prior to the Effective Date and who had not completed one year of participation service as of the Effective Date will also be deemed to have completed a year of participation service if he completes 1,000 or more Hours of Service during the first twelve months of his employment with the Employer. 2.3 MEMBERSHIP. Any Employee who is eligible for coverage under the Plan may become a Member upon the date on which he first becomes eligible pursuant to Section 2.1 by executing and filing with the Committee, within the time limits prescribed by the Committee, the forms prescribed by the Committee. If he does not become a Member upon the date on which he first becomes eligible pursuant to Section 2.1, he may become a Member on the first day of any subsequent month by executing and filing with the Committee the forms prescribed by the Committee within the time limits prescribed by the Committee. If an Employer is obligated to make or has agreed to make Employer Contributions to the Plan on behalf of an Employee without regard to such Employee's election to defer Base Compensation or Bonus Compensation, such Employee shall automatically become a Member of the Plan upon the date he first satisfies the eligibility requirements of Section 2.1. II-2 III. CONTRIBUTIONS 3.1 EMPLOYEE PRE-TAX CONTRIBUTIONS. A Member may elect to defer an integral percentage of from 1% to 12% (or such lesser percentage as may be prescribed from time to time by the Committee) of his Base Compensation for a Plan Year by having the Employer contribute the amount so deferred to the Plan. Base Compensation for a Plan Year not so deferred by such election shall be received by such Member in cash. A Member's election to defer an amount of his Base Compensation pursuant to this Section shall be made by authorizing his Employer, in the manner prescribed by the Committee, to reduce his Base Compensation in the elected amount and the Employer, in consideration thereof, agrees to contribute an equal amount to the Plan. The reduction in a Member's Base Compensation for a Plan Year pursuant to his election hereunder shall be effected by Base Compensation reductions as of each payroll period within such Plan Year following the effective date of such election. 3.2 EMPLOYEE BONUS CONTRIBUTIONS. A Member may elect to defer an integral percentage of from 0% to 100% of his Bonus Compensation for a Plan Year by having the Employer contribute the amount so deferred to the Plan. This contribution cannot exceed 12% of Base Compensation. Bonus Compensation for a Plan Year not so deferred by such election shall be received by such Member in cash. A Member's election to defer an amount of his Bonus Compensation pursuant to this Section shall be made by authorizing his Employer, in the manner prescribed by the Committee, to reduce his Bonus Compensation in the elected amount and the Employer, in consideration thereof, agrees to contribute an equal amount to the Plan. The reduction in a Member's Bonus Compensation for a Plan Year pursuant to his election hereunder shall be effected as of the date or dates of payment of Bonus Compensation to the Member. 3.3 COMPENSATION REDUCTION RULES. (a) A Member may make a separate Compensation reduction election pursuant to Section 3.1 and/or Section 3.2 or he may make a single combined Compensation reduction election as to both. A Compensation reduction election shall remain in force and effect for all periods following its effective date until modified or terminated or until the Member who made it terminates his employment. A Member who has elected to defer a portion of his Compensation may change his deferral election percentage (within the percentage limits set forth in Section 3.1 or 3.2, as applicable), by electing a new Compensation reduction percentage in the manner and within the time period prescribed by the Committee. (b) Effective at any time, a Member may cancel a Compensation reduction election in accordance with the provisions and within the time period prescribed by the Committee. A Member who so cancels a Compensation reduction election may make a new Compensation reduction election in the manner and within the time period prescribed by the Committee; provided, however, that a Member who cancels his Base Compensation reduction election may not resume Base Compensation deferrals until the expiration of three months following the date of such cancellation. III-1 (c) In restriction of the Members' elections provided in Sections 3.1 and 3.2 above, the Employee Pre-tax Contributions and Employee Bonus Contributions and the elective deferrals (within the meaning of section 402(g)(3) of the Code) under all other plans, contracts, and arrangements of the Employer on behalf of any Member for any calendar year shall not exceed the dollar limit authorized by section 402(g) of the Code) for such calendar year. (d) In further restriction of the Members' elections provided in Sections 3.1 and 3.2 above, it is specifically provided that one of the "actual deferral percentage" tests set forth in section 401(k)(3) of the Code and the Treasury regulations thereunder must be met in each Plan Year. (e) If the restrictions set forth in Paragraph (c) or (d) above would not otherwise be met for any Plan Year, the Compensation deferral elections made pursuant to Sections 3.1 and 3.2 above of affected Members may be reduced by the Committee on a temporary and prospective basis in such manner as the Committee shall determine. (f) As soon as administratively feasible following the end of each month, the Employer shall contribute to the Trust, with respect to each Member, the amount of Compensation elected to be deferred, pursuant to Section 3.1 above (as adjusted pursuant to Paragraph (e) above), by such Member during such month. As soon as administratively feasible following the end of each month, the Employer shall contribute to the Trust, with respect to each Member, the amount of Compensation elected to be deferred, pursuant to Section 3.2 above (as adjusted pursuant to Paragraph (e) above), by such Member during such month. Such contributions, as well as the contributions made pursuant to Section 3.4 shall be made without regard to current or accumulated profits of the Employer. Notwithstanding the foregoing, the Plan is intended to qualify as a profit sharing plan for purposes of sections 401(a), 402, 412, and 417 of the Code. 3.4 EMPLOYER CONTRIBUTIONS. For each Plan Year, the Employer shall contribute to the Trust on behalf of each Member the amount, if any, the Employer is obligated to contribute to the Plan under the Member's Union Contract. 3.5 ROLLOVER CONTRIBUTIONS. (a) Qualified Rollover Contributions may be made to the Plan by any Employee who is eligible for Plan coverage of amounts received by such Employee from an individual retirement account or annuity or from an employees' trust described in section 401(a) of the Code, which is exempt from tax under section 501(a) of the Code, but only if any such Rollover Contribution is made pursuant to and in accordance with applicable provisions of the Code and Treasury regulations promulgated thereunder. A Rollover Contribution of amounts that are "eligible rollover distributions" within the meaning of section 402(f)(2)(A) of the Code may be made to the Plan irrespective of whether such eligible rollover distribution was paid to the Employee or paid to the Plan as a "direct" Rollover Contribution. A direct Rollover Contribution to the Plan may be effectuated only by wire transfer directed to the Trustee or by issuance of a check made payable to the Trustee, which is negotiable only by the Trustee and which identifies the Employee for whose benefit the Rollover Contribution is being made. Any Employee desiring to effect a Rollover Contribution to the Plan must execute and file with the Committee the form prescribed by the Committee for such purpose. III-2 The Committee may require as a condition to accepting any Rollover Contribution that such Employee furnish any evidence that the Committee in its discretion deems satisfactory to establish that the proposed Rollover Contribution is in fact eligible for rollover to the Plan and is made pursuant to and in accordance with applicable provisions of the Code and Treasury regulations. All Rollover Contributions to the Plan must be made in cash. A Rollover Contribution shall be credited to the Rollover Contribution Account of the Employee for whose benefit such Rollover Contribution is being made as of the last day of the month in which such Rollover Contribution is made. (b) An Employee who has made a Rollover Contribution in accordance with this Section, but who has not otherwise become a Member of the Plan in accordance with Article II, shall become a Member coincident with such Rollover Contribution; provided, however, that such Member shall not have a right to defer Compensation or have Employer Contributions made on his behalf until he has otherwise satisfied the requirements imposed by Article II. 3.6 RETURN OF CONTRIBUTIONS. Anything to the contrary herein notwithstanding, the Employer's contributions to the Plan are contingent upon the deductibility of such contributions under section 404 of the Code. To the extent that a deduction for contributions is disallowed, such contributions shall, upon the written demand of the Employer, be returned to the Employer by the Trustee within one year after the date of disallowance, reduced by any net losses of the Trust Fund attributable thereto but not increased by any net earnings of the Trust Fund attributable thereto. Moreover, if Employer contributions are made under a mistake of fact, such contributions shall, upon the written demand of the Employer, be returned to the Employer by the Trustee within one year after the payment thereof, reduced by any net losses of the Trust Fund attributable thereto but not increased by any net earnings of the Trust Fund attributable thereto. 3.7 DISPOSITION OF EXCESS DEFERRALS. (a) Anything to the contrary herein notwithstanding, any Employee Pre-tax Contributions and Employee Bonus Contributions to the Plan for a calendar year on behalf of a Member in excess of the limitations set forth in Section 3.3 and any "excess deferrals" from other plans allocated to the Plan by such Member no later than March 1 of the next following calendar year within the meaning of, and pursuant to the provisions of, section 402(g)(2) of the Code, shall be distributed to such Member not later than April 15 of the next following calendar year. (b) Anything to the contrary herein notwithstanding, if, for any Plan Year, the aggregate Employee Pre-tax Contributions and Employee Bonus Contributions made by the Employer on behalf of Highly Compensated Employees exceeds the maximum amount of Employee Pre-tax Contributions and Employee Bonus Contributions permitted on behalf of such Highly Compensated Employees pursuant to Section 3.3(d) (determined by reducing Employee Pre-tax Contributions and Employee Bonus Contributions on behalf of Highly Compensated Employees in order of the highest dollar amounts contributed on behalf of such Highly Compensated Employees in accordance with section 401(k)(8)(C) of the Code and the Treasury regulations thereunder), such excess shall be distributed to the Highly Compensated Employees on whose behalf such excess was contributed before the end of the next following Plan Year. III-3 (c) Any distribution or forfeiture of excess deferrals or excess contributions pursuant to the provisions of this Section shall be adjusted for income or loss allocated thereto in the manner determined by the Committee in accordance with any method permissible under applicable Treasury regulations. Any forfeiture pursuant to the provisions of this Section shall be considered to have occurred on the date which is 2 1/2 months after the end of the Plan Year. III-4 IV. ALLOCATIONS AND LIMITATIONS 4.1 SUSPENDED AMOUNTS. All contributions, forfeitures, and the net income (or net loss) of the Trust Fund shall be held in suspense until allocated to the Accounts of the Members as provided herein. 4.2 ALLOCATION OF CONTRIBUTIONS. (a) Employee Pre-tax Contributions and Employee Bonus Contributions made by the Employer on a Member's behalf month pursuant to Section 3.1 and Section 3.2 shall be allocated to such Member's Employee Contribution Account as received. (b) Employer Contributions, if any, made on behalf of a Member pursuant to Section 3.3 for a Plan Year shall be allocated to the Employer Contribution Account of such Member. (c) Rollover Contributions made to the Plan by a Member shall be allocated to such Member's Rollover Contribution Account as received. (d) All contributions to the Plan shall be considered allocated to Members' Accounts no later than the last day of the Plan Year for which they were made, as determined pursuant to Article III, except that, for purposes of Section 4.4, contributions shall be considered allocated to Members' Accounts when received by the Trustee 4.3 APPLICATION OF FORFEITURES. Any amounts that are forfeited under any provision hereof during a Plan Year shall be applied to reduce Employer Contributions next coming due. Prior to such application, forfeited amounts shall continue to be invested in the same Investment Fund(s) in which they were invested immediately prior to their forfeiture. 4.4 VALUATION OF ACCOUNTS. All amounts contributed to the Trust Fund shall be invested at the time of their receipt by the Trustee, and the balance of each Account shall reflect the result of daily pricing of the assets in which such Account is invested from the time of receipt by the Trustee until the time of distribution. 4.5 LIMITATIONS AND CORRECTIONS. (a) For purposes of this Section, the following terms and phrases shall have these respective meanings: (1) "Annual Additions" of a Member for any Limitation Year shall mean the total of (A) the employer contributions, employee contributions, and forfeitures, if any, allocated to such Member's Accounts for such year, (B) Member's contributions, if any, (excluding any Rollover Contributions) for such year, and (C) amounts referred to in sections 415(l)(1) and 419A(d)(2) of the Code. IV-1 (2) "Limitation Year" shall mean the Plan Year. (3) "Maximum Annual Additions" of a Member for any Limitation Year shall mean the lesser of (A) $30,000 (or, if greater, one-fourth of the defined benefit dollar limitation in effect under section 415(b)(1)(A) of the Code for such Limitation Year) or (B) 25% of such Member's compensation, within the meaning of section 415(c)(3) of the Code and applicable Treasury regulations thereunder, during such year. (b) Contrary Plan provisions notwithstanding, in no event shall the Annual Additions credited to a Member's Accounts for any Limitation Year exceed the Maximum Annual Additions for such Member for such year. If as a result of a reasonable error in estimating a Member's compensation, a reasonable error in determining the amount of elective deferrals (within the meaning of section 402(g)(3) of the Code) that may be made with respect to any individual under the limits of section 415 of the Code, or because of other limited facts and circumstances, the Annual Additions that would be credited to a Member's Accounts for a Limitation Year would nonetheless exceed the Maximum Annual Additions for such Member for such year, the excess Annual Additions which, but for this Section, would have been allocated to such Member's Accounts shall be disposed of as follows: (1) First, any such excess Annual Additions in the form of employee contributions on behalf of such Member shall be distributed to such Member, adjusted for income or loss allocated thereto; (2) Next, any such excess Annual Additions in the form of employer contributions shall, to the extent such amounts would otherwise have been allocated to such Member's Accounts, be treated as a forfeiture. (c) For purposes of determining whether the Annual Additions under this Plan exceed the limitations herein provided, all defined contribution plans of the Employer are to be treated as one defined contribution plan. In addition, all defined contribution plans of Controlled Entities shall be aggregated for this purpose. For purposes of this Section only, a "Controlled Entity" (other than an affiliated service group member within the meaning of section 414(m) of the Code) shall be determined by application of a more than 50% control standard in lieu of an 80% control standard. If the Annual Additions credited to a Member's Accounts for any Limitation Year under this Plan plus the additions credited on his behalf under other defined contribution plans required to be aggregated pursuant to this Paragraph would exceed the Maximum Annual Additions for such Member for such Limitation Year, the Annual Additions under this Plan and the additions under such other plans shall be reduced on a pro rata basis and allocated, reallocated, or returned in accordance with applicable plan provisions regarding Annual Additions in excess of Maximum Annual Additions. (d) In the case of a Member who also participated in a defined benefit plan of the Employer or a Controlled Entity (as defined in Paragraph (c) above), the Employer shall reduce the Annual Additions credited to the Accounts of such Member under this Plan pursuant to the provisions of Paragraph (b) to the extent necessary to prevent the limitation set forth in section 415(e) of the Code from being exceeded. Notwithstanding the foregoing, the provisions of this Paragraph IV-2 shall apply only if such defined benefit plan does not provide for a reduction of benefits thereunder to ensure that the limitation set forth in section 415(e) of the Code is not exceeded. (e) If the limitations set forth in this Section would not otherwise be met for any Limitation Year, the Compensation deferral elections pursuant to Section 3.1 of affected Members may be reduced by the Committee on a temporary and prospective basis in such manner as the Committee shall determine. IV-3 V. INVESTMENT FUNDS 5.1 INVESTMENT OF ACCOUNTS. (a) Each Member shall designate, in accordance with the procedures established from time to time by the Committee, the manner in which the amounts allocated to each of his Accounts shall be invested from among the Investment Funds made available from time to time by the Committee. With respect to each of a Member's Accounts, such Member may designate one of such Investment Funds for all the amounts allocated to such Account or he may split the investment of the amounts allocated to such Account between such Investment Funds in such increments as the Committee may prescribe. If a Member fails to make a designation, then his Accounts shall be invested in the Investment Fund or Funds designated by the Committee from time to time in a uniform and nondiscriminatory manner. (b) A Member may change his investment designation for future contributions to be allocated to any one or all of his Accounts. Any such change shall be made in accordance with the procedures established by the Committee, and the frequency of such changes may be limited by the Committee. (c) A Member may elect to convert his investment designation with respect to the amounts already allocated to one or more of his Accounts. Any such conversion shall be made in accordance with the procedures established by the Committee, and the frequency of such conversions may be limited by the Committee. V-1 VI. RETIREMENT BENEFITS 6.1 RETIREMENT BENEFITS. A Member who terminates his employment on or after his Normal Retirement Date shall be entitled to a retirement benefit, payable at the time and in the form provided in Article X, equal in value to the sum of: (a) The value of his Accounts on his Benefit Commencement Date; and (b) If such Member's Benefit Commencement Date occurs prior to the close of the Plan Year during which his termination of employment occurred, the amount of such Member's allocation of Employer Contributions for such Plan Year. VI-1 VII. DISABILITY BENEFITS 7.1 DISABILITY BENEFITS. In the event a Member's employment is terminated, and such Member is totally and permanently disabled, as determined pursuant to Section 7.2, such Member shall have a 100% Vested Interest and be entitled to a disability benefit, payable at the time and in the form provided in Article X, equal in value to the sum of: (a) The value of his Accounts on his Benefit Commencement Date; and (b) If such Member's Benefit Commencement Date occurs prior to the close of the Plan Year during which such disability was determined, the amount of such Member's allocation of Employer Contributions Plan Year. 7.2 TOTAL AND PERMANENT DISABILITY DETERMINED. A Member shall be considered totally and permanently disabled if the Committee determines, based on a written medical opinion from a physician approved by the Employer (unless waived by the Committee as unnecessary), that such Member is permanently incapable of performing any substantial gainful employment for physical or mental reasons or if he has applied for and become eligible for Social Security disability benefits. VII-1 VIII. DETERMINATION OF VESTED INTEREST 8.1 NO BENEFITS UNLESS HEREIN SET FORTH. Except as set forth in this Article, upon termination of employment of a Member prior to his Normal Retirement Date for any reason other than total and permanent disability or death, such Member shall acquire no right to any benefit from the Plan or the Trust Fund. 8.2 VESTING. Each Member whose employment is terminated prior to his Normal Retirement Date for any reason other than total and permanent disability or death shall be entitled to the member's Vested Interest, payable at the time and in the form provided in Article X, equal in value to the sum of: (a) His Vested Interest in the value of his Accounts on his Benefit Commencement Date; and (b) If such Member's Benefit Commencement Date occurs prior to the close of the Plan Year during which his termination of employment occurred, the amount of such Member's Vested Interest in his allocation of Employer Contributions for such Plan Year. 8.3 DETERMINATION OF VESTED INTEREST. (a) A Member shall have a 100% Vested Interest in his Employee Contribution Account and Rollover Account at all times. (b) Unless specifically provided for otherwise in an Addendum, a Member's Vested Interest in his Employer Contribution Account shall be determined by such Member's years of Vesting Service in accordance with the following schedule: YEARS OF VESTING SERVICE VESTED INTEREST ------------------------ --------------- Less than 5 years 0% 5 years or more 100% (c) Paragraph (b) above notwithstanding, a Member shall have a 100% Vested Interest in his Employer Contribution Account upon attainment of his Normal Retirement Date while employed by the Employer or a Controlled Entity. 8.4 VESTING SERVICE. (a) For the period preceding the Effective Date, subject to the provisions of Paragraphs (e) and (f) below, an individual shall be credited with Vesting Service in an amount equal to all service credited to him for vesting purposes under the Plan as it existed on the day prior to the Effective Date. VIII-1 (b) On and after the Effective Date, subject to the remaining Paragraphs of this Section, an individual shall be credited with Vesting Service in an amount equal to his aggregate Periods of Service whether or not such Periods of Service are completed consecutively. (c) Paragraph (b) above notwithstanding, if an individual terminates his Service (at a time other than during a leave of absence) and subsequently resumes his Service, if his Reemployment Commencement Date is within twelve months of his Severance from Service Date, such Period of Severance shall be treated as a Period of Service for purposes of Paragraph (b) above. (d) Paragraph (b) above notwithstanding, if an individual terminates his Service during a leave of absence and subsequently resumes his Service, if his Reemployment Commencement Date is within twelve months of the beginning of such leave of absence, such Period of Severance shall be treated as a Period of Service for purposes of Paragraph (b) above. (e) In the case of an individual who terminates employment at a time when he does not have any Vested Interest in his Employer Contribution Account and who then incurs a Period of Severance that equals or exceeds the greater of five years or his aggregate Period of Service completed before such Period of Severance, such individual's Period of Service completed before such Period of Severance shall be disregarded in determining his years of Vesting Service. (f) In the case of a Member who incurs a Period of Severance of five consecutive years, such Member's years of Vesting Service completed after such Period of Severance shall be disregarded in determining such Member's Vested Interest in any Plan benefits derived from Employer Contributions on his behalf prior to such Period of Severance. 8.5 FORFEITURES. (a) With respect to a Member who terminates employment with the Employer with a Vested Interest in his Employer Contribution Account that is less than 100% and either is not entitled to a distribution from the Plan or receives an immediate lump sum distribution from the Plan of the balance of his Vested Interest in his Accounts, the forfeitable amount of the terminated Member's Employer Contribution Account shall become a forfeiture as of his Benefit Commencement Date (or as of his date of termination of employment if no amount is payable from the Trust Fund on behalf of such Member with such Member being considered to have received a distribution of zero dollars on his date of termination of employment). For purposes of this Paragraph (a), an immediate lump sum distribution is a distribution to a Member in the form of a lump sum distribution by the close of the second Plan Year following the Plan Year in which his employment is terminated. (b) In the event that an amount credited to a terminated Member's Employer Contribution Account becomes a forfeiture pursuant to Paragraph (a) above, the terminated Member shall, upon subsequent reemployment with the Employer prior to incurring a Period of Severance of five consecutive years, have the forfeited amount restored to such Member's Employer Contribution Account, unadjusted by any subsequent gains or losses of the Trust Fund; provided, however, that such restoration shall be made only if such Member repays in cash an amount equal to the amount so distributed to him pursuant to Paragraph (a) above within five years from the date the Member is reemployed. A reemployed Member who was not entitled to a distribution from the Plan on his date VIII-2 of termination of employment shall be considered to have repaid a distribution of zero dollars on the date of his reemployment. Any such restoration shall be made as soon as administratively feasible following the date of repayment. Notwithstanding anything to the contrary in the Plan, forfeited amounts to be restored by the Employer pursuant to this Paragraph shall be charged against and deducted from forfeitures for the Plan Year in which such amounts are restored that would otherwise be available to reduce Employer Contributions. If such forfeitures otherwise available are not sufficient to provide such restoration, any additional amount needed to restore such forfeited amounts shall be a minimum required Employer Discretionary Contribution. (c) With respect to a Member whose Vested Interest in his Employer Contribution Account is less than 100% and who makes a withdrawal from or receives a termination distribution from his Employer Contribution Account other than a lump sum distribution by the close of the second Plan Year following the Plan Year in which his employment is terminated, any amount remaining in his Employer Contribution Account shall continue to be maintained as a separate account. At any relevant time, such Member's nonforfeitable portion of his separate account shall be determined in accordance with the following formula: X=P(AB + (R X D)) - (R X D) For purposes of applying the formula: X is the nonforfeitable portion of such separate account at the relevant time; P is the Member's Vested Interest in his Employer Contribution Account at the relevant time; AB is the balance of such separate account at the relevant time; R is the ratio of the balance of such separate account at the relevant time to the balance of such separate account after the withdrawal or distribution; and D is the amount of the withdrawal or distribution. For all other purposes of the Plan, a Member's separate account shall be treated as an Employer Contribution Account. Upon his incurring a Period of Severance of five consecutive years, the forfeitable portion of a terminated Member's separate account and Employer Contribution Account shall be forfeited as of the end of the Plan Year during which the terminated Member completes such Period of Severance. (d) Distributions of benefits described in this Section shall be subject to the time of payment requirements of Section 10.1. VIII-3 IX. DEATH BENEFITS 9.1 DEATH BENEFITS. Upon the death of a Member while an Employee, he shall have a 100% Vested Interest and his Beneficiary shall be entitled to a death benefit payable at the time and in the form provided in Article X, equal in value to the sum of: (a) The value of his Accounts on his Benefit Commencement Date; and (b) If such Member's Benefit Commencement Date occurs prior to the close of the Plan Year during which his death occurred, the amount of such Member's allocation of Employer Contributions for such Plan Year. 9.2 DESIGNATION OF BENEFICIARIES. (a) Each Member shall have the right to designate the Beneficiary or Beneficiaries to receive payment of his benefit in the event of his death. Each such designation shall be made by executing the Beneficiary designation form prescribed by the Committee and filing such form with the Committee. Any such designation may be changed at any time by such Member by execution of a new designation in accordance with this Section. Notwithstanding the foregoing, if a Member who is married on the date of his death designates an individual or entity other than his surviving spouse as his Beneficiary, such designation shall not be effective unless (1) such spouse has consented thereto in writing and such consent (A) acknowledges the effect of such specific designation, (B) either consents to the specific designated Beneficiary (which designation may not subsequently be changed by the Member without spousal consent) or expressly permits such designation by the Member without the requirement of further consent by the spouse, and (C) is witnessed by a Plan representative (other than the Member) or a notary public or (2) the consent of such spouse cannot be obtained because such spouse cannot be located or because of other circumstances described by applicable Treasury regulations. Any such consent by such surviving spouse shall be irrevocable. (b) If no Beneficiary designation is on file with the Committee at the time of the death of the Member or if such designation is not effective for any reason as determined by the Committee, the designated Beneficiary or Beneficiaries to receive such death benefit shall be as follows: (1) If a Member leaves a surviving spouse, his death benefit shall be paid to such surviving spouse; (2) If a Member leaves no surviving spouse, his death benefit shall be paid to such Member's executor or administrator or to his heirs at law if there is no administration of such Member's estate. IX-1 X. TIME AND FORM OF PAYMENT OF BENEFITS 10.1 TIME OF PAYMENT. (a) Subject to the provisions of the remaining Paragraphs of this Section, a Member's Benefit Commencement Date shall be as soon as administratively feasible after the date the Member or his Beneficiary becomes entitled to a benefit pursuant to Article VI, VII, VIII, or IX. (b) Unless (1) the Member has attained age sixty-five or died, (2) the Member consents to a distribution pursuant to Paragraph (a) within the ninety-day period ending on the date payment of his benefit hereunder is to commence pursuant to Paragraph (a), or (3) the Member's Vested Interest in his Accounts is not in excess of $3,500 ($5,000, as adjusted by cost-of-living adjustments, commencing January 1, 1998), the Member's Benefit Commencement Date shall be deferred to the date which is as soon as administratively feasible after the Valuation Date coincident with or next succeeding the earlier of the date the Member attains age sixty-five or the Member's date of death, or such earlier Valuation Date as the Member may elect by written notice to the Committee prior to such Valuation Date. No less than thirty days (unless such thirty-day period is waived by an affirmative election in accordance with applicable Treasury regulations) and no more than ninety days before his Benefit Commencement Date, the Committee shall inform the Member of his right to defer his Benefit Commencement Date and shall describe the Member's Direct Rollover election rights pursuant to Section 10.5 below. (c) A Member's Benefit Commencement Date shall in no event be later than the sixtieth day following the close of the Plan Year during which such Member attains, or would have attained, his Normal Retirement Date or, if later, terminates his employment with the Employer or a Controlled Entity. (d) A Member's Benefit Commencement Date shall be in compliance with the provisions of section 401(a)(9) of the Code and applicable Treasury regulations thereunder and shall in no event be later than: (1) April 1 of the calendar year following the later of (A) the calendar year in which such Member attains the age of seventy and one-half or (B) the calendar year in which such Member terminates his employment with the Employer (provided, however, that clause (B) of this sentence shall not apply either in the case of a Member who is a "five-percent owner" (as defined in section 416 of the Code) with respect to the Plan Year ending in the calendar year in which such Member attains the age of seventy and one-half) or in the case of a Member who attains the age of seventy and one-half prior to January 1, 1999; and (2) In the case of a benefit payable pursuant to Article IX, the last day of the five-year period following the death of such Member. X-1 The preceding provisions of this Section notwithstanding, a Member may not elect to defer the receipt of his benefit hereunder to the extent that such deferral creates a death benefit that is more than incidental within the meaning of section 401(a)(9)(G) of the Code and applicable Treasury regulations thereunder. (e) Subject to the provisions of Paragraph (d), a Member's Benefit Commencement Date shall not occur while the Member is employed by the Employer or any Controlled Entity. 10.2 FORM OF PAYMENT. A Member's benefit shall be provided from the balance of such Member's Accounts under the Plan and shall be paid in one lump sum in cash on the Member's Benefit Commencement Date. The Member's benefit shall be paid to the Member unless the Member has died prior to his Benefit Commencement Date, in which case the Member's benefit shall be paid to his Beneficiary. 10.3 DIRECT ROLLOVER ELECTION. 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 Committee, to have all or any portion of an Eligible Rollover Distribution (other than any portion attributable to the offset of an outstanding loan balance of such Member pursuant to the Plan's loan procedure) paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover. The preceding sentence notwithstanding, a Distributee may elect a Direct Rollover pursuant to this Section only if such Distributee's Eligible Rollover Distributions during the Plan Year are reasonably expected to total $200 or more. Furthermore, if less than 100% of the Member's Eligible Rollover Distribution is to be a Direct Rollover, the amount of the Direct Rollover must be $500 or more. Prior to any Direct Rollover pursuant to this Section, the Committee may require the Distributee to furnish the Committee with a statement from the plan, account, or annuity to which the benefit is to be transferred verifying that such plan, account, or annuity is, or is intended to be, an Eligible Retirement Plan. 10.4 UNCLAIMED BENEFITS. In the case of a benefit payable on behalf of a Member, if the Committee is unable to locate the Member or Beneficiary to whom such benefit is payable, upon the Committee's determination thereof, such benefit shall be forfeited. Notwithstanding the foregoing, if subsequent to any such forfeiture the Member or Beneficiary to whom such benefit is payable makes a valid claim for such benefit, such forfeited benefit shall be restored to the Plan in the manner provided in Section 8.5(b). 10.5 CLAIMS REVIEW. In any case in which a claim for Plan benefits of a Member or Beneficiary is denied or modified, the Committee shall furnish written notice to the claimant within ninety days (or within 180 days if additional information requested by the Committee necessitates an extension of the ninety-day period), which notice shall: (a) State the specific reason or reasons for the denial or modification; (b) Provide specific reference to pertinent Plan provisions on which the denial or modification is based; X-2 (c) Provide a description of any additional material or information necessary for the Member, his Beneficiary, or representative to perfect the claim and an explanation of why such material or information is necessary; and (d) Explain the Plan's claim review procedure as contained herein. In the event a claim for Plan benefits is denied or modified, if the Member, his Beneficiary, or a representative of such Member or Beneficiary desires to have such denial or modification reviewed, he must, within sixty days following receipt of the notice of such denial or modification, submit a written request for review by the Committee of its initial decision. In connection with such request, the Member, his Beneficiary, or the representative of such Member or Beneficiary may review any pertinent documents upon which such denial or modification was based and may submit issues and comments in writing. Within sixty days following such request for review the Committee shall, after providing a full and fair review, render its final decision in writing to the Member, his Beneficiary or the representative of such Member or Beneficiary stating specific reasons for such decision and making specific references to pertinent Plan provisions upon which the decision is based. If special circumstances require an extension of such sixty-day period, the Committee's decision shall be rendered as soon as possible, but not later than 120 days after receipt of the request for review. If an extension of time for review is required, written notice of the extension shall be furnished to the Member, Beneficiary, or the representative of such Member or Beneficiary prior to the commencement of the extension period. X-3 XI. IN-SERVICE WITHDRAWALS 11.1 IN-SERVICE WITHDRAWALS. (a) A Member who has attained age fifty-nine and one-half may withdraw from his Accounts an amount not exceeding the then value of his Vested Interest in such Accounts. (b) A Member who has a financial hardship, as determined by the Committee, and who has made all available withdrawals pursuant to the Paragraphs above and pursuant to the provisions of any other plans of the Employer and any Controlled Entities of which he is a member and who has obtained all available loans pursuant to Article XII and pursuant to the provisions of any other plans of the Employer and any Controlled Entities of which he is a member may withdraw from his Employee Contribution Account and Rollover Account amounts not to exceed the amount determined by the Committee as being available for withdrawal pursuant to this Paragraph. Such withdrawal shall be made first from his Rollover Account and second from his Employee Contribution Account. For purposes of this Paragraph, financial hardship shall mean the immediate and heavy financial needs of the Member. A withdrawal based upon financial hardship pursuant to this Paragraph shall not exceed the amount required to meet the immediate financial need created by the hardship and not reasonably available from other resources of the Member. The amount required to meet the immediate financial need may include any amounts necessary to pay any federal, state, or local income taxes or penalties reasonably anticipated to result from the distribution. The determination of the existence of a Member's financial hardship and the amount required to be distributed to meet the need created by the hardship shall be made by the Committee. The decision of the Committee shall be final and binding, provided that all Members similarly situated shall be treated in a uniform and nondiscriminatory manner. A withdrawal shall be deemed to be made on account of an immediate and heavy financial need of a Member if the withdrawal is for: (1) Expenses for medical care described in section 213(d) of the Code previously incurred by the Member, the Member's spouse, or any dependents of the Member (as defined in section 152 of the Code) or necessary for those persons to obtain medical care described in section 213(d) of the Code and not reimbursed or reimbursable by insurance; (2) Costs directly related to the purchase of a principal residence of the Member (excluding mortgage payments); (3) Payment of tuition and related educational fees, and room and board expenses, for the next twelve months of post-secondary education for the Member or the Member's spouse, children, or dependents (as defined in section 152 of the Code); (4) Payments necessary to prevent the eviction of the Member from his principal residence or foreclosure on the mortgage of the Member's principal residence; or XI-1 (5) Such other financial needs that the Commissioner of Internal Revenue may deem to be immediate and heavy financial needs through the publication of revenue rulings, notices, and other documents of general applicability. The above notwithstanding, withdrawals under this Paragraph from a Member's Employee Contribution Account shall be limited to the sum of the Member's Employee Contributions to the Plan, plus income allocable thereto and credited to the Member's Employee Contribution Account as of the Valuation Date coincident with or next preceding December 31, 1988, less any previous withdrawals of such amounts. The above further notwithstanding, a Member may not make a hardship withdrawal pursuant to this Section 11.1 unless the amount required to meet the immediate financial need and not reasonably available from other resources of the Member requesting the withdrawal is at least equal to $1,000.00. If you take a hardship withdrawal, all contributions to your account will be suspended for the 12 months following the date of withdrawal. The suspension also applies to contributions to all other qualified and non-qualified plans sponsored by the Company in which you are a participant. 11.2 RESTRICTION ON IN-SERVICE WITHDRAWALS. (a) Withdrawals pursuant to this Article shall be made as soon as practicable after the withdrawal request is submitted to the Committee by executing and filing with the Committee the form prescribed by the Committee. (b) Notwithstanding the provisions of this Article, no withdrawal shall be made from an Account to the extent such Account has been pledged to secure a loan under Article XII. (c) If a Member's Accounts from which a withdrawal is made are invested in more than one Investment Fund, the withdrawal shall be made pro rata from each Investment Fund in which such Accounts are invested. (d) All withdrawals under this Article shall be paid in cash. XI-2 XII. LOANS 12.1 ELIGIBILITY FOR LOAN. Upon application by (1) any Member who is an Employee or (2) any Member no longer employed by the Employer, a Beneficiary of a deceased Member or an alternate payee under a qualified domestic relations order, as defined in section 414(p)(8) of the Code, who retains an Account balance under the Plan and who is a party-in-interest, as that term is defined in section 3(14) of the Act, as to the Plan (an individual who is eligible to apply for a loan under this Article being hereinafter referred to as a "Member" for purposes of this Article), the Committee may in its discretion direct the Trustee to make a loan or loans to such Member. Such loans shall be made pursuant to the provisions of the Committee's written loan procedure, which procedure is hereby incorporated by reference as a part of the Plan. 12.2 MAXIMUM LOAN. (a) A loan to a Member may not exceed 50% of the then value of such Member's Vested Interest in his Accounts. (b) Paragraph (a) above to the contrary notwithstanding, the amount of a loan made to a Member under this Article shall not exceed an amount equal to the difference between: (1) The lesser of $50,000 (reduced by the excess, if any, of (A) the highest outstanding balance of loans from the Plan during the one-year period ending on the day before the date on which the loan is made over (B) the outstanding balance of loans from the Plan on the date on which the loan is made) or one-half of the present value of the Member's total nonforfeitable accrued benefit under all qualified plans of the Employer or a Controlled Entity; minus (2) The total outstanding loan balance of the Member under all other loans from all qualified plans of the Employer or a Controlled Entity. 12.3 MINIMUM LOAN. A loan to a Member may not be for an amount less than $1,000.00. 12.4 INTEREST AND SECURITY. (a) Any loan made pursuant to this Article shall bear interest at a rate established by the Committee from time to time and communicated to the Members, which rate shall provide the Plan with a return commensurate with the interest rates charged by persons in the business of lending money for loans which would be made under similar circumstances. (b) Any loan shall be made as an investment of a segregated loan fund to be established in the Trust Fund for the Member to whom the loan is made. Any loan shall be considered to come, first, from the Member's Employee Contribution Account, second, from the Member's Rollover Contribution Account, and, third, from the Member's Vested Interest in his XII-1 Employer Contribution Account. The Trustee shall fund a Member's segregated loan fund by liquidating such portion of the assets of the Accounts from which the Member's loan is to be made as is necessary to fund the loan and transferring the proceeds to such segregated loan fund. If a Member's Accounts are invested in more than one Investment Fund, the transfer shall be made pro rata from each such Investment Fund. The loan shall be secured by a pledge of the Member's segregated loan fund. 12.5 REPAYMENT TERMS OF LOAN. (a) The Member shall be required, as a condition to receiving a loan, to enter into an irrevocable agreement authorizing the Employer to make payroll deductions from his Compensation so long as the Member is an Employee and to transfer such payroll deduction amounts to the Trustee in payment of such loan plus interest. (b) The terms of the loan shall (1) require level amortization with payments not less frequently than quarterly, (2) require that the loan be repaid within five years unless the Member certifies in writing to the Committee that the loan is to be used to acquire any dwelling unit which within a reasonable time is to be used (determined at the time the loan is made) as a principal residence of the Member, (3) allow prepayment without penalty, provided that any prepayment must be for the full outstanding loan balance (including interest), and (4) require that the balance of the loan (including interest) shall become due and payable (to the extent not otherwise due and payable) on the date the Member or, if applicable, the Member's Beneficiary, is first entitled to a distribution pursuant to the Plan (other than an in-service withdrawal) irrespective of whether such Member or Beneficiary elects or consents to such distribution and that such Member's outstanding loan balance (including interest) shall be repaid by offsetting such balance against the amount in the Member's segregated loan fund pledged as security for the loan. By agreeing to the pledge of the segregated loan fund as security for the loan, a Member shall be deemed to have consented to the distribution of such segregated loan fund prior to the time specified in section 411(a)(11) of the Code and the applicable Treasury regulations thereunder. (c) If the Member fails in any way to comply with the repayment terms of a loan, such loan shall be repaid by offsetting the Member's outstanding loan balance (including interest) against the amount in the Member's segregated loan fund pledged as security for the loan. Any such outstanding loan balance (including interest) shall be so offset and repaid as soon as administratively feasible after such failure to comply, and such repayment shall be prior to any withdrawal or distribution of benefits from the pledged portion of the Member's Accounts pursuant to the provisions of the Plan. Notwithstanding the foregoing, amounts in a Member's Employee Contributions Account may not be used to satisfy the payment of such loan (including interest) prior to the time such amounts are otherwise distributable from the Plan, and amounts in a Member's Employer Contribution Account may not be offset and used to satisfy the payment of such loan (including interest) prior to the earliest time such amounts are otherwise permitted to be distributed under applicable law. (d) The above notwithstanding, a Member who is on an unpaid leave of absence from the Employer may elect to suspend payments on his loan during such leave of absence for a period of up to one year. Upon such Member's return to active employment with the Employer at XII-2 the conclusion of such leave of absence or upon the expiration of such one-year period, if earlier, such Member shall be permitted to refinance his loan, including all accrued and unpaid interest, over a term that does not extend beyond the expiration of the original term of the loan. (e) Amounts tendered to the Trustee by a Member in repayment of a loan made pursuant to this Article (1) shall initially be credited to the Member's segregated loan fund, (2) then shall be transferred as soon as practicable following receipt thereof to the Account or Accounts from which the Member's loan was made, and (3) invested in accordance with Article V. 12.6 LOAN LIMITS. No more than one loan made pursuant to this Article to a Member may be outstanding at any time. No more than one loan per year may be made to a Member pursuant to this Article. No loan will be made to a Member pursuant to this Article to enable such Member to pay off a loan previously made to such Member pursuant to this Article. 12.7 LOAN FEES. The Committee may establish a fee to be charged to Members receiving loans pursuant to this Article, provided that such fees are nondiscriminatory and are communicated to the Plan Members. Any such fee shall be charged to the Accounts from which a Member's loan is being made. XII-3 XIII. ADMINISTRATION OF THE PLAN 13.1 APPOINTMENT OF COMMITTEE. The general administration of the Plan shall be vested in the Committee. For purposes of the Act, the Committee shall be the Plan "administrator" and shall be the "named fiduciary" with respect to the general administration of the Plan (except as to the investment of the assets of the Trust Fund). 13.2 COMPENSATION AND BONDING. The members of the Committee shall not receive compensation with respect to their services for the Committee. To the extent required by the Act or other applicable law, or required by the Company, members of the Committee shall furnish bond or security for the performance of their duties hereunder. 13.3 COMMITTEE POWERS AND DUTIES. The Committee shall supervise the administration and enforcement of the Plan according to the terms and provisions hereof and shall have all powers necessary to accomplish these purposes, including, but not by way of limitation, the right, power, authority, and duty: (a) To make rules, regulations, and bylaws for the administration of the Plan that are not inconsistent with the terms and provisions hereof, provided such rules, regulations, and bylaws are evidenced in writing and copies thereof are delivered to the Trustee and to the Company and to enforce the terms of the Plan and the rules and regulations promulgated thereunder by the Committee; (b) To construe in its discretion all terms, provisions, conditions, and limitations of the Plan. In all cases, the construction necessary for the Plan to qualify under the applicable provisions of the Code shall control; (c) To correct any defect or to supply any omission or to reconcile any inconsistency that may appear in the Plan, in such manner and to such extent as it shall deem in its discretion expedient to effectuate the purposes of the Plan; (d) To employ and compensate such accountants, attorneys, investment advisors, actuaries, and other agents and employees as the Committee may deem necessary or advisable for the proper and efficient administration of the Plan; (e) To determine in its discretion all questions relating to eligibility; (f) To make a determination in its discretion as to the right of any person to a benefit under the Plan and to prescribe procedures to be followed by distributees in obtaining benefits hereunder; XIII-1 (g) To prepare, file, and distribute, in such manner as the Committee determines to be appropriate, such information, and material as is required by the reporting and disclosure requirements of the Act; (h) To issue directions to the Trustee concerning all benefits that are to be paid from the Trust Fund pursuant to the provisions of the Plan; and (i) To receive and review reports from the Trustee as to the financial condition of the Trust Fund, including its receipts and disbursements. 13.4 COMPANY TO SUPPLY INFORMATION. The Company shall supply full and timely information to the Committee, including, but not limited to, information relating to each Participant's Compensation, age, retirement, death, or other cause of termination of employment and such other pertinent facts as the Committee may require. The Company shall advise the Trustee of such of the foregoing facts as are deemed necessary for the Trustee to carry out the Trustee's duties under the Plan. When making a determination in connection with the Plan, the Committee shall be entitled to rely upon the aforesaid information furnished by the Company. XIII-2 XIV. TRUSTEE AND ADMINISTRATION OF TRUST FUND 14.1 APPOINTMENT, RESIGNATION, REMOVAL, AND REPLACEMENT OF TRUSTEE. (a) The Trustee shall be appointed, removed, and replaced by and in the sole discretion of the Directors. The Trustee shall be the "named fiduciary" with respect to investment of the Trust Fund's assets. (b) Any Trustee may resign at any time by giving at least thirty days' written notice of such resignation to the Directors. Any Trustee may be removed, with or without cause, by the Directors on written notice of such removal to such Trustee. The Directors may appoint a successor Trustee by written designation, a copy of which shall be delivered to the Committee and the former Trustee. If there would be no other Trustee then acting, the actual appointment and qualification of a successor Trustee to whom the Trust Fund may be transferred are conditions which must be fulfilled before the resignation or removal of a Trustee shall become effective. The Directors may by resolution increase or decrease the number of Trustees at any time acting hereunder. 14.2 ACCEPTANCE OF FUND. The Trustee accepts the Trust Fund hereunder and agrees to accept and retain, manage, administer and hold the Trust Fund in accordance with the terms and provisions of this Plan. The Trustee shall receive any securities or other properties that are tendered to the Trustee pursuant to the Plan that are acceptable to the Trustee. 14.2 COMMITTEE DISCHARGING DUTY. The Trustee may assume that the Committee is discharging its duties under the Plan until and unless the Trustee is notified to the contrary in writing by any person known to be a member of the Committee or by the Employer. Upon receipt of such notice, the Trustee may, if the Trustee so desires, apply to a court of competent jurisdiction for guidance with respect to the disposition of the Trust Fund. 14.3 TAXES. If, pursuant to the provisions of any law now or hereafter enacted, any tax shall be imposed upon the Trustee with respect to the assets or income of the Trust Fund, the Trustee (without the necessity of any direction or approval by the Committee) may pay such tax from the Trust Fund, provided such payment is not otherwise prohibited by law. The Trustee, however, shall not be obligated to pay any such tax as long as the validity thereof is contested in good faith. In determining whether or not to pay any such tax, the Trustee may obtain the advice of counsel (including, but not limited to, counsel for the Employer or the Committee). 14.4 POWERS OF THE TRUSTEE. Subject to any limitations stated elsewhere herein, in addition to the authority, rights, privileges, powers, and duties elsewhere herein vested in the Trustee and those now or hereafter conferred by law, the Trustee shall also have the following authority, rights, privileges, powers, and duties: (a) To hold, manage, control, collect, and use the Trust Fund in accordance with the terms of this instrument; XIV-1 (b) To sell (for cash or on credit, or both), exchange, or otherwise dispose of, the whole or any part of the Trust Fund, at public or private sale; to lease (including, but not limited to, oil, gas, or mineral leases), rent, mortgage (including purchase money mortgages), pledge, or otherwise encumber the whole or any part of the Trust Fund; and to loan or borrow money in any manner, including by joint and several obligations, all upon such terms, regardless of the duration of the Trust, as the Trustee may deem advisable (provided that neither the Employer nor any Member may borrow from the Trust Fund except as otherwise permitted herein); (c) To invest or reinvest the Trust Fund in property of any description whatsoever (including, but not limited to, oil, gas, or mineral interests; common or preferred stock; shares of investment trusts or companies; bills, notes, and other evidences of indebtedness; non-income producing property; and property outside of Texas); (d) To make or hold investments of any part of the Trust Fund in common or undivided interest with other persons or entities, including an undivided interest in any property in which any Trustee, individually or otherwise, may hold an undivided interest; to buy from or sell to any person or entity to the extent not otherwise prohibited herein; (e) To make commingled, collective, or common investments and to invest and reinvest all or any portion of the Trust Fund collectively with funds of other pension and profit sharing trusts exempt from tax under section 501(a) of the Code by reason of qualifying under section 401(a) of said Code, including, without limitation, power to invest collectively with such other funds through the medium of one or more of the common, collective, or commingled trust funds, which has been or may hereafter be established and maintained by the Trustee or its affiliates. To the extent of the interest of the Trust Fund in any such collective trust, the agreement or declaration of trust establishing such collective trust shall be deemed to be adopted and made a part of the Plan and Trust as if set forth in full herein. (f) To deposit or invest all or a part of the Trust Fund in savings accounts, certificates of deposit, or other deposits that bear a reasonable rate of interest in a bank or similar financial institution, including the commercial department of the Trustee, if such bank or other institution is supervised by any agency of a state or the federal government. (g) To employ and compensate such attorneys, counsel, brokers, banks, investment advisors, or other agents, employees, or independent contractors and to delegate to them such of the duties, rights, and powers of the Trustee as may be deemed advisable in handling and administering the Plan; (h) To partition any property or interest held as a part of the Trust Fund and, in any and all such partitions, to pay or receive such money or property as may be necessary or advisable to equalize differences and to evaluate any property belonging to the Trust Fund; (i) To institute, join in, maintain, defend, compromise, submit to arbitration, or settle any litigation, claim, obligation, or controversy with respect to any matter affecting the XIV-2 Trust Fund, regardless of the manner in which such matter may have arisen, all in the name of the Trustee and without the joinder of any Member; and (j) To hold uninvested for a reasonable period of time any moneys received by it until the same shall be invested or disbursed pursuant to the provisions of the Plan. The Trustee is also authorized to exercise all the rights, powers, options, and privileges now or hereafter granted to, provided for, or vested in trustees under the Texas Trust Code, except as such may conflict with the terms of this instrument or applicable law. As far as possible, no subsequent legislation or regulation shall be in limitation of the rights, powers, or privileges granted the Trustee hereunder or set forth in the Texas Trust Code as it exists at the time of the execution hereof. Generally, the Trustee shall have, hold, manage, control, use, invest and reinvest, disburse, and dispose of the Trust Fund under all circumstances to the same extent as if the Trustee were the owner thereof in fee simple, subject only to such limitations as are contained herein and such applicable laws as cannot be waived. This instrument shall always be construed in favor of the validity of any act or omission by or of the Trustee. Notwithstanding the foregoing, the Trustee may not invest the Trust Fund assets in any Company security that is not a "qualifying Company security" or in any Company real property that is not "qualifying Company real property." The Trustee may, however, acquire "qualifying Company securities" or "qualifying Company real property" as an investment, provided that any such acquisition or investment will not result in the Trust Fund's holding more than 50% of the then fair market value of the assets of the Trust Fund in "qualifying Company securities" and "qualifying Company real property." The term "qualifying Company securities" means stock or marketable obligations of the Company or an affiliate. The term "qualifying Company real property" means parcels of real property leased to the Company or an affiliate if a substantial number of the parcels are dispersed geographically and if each such parcel is suitable for, or adaptable to, more than one use. 14.5 COMPENSATION, EXPENSES, AND BOND OF TRUSTEE. Unless prohibited by Section 14.10, the Trustee shall receive such compensation for services as Trustee hereunder as may be agreed upon from time to time by the Company and the Trustee. The Trustee shall be reimbursed for all reasonable expenses incurred while acting as Trustee as provided in Section 14.10. No bond or other security shall be required of the Trustee unless otherwise required by law or by the Company. 14.6 RELIANCE. The Trustee shall be fully protected in relying upon a resolution of the Directors as to the membership of the Committee as it then exists and in continuing to rely upon such resolution until a subsequent resolution is filed with the Trustee by the Directors. The Trustee may accept as true all papers, certificates, statements, and representations of fact that are presented to the Trustee by the Committee without investigation, questioning, or verification if the Trustee believes same to be true and authentic, and the Trustee may rely solely on the written advice of the Committee with respect to any question of fact. 14.7 ACCOUNTING. As soon as practicable after the end of each Plan Year, the Trustee shall render a written accounting of the administration of the Trust Fund showing all receipts and disbursements during the year and the then value of the assets of the Trust Fund. This accounting shall be transmitted to the Committee and to the Company. XIV-3 14.8 JUDICIAL PROTECTION. The Trustee may seek judicial protection by any action or proceeding deemed necessary to settle the accounts of the Trustee or may obtain a judicial determination or a declaratory judgment as to a question of construction of the Plan. The Trustee must join as parties defendant in any such action only the Committee and the Company, although the Trustee may join other parties if the Trustee deems it advisable to do so. 14.9 PAYMENT OF EXPENSES. All expenses incident to the administration of the Plan and Trust, including but not limited to, legal, accounting, Trustee fees, expenses of the Committee, and the cost of furnishing any bond or security required of the Committee shall be paid by the Trustee from the Trust Fund, and, until paid, shall constitute a claim against the Trust Fund which is paramount to the claims of Members and Beneficiaries; provided, however, that (a) the obligation of the Trustee to pay such expenses from the Trust Fund shall cease to exist to the extent such expenses are paid by the Employer and (b) in the event the Trustee's compensation is to be paid, pursuant to this Section, from the Trust Fund, any individual serving as Trustee who already receives full-time pay from an employer or an association of employers whose employees are participants in the Plan, or from an employee organization whose members are participants in the Plan, shall not receive any additional compensation for serving as Trustee. This Section shall be deemed to be a part of any contract to provide for expenses of Plan and Trust administration, whether or not the signatory to such contract is, as a matter of convenience, the Employer. 14.10 TRUST FUND PROPERTY. All income, profits, recoveries, contributions, forfeitures, and any and all moneys, securities, and properties of any kind at any time received or held by the Trustee hereunder shall be held for investment purposes as a commingled Trust Fund. The Committee shall maintain Accounts in the name of each Member, but the maintenance of an Account designated as the Account of a Member shall not mean that such Member shall have a greater or lesser interest than that due him by operation of the Plan and shall not be considered as segregating any funds or property from any other funds or property contained in the commingled fund. No Member shall have any title to any specific asset in the Trust Fund. 14.11 DISTRIBUTIONS FROM MEMBERS' ACCOUNTS. Distributions from a Member's Accounts shall be made by the Trustee only if, when, and in the amount and manner directed in writing by the Committee. Any distribution made to a Member or for his benefit shall be debited to such Member's Account or Accounts. All distributions hereunder shall be made in cash except as otherwise specifically provided herein. 14.12 PAYMENTS SOLELY FROM TRUST FUND. All benefits payable under the Plan shall be paid or provided for solely from the Trust Fund, and neither the Employer nor the Trustee assumes any liability or responsibility for the adequacy thereof. The Committee or the Trustee may require execution and delivery of such instruments as are deemed necessary to assure proper payment of any benefits. 14.13 NO BENEFITS TO THE EMPLOYER. No part of the corpus or income of the Trust Fund shall be used for any purpose other than the exclusive purpose of providing benefits for the Members and their Beneficiaries and of defraying reasonable expenses of administering the Plan. Anything to the contrary herein notwithstanding, the Plan shall not be construed to vest any rights in the Employer other than those specifically given hereunder. XIV-4 XV. FIDUCIARY PROVISIONS 15.1 ARTICLE CONTROLS. This Article shall control over any contrary, inconsistent or ambiguous provisions contained in the Plan. 15.2 GENERAL ALLOCATION OF FIDUCIARY DUTIES. Each fiduciary with respect to the Plan shall have only those specific powers, duties, responsibilities and obligations as are specifically given him under the Plan. The Directors shall have the sole authority to appoint and remove the Trustee and members of the Committee. Except as otherwise specifically provided herein, the Committee shall have the sole responsibility for the administration of the Plan, which responsibility is specifically described herein. Except as otherwise specifically provided herein [and in the Trust Agreement], the Trustee shall have the sole responsibility for the administration, investment, and management of the assets held under the Plan. It is intended under the Plan that each fiduciary shall be responsible for the proper exercise of his own powers, duties, responsibilities, and obligations hereunder and shall not be responsible for any act or failure to act of another fiduciary except to the extent provided by law or as specifically provided herein. 15.3 FIDUCIARY DUTY. Each fiduciary under the Plan, including, but not limited to, the Committee and the Trustee as "named fiduciaries," shall discharge his duties and responsibilities with respect to the Plan: (a) Solely in the interest of the Members, for the exclusive purpose of providing benefits to Members and their Beneficiaries and of defraying reasonable expenses of administering the Plan; (b) With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; (c) By diversifying the investments of the Plan so as to minimize the risk of large losses, unless under the circumstances it is prudent not to do so; and (d) In accordance with the documents and instruments governing the Plan insofar as such documents and instruments are consistent with applicable law. No fiduciary shall cause the Plan or Trust Fund to enter into a "prohibited transaction" as provided in section 4975 of the Code or section 406 of the Act. 15.4 DELEGATION AND ALLOCATION OF FIDUCIARY DUTIES. The Committee may appoint subcommittees, individuals or any other agents as it deems advisable and may delegate to any of such appointees any or all of the powers and duties of the Committee. Such appointment and delegation must be in writing, specifying the powers or duties being delegated, and must be accepted in writing by the delegatee. Upon such appointment, delegation and acceptance, the delegating Committee XV-1 members shall have no liability for the acts or omissions of any such delegatee, as long as the delegating Committee members do not violate any fiduciary responsibility in making or continuing such delegation. XV-2 XVI. AMENDMENTS 16.1 RIGHT TO AMEND. Subject to Section 16.2 and any other limitations contained in the Act or the Code, the Committee (acting pursuant to powers delegated to it by the Company pursuant to the Company's adoption of the Plan) may from time to time amend, in whole or in part, any or all of the provisions of the Plan on behalf of the Company and all Employers. Specifically, but not by way of limitation, the Committee may make any amendment necessary to acquire and maintain a qualified status for the Plan under the Code, whether or not retroactive. 16.2 LIMITATION ON AMENDMENTS. No amendment of the Plan shall be made that would vest in the Employer, directly or indirectly, any interest in or control of the Trust Fund. No amendment shall be made that would vary the Plan's exclusive purpose of providing benefits to Members and their Beneficiaries and of defraying reasonable expenses of administering the Plan or that would permit the diversion of any part of the Trust Fund from that exclusive purpose. No amendment shall be made that would reduce any then nonforfeitable interest of a Member. No amendment shall increase the duties or responsibilities of the Trustee unless the Trustee consents thereto in writing. XVI-1 XVII. DISCONTINUANCE OF CONTRIBUTIONS, TERMINATION, PARTIAL TERMINATION, AND MERGER OR CONSOLIDATION 17.1 RIGHT TO DISCONTINUE CONTRIBUTIONS, TERMINATE, OR PARTIALLY TERMINATE. The Employer has established the Plan with the bona fide intention and expectation that from year to year it will be able to, and will deem it advisable to, make its contributions as herein provided. However, the Directors realize that circumstances not now foreseen, or circumstances beyond its control, may make it either impossible or inadvisable for the Employer to continue to make its contributions to the Plan. Therefore, the Directors shall have the power to discontinue contributions to the Plan, terminate the Plan, or partially terminate the Plan at any time hereafter. Each member of the Committee and the Trustee shall be notified of such discontinuance, termination, or partial termination. 17.2 PROCEDURE IN THE EVENT OF DISCONTINUANCE OF CONTRIBUTIONS, TERMINATION, OR PARTIAL TERMINATION. (a) If the Plan is amended so as to permanently discontinue Employer Contributions, or if Employer Contributions are in fact permanently discontinued, the Vested Interest of each affected Member shall be 100%, effective as of the date of discontinuance. In case of such discontinuance, the Committee shall remain in existence and all other provisions of the Plan that are necessary, in the opinion of the Committee, for equitable operation of the Plan shall remain in force. (b) If the Plan is terminated or partially terminated, the Vested Interest of each affected Member shall be 100%, effective as of the termination date or partial termination date, as applicable. Unless the Plan is otherwise amended prior to dissolution of the Company, the Plan shall terminate as of the date of dissolution of the Company. (c) Upon discontinuance of contributions, termination, or partial termination, any previously unallocated contributions, forfeitures, and net income (or net loss) shall be allocated among the Accounts of the Members on such date of discontinuance, termination, or partial termination according to the provisions of Article IV, as if such date of discontinuance, termination, or partial termination were a Valuation Date. Thereafter, the net income (or net loss) shall continue to be allocated to the Accounts of the Members until the balances of the Accounts are distributed. In the event of termination, the date of the final distribution shall be treated as a Valuation Date. (d) In the case of a termination or partial termination of the Plan, and in the absence of a Plan amendment to the contrary, the Trustee shall pay the balance of the Accounts of a Member for whom the Plan is so terminated, or who is affected by such partial termination, to such Member, subject to the time of payment, form of payment, and consent provisions of Article X. 17.3 MERGER, CONSOLIDATION, OR TRANSFER. This Plan and Trust Fund may not merge or consolidate with, or transfer its assets or liabilities to, any other plan, unless immediately thereafter each Member would, in the event such other plan terminated, be entitled to a benefit which is equal XVII-1 to or greater than the benefit to which he would have been entitled if the Plan were terminated immediately before the merger, consolidation, or transfer. XVII-2 XVIII. PARTICIPATING EMPLOYERS 18.1 EMPLOYERS. (a) Each Employer shall be conclusively presumed to have consented to its designation and to have agreed to be bound by the terms of the Plan and any and all amendments thereto upon its submission of information to the Committee required by the terms of or with respect to the Plan or upon making a contribution to the Trust Fund pursuant to the terms of the Plan. (b) The provisions of the Plan shall apply separately and equally to each Employer and its Employees in the same manner as is expressly provided for the Company and its Employees, except that the power to appoint or otherwise affect the Committee or the Trustee and the power to amend or terminate the Plan shall be exercised by the Company alone. (c) Transfer of employment among Employers shall not be considered a termination of employment hereunder, and Service with one shall be considered as Service with all others. 18.2 SINGLE PLAN. For purposes of the Code and the Act, the Plan as adopted by the Employers shall constitute a single plan rather than a separate plan of each Employer. All assets in the Trust Fund shall be available to pay benefits to all Members and their Beneficiaries. XVIII-1 XIX. MISCELLANEOUS PROVISIONS 19.1 NOT CONTRACT OF EMPLOYMENT. The adoption and maintenance of the Plan shall not be deemed to be a contract between the Employer and any person or to be consideration for the employment of any person. Nothing herein contained shall be deemed to give any person the right to be retained in the employ of the Employer or to restrict the right of the Employer to discharge any person at any time nor shall the Plan be deemed to give the Employer the right to require any person to remain in the employ of the Employer or to restrict any person's right to terminate his employment at any time. 19.2 ALIENATION OF INTEREST FORBIDDEN. Except as otherwise provided with respect to "qualified domestic relations orders" pursuant to section 206(d) of the Act and sections 401(a)(13) and 414(p) of the Code and except as otherwise provided under other applicable law, no right or interest of any kind in any benefit shall be transferable or assignable by any Member or any Beneficiary or be subject to anticipation, adjustment, alienation, encumbrance, garnishment, attachment, execution, or levy of any kind. Plan provisions to the contrary notwithstanding, the Committee shall comply with the terms and provisions of any "qualified domestic relations order," including an order that requires distributions to an alternate payee prior to a Member's "earliest retirement age" as such term is defined in section 206(d)(3)(E)(ii) of the Act and section 414(p)(4)(B) of the Code, and shall establish appropriate procedures to effect the same. 19.3 UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT REQUIREMENTS. Notwithstanding any provision of the Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with section 414(u) of the Code. 19.4 PAYMENTS TO MINORS AND INCOMPETENTS. If a Member or Beneficiary entitled to receive a benefit under the Plan is a minor or is determined by the Committee in its discretion to be incompetent or is adjudged by a court of competent jurisdiction to be legally incapable of giving valid receipt and discharge for a benefit provided under the Plan, the Committee may pay such benefit to the duly appointed guardian or conservator of such Member or Beneficiary for the account of such Member or Beneficiary. If no guardian or conservator has been appointed for such Member or Beneficiary, the Committee may pay such benefit to any third party who is determined by the Committee, in its sole discretion, to be authorized to receive such benefit for the account of such Member or Beneficiary. Such payment shall operate as a full discharge of all liabilities and obligations of the Committee, the Trustee, the Employer, and any fiduciary of the Plan with respect to such benefit. 19.5 MEMBER'S ADDRESS. It shall be the affirmative duty of each Member to inform the Committee of, and to keep on file with the Committee, his current mailing address and the current mailing address of his designated Beneficiary. If a Member fails to keep the Committee informed of his current mailing address and the current mailing address of his designated Beneficiary, neither the Committee, the Trustee, the Employer, nor any fiduciary under the Plan shall be responsible for any XIX-1 late or lost payment of a benefit or for failure of any notice to be provided timely under the terms of the Plan. 19.6 SEVERABILITY. If any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions hereof; instead, each provision shall be fully severable and the Plan shall be construed and enforced as if said illegal or invalid provision had never been included herein. 19.7 JURISDICTION. The situs of the Plan and the Trust hereby created is Texas. All provisions of the Plan shall be construed in accordance with the laws of Texas except to the extent preempted by federal law. XIX-2 EXECUTED this ____ day of _______________________, 1997. DRESSER INDUSTRIES, INC. By: --------------------------------- ALEXANDRIA ADDENDUM [Text to Come] WAUKESHA ADDENDUM [Text to Come] EX-4.7 4 FORM OF SAVINGS PLAN FOR BARGAINING UNIT BASIC PLAN DOCUMENT #02 VANGUARD PROTOTYPE 401(k) SAVINGS PLAN SAVINGS PLAN FOR BARGAINING UNIT EMPLOYEES OF TEXSTEAM OPERATIONS OF DRESSER INDUSTRIES, INC. THE VANGUARD GROUP, INC. VANGUARD FINANCIAL CENTER VALLEY FORGE, PA 19482 VANGUARD PROTOTYPE 401(k) SAVINGS PLAN TABLE OF CONTENTS INTRODUCTION 1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . 6 DEFINITIONS 2.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 6 PARTICIPATION IN THE PLAN 3.1 Eligibility to Participate . . . . . . . . . . . . . . . . . 14 3.2 Commencement of Participation. . . . . . . . . . . . . . . . 14 3.3 Cessation of Participation . . . . . . . . . . . . . . . . . 15 3.4 Year of Service for Eligibility Purposes . . . . . . . . . . 15 3.5 Eligibility Computation Periods. . . . . . . . . . . . . . . 15 3.6 Participation and Service upon Reemployment. . . . . . . . . 16 3.7 Transfers To or From Covered Status. . . . . . . . . . . . . 16 CONTRIBUTIONS 4.1 Employee Pre-Tax Basic and Supplemental Contributions. . . . 17 4.2 Salary Reduction Agreement . . . . . . . . . . . . . . . . . 17 4.3 Employee Pre-Tax Bonus Contributions . . . . . . . . . . . . 19 4.4 Maximum Amount of Employee Pre-Tax Contributions . . . . . . 19 4.5 Employee After-Tax Contributions . . . . . . . . . . . . . . 21 4.6 Employer Matching Contributions. . . . . . . . . . . . . . . 21 4.7 Employer Nonelective Contributions . . . . . . . . . . . . . 21 4.8 Rollover Contributions . . . . . . . . . . . . . . . . . . . 22 4.9 Manner of Making Contributions . . . . . . . . . . . . . . . 23 4.10 Transfer of Assets . . . . . . . . . . . . . . . . . . . . . 23 NONDISCRIMINATION REQUIREMENTS 5.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 24 5.2 Average Actual Deferral Percentage Tests . . . . . . . . . . 28 5.3 Special Rules. . . . . . . . . . . . . . . . . . . . . . . . 29 5.4 Treatment of Qualified Matching Contributions and Qualified Nonelective Contributions as Employee Pre-Tax Contributions. . . . . . . . . . . . . . . . . . . . . . . . 30 5.5 Correction of Excess Contributions . . . . . . . . . . . . . 30 5.6 Average Contribution Percentage Tests. . . . . . . . . . . . 33 5.7 Special Rules. . . . . . . . . . . . . . . . . . . . . . . . 33 5.8 Treatment of Employee Pre-Tax Contributions and Qualified Nonelective Contributions as Employer Matching Contributions. . . . . . . . . . . . . . . . . . . . . . . . 34 5.9 Correction of Excess Aggregate Contributions . . . . . . . . 35 5.10 Multiple Use of Alternative Limitation . . . . . . . . . . . 38 5.11 Recordkeeping Requirements . . . . . . . . . . . . . . . . . 39 ALLOCATIONS AND INVESTMENTS 6.1 Receipt of Contributions by Trustee. . . . . . . . . . . . . 40 6.2 Establishment of Separate Accounts by Recordkeeper . . . . . 40 6.3 Allocation of Employer Nonelective Contributions Under Integrated Plan . . . . . . . . . . . . . . . . . . . 41 6.4 Allocation of Forfeitures. . . . . . . . . . . . . . . . . . 43 6.5 Investment of Plan Assets. . . . . . . . . . . . . . . . . . 43 6.6 Allocation of Earnings and Losses. . . . . . . . . . . . . . 44 6.7 Insurance Contracts. . . . . . . . . . . . . . . . . . . . . 45 6.8 No Rights Created by Allocation. . . . . . . . . . . . . . . 45 VESTING 7.1 Full Vesting in Employee Contributions and Rollover Contributions. . . . . . . . . . . . . . . . . . . . . . . . 45 7.2 Vesting in Employer Contributions. . . . . . . . . . . . . . 45 7.3 Year of Service for Vesting Purposes . . . . . . . . . . . . 46 7.4 Years of Service Upon Reemployment . . . . . . . . . . . . . 46 DISTRIBUTION OF BENEFITS 8.1 Distribution Upon Separation from Service. . . . . . . . . . 47 8.2 Distribution Upon Death. . . . . . . . . . . . . . . . . . . 47 8.3 Optional Forms of Distribution; Participant Consent. . . . . 47 8.4 Distribution Upon Written Instructions; Valuation of Distributions. . . . . . . . . . . . . . . . . . . . . . . . 49 8.5 Forfeitures Upon Separation from Service . . . . . . . . . . 50 8.6 Minimum Distribution Requirements. . . . . . . . . . . . . . 51 8.7 Joint and Survivor Annuity Requirement . . . . . . . . . . . 56 8.8 Preretirement Survivor Annuity Requirement . . . . . . . . . 57 8.9 Notice and Explanation to Participants . . . . . . . . . . . 57 8.10 Waiver of Qualified Joint or Survivor Annuity or Qualified Preretirement Survivor Annuity . . . . . . . . . . . . . . . 58 8.11 Exception To Joint and Survivor Annuity and Preretirement Survivor Annuity Requirements. . . . . . . . . . . . . . . . 60 8.12 Cash-Outs. . . . . . . . . . . . . . . . . . . . . . . . . . 60 8.13 Former Spouse Under Qualified Domestic Relations Order . . . 61 8.14 Purchase of Annuities; Nontransferability Provisions . . . . 61 8.15 Commencement of Benefits . . . . . . . . . . . . . . . . . . 61 8.16 Designation of Beneficiary . . . . . . . . . . . . . . . . . 61 8.17 Distributions Pursuant to Qualified Domestic Relations Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 8.18 Direct Rollovers . . . . . . . . . . . . . . . . . . . . . . 63 WITHDRAWALS 9.1 Withdrawals of Employee After-Tax Contributions. . . . . . . 64 9.2 Withdrawals of Rollover Contributions. . . . . . . . . . . . 64 9.3 Withdrawals on or After Age 59 1/2 . . . . . . . . . . . . . 64 9.4 Hardship Withdrawals . . . . . . . . . . . . . . . . . . . . 65 9.5 Manner of Making Withdrawals . . . . . . . . . . . . . . . . 67 LOANS 10.1 Amount of Loan . . . . . . . . . . . . . . . . . . . . . . . 67 10.2 Security for Loan. . . . . . . . . . . . . . . . . . . . . . 68 10.3 Interest Rate Charged. . . . . . . . . . . . . . . . . . . . 68 10.4 Repayment of Loans . . . . . . . . . . . . . . . . . . . . . 68 10.5 Default on Loan. . . . . . . . . . . . . . . . . . . . . . . 69 10.6 Setoff of Loan Upon Distributions. . . . . . . . . . . . . . 69 10.7 Manner of Making Loans . . . . . . . . . . . . . . . . . . . 69 10.8 Spousal Consent Required . . . . . . . . . . . . . . . . . . 69 10.9 Accounting for Loans . . . . . . . . . . . . . . . . . . . . 70 LIMITATION ON CONTRIBUTIONS AND BENEFITS 11.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 70 11.2 Employers Who Maintain No Other Qualified Plans. . . . . . . 75 11.3 Employers Who Maintain Other Qualified Master or Prototype Defined Contribution Plans . . . . . . . . . . . . 76 11.4 Employers Who Maintain a Qualified Defined Contribution Plan Other Than a Master or Prototype Plan. . . . . . . . . . . . 78 11.5 Employers Who Maintain a Qualified Defined Benefit Plan. . . 78 TOP-HEAVY PROVISIONS 12.1 Application. . . . . . . . . . . . . . . . . . . . . . . . . 79 12.2 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 79 12.3 Minimum Allocation . . . . . . . . . . . . . . . . . . . . . 82 12.4 Minimum Vesting Schedules. . . . . . . . . . . . . . . . . . 83 ADMINISTRATION 13.1 Duties and Responsibilities of Fiduciaries; Allocation of Fiduciary Responsibility . . . . . . . . . . . . . . . . . . 84 13.2 Powers and Responsibilities of the Plan Administrator. . . . 84 13.3 Allocation of Duties and Responsibilities. . . . . . . . . . 86 13.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 87 13.5 Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 87 13.6 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . 87 AMENDMENT, TERMINATION AND MERGER 14.1 Amendment of Plan. . . . . . . . . . . . . . . . . . . . . . 88 14.2 Termination of Plan; Suspension of Contributions . . . . . . 91 14.3 Successor Employer . . . . . . . . . . . . . . . . . . . . . 91 14.4 Merger, Consolidation or Transfer. . . . . . . . . . . . . . 91 14.5 Distribution Upon Termination of Plan or Disposition of Assets or Subsidiary . . . . . . . . . . . . . . . . . . . . 92 MISCELLANEOUS 15.1 Exclusive Benefit of Participants and Beneficiaries. . . . . 92 15.2 Leased Employees . . . . . . . . . . . . . . . . . . . . . . 93 15.3 Crediting Service With Predecessor Employer. . . . . . . . . 94 15.4 Special Requirements For Controlled Business By Owner-Employees. . . . . . . . . . . . . . . . . . . . . . . 94 15.5 Nonguarantee of Employment . . . . . . . . . . . . . . . . . 95 15.6 Right to Trust Assets. . . . . . . . . . . . . . . . . . . . 95 15.7 Nonalienation of Benefits. . . . . . . . . . . . . . . . . . 96 15.8 Failure of Qualification . . . . . . . . . . . . . . . . . . 96 15.9 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . 96 VANGUARD PROTOTYPE 401(k) SAVINGS PLAN ARTICLE 1 INTRODUCTION 1.1 INTRODUCTION. This 401(k) Savings Plan has been adopted by the Employer for the exclusive benefit of eligible Employees and their Beneficiaries. The Plan is to be maintained and administered according to the terms and conditions of this instrument. The assets of the Plan are held and managed by the Trustee in accordance with the terms and conditions of the Trust Agreement, which is considered to be an integral part of the Plan. ARTICLE 2 DEFINITIONS 2.1 "ADOPTION AGREEMENT" means the Vanguard Prototype 401(k) Plan Adoption Agreement (either Non-Standardized Safe Harbor Adoption Agreement #001 or Standardized Adoption Agreement #002) as executed by the Employer for purposes of adopting or amending the Plan. The provisions of the Adoption Agreement shall be considered an integral part of the Plan as if set forth fully herein. 2.2 "BENEFICIARY" means a person or persons (natural or otherwise) designated by a Participant in accordance with Article 8.16 to receive any undistributed amounts credited to the Participant's separate accounts under the Plan at the time of the Participant's death. 2.3 "BENEFITING" means, for any Plan Year, that the Participant has received or is deemed to have received an allocation under the Plan in accordance with IRS Regulation Section 1.410(b)-3(a). 2.4 "BREAK IN SERVICE" means: (a) for purposes of determining an Employee's eligibility to participate in the Plan, an eligibility computation period (as determined under Article 3.5) during which the Employee does not complete more than 500 Hours of Service; and (b) for all other purposes under the Plan, including the determination of the Employee's vested percentage under Article 7.4, a Plan Year during which an Employee does not complete more than 500 Hours of Service. An Employee shall not be deemed to have incurred a Break in Service during any leave of absence granted in writing by the Employer. 2.5 "CODE" means the Internal Revenue Code of 1986, including any amendments thereto. 6 2.6 "COMPENSATION" means compensation as that term is defined in Article 11.1(b) of the Plan, unless the Employer selects an alternative definition of Compensation under the Non-Standardized Safe Harbor Adoption Agreement (#001). Compensation shall include only that Compensation which is actually paid by the Employer to the Participant while participating in the Plan during the Plan Year, adjusted as follows: (a) the Compensation of each Participant for a Plan Year shall include all Employee Pre-Tax Contributions made to the Plan on behalf of the Participant for the Plan Year and all pre-tax elective contributions made to any other plan by the Employer for the Plan Year pursuant to a salary reduction agreement with the Participant which are not includible in the Participant's gross income under Section 125, 402(e)(3), 402(h)(1)(B) or 403(b) of the Code, provided that the Employer has elected to treat all such pre-tax elective contributions as compensation with respect to all employees under all plans of the Employer; and (b) in no event shall the amount of Compensation of any Participant taken into account for purposes of determining any benefits under the Plan for any Plan Year exceed the Annual Compensation Limit. For these purposes, the Annual Compensation Limit for Plan Years beginning on or after January 1, 1994, is $150,000, as adjusted by the Commissioner of Internal Revenue for increases in the cost of living in accordance with Section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect for any calendar year shall apply to any Plan Year beginning in such calendar year. For Plan Years beginning on or after January 1, 1989, but before January 1, 1994, the Annual Compensation Limit is $200,000, as adjusted by the Commissioner of Internal Revenue at the same time and in the same manner as under Section 415(d) of the Code, with the exception that the adjustment in effect on January 1 of any calendar year is effective for any Plan Year beginning in such calendar year and the first adjustment to the $200,000 limitation is effective on January 1, 1990. If a Plan Year consists of fewer than 12 months, the Annual Compensation Limit for such Plan Year shall be multiplied by a fraction, the numerator of which is the number of months in such Plan Year and the denominator of which is 12. For purposes of the Annual Compensation Limit, the family aggregation rules of Section 414(q)(6) of the Code shall apply, with the exception that in applying such rules the term "family" shall include only the spouse of the Participant and any lineal descendants of the Participant who have not attained age 19 before the close of the Plan Year. If, as a result of the application of such family aggregation rules, the Annual Compensation Limit is exceeded, then the Annual Compensation Limit shall be prorated among the affected individuals in proportion to each such individual's Compensation as otherwise determined under this Article 2.2 prior to the application of the Annual Compensation Limit (with the exception that such proration shall not apply for purposes of determining the portion of Compensation up to the Integration Level designated by the Employer in the Adoption Agreement if the Plan is an Integrated Plan). In the case 7 of a Self-Employed Individual who is treated as employed by the Employer under Section 401(c) of the Code, Compensation shall include the individual's Earned Income as defined in Article 2.8. 2.7 "DISABILITY" means an inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. The permanence and degree of impairment shall be supported by medical evidence. 2.8 "EARNED INCOME" means the net earnings derived by an Employee from self-employment in the trade or business with respect to which the Plan is established and for which the personal services of the Employee are a material income-producing factor, determined without regard to any items not included in the Employee's gross income and the deductions allocable to such items. Net earnings shall be reduced by contributions by the Employer to a qualified plan to the extent deductions are allowed to the Employee for such contributions under Section 404 of the Code. Net Earnings shall be determined by taking into account any deduction allowed to the taxpayer under Section 164(f) of the Code. 2.9 "EFFECTIVE DATE" means the date designated by the Employer in the Adoption Agreement as the date on which the provisions of the Plan, as originally adopted or as amended and restated by the Employer (whichever is applicable) shall apply. 2.10 "EMPLOYEE" means any individual who is employed (or treated as employed under Section 401(c)(1) of the Code) by the Employer or by any other employer required to be aggregated with the Employer under Section 414(b), (c), (m) or (o) of the Code, and shall include any leased employee as described in Article 15.2 who is deemed to be an employee of the Employer or of any employer required to be aggregated with the Employer as provided under Section 414(n) or (o) of the Code. 2.11 "EMPLOYEE AFTER-TAX CONTRIBUTION" means an after-tax contribution to the Plan by a Participant in accordance with Article 4.5 which is includible in the Participant's gross income for federal income tax purposes in the year of contribution. 2.12 "EMPLOYEE AFTER-TAX CONTRIBUTION ACCOUNT" means the separate account established in the name of a Participant pursuant to Article 6.2(a)(ii) to record the Employee After-Tax Contributions by the Participant and the earnings, losses and expenses allocated thereto. 2.13 "EMPLOYEE PRE-TAX BASIC CONTRIBUTION" means an Employee Pre-Tax Contribution to the Plan on behalf of a Participant in accordance with Article 4.1(a). 8 2.14 "EMPLOYEE PRE-TAX BONUS CONTRIBUTION" means an Employee Pre-Tax Contribution to the Plan on behalf of a Participant in accordance with Article 4.3. 2.15 "EMPLOYEE PRE-TAX CONTRIBUTION" means a pre-tax contribution to the Plan by the Employer on behalf of a Participant in accordance with the Participant's election under Article 4.1 or 4.3 to have the amount contributed to the Plan rather than paid to the Participant as current-year Compensation. 2.16 "EMPLOYEE PRE-TAX CONTRIBUTION ACCOUNT" means the separate account established in the name of a Participant pursuant to Article 6.2(a)(i) to record the Employee Pre-Tax Contributions on behalf of the Participant and the earnings, losses and expenses allocated thereto. 2.17 "EMPLOYEE PRE-TAX SUPPLEMENTAL CONTRIBUTION" means an Employee Pre-Tax Contribution to the Plan on behalf of a Participant in accordance with Article 4.1(b). 2.18 "EMPLOYER" means the corporation, partnership or other employer which has adopted the Plan by executing the Adoption Agreement. 2.19 "EMPLOYER MATCHING CONTRIBUTION" means a contribution to the Plan by the Employer on behalf of a Participant in accordance with Article 4.6 on account of the Employee Pre-Tax Contributions or Employee After-Tax Contributions by the Participant to the Plan. 2.20 "EMPLOYER MATCHING CONTRIBUTION ACCOUNT" means the separate account established in the name of a Participant pursuant to Article 6.2(a)(iii) to record the Employer Matching Contributions on behalf of the Participant and the earnings, losses, and expenses allocated thereto. 2.21 "EMPLOYER NONELECTIVE CONTRIBUTION" means a contribution to the Plan by the Employer on behalf of a Participant for a Plan Year in accordance with Article 4.7. 2.22 "EMPLOYER NONELECTIVE CONTRIBUTION ACCOUNT" means the separate account established in the name of a Participant pursuant to Article 6.2(a)(iv) to record the Employer Nonelective Contributions on behalf of the Participant and the earnings, losses, and expenses allocated thereto. 2.23 "ENTRY DATE" means the date designated by the Employer in the Adoption Agreement on which an Employee who has otherwise satisfied the participation requirements selected by the Employer in the Adoption Agreement shall be eligible to commence participation in the Plan. In no event shall the initial Entry Date for any Employee be later than the earlier of: 9 (a) the first day of the Plan Year coinciding with or next following the date the Employee otherwise satisfies the participation requirements selected by the Employer in the Adoption Agreement; or (b) the date that is six months after the date the Employee satisfies such participation requirements. 2.24 "EXCESS ELECTIVE DEFERRAL" means the amount of a Participant's pre-tax elective deferrals (as defined in Article 4.4(a)) for a taxable year which are includible in the Participant's gross income for the taxable year for the reason they exceed the dollar limitation in effect under Section 402(g) of the Code. 2.25 "FORFEITURE" means the portion of a Participant's Employer Matching Contribution Account or Employer Nonelective Contribution Account which is forfeited, in accordance with the provisions of Article 8.5, on account of the Participant's termination of employment prior to full vesting under Article 7.2. Forfeitures shall also include any Employer Matching Contributions on behalf of Highly Compensated Employees (as defined in Article 5.1(j)) which are forfeited in accordance with the provisions of Article 4.6 and any Excess Aggregate Contributions on behalf of Highly Compensated Employees which are forfeited in accordance with the provisions of Article 5.9(c). 2.26 "HOUR OF SERVICE" means: (a) Each hour for which the individual is paid or entitled to be paid for the performance of duties for the Employer. Hours of Service under this paragraph shall be credited to the individual for the computation period in which the duties are performed. (b) Each hour for which the individual is paid or entitled to be paid by the Employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence; provided, however, that no more than 501 Hours of Service shall be credited under this paragraph for any single continuous period (whether or not such period occurs in a single computation period) during which the individual performed no duties. Hours of Service under this paragraph shall be calculated and credited pursuant to Section 2530.200b-2 of the Department of Labor Regulations which are incorporated herein by reference. 10 (c) Each hour for which back pay, irrespective of mitigation or damages, is either awarded or agreed to by the Employer; provided, however, that Hours of Service credited under paragraphs (a) or (b) above shall not be re-credited by operation of this paragraph. Hours of Service under this paragraph shall be credited to the individual for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement or payment is made. Hours of Service shall be credited to an Employee in a manner consistent with the rules of (a), (b) and (c) above for employment with any other employer required to be aggregated with the Employer in an affiliated service group under Section 414(m) of the Code, a controlled group of corporations under Section 414(b) of the Code, or a group of trades or businesses under common control under Section 414(c) of the Code, or with any other employer required to be aggregated with the Employer pursuant to Section 414(o) of the Code and the regulations thereunder. Hours of Service shall also be credited to any leased employee as described in Article 15.2 who is deemed to be an Employee for purposes of the Plan as required under Section 414(n) or (o) of the Code and the regulations thereunder. Solely for purposes of determining whether a Break in Service has occurred for participation and vesting purposes, an individual who is absent from work for maternity or paternity reasons shall receive credit for the Hours of Service which would otherwise normally have been credited to such individual but for such absence, or in any case in which such Hours of Service cannot be determined, eight Hours of Service per day of such absence. For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence: (i) by reason of the pregnancy of the individual; (ii) by reason of the birth of a child of the individual; (iii) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual; or (iv) for purposes of caring for such child for a period beginning immediately following such birth or placement. The Hours of Service credited under this paragraph shall be credited: (i) in the eligibility computation period or Plan Year in which the absence begins if the crediting is necessary to prevent a Break in Service in that period; or (ii) in all other cases, in the following eligibility computation period or Plan Year. In lieu of determining Hours of Service on the basis of the actual hours for which an individual is paid or entitled to be paid under subsections (a) through (c) above, the Employer may elect under the Non-Standardized Safe Harbor Adoption Agreement (#001) to credit Hours of Service in accordance with an equivalency method prescribed by regulations issued by the Department of Labor. 2.27 "INTEGRATED PLAN" means the Plan if the Employer has executed the Non-Standardized Safe Harbor Adoption Agreement (#001) and elected under that Adoption Agreement either: (1) the Permitted Disparity (Integration with Social Security) Contribution Formula for Employer Nonelective Contributions; or (2) the Permitted Disparity (Integration with Social Security) Allocation Formula for Employer Nonelective 11 Contributions. The Employer may not adopt this Plan as an Integrated Plan if the Employer maintains any other integrated plan providing for permitted disparity which covers any of the same Participants under this Plan. 2.28 "NORMAL RETIREMENT AGE" means the date a Participant attains age 65, unless the Employer designates a different Normal Retirement Age in the Adoption Agreement. If the Employer enforces a mandatory retirement age, the Normal Retirement Age shall not exceed such mandatory retirement age. 2.29 "OWNER-EMPLOYEE" means: (1) if the Employer is a sole proprietorship, the proprietor of the sole proprietorship; or (2) if the Employer is a partnership, a partner who owns more than 10 percent of either the capital interest or the profits interest of the partnership. 2.30 "PARTICIPANT" means an Employee who is participating in the Plan in accordance with the provisions of Article 3. 2.31 "PLAN" means the Vanguard Prototype 401(k) Savings Plan as set forth herein and as adopted by the Employer under the Adoption Agreement, as each such document may be amended from time to time. 2.32 "PLAN ADMINISTRATOR" means the individual(s) or committee designated by the Employer in the Adoption Agreement or subsequent written resolution furnished to the Trustee to be solely responsible for the administration of the Plan, as more fully described in Article 13.2. If no such designation is made, the Employer shall be deemed to be the Plan Administrator. 2.33 "PLAN YEAR" means the 12-consecutive month period designated by the Employer in the Adoption Agreement. 2.34 "RECORDKEEPER" means the individual(s) or firm selected by the Employer to provide record-keeping and participant accounting services for the Plan, including the maintenance of separate accounts for Participants in accordance with the provisions of Article 6. 2.35 "ROLLOVER CONTRIBUTION ACCOUNT" means the separate account established in the name of a Participant pursuant to Article 6.2(a)(v) to record any rollover contributions to the Plan by or on behalf of the Participant under Article 4.8 and the earnings, losses and expenses allocated thereto. 2.36 "SELF-EMPLOYED INDIVIDUAL" means an individual who has Earned Income for the taxable year from the trade or business with respect to which the Plan is established or who would have had such Earned Income but for the fact that the trade or business had no net profits for the taxable year. 12 2.37 "SPONSOR" means Vanguard Fiduciary Trust Company, a trust company incorporated under Pennsylvania banking laws. Vanguard Fiduciary Trust Company is a wholly-owned subsidiary of The Vanguard Group, Inc., Vanguard Financial Center, Valley Forge, Pennsylvania 19482. 2.38 "STRAIGHT LIFE ANNUITY" means an annuity payable in equal installments for the life of the Participant that terminates upon the death of the Participant. 2.39 "TRUST" means the trust maintained by the Trustee to hold the assets of the Plan in accordance with the terms and conditions of the Trust Agreement. 2.40 "TRUST AGREEMENT" means the agreement between the Employer and Trustee which governs the management and administration of the Trust. The provisions of the Trust Agreement shall be considered an integral part of this Plan as if set forth fully herein. 2.41 "TRUSTEE" means the individual(s) or qualified corporate fiduciary designated by the Employer in the Adoption Agreement to serve as Trustee for the Plan and any successor thereto. 2.41 "VALUATION DATE" means any business day that the New York Stock Exchange is open for trading. 2.42 "VANGUARD FUND(S)" means one or more of the regulated investment companies, collective investment funds or other investments offered by The Vanguard Group, Inc. as funding vehicles for employee benefit plans. The Employer shall have the authority to designate the Vanguard Funds available for investment under the Plan in accordance with the provisions of the Trust Agreement. 2.43 "YEAR OF SERVICE" means a 12-consecutive month period during which an Employee completes at least 1,000 Hours of Service as determined under Article 3.4 for purposes of determining the Employee's eligibility to participate in the Plan and Article 7.3 for purposes of determining the Employee's vested percentage under the Plan. ARTICLE 3 PARTICIPATION IN THE PLAN 3.1 ELIGIBILITY TO PARTICIPATE. An Employee shall be eligible to participate in the Plan when the Employee satisfies the participation requirements designated by the Employer in Section 2 of the Adoption Agreement. 13 3.2 COMMENCEMENT OF PARTICIPATION. (a) An Employee who satisfies the participation requirements designated by the Employer in Section 2 of the Adoption Agreement as of the Effective Date of the Plan shall become a Participant on the Effective Date. (b) An Employee who satisfies the participation requirements designated by the Employer in Section 2 of the Adoption Agreement after the Effective Date of the Plan shall become a Participant on the next Entry Date. 3.3 CESSATION OF PARTICIPATION. An Employee shall cease to participate in the Plan on the date on which the Employee's employment with the Employer terminates for any reason or the Employee no longer satisfies the participation requirements designated by the Employer in Section 2 of the Adoption Agreement. 3.4 YEAR OF SERVICE FOR ELIGIBILITY PURPOSES. (a) GENERAL RULE. For purposes of determining the eligibility of an Employee to participate in the Plan, the Employee shall be credited with one Year of Service for each eligibility computation period (as determined under Article 3.5) during which the Employee completes 1,000 or more Hours of Service. All Years of Service by an Employee (including Years of Service completed prior to the Effective Date of the Plan) shall be counted for purposes of determining the Employee's eligibility to participate in the Plan, except as specifically provided otherwise in Article 3.6(b). (b) SERVICE WITH PREDECESSOR EMPLOYER. If so designated by the Employer in the Adoption Agreement, an Employee's Years of Service for eligibility purposes shall include all years of service (determined in a manner consistent with subsection (a) above) with any predecessor employer of the Employer; provided, however, that if the Employer is maintaining the Plan as the plan of a predecessor employer, an Employee's Years of Service shall automatically include years of service with such predecessor employer without regard to any designation in the Adoption Agreement. 3.5 ELIGIBILITY COMPUTATION PERIODS. For purposes of determining the eligibility of an Employee to participate in the Plan, the Employee's initial eligibility computation period which shall be used to measure the Employee's Years of Service and Breaks in Service shall be the 12-consecutive month period beginning on the date the Employee first performs an Hour of Service for the Employer (the Employee's "employment 14 commencement date"). The Employee's subsequent eligibility computation periods shall be the 12-consecutive month periods beginning on each anniversary of the Employee's employment commencement date. 3.6 PARTICIPATION AND SERVICE UPON REEMPLOYMENT. (a) PARTICIPATION. A Participant who terminates employment with the Employer shall be eligible to resume participation in the Plan immediately upon reemployment by the Employer (provided that, upon reemployment, the former Participant satisfies the participation requirements designated by the Employer in Section 2 of the Adoption Agreement). (b) YEARS OF SERVICE. An Employee who terminates employment with the Employer prior to becoming a Participant in the Plan shall have all Years of Service which the Employee completed for eligibility purposes automatically reinstated upon reemployment by the Employer, unless the Employee incurs a Break in Service, in which case the Employee's prior Years of Service shall be reinstated only if the number of the Employee's consecutive one-year Breaks in Service is less than the greater of five or the aggregate number of the Employee's Years of Service prior to the Break in Service. For these purposes, the Employee's aggregate number of Years of Service prior to the period of consecutive one-year Breaks in Service shall exclude any Years of Service which were not reinstated under this Article 3.6(b) by reason of any prior period of consecutive one-year Breaks in Service. If an Employee's Years of Service are disregarded pursuant to this Article 3.6(b), the Employee shall be treated as a new Employee for eligibility purposes upon reemployment by the Employer. 3.7 TRANSFERS TO OR FROM COVERED STATUS. (a) In the event a Participant ceases participation in the Plan because he or she is no longer a member of the category of Employees who are eligible to participate in the Plan as designated by the Employer in Section 2 of the Adoption Agreement, the former Participant shall be eligible to resume participation in the Plan immediately upon his or her return to such category of eligible Employees. (b) Any Employee who is not a member of the category of Employees who are eligible to participate in the Plan (as designated by the Employer in Section 2 of the Adoption Agreement) shall be eligible to immediately commence participation in the Plan if the Employee becomes such 15 a member and has otherwise satisfied the participation requirements designated by the Employer in the Adoption Agreement. ARTICLE 4 CONTRIBUTIONS 4.1 EMPLOYEE PRE-TAX BASIC AND SUPPLEMENTAL CONTRIBUTIONS. (a) EMPLOYEE PRE-TAX BASIC CONTRIBUTIONS. A Participant may elect under a salary reduction agreement as described in Article 4.2 to have the Employer make Employee Pre-Tax Basic Contributions to the Plan on the Participant's behalf in an amount not to exceed the maximum amount permitted under the Adoption Agreement, subject to the limitations of Article 4.4 and Article 11. (b) EMPLOYEE PRE-TAX SUPPLEMENTAL CONTRIBUTIONS. If so designated by the Employer in the Adoption Agreement, a Participant who has elected to have the Employer make Employee Pre-Tax Basic Contributions to the Plan in the maximum amount permitted under the Adoption Agreement may also elect under the Participant's salary reduction agreement to have the Employer make Employee Pre-Tax Supplemental Contributions to the Plan on the Participant's behalf, subject to the limitations of Article 4.4 and Article 11. 4.2 SALARY REDUCTION AGREEMENT. (a) NATURE OF AGREEMENT. The salary reduction agreement referred to in Article 4.1 shall be on a form prescribed by the Plan Administrator whereby the Participant agrees to reduce his or her Compensation by specified amounts for purposes of having the Employer contribute the reduced Compensation amount to the Plan as Employee Pre-Tax Contributions on behalf of the Participant under Article 4.1. (b) COMMENCEMENT OF AGREEMENT. Every Employee who is eligible to participate in the Plan under Article 3.1 shall be afforded a reasonable opportunity by the Plan Administrator to enter into a salary reduction agreement and to elect to have Employee Pre-Tax Contributions made to the Plan on his or her behalf under Article 4.1. A Participant's salary reduction agreement shall be effective as soon as practicable following the date the agreement is received in executed form by the Plan Administrator, provided such effective date shall be no earlier than the date the 16 Participant would otherwise commence participation in the Plan under Article 3.2. Under no circumstances shall a Participant's salary reduction agreement be adopted retroactively. A Participant's salary reduction agreement shall remain in effect until amended or terminated by the Participant in accordance with (f) or (g) below. (c) TIMING OF REDUCTION AND CONTRIBUTION. The reduction in a Participant's Compensation which is used for purposes of funding the Participant's Employee Pre-Tax Contributions under Article 4.1 shall be done on a monthly, semimonthly, biweekly, weekly or other periodic basis in accordance with the Participant's regular payroll period and, if applicable under (h) below, at the time any bonus is payable to the Participant. The Employee Pre-Tax Contributions on behalf of a Participant for a payroll period shall be contributed to the Trust as of the earliest date on which such amounts can reasonably be segregated from the Employer's general assets, and in no event later than 90 days following the date on which such amounts would otherwise have been payable to the Participant as Compensation. (d) CUT-BACK IN EMPLOYEE PRE-TAX CONTRIBUTIONS. If the Plan Administrator reasonably determines that all or any part of the Participant's reduced Compensation amount for any Plan Year may not be contributed to the Plan as Employee Pre-Tax Contributions under Article 4.1 without causing the Plan to fail the nondiscrimination requirements of Article 5 or the contribution limitations of Article 11, the Employer shall not be required to make such contributions to the Plan and shall instead pay such reduced Compensation amount directly to the Participant. (e) AMENDMENT OF AGREEMENT. A Participant shall be permitted to amend his or her salary reduction agreement at any time with respect to Compensation not yet received to provide a new amount which will be used to determine the Employee Pre-Tax Contributions to the Plan on the Participant's behalf under Article 4.1. A Participant's amended salary reduction agreement shall be effective as soon as practicable following the date the amended agreement is received in executed form by the Plan Administrator. The Plan Administrator may prescribe uniform and nondiscriminatory rules limiting the number of times a Participant may amend his or her salary reduction agreement during a Plan Year, provided that Participants are afforded a reasonable opportunity at least once each Plan Year to amend their salary reduction agreements. (f) TERMINATION OF AGREEMENT. A Participant may terminate his or her salary reduction agreement at any time with respect to Compensation not yet received by delivering written notice of termination to the Plan Administrator. Any Participant who terminates his or her salary reduction agreement may be permitted, in accordance with uniform and nondiscriminatory rules prescribed by the Plan Administrator, to execute a new salary reduction agreement and resume having Employee Pre-Tax Contributions made to the Plan on his or her behalf under Article 4.1. 17 (g) TRANSFER TO OR FROM NON-COVERED EMPLOYMENT. A Participant's salary reduction agreement shall automatically terminate if the Participant is no longer a member of the category of Employees who are eligible to participate in the Plan as designated by the Employer in Section 2 of the Adoption Agreement. If such a Participant subsequently returns to the category of eligible Employees, the Participant shall be permitted to execute a new salary reduction agreement and resume having Employee Pre-Tax Contributions made to the Plan on his or her behalf under Article 4.1. (h) COORDINATION WITH EMPLOYEE PRE-TAX BONUS CONTRIBUTIONS. If the Employer has elected under the Adoption Agreement to allow Participants to make Employee Pre-Tax Bonus Contributions, any designated bonus payable to a Participant shall be eligible for reduction as Employee Pre-Tax Bonus Contributions under Article 4.3 (and not as Employee Pre-Tax Basic or Supplemental Contributions under Article 4.1). 4.3 EMPLOYEE PRE-TAX BONUS CONTRIBUTIONS. (a) BONUS REDUCTION AGREEMENT. If so designated by the Employer in the Adoption Agreement, a Participant may elect to have the Employer make Employee Pre-Tax Bonus Contributions to the Plan on the Participant's behalf by executing a bonus reduction agreement. Such agreement shall be on a form prescribed by the Plan Administrator whereby the Participant agrees to reduce the amount of any designated bonus payable to the Participant by the Employer by an amount specified by the Participant (not to exceed the maximum amount permitted under the Adoption Agreement) for purposes of having the Employer contribute the bonus reduction amount to the Plan as an Employee Pre-Tax Bonus Contribution on behalf of the Participant, subject to the limitations of Article 4.4 and Article 11. (b) TIMING OF CONTRIBUTION. Any Employee Pre-Tax Bonus Contribution on behalf of a Participant shall be contributed to the Trust by the Employer as of the earliest date on which such amount can reasonably be segregated from the Employer's general assets, and in no event later than 90 days following the date on which such amount would otherwise have been payable to the Participant as Compensation. 4.4 MAXIMUM AMOUNT OF EMPLOYEE PRE-TAX CONTRIBUTIONS. (a) LIMITATION ON EMPLOYEE PRE-TAX CONTRIBUTIONS. No Participant shall be permitted to have aggregate elective deferrals made to this Plan or any other qualified plans maintained by the Employer during any taxable year in excess of the dollar limitation of Section 402(g) of the Code in effect at the beginning of such taxable year. For these purposes, a Participant's "elective 18 deferrals" include: (i) the Participant's Employee Pre-Tax Contributions to this Plan (excluding any Employee Pre-Tax Contributions returned to the Participant as an Excess Amount under Article 11); (ii) Employer contributions made on behalf of the Participant pursuant to an election to defer under any other plan with a qualified cash or deferred arrangement under Section 401(k) of the Code, any simplified employee pension as described in Section 402(h)(1)(B) of the Code, any eligible deferred compensation plan as described in Section 457 of the Code, or any plan as described in Section 501(c)(18) of the Code; and (iii) Employer contributions made on behalf of the Participant pursuant to a salary reduction agreement to purchase an annuity contract under Section 403(b) of the Code. (b) ALLOCATION OF EXCESS ELECTIVE DEFERRALS. If a Participant has made Excess Elective Deferrals for any taxable year, the Participant may assign to this Plan any portion of such Excess Elective Deferrals by notifying the Plan Administrator in writing no later than the first March 1st following the close of the taxable year. Such written notification shall certify that the Participant has made Excess Elective Deferrals for the taxable year, and shall specify the amount of such Excess Elective Deferrals to be allocated to this Plan for the taxable year. A Participant shall be deemed to have notified the Plan Administrator of the existence of any Excess Elective Deferrals which arise by taking into account only those elective deferrals on behalf of the Participant to this Plan and any other plans maintained by the Employer, and to have assigned those Excess Elective Deferrals to such plans maintained by the Employer. (c) DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS. Notwithstanding any provision of the Plan to the contrary, if a Participant has assigned Excess Elective Deferrals to this Plan for a taxable year, the amount of such Excess Elective Deferrals, plus any income or minus any loss allocable thereto, shall be distributed to the Participant from the Participant's Employee Pre-Tax Contribution Account no later than the first April 15th following the close of the taxable year. (d) INCOME OR LOSS ALLOCABLE TO EXCESS ELECTIVE DEFERRALS. The income or loss allocable to the amount of Excess Elective Deferrals referred to in subsection (c) above shall include all allocable income or loss for the taxable year of the Excess Elective Deferral and shall be calculated using any reasonable method for computing income or loss, provided such method is used consistently for all Participants and for all corrective distributions under the Plan for the relevant year, and is used by the Plan for allocating income or loss to Participants' Employee Pre-Tax Contribution Accounts. (e) ALTERNATIVE METHOD FOR CALCULATING INCOME OR LOSS ALLOCABLE TO EXCESS ELECTIVE DEFERRALS. Notwithstanding (d) above, the Plan may elect to calculate the income or loss allocable to the amount of Excess Elective Deferrals referred to in subsection (c) above by 19 multiplying the total investment income or loss (including dividends, interest, realized gains or losses, and unrealized appreciation or depreciation) allocated to the Participant's Employee Pre-Tax Contribution Account for the taxable year of the Excess Elective Deferrals by a fraction, the numerator of which is the Excess Elective Deferral amount to be distributed to the Participant by the Plan for the taxable year, and the denominator of which is the total account balance attributable to the Participant's Employee Pre-Tax Contributions as of the end of the taxable year, reduced by the investment gain or increased by the investment loss allocated to such total amount for the taxable year. 4.5 EMPLOYEE AFTER-TAX CONTRIBUTIONS. If so designated by the Employer in the Adoption Agreement, a Participant shall be permitted to make Employee After-Tax Contributions to the Plan in an amount not to exceed the maximum amount permitted under the Adoption Agreement, subject to the limitations of Article 11. All Employee After-Tax Contributions for a Plan Year shall be made to the Trust no later than the last day of the Plan Year. 4.6 EMPLOYER MATCHING CONTRIBUTIONS. If so designated by the Employer in the Adoption Agreement, the Employer shall make Employer Matching Contributions to the Plan for each Plan Year in an amount determined under the provisions of the Adoption Agreement, subject to the limitations of Article 11. All Employer Matching Contributions for any Plan Year shall be made to the Trust no later than the end of the 12-month period immediately following the close of the Plan Year. Notwithstanding the preceding, if any Employer Matching Contribution on behalf of any Highly Compensated Employee (as defined in Article 5.1(j)) relates to an Excess Elective Deferral, Excess Contribution (as defined in Article 5.1(g)) or an Excess Aggregate Contribution (as defined in Article 5.1(h)) which is distributed to the Highly Compensated Employee, such Employer Matching Contribution shall be forfeited no later than the end of the 12-month period immediately following the close of the Plan Year. 4.7 EMPLOYER NONELECTIVE CONTRIBUTIONS. (a) If so designated by the Employer in the Adoption Agreement, the Employer shall make Employer Nonelective Contributions to the Plan for each Plan Year in an amount determined under the provisions of the Adoption Agreement, subject to the limitations of Article 11. Employer Nonelective Contributions for any Plan Year shall be allocated to the Employer Nonelective Contribution Accounts of each Participant who either completes more than 500 Hours of Service during the Plan Year or who is employed by the Employer on the last day of the Plan Year in the proportion that such Participant's Compensation for the Plan Year bears to the total Compensation of all such Participants for the Plan Year. Employer Nonelective 20 Contributions for any Plan Year shall be made to the Trust no later than the end of the 12-month period immediately following the close of the Plan Year. (b) For any Plan Year in which the Plan does not satisfy one of the Average Actual Deferral Percentage tests of Article 5.2 or one of the Average Contribution Percentage tests of Article 5.6, the Employer shall be permitted, in its sole discretion by resolution duly adopted on or before the last day of the following Plan Year, to make Employer Nonelective Contributions which qualify as Qualified Nonelective Contributions (as defined is Article 5.1(m)) to the Plan on behalf of Eligible Employees who are Non-Highly Compensated Employees (as defined in Article 5.1(k)) for the Plan Year in an amount sufficient to enable the Plan to satisfy one of the Average Actual Deferral Percentage tests or one of the Average Contribution Percentage Tests for the Plan Year. All Qualified Nonelective Contributions for a Plan Year shall be made to the Trust no later than the end of the 12-month period immediately following the close of the Plan Year. 4.8 ROLLOVER CONTRIBUTIONS. (a) An Employee who has participated in any other qualified plan described in Section 401(a) of the Code or in a qualified annuity plan described in Section 403(a) of the Code shall be permitted, subject to the approval of the Plan Administrator, to make a rollover contribution to the Plan of an amount received by the Employee which is attributable to participation in such other plan (reduced by any employee after-tax contributions made to the plan), provided that the rollover contribution complies with all applicable requirements of the Code and the regulations and rulings thereunder. (b) Any Employee who is permitted to make a rollover contribution to the Plan, but who has not otherwise commenced participation in the Plan under Article 3.2, shall be considered a Participant for all purposes under the Plan except Articles 4.1, 4.3, 4.5, 4.6 and 4.7. (c) The Sponsor, Trustee and Recordkeeper shall not be liable for any adverse consequences which may result to any Employee, the Employer, the Plan or the Trust should any rollover contribution pursuant to this Article 4.8 which is duly authorized by the Plan Administrator be determined not to constitute a proper rollover contribution under the Code, and the Employer specifically agrees to hold the Sponsor, Trustee and Recordkeeper harmless from any and all such liability. 4.9 MANNER OF MAKING CONTRIBUTIONS. All contributions to the Trust shall be paid directly to the Trustee. Contributions may be made by check, bank wire or money order. The Plan Administrator shall 21 furnish the Recordkeeper with allocation instructions with respect to each contribution which: (i) identify each Participant on whose behalf the contribution is being made and the amount thereof; (ii) identify whether the amount contributed on behalf of the Participant represents an Employee Pre-Tax Contribution, Employee After-Tax Contribution, Employer Matching Contribution, Employer Nonelective Contribution, or rollover contribution; and (iii) direct the investment of the amount contributed on behalf of the Participant in accordance with the provisions of Article 6.5. 4.10 TRANSFER OF ASSETS. (a) If so authorized by the Plan Administrator, the Trustee may accept a transfer of assets from the trustee of any other qualified plan described in Section 401(a) of the Code or from a qualified annuity plan described in Section 403(a) of the Code on behalf of any one or more Employees to the extent permitted by the Code and the regulations and rulings thereunder. (b) In the event assets are transferred to this Plan on behalf of any Employee in accordance with (a) above, the transferred assets shall be accounted for separately under Article 6.2, and any optional forms of benefit available to the Employee under the transferor plan shall be preserved with respect to the transferred assets of the Employee under this Plan to the extent required by the Code and the regulations and rulings thereunder. (c) The Sponsor, Trustee and Recordkeeper shall not be liable for any adverse consequences which may result to any Employee, the Employer, the Plan or the Trust should any transfer of assets that is duly authorized by the Plan Administrator pursuant to this Article 4.10 be determined not to constitute a proper transfer under the Code, and the Employer specifically agrees to hold the Sponsor, Trustee and Recordkeeper harmless from any and all such liability. ARTICLE 5 NONDISCRIMINATION REQUIREMENTS 5.1 DEFINITIONS. For purposes of this Article 5, the following terms shall be defined as follows: (a) "ACTUAL DEFERRAL PERCENTAGE" means the ratio, expressed as a percentage calculated to the nearest one-hundredth of one percent, of the amount of Employee Pre-Tax Contributions on 22 behalf of an Eligible Employee for a Plan Year to the Employee's Compensation for the Plan Year, whether or not the Employee was a Participant in the Plan for the entire Plan Year. For these purposes, an Eligible Employee's Employee Pre-Tax Contributions shall include any Qualified Nonelective Contributions and Qualified Matching Contributions on behalf of the Eligible Employee for the Plan Year which the Employer elects to treat as Employee Pre-Tax Contributions under Article 5.4, but shall not include any Employee Pre-Tax Contributions on behalf of the Eligible Employee for the Plan Year which the Employer elects to treat as Employer Matching Contributions under Article 5.8. A Highly Compensated Employee's Employee Pre-Tax Contributions shall include any Excess Elective Deferrals on behalf of the Highly Compensated Employee for the Plan Year. Any Eligible Employee who does not elect to make Employee Pre-Tax Contributions and who does not receive any allocation of Qualified Nonelective Contributions or Qualified Matching Contributions which are treated as Employee Pre-Tax Contributions for a Plan Year shall have a zero Actual Deferral Percentage for the Plan Year. An Eligible Employee's Actual Deferral Percentage for a Plan Year shall be calculated by disregarding any Employee Pre-Tax Contributions on behalf of the Eligible Employee for the Plan Year which are properly returned to the Eligible Employee as an Excess Amount under Article 11. (b) "AVERAGE ACTUAL DEFERRAL PERCENTAGE" means, for the group of Eligible Employees who are Highly Compensated Employees for a Plan Year or the group of Eligible Employees who are Non-Highly Compensated Employees for the Plan Year, the average of the Actual Deferral Percentages of all Eligible Employees in such group for the Plan Year. (c) "AVERAGE CONTRIBUTION PERCENTAGE" means, for the group of Eligible Employees who are Highly Compensated Employees for a Plan Year or the group of Eligible Employees who are Non-Highly Compensated Employees for the Plan Year, the average of the Contribution Percentages of all Eligible Employees in such group for the Plan Year. (d) "CONTRIBUTION PERCENTAGE" means the ratio, expressed as a percentage calculated to the nearest one-hundredth of one percent, of the sum of Employer Matching Contributions (other than Qualified Matching Contributions treated as Employee Pre-Tax Contributions under Article 5.4), Employee After-Tax Contributions, and any Employee Pre-Tax Contributions and Qualified Nonelective Contributions treated as Employer Matching Contributions under Article 5.8, on behalf of an Eligible Employee for a Plan Year to the Employee's Compensation for the Plan Year, whether or not the Employee was a Participant in the Plan for the entire Plan Year. For these purposes, an Eligible Employee's Contribution Percentage for any Plan Year shall be calculated by excluding any Employer Matching Contributions which are forfeited either to 23 correct Excess Aggregate Contributions or because the contributions to which they relate are Excess Elective Deferrals, Excess Contributions, or Excess Aggregate Contributions. An Eligible Employee's Contribution Percentage for a Plan Year shall be calculated by disregarding any Employee After-Tax Contributions or Employee Pre-Tax Contributions on behalf of the Eligible Employee for the Plan Year which are properly returned to the Eligible Employee as an Excess Amount under Article 11. (e) "COMPENSATION" means the total amount of compensation (as defined in Article 11.1(b) of the Plan) received by an Employee from the Employer while an Eligible Employee under the Plan during the Plan Year. An Eligible Employee's Compensation for a Plan Year shall include all Employee Pre-Tax Contributions made to the Plan on behalf of the Employee for the Plan Year, and all elective contributions made by the Employer for the Plan Year to any other plan on behalf of the Employee which are not currently includible in the gross income of the Employee under Section 125, 402(a)(8), 402(h) or 403(b) of the Code, provided that the Employer has elected to treat all such elective contributions as compensation with respect to all employees under all plans of the Employer. (f) "ELIGIBLE EMPLOYEE" means, with respect to any Plan Year, any Employee who is eligible to commence participation in the Plan under Article 3.2 and to have Employee Pre-Tax Contributions made to the Plan under Article 4.1 for the Plan Year, regardless of whether any contributions are made to the Plan on behalf of the Employee for the Plan Year. (g) "EXCESS CONTRIBUTIONS" means, with respect to any Plan Year, the excess of the aggregate amount of Employee Pre-Tax Contributions, including any Qualified Nonelective Contributions and Qualified Matching Contributions treated as Employee Pre-Tax Contributions under Article 5.4, actually made to the Plan on behalf of Highly Compensated Employees for the Plan Year over the maximum amount of such contributions permitted under Article 5.2. (h) "EXCESS AGGREGATE CONTRIBUTIONS" means, with respect to any Plan Year, the excess of the aggregate amount of Employer Matching Contributions, Employee After-Tax Contributions, and any Employee Pre-Tax Contributions and Qualified Nonelective Contributions treated as Employer Matching Contributions under Article 5.8, actually made to the Plan on behalf of Highly Compensated Employees for the Plan Year over the maximum amount of such contributions permitted under Article 5.6. (i) "FAMILY MEMBER" means, with respect to any Eligible Employee, an individual described in Section 414(q)(6)(B) of the Code. 24 (j) "HIGHLY COMPENSATED EMPLOYEE" includes, for any Plan Year, all Highly Compensated Active Employees and all Highly Compensated Former Employees: (1) A Highly Compensated Active Employee includes any Employee who performs service for the Employer during the Determination Year and who during the Look-Back Year: (i) received Compensation from the Employer in excess of the $75,000 indexed amount of Section 414(q)(1)(B) of the Code in effect for the Look-Back Year; (ii) received Compensation from the Employer in excess of the $50,000 indexed amount of Section 414(q)(1)(C) of the Code in effect for the Look-Back Year and was a member of the top-paid group within the meaning of Section 414(q)(4) of the Code for such year; or (iii) was an officer of the Employer as described in Section 414(q)(1)(D) of the Code for such year. (2) A Highly Compensated Active Employee also includes: (i) any Employee who is described in (1) above if the term "Determination Year" is substituted for the term "Look-Back Year" and the Employee is one of the 100 Employees who received the most Compensation from the Employer during the Determination Year; and (ii) any Employee who is a five percent owner of the Employer at any time during the Look-Back Year or Determination Year. (3) A Highly Compensated Former Employee includes any Employee who separated from service with the Employer (or was deemed to have separated from service) prior to the Determination Year, performs no service for the Employer during the Determination Year, and was a Highly Compensated Active Employee for either the year of separation from service or any Determination Year ending on or after the employee's 55th birthday. (4) For purposes of this Article 5.1(j), the term "Determination Year" shall mean the Plan Year, and the term "Look-Back Year" shall mean the twelve-month period 25 immediately preceding the Determination Year (unless the Employer elects, in accordance with the regulations under Section 414(q) of the Code, to make the Look-Back Year the calendar year ending with or within the applicable Determination Year). (5) If during a Determination Year or Look-Back Year an Employee is a family member of either (i) a five percent owner who is an active or former Employee, or (ii) a Highly Compensated Employee who is one of the 10 most highly compensated Employees ranked on the basis of Compensation paid by the Employer during such year, then the family member and the five percent owner or top-ten Highly Compensated Employee shall be treated as a single Employee receiving aggregate Compensation and Plan contributions equal to the sum of the Compensation and Plan contributions on behalf of the family member and five percent owner or top-ten Highly Compensated Employee. For these purposes, family members shall include the spouse, lineal ascendant and descendants of the Employee and the spouses of such lineal ascendant and descendants. (6) The determination of Highly Compensated Employees, including the determination of the number and identity of Employees in the top-paid group, the top-100 Employees, the number of Employees treated as officers and the Compensation that is taken into account with respect to each Employee shall be made in accordance with Section 414(q) of the Code and the regulations thereunder. (k) "NON-HIGHLY COMPENSATED EMPLOYEE" means, for any Plan Year, an Employee who is not a Highly Compensated Employee. (l) "QUALIFIED MATCHING CONTRIBUTIONS" means any Employer Matching Contributions to this Plan on behalf of Eligible Employees, and any matching contributions (as defined in Section 401(m)(4)(A) of the Code) by the Employer to any other plan or plans on behalf of Eligible Employees, which are nonforfeitable (fully vested) when made and which are subject to the distribution restrictions of Section 401(k)(2)(B) of the Code, provided that amounts attributable to such contributions are not distributable solely on account of the Employee's hardship. A Qualified Matching Contribution is not treated as forfeitable merely because under the Plan it is forfeited when the contribution to which it relates is treated as an Excess Elective Deferral, Excess Contribution or Excess Aggregate Contribution. (m) "QUALIFIED NONELECTIVE CONTRIBUTIONS" means any Employer Nonelective Contributions to this Plan on behalf of Eligible Employees, and any qualified nonelective contributions (as 26 defined in Section 401(m)(4)(C) of the Code) by the Employer to any other plan or plans on behalf of Eligible Employees that Eligible Employees may not elect to receive in cash until distributed from the plan, which are nonforfeitable (fully-vested) when made, and which are subject to the distribution restrictions of Section 401(k)(2)(B) of the Code, provided that amounts attributable to such contributions are not distributable merely on account of the Employee's hardship. 5.2 AVERAGE ACTUAL DEFERRAL PERCENTAGE TESTS. For each Plan Year, the Plan shall satisfy one of the following Average Actual Deferral Percentage tests with respect to the Employee Pre-Tax Contributions, and any Qualified Nonelective Contributions and Qualified Matching Contributions treated as Employee Pre-Tax Contributions under Article 5.4, made to the Plan for the Plan Year: (a) the Average Actual Deferral Percentage for the group of Eligible Employees who are Highly Compensated Employees for the Plan Year shall not exceed the Average Actual Deferral Percentage for the group of Eligible Employees who are Non-Highly Compensated Employees for the Plan Year multiplied by 1.25; or (b) the Average Actual Deferral Percentage for the group of Eligible Employees who are Highly Compensated Employees for the Plan Year shall not exceed the Average Actual Deferral Percentage for the group of Eligible Employees who are Non-Highly Compensated Employees for the Plan Year multiplied by two, provided that the Average Actual Deferral Percentage for the group of Eligible Employees who are Highly Compensated Employees for the Plan Year does not exceed the Average Actual Deferral Percentage for the group of Eligible Employees who are Non-Highly Compensated Employees by more than two percentage points. 5.3 SPECIAL RULES. (a) AGGREGATION OF FAMILY MEMBERS. For purposes of determining the Actual Deferral Percentage of any Eligible Employee who is a Highly Compensated Employee and who is subject to the family aggregation rule of Section 414(q)(6) of the Code because the Employee is either a five-percent owner or one of the ten most highly-paid Highly Compensated Employees, the Employee Pre-Tax Contributions (and any Qualified Matching Contributions and Qualified Nonelective Contributions treated as Employee Pre-Tax Contributions under Article 5.4) made on behalf of any Family Member of the Highly Compensated Employee for the Plan Year shall, to the extent required by regulations of the Secretary of Treasury, be treated as made on behalf of the Highly Compensated Employee, and any Compensation of such Family Member for the Plan Year shall, to the extent required by regulations of the Secretary of Treasury, be treated as 27 Compensation of the Highly Compensated Employee. In such a case, the Family Member of the Highly Compensated Employee shall not be considered a separate employee for purposes of calculating Average Actual Deferral Percentages for the Plan Year. (b) HIGHLY COMPENSATED EMPLOYEES UNDER MULTIPLE CASH OR DEFERRED ARRANGEMENTS. In the case of any Eligible Employee who is a Highly Compensated Employee for a Plan Year and who is eligible to participate in more than one cash or deferred arrangement described in Section 401(k) of the Code maintained by the Employer during the Plan Year, the Actual Deferral Percentage of the Employee for the Plan Year shall be calculated by treating all such cash or deferred arrangements in which the Employee is eligible to participate as one arrangement. If the Highly Compensated Employee participates in two or more such cash or deferred arrangements that have different plan years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. (c) AGGREGATION OF PLANS. In the event that this Plan satisfies the requirements of Section 401(a)(4), 401(k) or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such sections of the Code only if aggregated with this Plan, then this Article 5 shall be applied by determining the Actual Deferral Percentages of Employees as if all such plans were a single plan. For plan years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(k) of the Code only if they have the same plan year. 5.4 TREATMENT OF QUALIFIED MATCHING CONTRIBUTIONS AND QUALIFIED NONELECTIVE CONTRIBUTIONS AS EMPLOYEE PRE-TAX CONTRIBUTIONS. If any Qualified Matching Contributions or Qualified Nonelective Contributions are made on behalf of Eligible Employees for a Plan Year, the Employer may elect, in accordance with the regulations of the Secretary of Treasury under Section 401(k) of the Code, to treat all or a portion of such Qualified Matching Contributions or Qualified Nonelective Contributions as Employee Pre-Tax Contributions for purposes of calculating the Actual Deferral Percentages of Eligible Employees for the Plan Year. Any such Qualified Nonelective Contributions or Qualified Matching Contributions for a Plan Year must be made no later than the end of the 12-month period immediately following the close of the Plan Year. 5.5 CORRECTION OF EXCESS CONTRIBUTIONS (a) GENERAL RULE. If the Plan does not satisfy one of the Average Actual Deferral Percentage tests of Article 5.2 as of the end of a Plan Year, the Excess Contributions for the Plan Year shall be corrected if the Employer makes Qualified Nonelective Contributions to the Plan on behalf of 28 Non-Highly Compensated Employees in accordance with Article 4.7(b) in an amount sufficient to enable the Plan to satisfy one of the Average Actual Deferral Percentage tests of Article 5.2 for the Plan Year, or if the Excess Contributions for the Plan Year are timely distributed to Highly Compensated Employees in accordance with subsection (c) below. (b) ALLOCATION OF EXCESS CONTRIBUTIONS. In the event Excess Contributions are made to the Plan for a Plan Year, the Actual Deferral Percentage for the Highly Compensated Employee with the highest Actual Deferral Percentage for the Plan Year shall be reduced to the minimum extent necessary either: (i) to enable the Plan to satisfy one of the Average Actual Deferral Percentage tests of Article 5.2 for the Plan Year; or (ii) to cause the Employee's Actual Deferral Percentage to equal the next highest Actual Deferral Percentage of any Highly Compensated Employee for the Plan Year. This process shall be repeated until the Average Actual Deferral Percentage for the group of Eligible Employees who are Highly Compensated Employees is sufficiently reduced to enable the Plan to satisfy one of the Average Actual Deferral Percentage tests of Article 5.2 for the Plan Year. The amount of Excess Contributions to be allocated to each Highly Compensated Employee for the Plan Year shall equal the total Employee Pre-Tax Contributions, including Qualified Matching Contributions and Qualified Nonelective Contributions treated as Employee Pre-Tax Contributions under Article 5.4, on behalf of the Highly Compensated Employee for the Plan Year minus the amount determined by multiplying the Highly Compensated Employee's reduced Actual Deferral Percentage (as determined above) by the Employee's Compensation for the Plan Year. Excess Contributions shall be allocated to Employees who are subject to the family aggregation rule of Section 414(q)(6) of the Code in the manner prescribed by regulations of the Secretary of Treasury. (c) DISTRIBUTION OF EXCESS CONTRIBUTIONS. If any Excess Contributions allocated to Highly Compensated Employees for a Plan Year are not corrected by Qualified Nonelective Contributions under Article 4.7(b), such Excess Contributions, plus any income and minus any loss allocable thereto, shall be distributed to Highly Compensated Employees no later than 12 months following the close of the Plan Year. Such distributions shall be made to Highly Compensated Employees on the basis of the respective portions of the Excess Contributions attributable to each such Highly Compensated Employee. Excess Contributions of Highly Compensated Employees who are subject to the family member aggregation rules of Article 29 5.3(a) shall be allocated among the Family Members of the Highly Compensated Employee in proportion to the Employee Pre-Tax Contributions (and amounts treated as Employee Pre-Tax Contributions) of each Family Member which are combined to determine the Highly Compensated Employee's Actual Deferral Percentage. (d) INCOME OR LOSS ALLOCABLE TO EXCESS CONTRIBUTIONS. The income or loss allocable to the Excess Contributions referred to in subsection (c) above shall include the allocable income or loss for the Plan Year of the Excess Contributions and shall be calculated using any reasonable method for computing income or loss, provided such method is used consistently for all Participants and for all corrective distributions under the Plan for the Plan Year, and is used by the Plan for allocating income or loss to Participants' separate accounts under the Plan. (e) ALTERNATIVE METHOD FOR CALCULATING INCOME OR LOSS ALLOCABLE TO EXCESS CONTRIBUTIONS. Notwithstanding (d) above, the Plan may elect to calculate the income or loss allocable to the amount of Excess Contributions referred to in subsection (c) above by multiplying the total investment income or loss (including dividends, interest, realized gains or losses, and unrealized appreciation or depreciation) allocable to the Participant's Employee Pre-Tax Contributions and amounts treated as Employee Pre-Tax Contributions under Article 5.4 for the Plan Year by a fraction, the numerator of which is the Excess Contributions allocated to the Participant for the Plan Year, and the denominator of which is the total account balance attributable to the Participant's Employee Pre-Tax Contributions and amounts treated as Employee Pre-Tax Contributions under Article 5.4 as of the end of the Plan Year, reduced by the investment gain (or increased by the investment loss) allocated to such total amount for the Plan Year. (f) COORDINATION WITH EXCESS ELECTIVE DEFERRALS. The amount of any Excess Contributions to be distributed under subsection (c) above with respect to any Highly Compensated Employee for a Plan Year shall be reduced by any Excess Elective Deferrals previously distributed to the Highly Compensated Employee under Article 4.4(c) for the Employee's taxable year ending with or within the Plan Year. (g) ACCOUNTING FOR EXCESS CONTRIBUTIONS. The amount of Excess Contributions allocated to a Highly Compensated Employee for a Plan Year which is distributed under subsection (c) above shall be attributed first to the Participant's Employee Pre-Tax Contributions for the Plan Year and then, to the extent such Excess Contributions exceed the Participant's Employee Pre-Tax Contributions for the Plan Year, attributed to amounts treated as Employee Pre-Tax Contributions under Article 5.4 in proportion to the amounts of such contributions on behalf of the Participant for the Plan Year. 30 (h) EXCISE TAX. If any Excess Contributions for a Plan Year are not distributed to Highly Compensated Employees in accordance with subsection (c) above within 2 1/2 months after the close of the Plan Year, the Employer shall be subject to the 10 percent excise tax of Section 4979 of the Code, unless Qualified Nonelective Contributions are made to the Plan on behalf of Non-Highly Compensated Employees in accordance with Article 4.7(b) prior to the end of the 12-month period immediately following the close of the Plan Year in an amount sufficient to enable the Plan to satisfy one of the Average Actual Deferral Percentage tests of Article 5.2 for the Plan Year. 5.6 AVERAGE CONTRIBUTION PERCENTAGE TESTS. For each Plan Year for which any Employer Matching Contributions are made to the Plan (other than Qualified Matching Contributions treated as Employee Pre-Tax Contributions for the Plan Year under Article 5.4) or any Employee After-Tax Contributions are made to the Plan, the Plan shall satisfy one of the following Average Contribution Percentage tests for the Plan Year: (a) the Average Contribution Percentage for the group of Eligible Employees who are Highly Compensated Employees for the Plan Year shall not exceed the Average Contribution Percentage for the group of Eligible Employees who are Non-Highly Compensated Employees for the Plan Year multiplied by 1.25; or (b) the Average Contribution Percentage for the group of Eligible Employees who are Highly Compensated Employees for the Plan Year shall not exceed the Average Contribution Percentage for the group of Eligible Employees who are Non-Highly Compensated Employees for the Plan Year multiplied by two, provided that the Average Contribution Percentage for the group of Eligible Employees who are Highly Compensated Employees for the Plan Year does not exceed the Average Contribution Percentage for the group of Eligible Employees who are Non-Highly Compensated Employees by more than two percentage points. 5.7 SPECIAL RULES. (a) AGGREGATION OF FAMILY MEMBERS. For purposes of determining the Contribution Percentage of any Eligible Employee who is a Highly Compensated Employee and who is subject to the family aggregation rule of Section 414(q)(6) of the Code because the Employee is either a five-percent owner or one of the ten most highly paid Highly Compensated Employees, the Employee After-Tax Contributions and Employer Matching Contributions (and any Employee Pre-Tax Contributions and Qualified Nonelective Contributions treated as Employer Matching Contributions under Article 5.8) made on behalf of any Family Member of the Highly 31 Compensated Employee for the Plan Year shall, to the extent required by regulations of the Secretary of Treasury, be treated as made on behalf of the Highly Compensated Employee, and any Compensation of such Family Member for the Plan Year shall, to the extent required by regulations of the Secretary of Treasury, be treated as Compensation of the Highly Compensated Employee. In such a case, the Family Member of the Highly Compensated Employee shall not be considered a separate employee for purposes of calculating Average Contribution Percentages for the Plan Year. (b) HIGHLY COMPENSATED EMPLOYEES UNDER MULTIPLE PLANS. In the case of any Eligible Employee who is a Highly Compensated Employee for a Plan Year and who is eligible to participate in more than one plan maintained by the Employer during the Plan Year, all matching contributions (as defined in Section 401(m)(4)(A) of the Code), all employee contributions, and any elective deferrals and qualified nonelective contributions taken into account under Section 401(m)(3) of the Code with respect to the Employee for the Plan Year, shall be aggregated for purposes of determining the Employee's Contribution Percentage for the Plan Year. If the Highly Compensated Employee participates in two or more cash or deferred arrangements described in Section 401(k) of the Code maintained by the Employer that have different plan years, all such cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. (c) AGGREGATION OF PLANS. In the event that this Plan satisfies the requirements of Section 401(a)(4), 401(m) or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such sections of the Code only if aggregated with this Plan, then this Article 5 shall be applied by determining the Contribution Percentages of Employees as if all such plans were a single plan. For plan years beginning after December 31, 1989, plans may be aggregated to satisfy Section 401(m) of the Code only if they have the same plan year. (d) COLLECTIVELY BARGAINED PLANS. If this Plan (or any portion of the Plan) is a collectively bargained plan which automatically satisfies Section 410(b) of the Code, the requirements of Article 5.6 shall be treated as satisfied with respect to the Employee After-Tax Contributions and Employer Matching Contributions to the Plan (or portion of the Plan). 5.8 TREATMENT OF EMPLOYEE PRE-TAX CONTRIBUTIONS AND QUALIFIED NONELECTIVE CONTRIBUTIONS AS EMPLOYER MATCHING CONTRIBUTIONS. The Employer may elect, in accordance with the regulations of the Secretary of Treasury under Section 401(m) of the Code, to treat all or a portion of the Employee Pre-Tax Contributions and any Qualified Nonelective Contributions on behalf of Eligible Employees for a Plan Year 32 as Employer Matching Contributions for purposes of calculating the Contribution Percentages of Eligible Employees for the Plan Year. Any such Employee Pre-Tax Contributions or Qualified Nonelective Contributions for a Plan Year must be made no later than the end of the 12-month period immediately following the close of the Plan Year. Notwithstanding the preceding, the Employer may elect to treat Employee Pre-Tax Contributions as Employer Matching Contributions for purposes of calculating Contribution Percentages only if one of the Average Actual Deferral Percentage Tests of Article 5.2 is satisfied before the Employee Pre-Tax Contributions are treated as Employer Matching Contribution for the Plan Year, and one of the Average Actual Deferral Percentage Tests of Article 5.2 continues to be satisfied for the Plan Year excluding the Employee Pre-Tax Contributions treated as Employer Matching Contributions for the Plan Year. 5.9 CORRECTION OF EXCESS AGGREGATE CONTRIBUTIONS (a) GENERAL RULE. If the Plan does not satisfy one of the Average Contribution Percentages tests of Article 5.6 as of the end of a Plan Year, the Excess Aggregate Contributions for the Plan Year shall be corrected if the Employer makes Qualified Nonelective Contributions to the Plan on behalf of Non-Highly Compensated Employees in accordance with Article 4.7(b) in an amount sufficient to enable the Plan to satisfy one of the Average Contribution Percentage tests of Article 5.6 for the Plan Year, or if the Excess Aggregate Contributions for the Plan Year are forfeited or timely distributed to Highly Compensated Employees in accordance with subsection (c) below. (b) ALLOCATION OF EXCESS CONTRIBUTIONS. In the event Excess Aggregate Contributions are made to the Plan for a Plan Year, the Contribution Percentage for the Highly Compensated Employee with the highest Contribution Percentage for the Plan Year shall be reduced to the minimum extent necessary either: (i) to enable the Plan to satisfy one of the Average Contribution Percentage tests of Article 5.6 for the Plan Year, or; (ii) to cause the Highly Compensated Employee's Contribution Percentage to equal the next highest Contribution Percentage of any Highly Compensated Employee for the Plan Year. This process shall be repeated until the Average Contribution Percentage for the group of Eligible Employees who are Highly Compensated Employees for the Plan Year is sufficiently reduced to enable the Plan to satisfy one of the Average Contribution Percentage tests of Article 5.6 for the Plan Year. The amount of Excess Aggregate Contributions to be allocated to each Highly 33 Compensated Employee for the Plan Year shall equal the total Employee After-Tax Contributions and Employer Matching Contributions, including Employee Pre-Tax Contributions and Qualified Nonelective Contributions treated as Employer Matching Contributions under Article 5.8, on behalf of the Highly Compensated Employee for the Plan Year minus the amount determined by multiplying the Highly Compensated Employee's reduced Contribution Percentage (as determined above) by the Employee's Compensation for the Plan Year. Excess Aggregate Contributions shall be allocated to Employees who are subject to the family aggregation rules of Section 414(q)(6) of the Code in the manner prescribed by regulations of the Secretary of Treasury. (c) FORFEITURE OR DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS. If any Excess Aggregate Contributions allocated to Highly Compensated Employees for a Plan Year are not corrected by Qualified Nonelective Contributions under Article 4.7(b), such Excess Aggregate Contributions, plus any income or minus any loss allocable thereto, must be forfeited to the extent attributable under subsection (g) below to Employer Matching Contributions that are not vested under Article 7.2, and otherwise distributed to Highly Compensated Employees no later than 12 months following the close of the Plan Year. Such distributions shall be made to Highly Compensated Employees on the basis of the respective portions of the Excess Aggregate Contributions attributable to each such Highly Compensated Employee. Excess Aggregate Contributions of Highly Compensated Employees who are subject to the family member aggregation rules of Article 5.7(a) shall be allocated among the Family Members of the Highly Compensated Employee in proportion to the Employee After-Tax Contributions and Employer Matching Contributions of each Family Member which are combined to determine the Highly Compensated Employee's Average Contribution Percentage. (d) INCOME OR LOSS ALLOCABLE TO EXCESS AGGREGATE CONTRIBUTIONS. The income or loss allocable to the Excess Aggregate Contributions referred to in subsection (c) above shall include the allocable income or loss for the Plan Year of the Excess Aggregate Contributions and shall be calculated using any reasonable method for computing income or loss, provided such method is used consistently for all Participants and for all corrective distributions under the Plan for the Plan Year, and is used by the Plan for allocating income or loss to Participants' separate accounts under the Plan. (e) ALTERNATIVE METHOD FOR CALCULATING INCOME OR LOSS ALLOCABLE TO EXCESS AGGREGATE CONTRIBUTIONS. Notwithstanding (d) above, the Plan may elect to calculate the income or loss allocable to the amount of Excess Aggregate Contributions referred to in subsection (c) above by multiplying the total investment income or loss (including dividends, interest, realized gains or losses, and unrealized appreciation or depreciation) allocable to the Participant's Employee After-Tax Contributions, Employer Matching Contributions, and amounts treated as Employer 34 Matching Contributions under Article 5.8 for the Plan Year by a fraction, the numerator of which is the Excess Aggregate Contributions allocated to the Participant for the Plan Year, and the denominator of which is the total account balance attributable to the Participant's Employee After-Tax Contributions, Employer Matching Contributions and amounts treated as Employer Matching Contributions under Article 5.8 as of the end of the Plan Year, reduced by the investment gain (or increased by the investment loss) allocated to such total amount for the Plan Year. (f) COORDINATION WITH EXCESS CONTRIBUTIONS. The determination of the amount of Excess Aggregate Contributions for a Plan Year shall be made after the determination of the amount of any Excess Contributions for the Plan Year. (g) ACCOUNTING FOR EXCESS AGGREGATE CONTRIBUTIONS. (i) NON-MATCHED EMPLOYEE AFTER-TAX CONTRIBUTIONS. If the Plan provides for Employee After-Tax Contributions which are not matched by Employer Matching Contributions under Article 4.6, the amount of Excess Aggregate Contributions allocated to a Highly Compensated Employee for a Plan Year shall be attributed first to the Employee After-Tax Contributions by the Participant for the Plan Year. To the extent such Excess Aggregate Contributions exceed the Participant's Employee After-Tax Contributions for the Plan Year, such Excess Aggregate Contributions shall be attributed to the Employer Matching Contributions and any amounts treated as Employer Matching Contributions under Article 5.8 in proportion to the amounts of such contributions on behalf of the Participant for the Plan Year. (ii) OTHER SITUATIONS. If subsection (a) above does not apply, the amount of Excess Aggregate Contributions allocated to a Highly Compensated Employee for a Plan Year shall be attributed to the Employee After-Tax Contributions, Employer Matching Contributions and any amounts treated as Employer Matching Contributions under Article 4.6 in proportion to the amounts of such contributions on behalf of the Participant for the Plan Year. (h) EXCISE TAX. If any Excess Aggregate Contributions for a Plan Year are not forfeited or distributed to Highly Compensated Employees in accordance with subsection (c) above within 2 1/2 months after the close of the Plan Year, the Employer shall be subject to the 10 percent excise tax of Section 4979 of the Code, unless Qualified Nonelective Contributions are made to the Plan on behalf of Non-Highly Compensated Employees in accordance with Article 4.7(b) prior to the end of the 12-month period immediately following the close of the Plan Year in an amount 35 sufficient to enable the Plan to satisfy one of the Average Contribution Percentage Tests of Article 5.6 for the Plan Year. 5.10 MULTIPLE USE OF ALTERNATIVE LIMITATION. (a) IN GENERAL. This Article 5.10 shall apply for any Plan Year if: (i) any Eligible Employee who is a Highly Compensated Employee is eligible to participate in a plan maintained by the Employer (including this Plan) which is subject to the requirements of Section 401(m) of the Code because such plan accepts matching contributions or employee contributions for the plan's plan year beginning with or within the Plan Year; (ii) this Plan does not pass the 1.25 Average Actual Deferral Percentage Test of Article 5.2(a) for the Plan Year, and the Employer's plan which is subject to the requirements of Section 401(m) of the Code does not pass the 1.25 contribution percentage test of Section 401(m)(2)(A)(i) of the Code for the plan's plan year beginning with or within the Plan Year; and (iii) the sum of the Average Actual Deferral Percentage for all Eligible Employees who are Highly Compensated Employees for the Plan Year, and the average contribution percentage (as defined in Section 401(m)(3) of the Code) for all Highly Compensated Employees who are eligible to participate in the Employer's plan which is subject to Section 401(m) of the Code for the plan's plan year beginning with or within the Plan Year, exceeds the aggregate limit of subsection (b) below. For purposes of this Article 5.10, the Average Actual Deferral Percentage of Highly Compensated Employees for the Plan Year shall be determined after any corrective measures as described in Article 5.5 are undertaken for the Plan Year. The average contribution percentage for all Highly Compensated Employees under the Employer's plan that is subject to Section 401(m) of the Code shall be determined after any corrective measures (including those described in Article 5.9) are undertaken to satisfy the average contribution percentage tests of Section 401(m)(2) of the Code for the plan's plan year beginning with or within the Plan Year. (b) AGGREGATE LIMIT. For purposes of this Article 5.10, the term "aggregate limit" shall means the sum of: 36 (i) 125 percent of the greater of: (1) the Average Actual Deferral Percentage for Eligible Employees who are Non-Highly Compensated Employees for the Plan Year or (2) the average contribution percentage (as defined in Section 401(m)(3) of the Code) for Non-Highly Compensated Employees who are eligible to participate in the Employer's plan that is subject to Section 401(m) of the Code for the plan's plan year beginning with or within the Plan Year; plus (ii) two plus the lesser of (1) or (2) above, provided that in no event shall this amount exceed 200 percent of the lesser of (1) or (2) above. (c) REQUIRED CORRECTION. In the event that the aggregate limit of subsection (b) is exceeded as of the end of any Plan Year, the Employer shall reduce the Average Actual Deferral Percentage of those Highly Compensated Employees who also participate in the Employer's plan which is subject to Section 401(m) of the Code (beginning with such Highly Compensated Employees whose Actual Deferral Percentage is the highest) so that the aggregate limit is not exceeded. The amount by which each such Highly Compensated Employee's Average Actual Deferral Percentage is reduced shall be determined in accordance with the procedures of Article 5.5, by treating the excess amount as Excess Contributions. 5.11 RECORDKEEPING REQUIREMENTS. (a) AVERAGE ACTUAL DEFERRAL PERCENTAGE TESTS. The Employer shall maintain records sufficient to demonstrate satisfaction of the Average Actual Deferral Percentage tests of Article 5.2 for each Plan Year and the extent to which any Qualified Nonelective Contributions and Qualified Matching Contributions are treated as Employee Pre-Tax Contributions under Article 5.4 for purposes of such tests. The determination of Eligible Employees' Actual Deferral Percentages, and the disposition of all Employee Pre-Tax Contributions (and any Qualified Nonelective Contributions and Qualified Matching Contributions treated as Employee Pre-Tax Contributions under Article 5.4) on behalf of Participants, shall satisfy such other requirements as may be prescribed by the Secretary of Treasury. (b) AVERAGE CONTRIBUTION PERCENTAGE TESTS. The Employer shall maintain records sufficient to demonstrate satisfaction of the Average Contribution Percentage tests of Article 5.6 for each Plan Year and the extent to which any Employee Pre-Tax Contributions and Qualified Nonelective Contributions are treated as Employer Matching Contributions under Article 5.8 for purposes of such tests. The determination of Eligible Employees' Average Contribution Percentages, and the disposition of all Employer Matching Contributions and Employee After-Tax 37 Contributions (and any Employee Pre-Tax Contributions and Qualified Nonelective Contributions treated as Employer Matching Contributions under Article 5.8) on behalf of Participants, shall satisfy such other requirements as may be prescribed by the Secretary of Treasury. ARTICLE 6 ALLOCATIONS AND INVESTMENTS 6.1 RECEIPT OF CONTRIBUTIONS BY TRUSTEE. All contributions to the Plan which are paid to the Trustee under Article 4.9 shall be held in trust and managed by the Trustee in accordance with the terms and conditions of the Trust Agreement. 6.2 ESTABLISHMENT OF SEPARATE ACCOUNTS BY RECORDKEEPER. (a) In accordance with the directions of the Plan Administrator, the Recordkeeper shall establish and maintain the following separate accounts in the name of each Participant: (i) an Employee Pre-Tax Contribution Account to record the Employee Pre-Tax Contributions to the Plan on behalf of the Participant under Articles 4.1 and 4.3, and the earnings, losses and expenses allocated thereto; (ii) an Employee After-Tax Contribution Account to record any Employee After-Tax Contributions to the Plan by the Participant under Articles 4.5 and the earnings, losses and expenses allocated thereto; (iii) an Employer Matching Contribution Account to record any Employer Matching Contributions to the Plan under Article 4.6 on behalf of the Participant and the earnings, losses and expenses allocated thereto; (iv) an Employer Nonelective Contribution Account to record any Employer Nonelective Contributions to the Plan on behalf of the Participant under Article 4.7 and the earnings, losses and expenses allocated thereto; (v) a Rollover Contribution Account to record any rollover contributions to the Plan on behalf of the Participant under Article 4.8 and the earnings, losses and expenses allocated thereto; and (vi) such other accounts as the Plan Administrator shall direct in accordance with the provisions of the Plan or the requirements of the Code. 38 If the Employer makes both Employer Nonelective Contributions under Article 4.7(a) which do not qualify as Qualified Nonelective Contributions and Qualified Nonelective Contributions under Article 4.7(b), separate sub-accounts shall be established within the Participant's Employer Nonelective Contribution Account to record separately such contributions and the earnings, losses and expenses allocated thereto. (b) The Plan Administrator shall certify to the Recordkeeper the name, address and social security number of each Participant for whom a separate account is to be established under the Plan. The Plan Administrator shall furnish the Recordkeeper with instructions in accordance with Article 4.9 allocating all contributions to the Plan to Participants' separate accounts. In crediting amounts to Participants' separate accounts, the Recordkeeper shall be fully entitled to rely on the instructions furnished by the Plan Administrator, and shall be under no duty to make any inquiry or investigation with respect thereto. (c) The maintenance of separate accounts under subsection (a) above shall be for accounting purposes only. Any amount distributed to a Participant or Beneficiary under Article 8, or any amount withdrawn by a Participant under Article 9, shall be charged to the appropriate separate accounts of the Participant as of the applicable Valuation Date for such distribution or withdrawal under Article 8.4 or 9.5. 6.3 ALLOCATION OF EMPLOYER NONELECTIVE CONTRIBUTIONS UNDER INTEGRATED PLAN. If the Employer has adopted an Integrated Plan by selecting the Permitted Disparity (Integration with Social Security) Allocation Formula under Section 6(b) of the Adoption Agreement, the Employer Nonelective Contributions to the Plan for any Plan Year plus any Forfeitures (if applicable under Article 6.4) shall be allocated to Participants' Employer Nonelective Contribution Accounts in accordance with the Steps One through Four outlined below, subject to the Overall Permitted Disparity Limits set forth in (e) below: (a) STEP ONE (TOP-HEAVY PLANS). First, for any Plan Year that the Plan is a Top-Heavy Plan as defined in Article 12.2(b), the Employer Nonelective Contributions and Forfeitures, if applicable, shall be allocated to the Employer Nonelective Contribution Accounts of all Participants in the proportion that each such Participant's total Compensation for the Plan Year bears to the total Compensation of all Participants for the Plan Year; provided, however, that the amount allocated to any Participant's Employer Nonelective Contribution Account for the Plan Year under this paragraph shall not exceed three percent of the Participant's Compensation for the Plan Year. 39 (b) STEP TWO (TOP HEAVY PLANS). Second, for any Plan Year that the Plan is a Top-Heavy Plan as defined in Article 12.2(b), any Employer Nonelective Contributions and Forfeitures, if applicable, remaining after Step One shall be allocated to the Employer Nonelective Contribution Accounts of all Participants in the proportion that each such Participant's Compensation in excess of the Integration Level designated in the Adoption Agreement for the Plan Year bears to the total Compensation in excess of said Integration Level of all such Participants; provided, however, that the amount allocated to any Participant's Employer Nonelective Contribution Account for the Plan Year under this paragraph shall not exceed three percent of the Participant's Compensation. In the case of any Participant who has exceeded the Cumulative Permitted Disparity Limit set forth in (e)(ii) below, such Participant's total Compensation for the Plan Year shall be taken into account for purposes of this paragraph. (c) STEP THREE. Third, any Employer Nonelective Contributions and Forfeitures, if applicable, remaining after Steps One and Two shall be allocated to the Employer Nonelective Contribution Accounts of all Participants in the proportion that the sum of each such Participant's total Compensation plus Compensation in excess of the Integration Level designated in the Adoption Agreement bears to the sum of the total Compensation plus Compensation in excess of said Integration Level for all such Participants for the Plan Year; provided however, that the amount allocated to any Participant's Employer Nonelective Contribution Accounts for the Plan Year under this paragraph shall not exceed the Maximum Disparity Rate designated in the Adoption Agreement multiplied by the sum of the Participant's total Compensation plus Compensation in excess of the Integration Level designated in the Adoption Agreement. In the case of any Participant who has exceeded the Cumulative Permitted Disparity Limit set forth in (e)(ii) below, two times such Participant's total Compensation for the Plan Year shall be taken into account for purposes of this paragraph. (d) STEP FOUR. Fourth, any remaining Employer Nonelective Contributions and Forfeitures, if applicable, shall be allocated to the Employer Nonelective Contribution Accounts of all Participants in the proportion that each such Participant's total Compensation for the Plan Year bears to the total Compensation of all eligible Participants for the Plan Year. (e) OVERALL PERMITTED DISPARITY LIMITS (i) ANNUAL OVERALL PERMITTED DISPARITY LIMIT. If for any Plan Year the Plan benefits any Participant who also benefits under another qualified plan or simplified employee pension maintained by the Employer that provides for permitted disparity (or imputes disparity), the Employer Nonelective Contributions and Forfeitures shall be allocated to 40 the Employer Nonelective Contribution Accounts of each Participant eligible to share in Employer Nonelective Contributions for the Plan Year in the proportion that each such Participant's total Compensation for the Plan Year bears to the total Compensation of all eligible Participants for the Plan Year. (ii) CUMULATIVE PERMITTED DISPARITY LIMIT. Effective for Plan Years beginning on or after January 1, 1995, the Cumulative Permitted Disparity Limit for a Participant is 35 total cumulative permitted disparity years. Total cumulative permitted disparity years means the number of years credited to the Participant for allocation or accrual purposes under this Plan or any other qualified plan or simplified employee pension (whether or not terminated) ever maintained by the Employer. For purposes of determining a Participant's Cumulative Permitted Disparity Limit, all years ending in the same calendar year are treated as the same year. If the Participant has not benefited under a defined benefit plan or target benefit plan for any year beginning on or after January 1, 1994, the Cumulative Permitted Disparity Limit shall be satisfied with respect to such Participant. 6.4 ALLOCATION OF FORFEITURES. Any Forfeitures which have become available for allocation under Article 4.6, Article 5.9(c) or Article 8.5 during a Plan Year shall be used to reduce the amount of contributions thereafter required to be made to the Plan by the Employer. 6.5 INVESTMENT OF PLAN ASSETS. (a) Unless otherwise designated by the Employer in the Adoption Agreement, all amounts which are allocated to the separate accounts of a Participant under the Plan shall be invested and reinvested in the Vanguard Funds or other investments authorized under the Trust Agreement in accordance with the Participant's investment directions. All such investment directions by a Participant shall be made in accordance with rules and procedures prescribed by the Plan Administrator. To the extent that any Participant fails to provide investment directions in accordance with such rules and procedures, the Plan Administrator or other named fiduciary for the Plan which the Employer identifies in the Adoption Agreement shall be responsible for directing the investment of amounts allocated to the Participant's separate accounts under the Plan. A Participant shall be permitted to change investment directions both as to existing amounts credited to his or her separate accounts under the Plan and future contributions by or on behalf of the Participant under the Plan. Any such change in investment directions shall be made in accordance with rules and procedures prescribed by the Plan Administrator. (b) To the extent that the Employer provides in the Adoption Agreement that the investment of the assets of the Plan shall not be subject to participant direction, such Plan assets shall be 41 invested and reinvested in the Vanguard Funds or other investments authorized under the Trust Agreement as directed by the Plan Administrator or other named fiduciary for the Plan which the Employer identifies in the Adoption Agreement to be responsible for Plan investments. All such investment directions by the Plan Administrator or other named fiduciary for the Plan shall uniformly and ratably apply to all Participants similarly situated. 6.6 ALLOCATION OF EARNINGS AND LOSSES. (a) The dividends, capital gains distributions, and other earnings received on any shares or units of the Vanguard Funds or on any other Plan investments which are specifically credited or earmarked to a Participant's separate account under the Plan shall be allocated to such separate account and immediately reinvested, to the extent practicable, in additional shares or units of such Vanguard Funds or other earmarked Plan investments. (b) Any Plan earnings or losses attributable to the investment of a Participant's separate account under the Plan in a loan to the Participant under Article 10 shall be allocated to the Participant's separate account in accordance with the provisions of Article 10.9. (c) To the extent not otherwise provided in subsection (a) or (b) above, the assets of the Plan shall be valued at their current fair market value on periodic Valuation Dates as determined by the Recordkeeper, which shall occur no less frequently than once each calendar quarter. On each such periodic Valuation Date, the earnings or losses of the Plan since the immediately preceding periodic Valuation Date shall be allocated to the separate accounts of all Participants and former Participants under the Plan in the ratio that the fair market value of each such account as of that immediately preceding Valuation Date, reduced by any distributions or withdrawals therefrom since such preceding Valuation Date, bears to the total fair market value of all separate accounts as of the immediately preceding Valuation Date, reduced by any distributions or withdrawals therefrom since such preceding Valuation Date. 6.7 INSURANCE CONTRACTS. Any insurance contract purchased on behalf of a Participant under the Plan shall provide that all proceeds payable upon the death of the Participant shall be paid to the Plan. The Plan shall be required to distribute all such proceeds in accordance with the Plan's distribution provisions (including the provisions of Article 8.8(a) requiring in certain cases a qualified preretirement survivor annuity to be distributed to the Participant's surviving spouse). Under no circumstances shall the Plan retain any part of the proceeds. In the event of any conflict between the terms of the Plan and the terms of any insurance contract purchased hereunder, the provisions of the Plan shall control. 42 6.8 NO RIGHTS CREATED BY ALLOCATION. Any allocation of contributions or earnings to the separate account of a Participant under this Article 6 shall not cause the Participant to have any right, title or interest in any assets of the Plan except at the time and under the terms and conditions expressly provided for in the Plan. ARTICLE 7 VESTING 7.1 FULL VESTING IN EMPLOYEE CONTRIBUTIONS AND ROLLOVER CONTRIBUTIONS. A Participant shall be fully vested at all times in all Employee Pre-Tax Contributions, Employee After-Tax Contributions, and Rollover Contributions made to the Plan on the Participant's behalf and all earnings on such contributions. 7.2 VESTING IN EMPLOYER CONTRIBUTIONS. (a) GENERAL RULE. Except as otherwise provided below, the vested amounts in a Participant's Employer Matching Contribution Account and Employer Nonelective Contribution Account shall be determined by the number of Years of Service completed by the Participant for vesting purposes (as determined under Article 7.3) and the vesting schedules designated by the Employer in the Adoption Agreement. (b) FULL VESTING UPON NORMAL RETIREMENT AGE, DISABILITY OR DEATH. Notwithstanding the vesting schedules designated by the Employer in the Adoption Agreement, all amounts allocated to a Participant's Employer Matching Contribution Account and Employer Nonelective Contribution Account shall automatically become fully vested if the Participant attains Normal Retirement Age, incurs a Disability or dies while employed by the Employer. (c) VESTING AFTER IN-SERVICE WITHDRAWALS. If a Participant makes an in-service withdrawal under Article 9.2 or 9.3 from the Participant's Employer Matching Contribution Account or Employer Nonelective Contribution Account at a time when the Participant is not fully-vested, the Participant's vested amount in such account on any date thereafter shall be an amount ("X") determined by the following formula: X = P(AB + D) - D. For purposes of this formula, "P" is the Participant's vested percentage under the Plan's vesting schedule on the relevant date, "AB" is the account balance on the relevant date, and "D" is the amount of the Participant's in-service withdrawal. 7.3 YEAR OF SERVICE FOR VESTING PURPOSES. 43 (a) GENERAL RULE. For vesting purposes, a Participant shall be credited with one Year of Service for each Plan Year during which the Participant completes 1,000 or more Hours of Service. All Years of Service completed by the Participant, including Years of Service completed prior to the Effective Date of the Plan or prior to the Participant's commencement of participation in the Plan, shall be counted for vesting purposes except as otherwise provided in Article 7.4. (b) SERVICE WITH PREDECESSOR EMPLOYER. If so designated in the Adoption Agreement, a Participant's Years of Service shall include years of service (determined in a manner consistent with (a) above) with any predecessor employer of the Employer; provided, however, that if the Employer is maintaining the Plan as the plan of a predecessor employer, an Employee's Years of Service shall automatically include years of service with such predecessor employer without regard to any designation in the Adoption Agreement. 7.4 YEARS OF SERVICE UPON REEMPLOYMENT. If a Participant incurs five or more consecutive one-year Breaks in Service, any Years of Service completed by the Participant after the Breaks in Service shall be disregarded for purposes of determining the Participant's vested amounts in his or her Employer Matching Contribution Account and Employer Nonelective Contribution Account prior to the date the Participant incurred the Breaks in Service (although both pre-Break and post-Break Years of Service shall count for purposes of determining the Participant's vested percentage in his or her Employer Matching Contribution Account and Employer Nonelective Contribution Account after the date the Participant incurred the Breaks in Service). To the extent necessary, separate sub-accounts shall be established by the Recordkeeper within the Participant's Employer Matching Contribution Account and Employer Nonelective Contribution Account to reflect the Participant's pre-Break and post-Break amounts derived from Employer Matching Contributions and Employer Nonelective Contributions, which sub-accounts shall share in the allocation of earnings and losses under Article 6.6. In the case of any Participant who incurs a Break in Service of less than five consecutive one-year Breaks in Service, all pre-Break Years of Service and any post-Break Years of Service completed by the Participant shall count for purposes of determining the Participant's vested percentage in his or her Employer Matching Contribution Account and Employer Nonelective Contribution Account both before and after the date the Participant incurred the Break in Service. ARTICLE 8 DISTRIBUTION OF BENEFITS 8.1 DISTRIBUTION UPON SEPARATION FROM SERVICE. A Participant shall be entitled to receive the vested amounts (as determined under Articles 7.1 and 7.2) credited to the Participant's separate accounts under the Plan when the Participant separates from service with the Employer. 44 8.2 DISTRIBUTION UPON DEATH. In the event of a Participant's death, the Participant's Beneficiary under Article 8.16 shall be entitled to receive the vested amounts (as determined under Article 7.1 and 7.2) credited to the Participant's separate accounts under the Plan, which amounts shall be determined after the payment of any preretirement survivor annuity required under Article 8.8. 8.3 OPTIONAL FORMS OF DISTRIBUTION; PARTICIPANT CONSENT. (a) AMOUNTS NOT GREATER THAN $3,500. If the total vested amount which a Participant is entitled to receive under Article 8.1 does not exceed (or at the time of any prior distribution did not exceed) $3,500, such amount shall be distributed to the Participant in a lump-sum payment as soon as practicable following the date of the Participant's separation from service. For purposes of this Article 8.3(a), a Participant's vested account balance shall not include any accumulated deductible employee contributions within the meaning of Section 72(o)(5)(B) of the Code for Plan Years beginning prior to January 1, 1989. (b) AMOUNTS GREATER THAN $3,500. If the total vested amount which a Participant is entitled to receive under Article 8.1 exceeds (or at the time of any prior distribution exceeded) $3,500, such amount shall not be distributed to the Participant prior to his or her required beginning date under Article 8.6(b) unless the Participant consents to such distribution within 90 days before the date of distribution. If the vested amount which the Participant is entitled to receive is not required to be distributed in the form of a qualified joint and survivor annuity under Article 8.7, the Participant shall be permitted to elect to have such amount distributed: (i) in a single-sum payment; or (ii) if so designated by the Employer in the Adoption Agreement, in monthly, quarterly or annual installment payments over a period not to exceed the life expectancy of the Participant or the joint life and last survivor expectancy of the Participant and the Participant's designated Beneficiary. The method (if applicable) and timing of distribution shall be selected by the Participant on a form prescribed for these purposes by the Plan Administrator. If no such selection is made by the Participant and the Participant's distribution is not required to be made in the form of a qualified joint and survivor annuity under Article 8.7, the Participant's distribution shall be automatically made in a lump-sum payment no later than the Participant's required beginning date under Article 8.6(b). Notwithstanding the preceding, if the Plan is terminated under Article 14.2 and if the Employer (or any entity within the same controlled group as the Employer) maintains another defined contribution plan (other than an employee stock ownership plan as defined in Section 45 4975(e)(7) of the Code), then the amounts which a Participant is entitled to receive under the Plan shall be transferred without the Participant's consent directly to the other plan if the Participant does not consent to an immediate distribution. (c) EXPLANATION TO PARTICIPANTS. No more than 90 days and no less than 30 days prior to the date of any distribution to a Participant under (b) above, the Plan Administrator shall furnish the Participant with a notice of the material features and relative values of the optional forms of distribution available under the Plan and the Participant's right to defer such distribution to the Participant's required beginning date. However, distribution to the Participant may commence less than 30 days after the notice in the preceding sentence is given to the Participant, provided that the following conditions are satisfied: (i) the distribution is one to which Sections 401(a)(11) and 417 of the Internal Revenue Code do not apply; (ii) the Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option); and (iii) the Participant, after receiving the notice, affirmatively elects to receive a distribution from the Plan (or to make a direct rollover under Article 8.18). If the Participant elects to defer the distribution of all or any portion of the amount which the Participant is entitled to receive, such deferred amount shall remain in the Plan and continue to receive allocations of earnings and losses pursuant to Article 6.6 until the Participant elects or is otherwise required to receive such deferred amount. (d) PAYMENTS TO DEATH BENEFICIARIES. Any amount which a Participant's Beneficiary is entitled to receive under Article 8.2 upon the death of the Participant shall be distributed in a lump-sum payment or in monthly, quarterly or annual installment payments over a specified period as selected by the Beneficiary in accordance with the minimum distribution requirements of Article 8.6(e). The method and timing of distribution shall be selected by the Beneficiary on a form prescribed for these purposes by the Plan Administrator. If the Beneficiary does not select a method of distribution, the entire amount which the Beneficiary is entitled to receive under Article 8.2 shall be distributed to the Beneficiary in a lump-sum payment no later than the December 31st of the calendar year containing the fifth anniversary of the Participant's death. If the Beneficiary 46 dies before receiving a complete distribution of any amount which the Beneficiary is entitled to receive under Article 8.2, such remaining amount shall be distributed as soon as practicable in a lump-sum payment to the Beneficiary's estate. 8.4 DISTRIBUTION UPON WRITTEN INSTRUCTIONS; VALUATION OF DISTRIBUTIONS. All distributions from the Plan shall be made by the Trustee as soon as practicable following receipt of proper instructions furnished by the Plan Administrator setting forth the name and address of the recipient and the amount and form of distribution. In the case of a single-sum payment, the amount of the distribution shall be determined by the value of the amounts credited to the Participant's separate accounts under the Plan as of the Valuation Date on which the Trustee receives instructions in good order from the Plan Administrator to make the distribution. In the case of installment payments, the amount of each distribution shall be determined by the value of the amounts credited to the Participant's separate accounts under the Plan as of the Valuation Date on which the installment payment is to be made in accordance with the Plan Administrator's instructions. In making any distribution from the Plan, the Trustee shall be fully entitled to rely on instructions furnished to it by the Plan Administrator, and shall be under no duty to make any inquiry or investigation with respect thereto. 8.5 FORFEITURES UPON SEPARATION FROM SERVICE. (a) If a Participant separates from service with the Employer prior to becoming fully vested in the Participant's Employer Matching Contribution Account or Employer Nonelective Contribution Account (the "Employer Contribution Accounts") under Article 7.2 and the Participant elects or is otherwise required to receive a distribution of the entire vested amounts credited to the Participant's Employer Contribution Accounts, the total non-vested amount of the Participant's Employer Contribution Accounts shall be treated as a Forfeiture. For these purposes, a Participant who separates from service at a time when the vested amount credited to the Participant's Employer Contribution Accounts is zero shall be deemed to have received a distribution of the vested amount credited to the Participant's Employer Contribution Accounts and the entire non-vested amount of the Participant's Employer Contribution Accounts shall be treated as a Forfeiture. All Forfeitures by Participants under this Article 8.5 shall be available for allocation in accordance with the provisions of Article 6.4. (b) If a Participant who separates from service with the Employer prior to becoming fully vested in the Participant's Employer Contribution Accounts under Article 7.2 elects at any time under Article 8.4 to receive less than the entire vested amount credited to the Participant's Employer Contribution Accounts, the non-vested amount of the Participant's Employer Contribution Accounts which shall be treated as a Forfeiture upon such distribution shall equal the total non- 47 vested amount credited to the Participant's Employer Contribution Accounts prior to the distribution multiplied by a fraction, the numerator of which is the amount of the Participant's distribution from the Employer Contribution Accounts, and the denominator of which is the total vested amount credited to the Employer Contribution Accounts immediately prior to the distribution. (c) Any amount forfeited by a Participant under (a) or (b) above (unadjusted for gains or losses) shall be restored to the Participant's Employer Contribution Accounts if the Participant returns to the service of the Employer and repays the amount of any distribution the Participant received from the Participant's Employer Contribution Accounts upon the Participant's prior separation from service before the earlier of: (i) five years after the first date the Participant is subsequently reemployed by the Employer; or (ii) the date the Participant incurs five consecutive one-year Breaks in Service for vesting purposes following the date of the Participant's distribution. The amount of any such Forfeiture shall be restored to the Participant's Employer Contribution Accounts from other Forfeiture amounts by Participants and the Plan earnings attributable thereto, or by additional Employer contributions to the Plan on behalf of the Participant. If a Participant is deemed to have received a distribution under (a) above because the Participant separated from service at a time when the vested amount credited to the Participant's Employer Contribution Accounts was zero and the Participant resumes employment covered under the Plan before the date the Participant incurs five consecutive one-year Breaks in Service, the amount forfeited by the Participant under (a) above shall be restored to the Participant's Employer Contribution Accounts upon the Participant's reemployment by the Employer. 8.6 MINIMUM DISTRIBUTION REQUIREMENTS. (a) APPLICATION. Subject to the joint and survivor annuity requirements of Article 8.7, all minimum distributions required to be made to Participants and Beneficiaries under this Article 8.6 shall be determined in accordance with the U.S. Department of Treasury regulations under Section 401(a)(9) of the Code, including the minimum distribution incidental benefit requirement of Treasury Regulation Section 1.401(a)(9)-2. Unless otherwise specified, the provisions of this Article 8.6 shall apply to calendar years beginning after December 31, 1984, and shall take precedence over any inconsistent provisions of the Plan. 48 (b) REQUIRED BEGINNING DATE. All amounts which a Participant is entitled to receive under Article 8.1 shall be distributed or begin to be distributed to the Participant no later than the Participant's required beginning date. For purposes of this requirement, a Participant's required beginning date shall be the first day of April of the calendar year following the calendar year in which the Participant attains age 70 1/2. However, in the case of any Participant who attained age 70 1/2 before January 1, 1988, the Participant's required beginning date shall be determined in accordance with (i) or (ii) below: (I) IN GENERAL. If the Participant is not a five-percent owner of the Employer (as defined in (ii) below), the Participant's required beginning date shall be the first day of April of the calendar year following the calendar year in which the later of the Participant's retirement or attainment of age 70 1/2 occurs. (II) FIVE-PERCENT OWNERS. If the Participant is a five-percent owner of the Employer during any year beginning after December 31, 1979, the Participant's required beginning date shall be the first day of April following the later of: (1) the calendar year in which the Participant attains age 70 1/2, or (2) the earlier of the calendar year with or within which ends the Plan Year in which the Participant becomes a five-percent owner or the calendar year in which the Participant retires. Once minimum distributions have commenced to a five-percent owner under this Article 8.6, they must continue to be made even if the Participant ceases to be a five-percent owner in a subsequent year. For purposes of this Article 8.6, a Participant is treated as a five-percent owner if such Participant is a five-percent owner as defined in Section 416(i) of the Code (without regard to whether the Plan is a top-heavy plan) at any time during the Plan Year ending with or within the calendar year in which such owner attains age 66-1/2 or any subsequent Plan Year. (c) LIMITS ON DISTRIBUTION PERIODS. The method of distribution selected by a Participant under Article 8.3 shall satisfy the minimum distribution requirements of this Article 8.6 for each calendar year beginning with the calendar year immediately preceding the calendar year which contains the Participant's required beginning date (the "first distribution calendar year"). As of the first distribution calendar year, distributions, if not made in a single-sum, shall be made over one of the following periods (or combination thereof): (i) the life of the Participant; (ii) the life of the Participant and his or her designated Beneficiary; 49 (iii) a period certain not extending beyond the life expectancy of the Participant; or (iv) a period certain not extending beyond the joint and last survivor expectancy of the Participant and his or her designated Beneficiary. (d) MINIMUM DISTRIBUTION AMOUNTS. The minimum distribution amount for the first distribution calendar year shall be made on or before the Participant's required beginning date. The minimum distribution amount for each distribution calendar year thereafter, including the calendar year in which the Participant's required beginning date occurs, shall be made on or before December 31st of that calendar year. Such minimum distribution amounts shall be calculated as follows: (i) For calendar years beginning after December 31, 1988, the minimum distribution amount for each distribution calendar year shall be determined by dividing the Participant's account balance under the Plan for the distribution calendar year by the lesser of: (1) the life expectancy of the Participant or joint life and last survivor expectancy of the Participant and his or her designated Beneficiary for the calendar year; or (2) if the Participant's designated Beneficiary under the Plan is not the Participant's spouse, the applicable divisor for the distribution calendar year determined from the table set forth in Treasury Regulation Section 1.401(a)(9)-2, Q&A-4. (ii) For calendar years beginning before January 1, 1989, the minimum distribution amount for each distribution calendar year shall be determined by dividing the Participant's vested account balance under the Plan for the distribution calendar year by the life expectancy of the Participant or joint and last survivor expectancy of the Participant and his or her designated Beneficiary for the distribution calendar year; provided however, that if the Participant's designated Beneficiary under the Plan is not the Participant's spouse, the method of distribution selected by the Participant under Article 8.3 must provide for at least 50 percent of the amount available for distribution under the Plan at the time of selection to be paid within the life expectancy of the Participant. For purposes of these minimum distribution requirements, a Participant's account balance under the Plan for any distribution calendar year shall mean the total vested amount credited to the Participant's separate accounts under the Plan as of the last Valuation Date of the preceding calendar year (the "valuation calendar year"), increased by the amount of any contributions or Forfeitures allocated to the Participant's accounts in the valuation calendar year after such Valuation Date, and decreased by any distributions made from the Participant's accounts in the 50 valuation calendar year after such Valuation Date. If any minimum distribution for the Participant's first distribution calendar year is made in the following calendar year but on or before the Participant's required beginning date, the amount of such minimum distribution shall be treated as if it had been made in the Participant's first distribution calendar year. (e) DEATH DISTRIBUTION PROVISIONS. Any amount which a Participant's designated Beneficiary shall be entitled to receive under Article 8.2 upon the death of the Participant shall be distributed in accordance with the following rules: (i) WHERE DISTRIBUTION HAD ALREADY COMMENCED. If the Participant died after minimum distributions had already commenced, all amounts payable to the Participant's designated Beneficiary shall be distributed at least as rapidly as under the method of distribution in effect prior to the Participant's death. For these purposes, a Participant's minimum distributions shall be considered to have commenced no earlier than the Participant's required beginning date. If distribution in the form of an annuity as described in Article 8.6(f) has irrevocably commenced prior to the Participant's required beginning date, the Participant's minimum distributions shall be considered to have commenced on the date distributions actually commenced under the annuity contract. (ii) FIVE-YEAR RULE. If the Participant died before minimum distributions had already commenced in accordance with (a) above, all amounts payable to the Participant's designated Beneficiary shall be distributed by December 31st of the calendar year which contains the fifth anniversary of the date of the Participant's death. (iii) EXCEPTION TO FIVE-YEAR RULE. Notwithstanding subsection (ii) above, all amounts payable to the Participant's designated Beneficiary may (if subsection (a) does not apply) be distributed in installment payments over a period not extending beyond the Beneficiary's life expectancy, provided such distribution commences by December 31st of the calendar year following the calendar year of the Participant's death. If the designated Beneficiary is the surviving spouse of the Participant, the date that distributions are required to commence in accordance with the preceding sentence shall be the later of: (1) December 31st of the calendar year following the calendar year of the Participant's death, or (2) December 31st of the calendar year in which the Participant would have attained age 70 1/2. (iv) CALCULATION OF MINIMUM INSTALLMENT PAYMENTS. In the case of installment payments over the Beneficiary's life expectancy under (iii) above, the minimum 51 distribution amount for each calendar year shall be determined by dividing the Beneficiary's account balance under the Plan for the calendar year by the Beneficiary's life expectancy for the calendar year. For these purposes, a Beneficiary's account balance under the Plan for any calendar year shall mean the total vested amount credited to the deceased Participant's separate accounts under the Plan which the Beneficiary is entitled to receive under Article 8.2 as of the last Valuation Date of the preceding calendar year (the "valuation calendar year"), increased by the amount of any contributions or Forfeitures allocated to the deceased Participant's accounts in the valuation calendar year after such Valuation Date, and decreased by any distributions made from the deceased Participant's accounts in the valuation calendar year after such Valuation Date. (f) APPLICABLE LIFE EXPECTANCY. For purposes of this Article 8.6, the life expectancy of the Participant or his or her designated Beneficiary, or the joint life and last survivor expectancy of the Participant and his or her designated Beneficiary, shall be determined by the following rules: (i) Life expectancy or joint life and last survivor expectancy shall be computed by using the expected return multiples contained in Tables V and VI of Treasury Regulation Section 1.72-9. The life expectancies of the Participant and his or her spouse (if the spouse is designated Beneficiary) shall be recalculated annually unless otherwise elected by the Participant or by the spouse in the case of distributions referred to in (d)(iii) above on or before the date minimum distributions are required to begin. Any such election by the Participant or spouse shall be irrevocable and shall apply to all subsequent years. The life expectancy of a non-spouse Beneficiary shall not be recalculated. (ii) For purposes of determining the minimum distribution amounts to be paid to the Participant for each distribution calendar year under (c)(i) or (ii) above, the life expectancy of the Participant, or the joint life and last survivor expectancy of the Participant and his or her designated Beneficiary, shall be calculated based on the attained age of the Participant or Beneficiary as of the Participant's or Beneficiary's birthday in the first distribution calendar year. If life expectancy is being recalculated, the life expectancy of the Participant, or the joint life and last survivor expectancy of the Participant and his or her spouse (if the spouse is the designated Beneficiary), shall be calculated based on the attained age of the Participant and spouse as of the Participant's and spouse's birthday in each succeeding distribution calendar year. (iii) For purposes of determining the minimum distribution amounts to be paid to the Beneficiary for each calendar year under (d)(iv) above, the life expectancy of the 52 designated Beneficiary shall be calculated based on the attained age of the Beneficiary as of the Beneficiary's birthday in the calendar year in which distributions are required to commence under (d)(iii). If life expectancy is being recalculated, the life expectancy of the Participant's surviving spouse (if the spouse is designated Beneficiary) shall be calculated based on the attained age of the spouse as of the spouse's birthday in each succeeding calendar year. (iv) For purposes of determining the joint life and last survivor expectancy of the Participant and his or her designated Beneficiary under (c)(i) or (ii) above, or the life expectancy of the Participant's designated Beneficiary under (d)(iii) above, the Participant's designated Beneficiary shall mean the appropriate individual (if any) designated as Beneficiary under Article 8.16 as determined in accordance with the Department of Treasury regulations under Section 401(a)(9) of the Code. (g) ANNUITY DISTRIBUTIONS. If distributions to any Participant or Beneficiary from the Plan are to be made in the form of an annuity contract purchased from an insurance company, such contract shall provide for distributions to be made in accordance with Section 401(a)(9) of the Code and the Treasury Regulations thereunder. 8.7 JOINT AND SURVIVOR ANNUITY REQUIREMENT. (a) GENERAL RULE. Notwithstanding any provision of the Plan to the contrary, any amount which a Participant is entitled to receive from the Plan (including any withdrawal under Article 9) shall be distributed in the form of a qualified joint and survivor annuity in the absence of a qualified waiver under Article 8.10, or except as otherwise provided in Article 8.11 or 8.12. The requirement for a qualified joint and survivor annuity shall apply to all vested amounts payable to the Participant under the Plan (whether derived from Employer or Employee contributions) as of the earliest date upon which the Participant is entitled to receive a distribution under the Plan. (b) DEFINITION OF QUALIFIED JOINT AND SURVIVOR ANNUITY. For purposes of this Article 8, the term "qualified joint and survivor annuity" means, in the case of a married participant, an immediate annuity payable for the life of the Participant with a survivor annuity payable for the life of the Participant's surviving spouse which is not less than 50 percent nor more than 100 percent of the annuity payable for the life of the Participant, as designated by the Participant during his or her lifetime; provided that if no such designation is made by the Participant, the percentage shall be 50 percent. In the case of an unmarried participant, the term "qualified joint and survivor annuity" means an annuity payable for the life of the Participant. The qualified joint 53 and survivor annuity shall be purchased with the total amount available for distribution from the Participant's separate accounts under the Plan at the time of distribution. 8.8 PRERETIREMENT SURVIVOR ANNUITY REQUIREMENT. (a) GENERAL RULE. Notwithstanding any provision of the Plan to the contrary, in the case of any vested Participant who dies before his or her annuity starting date, a qualified preretirement survivor annuity shall be payable to the surviving spouse of the Participant in the absence of a qualified waiver under Article 8.10, or except as otherwise provided in Article 8.11 or 8.12. For these purposes, the Participant's "annuity starting date" means the first day of the first period for which an amount is paid to the Participant under the Plan as an annuity or any other form of benefit. The surviving spouse may elect to have the preretirement survivor annuity distributed within a reasonable time after the Participant's death. (b) DEFINITION OF QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. For purposes of this Article 8, the term "qualified preretirement survivor annuity" means an annuity payable for the life of the Participant's surviving spouse which is purchased with 50 percent of the Participant's vested account balance under the Plan at the time of the Participant's death. For these purposes, the Participant's "vested account balance" shall mean the aggregate vested amount (as determined under Article 7) credited to the Participant's separate accounts under the Plan derived from all Employer and Employee contributions (including rollover contributions) at the time of death. 8.9 NOTICE AND EXPLANATION TO PARTICIPANTS. (a) EXPLANATION OF JOINT AND SURVIVOR ANNUITY. The Plan Administrator shall provide each Participant with a written explanation at least 30 days, but no more than 90 days, prior to the Participant's annuity starting date (as defined in Article 8.8(a)) setting forth: (i) the terms and conditions of the qualified joint and survivor annuity under Article 8.7; (ii) the Participant's right to make, and the effect of, an election to waive the qualified joint and survivor annuity form of distribution in accordance with Article 8.10; (iii) the rights of the Participant's spouse; and (iv) the right to make, and the effect of, a revocation of a previous election to waive the qualified joint and survivor annuity method of distribution. (b) EXPLANATION OF PRERETIREMENT SURVIVOR ANNUITY. The Plan Administrator shall provide each Participant within the period beginning with the first day of the Plan Year in which the Participant attains age 32 and ending with the close of the Plan Year in which the Participant attains age 35 a written explanation of the qualified preretirement survivor annuity of Article 8.8 54 in such terms and in such a manner as would be comparable to the explanation required under subsection (a) above with respect to the qualified joint and survivor annuity. If a Participant commences participation in the Plan after the first day of the Plan Year in which the Participant attains age 32, the Plan Administrator shall provide the written explanation required by the preceding sentence no later than the end of the one-year period beginning on the date the Participant commences participation in the Plan. If a Participant terminates employment with the Employer before attaining age 35, the Plan Administrator shall provide the required written explanation during the period beginning one year before the Participant's termination of employment and ending one year after such termination of employment; provided that if the Participant thereafter resumes employment with the Employer, the Plan Administrator shall provide the required written explanation during the period otherwise required above. 8.10 WAIVER OF QUALIFIED JOINT OR SURVIVOR ANNUITY OR QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. (a) GENERAL RULE. A Participant may elect at any time during the applicable election period to waive the qualified joint and survivor annuity form of distribution or the qualified preretirement survivor annuity (or both), and may revoke any such election at any time during the applicable election period. (b) SPOUSAL CONSENT REQUIRED. Any election by a Participant to waive the qualified joint and survivor annuity form of distribution or the qualified preretirement survivor annuity under (a) above shall not be effective unless: (i) the Participant's spouse consents in writing to the Participant's election; (ii) the Participant's election designates the specific non-spouse Beneficiary (including any class of Beneficiaries or contingent Beneficiaries) to receive the Participant's benefits under the Plan upon the Participant's death, which Beneficiary designation shall not be thereafter changed by the Participant without further spousal consent (unless the spouse expressly permits subsequent Beneficiary designations by the Participant without further spousal consent); (iii) the spouse's consent acknowledges the effect of the Participant's election; and (iv) the spouse's consent is witnessed by a Plan representative or a notary public. 55 In addition, in the case of a waiver of the qualified joint and survivor annuity, the Participant's election shall specify the optional form of distribution elected by the Participant under Article 8.3 which may not be thereafter changed without further spousal consent (unless the spouse expressly permits subsequent changes by the Participant without further spousal consent). Notwithstanding the preceding, if the Participant establishes to the satisfaction of the Plan Administrator that there is no spouse or the spouse cannot be located, the Participant's election to waive the qualified joint and survivor annuity form of distribution or the qualified preretirement survivor annuity shall be deemed a qualified election for which no spousal consent is required. Any consent by a spouse, or establishment that the consent of a spouse may not be obtained, shall not be effective with respect to any other spouse. Any spousal consent which permits subsequent changes by the Participant to the Beneficiary designation or optional form of distribution without the requirement of further spousal consent shall acknowledge that the spouse has the right to limit such consent to a specific Beneficiary or optional form of distribution, and that the spouse voluntarily elects to relinquish such right. A Participant may revoke any prior waiver of the qualified joint and survivor annuity or qualified preretirement survivor annuity at any time prior to the commencement of benefits without the consent of his or her spouse, and the number of such revocations shall not be limited. Any new waiver of the qualified joint and survivor annuity or qualified preretirement survivor annuity, or any change to an existing Beneficiary designation by a Participant under Article 8.16 which was in effect at the time of a waiver of the qualified joint and survivor annuity or qualified preretirement survivor annuity, shall require a new spousal consent in accordance with this Article 8.10(b). No consent obtained under this Article 8.10(b) shall be valid unless the Participant has received the appropriate notice and written explanation as provided in Article 8.9. (c) APPLICABLE ELECTION PERIOD DEFINED. For purposes of this Article 8.10, the term "applicable election period" means: (i) in the case of an election to waive the qualified joint and survivor annuity form of distribution, the 90-day period ending on the Participant's annuity starting date (as defined in Article 8.8(a)); or (ii) in the case of an election to waive the qualified preretirement survivor annuity, the period which begins on the first day of the Plan Year in which the Participant attains age 35 and ends on the date of the Participant's death. If a Participant separates from service prior to the first day of the Plan Year in which he attains age 35, the applicable election period for purposes of (ii) shall begin on the date of the Participant's separation from service with respect to the separate accounts of the Participant under the Plan as of the date of separation. 8.11 EXCEPTION TO JOINT AND SURVIVOR ANNUITY AND PRERETIREMENT SURVIVOR ANNUITY REQUIREMENTS. The qualified joint and survivor annuity requirement of Article 8.7 and the qualified preretirement survivor 56 annuity requirement of Article 8.8 shall not apply with respect to any Participant: (1) who does not or cannot elect to receive payments under the Plan in the form of a life annuity; and (2) whose spouse is the sole Beneficiary entitled to receive the Participant's vested account balance under the Plan at the time of the Participant's death, unless the Participant has no surviving spouse or the Participant's spouse has consented, in a manner conforming to the requirements of Article 8.10(b), to the designation by the Participant of another Beneficiary who shall receive all amounts credited to the Participant's separate accounts under the Plan at the time of the Participant's death. This Article 8.11 shall not be operative with respect to any Participant if it is determined that this Plan constitutes a direct or indirect transferee of the Participant's interest in a defined benefit plan, money purchase pension plan (including a target benefit plan), or stock bonus or profit-sharing plan which is subject to the survivor annuity requirements of Sections 401(a)(11) and 417 of the Code. In addition, this Article 8.11 shall not be operative with respect to any Participant unless the Participant's spouse is the beneficiary of any insurance on the Participant's life which may be purchased by Employer Contributions or Forfeitures which are allocated to the Participant's separate accounts under the Plan. For purposes of this Article 8.11, the Participant's "vested account balance" shall have the same meaning as provided in Article 8.8(b). 8.12 CASH-OUTS. (a) DISTRIBUTIONS NOT IN EXCESS OF $3,500. If the total amount otherwise required to be distributed in the form of a qualified joint and survivor annuity or a qualified preretirement survivor annuity to a Participant or his or her surviving spouse under Article 8.7 or 8.8 does not exceed $3,500, such distribution shall automatically be made in the form of a lump-sum payment. No distribution shall be made under the preceding sentence after the first day of the first period for which an amount is received as an annuity unless the Participant and his or her spouse (or the Participant's surviving spouse if the Participant has died) consents in writing to such distribution. (b) DISTRIBUTIONS IN EXCESS OF $3,500 ONLY WITH CONSENT. If the total amount otherwise required to be distributed in the form of a qualified joint and survivor annuity or a qualified preretirement survivor annuity to a Participant or his or her surviving spouse under Article 8.7 or 8.8 exceeds $3,500, such distribution shall be made in the form of a lump-sum payment if the Participant and his or her spouse (or the Participant's surviving spouse if the Participant has died) consent in writing to such distribution. 8.13 FORMER SPOUSE UNDER QUALIFIED DOMESTIC RELATIONS ORDER. For purposes of the qualified joint and survivor annuity requirement and the qualified preretirement survivor annuity requirement of this Article 8, a former spouse of a Participant shall be treated as the spouse or surviving spouse of the Participant, and any current spouse of a Participant shall not be treated as the spouse or surviving spouse 57 of the Participant, to the extent provided for in any qualified domestic relations order as described in Section 414(p) of the Code. 8.14 PURCHASE OF ANNUITIES; NONTRANSFERABILITY PROVISIONS. The Plan Administrator shall be responsible for arranging the purchase of any annuity contract required to be distributed by the Plan under this Article 8 and directing the Trustee to transfer Plan funds for purposes of making any such purchase. Any annuity contract distributed by the Plan to a Participant or his or her surviving spouse shall be nontransferable and comply with all requirements of this Plan. 8.15 COMMENCEMENT OF BENEFITS. Unless a Participant elects otherwise, distribution of the Participant's benefits under the Plan shall commence no later than 60 days after the close of the Plan Year in which the latest of the following events occurs: (i) the Participant attains age 65 (or Normal Retirement Age, if earlier); (ii) the 10th anniversary of the Plan Year in which the Participant commenced participation in the Plan; or (iii) the Participant's termination of employment with the Employer. Notwithstanding the foregoing, the failure of any Participant to consent to a distribution of benefits under Article 8.3(b) shall be deemed to be an election by the Participant to defer the distribution of his benefits for purposes of this Article 8.15. 8.16 DESIGNATION OF BENEFICIARY. A Participant may designate from time to time any person or persons, who may be designated contingently or successively and who may be an entity other than a natural person, as the Participant's Beneficiary who shall be entitled to receive, except as otherwise required under Article 8.7 or 8.8, any undistributed vested amounts credited to the Participant's separate accounts under the Plan at the time of the Participant's death. Notwithstanding the preceding, to the extent that the Employer elects to satisfy the exception of Article 8.11 to the survivor annuity requirements with respect to all Participants in the Plan, the Employer may require that the sole Beneficiary of every Participant be the Participant's spouse, unless the Participant has no spouse or the Participant's spouse has consented, in a manner conforming to the requirements of Article 8.10(b), to the designation by the Participant of another Beneficiary who shall be entitled to receive any undistributed vested amounts credited to the Participant's separate accounts under the Plan at the time of the Participant's death. Any Beneficiary designation by a Participant shall be made on a form prescribed by the Plan Administrator and shall be effective only when filed with the Plan Administrator during the Participant's lifetime. A Participant may change or revoke his or her Beneficiary designation at any time by filing a new instrument with the Plan Administrator (except where the Participant's spouse is required to be the Beneficiary). If the designated Beneficiary predeceases the Participant, the Participant's Beneficiary designation shall be ineffective. If no Beneficiary designation is in effect at the time of the Participant's death, the Participant's Beneficiary shall be the Participant's estate. 8.17 DISTRIBUTIONS PURSUANT TO QUALIFIED DOMESTIC RELATIONS ORDERS. 58 (a) IN GENERAL. Notwithstanding any provision of the Plan to the contrary, the Plan Administrator may direct the Trustee to distribute all or any portion of a Participant's benefits under the Plan to an alternate payee in accordance with the terms and conditions of a qualified domestic relations order as defined in Section 414(p) of the Code (a "QDRO"). The Plan hereby specifically permits and authorizes distribution of a Participant's benefits under the Plan to an alternate payee in accordance with a QDRO prior to the date the Participant separates from service with the Employer or attains the Participant's earliest retirement age as defined in Section 414(p)(4)(B) of the Code. (b) PLAN PROCEDURES. The Plan Administrator shall be responsible for establishing reasonable procedures for determining whether any domestic relations order received with respect to the Plan qualifies as a QDRO and for administering distributions in accordance with the terms and conditions of a QDRO. If any domestic relations order is received with respect to the Plan, the Plan Administrator shall promptly notify the Participant and each alternate payee identified in the order. The Plan Administrator shall determine within a reasonable period after receipt of the domestic relations order whether the order qualifies as a QDRO, and notify the Participant and each alternate payee of such determination. In making any distribution to an alternate payee pursuant to the Plan Administrator's directions under this Article 8.17, the Trustee shall be fully entitled to rely on such directions furnished by the Plan Administrator and shall be under no duty to make any inquiry or investigation with respect thereto. 8.18 DIRECT ROLLOVERS. This Article applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary which would otherwise limit a distributee's election under this Article 8.18, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have all or any portion of an eligible rollover distribution paid directly in the form of a direct rollover to any eligible retirement plan specified by the distributee. For purposes of this Article 8.18, the following definitions shall apply: (a) ELIGIBLE ROLLOVER DISTRIBUTION. An eligible rollover distribution includes any distribution of all or any portion of the balance to the credit of the distributee, except than an eligible rollover distribution does not include: (1) any distribution which is one of a series of substantially equal periodic payments made (not less frequently than annually) for (i) the life or life expectancy of the distributee, (ii) the joint lives or joint life expectancies of the distributee and the distributee's designated beneficiary, or (iii) a specified period of ten years or more; 59 (2) any distribution to the extent that such distribution is required under Section 401(a)(9) of the Code; (3) the portion of any distribution which is not includible in the distributee's gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); and (4) any other distribution(s) that is reasonably expected to total less than $200 during a year. (b) ELIGIBLE RETIREMENT PLAN. An eligible retirement plan includes an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the Code which accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to an Employee's surviving spouse, an eligible retirement plan is limited to an individual retirement account or individual retirement annuity. (c) 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 Section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse. (d) DIRECT ROLLOVER. A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. ARTICLE 9 WITHDRAWALS 9.1 WITHDRAWALS OF EMPLOYEE AFTER-TAX CONTRIBUTIONS. A Participant shall be permitted to withdraw at any time all or any portion of the total amount credited to the Participant's Employee After-Tax Contribution Account. The Plan Administrator may prescribe uniform and nondiscriminatory rules and procedures limiting the number of times that any Participant may make withdrawals under this Article 9.1 during any Plan Year and the minimum amount that a Participant may withdraw on any single occasion. No forfeitures or penalties shall apply under the Plan solely as a result of a Participant's withdrawal of Employee After-Tax Contributions. 60 9.2 WITHDRAWALS OF ROLLOVER CONTRIBUTIONS. A Participant shall be permitted to withdraw at any time all or any portion of the total amount credited to the Participant's Rollover Contribution Account. The Plan Administrator may prescribe uniform and nondiscriminatory rules and procedures limiting the number of times that any Participant may make withdrawals under this Article 9.2 during any Plan Year and the minimum amount that a Participant may withdraw on any single occasion. 9.3 WITHDRAWALS ON OR AFTER AGE 59 1/2. If so designated by the Employer in the Adoption Agreement, a Participant who has attained age 59 1/2 shall be entitled to withdraw all or any portion of the total vested amount (as determined under Article 7) credited to the Participant's separate accounts under the Plan. The Plan Administrator may prescribe uniform and nondiscriminatory rules and procedures limiting the number of times that a Participant may make withdrawals under this Article 9.3 during any Plan Year and the minimum amount that a Participant may withdraw on any single occasion. 9.4 HARDSHIP WITHDRAWALS. (a) IMMEDIATE AND HEAVY FINANCIAL NEED. If so designated by the Employer in the Adoption Agreement, a Participant shall be permitted to make a hardship withdrawal from the Plan, subject to the joint and survivor annuity requirements of Article 8.7, if the Participant certifies that he or she has incurred an immediate and heavy financial need for funds. For these purposes, an immediate and heavy financial need shall include a need: (1) to pay expenses incurred or necessary for medical care, described in Section 213(d) of the Code, of the Participant or the Participant's spouse, children or dependents; (2) to purchase the principal residence of the Participant (excluding mortgage payments); (3) to pay tuition and related educational fees for the next 12 months of post-secondary education for the Participant or the Participant's spouse, children, or dependents; or (4) to prevent the eviction of the Participant from his or her principal residence or foreclosure on the mortgage of the Participant's principal residence. (b) NECESSARY TO SATISFY FINANCIAL NEED. The amount of any hardship withdrawal by a Participant under subsection (a) above shall not exceed the amount which is necessary to satisfy the Participant's immediate and heavy financial need and which is not reasonably available from other resources of the Participant. For these purposes, a hardship withdrawal will be treated as necessary to satisfy an immediate and heavy financial need under subsection (a) above if: 61 (1) the Participant has obtained all distributions, other than hardship distributions, and all nontaxable loans from the Plan and any other plans maintained by the Employer; (2) all plans maintained by the Employer provide that, if the hardship withdrawal is made from the Participant's Employee Pre-Tax Contribution Account under subsection (c) below, the Participant's elective deferrals (as defined in Article 4.4) and employee after-tax contributions will be suspended for twelve months after the receipt of the hardship distribution; (3) the distribution is not in excess of the amount of the Participant's immediate and heavy financial need (including amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the distribution); and (4) all plans maintained by the Employer provide that, if the hardship withdrawal is made from the Participant's Employee Pre-Tax Contribution Account under subsection (c) below, the Participant may not make elective deferrals for the Participant's taxable year immediately following the taxable year of the hardship distribution in excess of the applicable limit under Section 402(g) of the Code for such taxable year less the amount of the Participant's elective deferrals for the taxable year of the hardship distribution. (c) LIMITATIONS ON HARDSHIP WITHDRAWALS. Any hardship withdrawal by a Participant under subsection (a) above shall be made from: (1) the Participant's Employee Pre-Tax Contributions to the Plan, including any earnings attributable thereto which were allocated to the Participant's Employee Pre-Tax Contribution Account as of the end of the last Plan Year ending before July 1, 1989 (but not the earnings allocated thereafter); (2) the Participant's Employer Matching Contribution Account, unless the Employer Matching Contributions allocated thereto qualify as Qualified Matching Contributions under Article 5.1(l) in which case only the amount allocated to the Participant's Employer Matching Contribution Account as of the end of the last Plan Year ending before July 1, 1989, shall be eligible for hardship withdrawal by the Participant; and (3) the Participant's Employer Nonelective Contribution Account, unless the Employer Nonelective Contributions allocated thereto qualify as Qualified Nonelective Contributions under Article 5.1(m) in which case only the amount allocated to the Participant's Employer Nonelective Contribution Account as of the end of the last Plan 62 Year ending before July 1, 1989, shall be eligible for hardship withdrawal by the Participant. (d) PRIOR WITHDRAWAL OF EMPLOYEE AFTER-TAX AND ROLLOVER CONTRIBUTIONS REQUIRED. A Participant shall not be permitted to make a hardship withdrawal under subsection (a) above unless the Participant has already withdrawn, in accordance with Articles 9.1 and 9.2, all available amounts credited to the Participant's Employee After-Tax Contribution Account and Rollover Contribution Account. 9.5 MANNER OF MAKING WITHDRAWALS. Any withdrawal by a Participant under the Plan shall be made only after the Participant files a written request with the Plan Administrator specifying the nature of the withdrawal (and the reasons therefor, if a hardship withdrawal), the amount of funds requested to be withdrawn, and the separate accounts from which the withdrawal should be made. Upon approving any withdrawal, the Plan Administrator shall furnish the Trustee with instructions directing the Trustee to make the withdrawal from the Participant's separate accounts under the Plan in a lump-sum payment to the Participant, unless such withdrawal is required to be paid in the form of a qualified joint and survivor annuity under Article 8.7. The amount of any withdrawal shall be determined by the value of the amounts credited to the Participant's separate accounts under the Plan as of the Valuation Date on which the Trustee receives instructions in good order from the Plan Administrator to make the withdrawal payment. In making any such withdrawal payment, the Trustee shall be fully entitled to rely on the instructions furnished by the Plan Administrator, and shall be under no duty to make any inquiry or investigation with respect thereto. ARTICLE 10 LOANS 10.1 AMOUNT OF LOAN. If so designated by the Employer in the Adoption Agreement, the Plan Administrator may direct the Trustee to make a loan to a Participant from the vested amounts (as determined under Article 7) credited to the Participant's separate accounts under the Plan. The total amount of any such loan, when added to the outstanding balance of all other loans to the Participant from the Plan, shall not exceed the lesser of: (a) 50 percent of the total vested accrued benefits of the Participant under the Plan as of the date of the loan; or (b) $50,000 reduced by the excess (if any) of the highest outstanding balance of all loans to the Participant from the Plan during the one-year period ending on the day before the loan was made 63 over the outstanding balance of all loans to the Participant from the Plan on the date on which the loan was made. For purposes of the above limitation, all loans to the Participant from all qualified plans maintained by the Employer and other members of a group of employers described in Section 414(b), 414(c), or 414(m) of the Code which includes the Employer shall be aggregated. In no event shall any loan be made from the Plan to any Participant who is an Owner-Employee or a shareholder- employee. For these purposes, a "shareholder-employee" means any employee or officer of an electing small business (Subchapter S) corporation who owns (or is considered as owning within the meaning of Section 318(a)(1) of the Code) on any day during the taxable year of such corporation more than 5 percent of the outstanding stock of the corporation. 10.2 SECURITY FOR LOAN. Any loan to a Participant under the Plan shall be adequately secured within the meaning of Section 4975(d) of the Code. Such security shall include the pledge of all the Participant's right, title and interest in the Plan, which pledge shall be evidenced by the execution of a legally binding promissory note by the Participant. The Participant shall further authorize the Employer to deduct specified amounts from the wages or salary thereafter payable to the Participant by the Employer and to transmit such amounts to the Trustee as the periodic repayments of the Participant's loan. 10.3 INTEREST RATE CHARGED. Any loan to a Participant under the Plan shall bear a reasonable rate of interest which is commensurate with the prevailing interest rate charged by professional lenders for similarly secured personal loans, as determined by the Plan Administrator. The Plan Administrator shall not discriminate among Participants in the matter of interest rates, but loans granted at different times may bear different interest rates if, in the opinion of the Plan Administrator, the difference in rates reflects prevailing interest rates. 10.4 REPAYMENT OF LOANS. (a) Any loan to a Participant under the Plan shall by its terms be required to be repaid within five years of the date on which the loan is made, with the exception that a loan which is used to acquire a dwelling unit which within a reasonable period of time (determined at the time the loan is made) will be used as the principal residence of the Participant may be repaid over a longer, reasonable period of time as determined by the Plan Administrator. Repayments on any loan shall be made in regular periodic installments on a schedule prescribed by the Plan Administrator with payments not less frequently than quarterly, and shall be applied on a substantially level amortization basis to reduce the principal as well as the accrued interest of the loan. 64 (b) The Plan Administrator shall have the sole responsibility for assuring that a Participant timely makes all loan repayments and notifying the Trustee in the event of any default by a Participant on a loan repayment. Loan repayments shall be paid to the Trustee and shall be accompanied by instructions from the Plan Administrator which identify each Participant on whose behalf a loan repayment is being made and the amount thereof. 10.5 DEFAULT ON LOAN. In the event of a default by a Participant on any loan repayment, all remaining payments on the loan shall be immediately due and payable. The Plan Administrator shall take any and all actions necessary and appropriate to enforce collection of the unpaid loan, although foreclosure on the Participant's promissory note and attachment of the Plan's security shall not occur until a distributable event occurs under the Plan. 10.6 SETOFF OF LOAN UPON DISTRIBUTIONS. Prior to making any distribution of benefits from a Participant's separate accounts under Article 8 upon the Participant's separation from service or death, the Plan Administrator shall direct the Trustee to deduct the total amount of any outstanding Plan loans to the Participant, plus any unpaid interest due thereon, from the Participant's separate accounts under the Plan in order to satisfy the amounts due on the Participant's loans. If, upon a Participant's death, a preretirement survivor annuity is payable under Article 8.8 from 50 percent of the total vested amount credited to the Participant's separate accounts under the Plan, such 50 percent amount shall be determined after reducing the total vested amount credited to the Participant's separate accounts at the time of the Participant's death by the amount of any outstanding Plan loans to the Participant, plus any unpaid interest due thereon. 10.7 MANNER OF MAKING LOANS. A request by a Participant for a loan shall be made in writing to the Plan Administrator and shall specify the amount of the loan and the separate accounts of the Participant from which the loan should be made. The terms and conditions on which the Plan Administrator shall approve loans under the Plan shall be applied on a uniform and reasonably equivalent basis with respect to all Participants and Beneficiaries who are "parties in interest" as defined in Section 3(14) of ERISA. Loans shall not be made available to Participants who are highly compensated employees (within the meaning of Section 414(q) of the Code) in an amount greater than the amount made available to other employees. If a Participant's request for a loan is approved by the Plan Administrator, the Plan Administrator shall furnish the Trustee with written instructions directing the Trustee to make the loan in a lump sum payment to the Participant. In making any loan under this Article 10.7, the Trustee shall be fully entitled to rely on the instructions furnished by the Plan Administrator, and shall be under no duty to make any inquiry or investigation with respect thereto. 10.8 SPOUSAL CONSENT REQUIRED. No loan shall be made to a Participant from the Plan unless within the 90-day period before the making of the loan the Participant's spouse consents in writing to the pledge of 65 the participant's interest in the Plan as security for the loan under Article 10.2. Any such consent by the Participant's spouse shall be in writing, shall acknowledge the effect of the loan, and shall be witnessed by a Plan representative or notary public. The spouse's consent shall be thereafter binding on the consenting spouse or any subsequent spouse with respect to the Participant's loan. A new spousal consent shall be required for any renegotiation, extension, renewal or other revision of the Participant's loan. Notwithstanding the preceding, spousal consent shall not be required under this Article 10.8 if the qualified joint and survivor annuity requirement of Article 8.8 and the qualified preretirement survivor annuity requirement of Article 8.9 do not apply with respect to the Participant by reason of Article 8.11. 10.9 ACCOUNTING FOR LOANS. A loan to a Participant from the Plan shall be considered an investment of the separate accounts of the Participant from which the loan is made, and all loan repayments by the Participant shall be credited to such separate accounts and reinvested in the Vanguard Funds and other investments authorized under the Trust Agreement in accordance with the investment provisions of Article 6.5. ARTICLE 11 LIMITATIONS ON CONTRIBUTIONS AND BENEFITS 11.1 DEFINITIONS. For purposes of this Article 11 only, the following terms shall be defined as follows: (a) ANNUAL ADDITIONS. The sum of the following amounts that are allocated to a Participant's separate accounts under the Plan for any Limitation Year: (i) Employer contributions including Employee Pre-Tax Contributions, Employer Matching Contributions and Employer Nonelective Contributions (regardless of whether any amounts attributable to such contributions are distributed to the Participant, recharacterized or forfeited as Excess Elective Deferrals, Excess Contributions or Excess Aggregate Contributions); (ii) Employee After-Tax Contributions; (iii) Forfeitures; (iv) any amounts allocated after March 31, 1984, to an individual medical account (as defined in Section 415(1)(2) of the Code) which is part of a pension or annuity plan maintained by the Employer shall be treated as Annual Additions; 66 (v) any amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post-retirement medical benefits allocated to the separate account of a key employee (as defined in Section 419A(d)(3) of the Code) under a welfare benefit fund (as defined in Section 419(e) of the Code) maintained by the Employer; and (vi) allocations under a simplified employee pension maintained by the Employer. For purposes of this definition, any Excess Amount, plus any investment gains or other income or less any investment losses attributable thereto, that is applied under Article 11.2(c) or 11.3(e) to reduce the Employer contributions on behalf of a Participant for a Limitation Year shall be considered Annual Additions for such Limitation Year. (b) COMPENSATION. A Participant's earned income, wages, salaries, fees for professional services and other amounts received (without regard to whether an amount is paid in cash) for personal services actually rendered in the course of employment with the Employer maintaining the plan (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, and reimbursements or other expense allowances under a non-accountable plan as described in IRS Reg. Section 1.62-2(c)), excluding the following: (i) Employer contributions to a plan of deferred compensation which are not includible in the gross income of the Participant for the taxable year in which contributed, or Employer contributions under a simplified employee pension plan, or any distributions from a plan of deferred compensation; (ii) amounts realized from the exercise of a non-qualified stock option, or when restricted stock (or property) held by the Participant either becomes freely transferable or is no longer subject to a substantial risk of forfeiture; (iii) amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and (iv) other amounts which receive special tax benefits, such as contributions made by the Employer (whether or not under a salary reduction agreement) towards the purchase of an annuity contract under Section 403(b) of the Code (whether or not the contributions are excludable from the gross income of the Participant). 67 For purposes of applying the limitations of this Article 11, Compensation for a Limitation Year shall be the Compensation annually paid to a Participant or includible in his gross income during such Limitation Year. Notwithstanding the preceding sentence, Compensation for a Participant in a defined contribution plan who is permanently and totally disabled (as defined in Section 22(e)(3) of the Internal Revenue Code) shall be the Compensation such Participant would have received for the Limitation Year if the Participant had been paid at the rate of compensation paid immediately before becoming permanently and totally disabled; provided that such imputed Compensation for the disabled Participant may be taken into account only if the Participant is not a highly compensated employee (as defined in Article 5.1(j) of the Plan) and contributions made on behalf of such Participant to the defined contribution plan are nonforfeitable when made. (c) DEFINED BENEFIT PLAN FRACTION. A fraction, the numerator of which is the sum of a Participant's Projected Annual Benefits under all defined benefit plans (whether or not terminated) maintained by the Employer, and the denominator of which is the lesser of 125 percent of the dollar limitation determined for the Limitation Year under Sections 415(b) and (d) of the Code or 140 percent of the Participant's Highest Average Compensation, including any adjustments under Section 415(b) of the Code. Notwithstanding the above, if the Participant was a participant as of the first day of the Limitation Year beginning after December 31, 1986, in one or more defined benefit plans maintained by the Employer which were in existence on May 6, 1986, the denominator of the Defined Benefit Plan Fraction shall not be less than 125 percent of the sum of the annual benefits under all such plans which the Participant had accrued as of the close of the last Limitation Year beginning before January 1, 1987, disregarding any changes in the terms and conditions of the plan after May 5, 1986. The preceding sentence shall apply only if the Employer's defined benefit plans individually and in the aggregate satisfied the requirements of Section 415 of the Code for all Limitation Years beginning before January 1, 1987. (d) DEFINED CONTRIBUTION DOLLAR LIMITATION. The greater of $30,000 or one-fourth of the defined benefit dollar limitation set forth in Section 415(b)(1) of the Code as in effect for the Limitation Year. (e) DEFINED CONTRIBUTION PLAN FRACTION. A fraction, the numerator of which is the sum of the Annual Additions credited to a Participant's accounts under all defined contribution plans (whether or not terminated) maintained by the Employer for the current and all prior Limitation Years (including any Annual Additions attributable to nondeductible employee contributions to any defined benefit plans, whether or not terminated, maintained by the Employer and any Annual 68 Additions attributable to any welfare benefit funds, individual medical accounts and simplified employee pensions maintained by the Employer) and the denominator of which is the sum of the maximum aggregate amounts for the current and all prior Limitation Years of service with the Employer (regardless of whether a defined contribution plan was maintained by the Employer). The maximum aggregate amount for any Limitation Year is the lesser of 125 percent of the dollar limitation determined under Sections 415(b) and (d) of the Code in effect under Section 415(c)(1)(A) of the Code or 35 percent of the Participant's Compensation for such year. Notwithstanding the above, if the Participant was a participant as of the end of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined contribution plans maintained by the Employer which were in existence on May 6, 1986, the numerator of the Defined Contribution Plan Fraction shall be adjusted if the sum of such fraction and the Defined Benefit Plan Fraction would otherwise exceed 1.0 under the terms of this Plan. Under this adjustment, an amount equal to the product of (i) the excess of the sum of the Defined Benefit and Defined Contribution Plan Fractions over 1.0 times (ii) the denominator of the Defined Contribution Plan Fraction shall be permanently subtracted from the numerator of the Defined Contribution Plan Fraction. This adjustment shall be calculated using the Defined Benefit and Defined Contribution Plan Fractions as they would have been calculated as of the end of the last Limitation Year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the plan made after May 5, 1986, but using the Section 415 limitation applicable to the first Limitation Year beginning on or after January 1, 1987. The Annual Additions for any Limitation Year beginning before January 1, 1987, shall not be recomputed to treat all employee contributions as Annual Additions. (f) EMPLOYER. For purposes of this Article 11, the Employer shall mean the Employer that adopts this Plan and all members of a controlled group of corporations (as defined in Section 414(b) of the Code, as modified by Section 415(h) of the Code), all commonly controlled trades or businesses (as defined in Section 414(c) of the Code, as modified by Section 415(h) of the Code) or affiliated service groups (as defined in Section 414(m) of the Code) of which the adopting Employer is a member, and any other entity required to be aggregated with the Employer pursuant to regulations under Section 414(o) of the Code. (g) EXCESS AMOUNT. The excess of a Participant's Annual Additions for a Limitation Year over the Maximum Permissible Amount for the Limitation Year. 69 (h) HIGHEST AVERAGE COMPENSATION. A Participant's average annual Compensation for the three consecutive Years of Service (as defined in Article 7.3) that produces the highest average annual compensation. (i) LIMITATION YEAR. The Plan Year or other 12-consecutive month period designated by the Employer in the Adoption Agreement. All qualified plans maintained by the Employer must use the same Limitation Year. If the Limitation Year is amended to a different 12-consecutive month period, the new Limitation Year shall begin on a date within the Limitation Year in which the amendment is made. (j) MASTER OR PROTOTYPE PLAN. A qualified plan the form of which is the subject of a favorable opinion letter from the Internal Revenue Service. (k) MAXIMUM PERMISSIBLE AMOUNT. The maximum amount of Annual Additions that may be contributed or allocated to any Participant's accounts under the Plan for any Limitation Year shall not exceed the lesser of: (a) the Defined Contribution Dollar Limitation, or (b) 25 percent of the Participant's Compensation for the Limitation Year. The Compensation limitation referred to in (b) above shall not apply to any contribution for medical benefits (within the meaning of Section 401(h) or 419A(f)(2) of the Code) which is otherwise treated as Annual Additions under Section 415(l)(2) or 419A(d)(2) of the Code. If a short Limitation Year is created because of an amendment changing the Limitation Year to a different 12-consecutive month period, then the Maximum Permissible Amount shall not exceed the Defined Contribution Dollar Limitation multiplied by the following fraction: NUMBER OF MONTHS IN THE SHORT LIMITATION YEAR --------------------------------------------- 12 (l) PROJECTED ANNUAL BENEFIT. The annual retirement benefit (adjusted to an actuarially equivalent straight life annuity if such benefit is expressed in a form other than a straight life annuity or qualified joint and survivor annuity) to which a Participant would be entitled under the terms of the plan assuming: (i) the Participant will continue employment until normal retirement age under the plan (or current age, if later), and 70 (ii) the Participant's Compensation for the current Limitation Year and all other relevant factors used to determine benefits under the plan will remain constant for all future Limitation Years. 11.2 EMPLOYERS WHO MAINTAIN NO OTHER QUALIFIED PLANS (a) If a Participant does not participate in, and has never participated in, another qualified plan maintained by the Employer, or a welfare benefit fund, as defined in Section 419(e) of the Code, maintained by the Employer, or an individual medical account, as defined in Section 415(l)(2) of the Code, maintained by the Employer, or a simplified employee pension, as defined in Section 408(k) of the Code, maintained by the Employer, which provides an Annual Addition, as defined in Article 11.1(a), the amount of Annual Additions which may be credited to the Participant's separate accounts under the Plan for any Limitation Year shall not exceed the lesser of the Maximum Permissible Amount or any other limitation contained in the Plan. If the Employer Contributions that would otherwise be contributed or allocated to the Participant's separate accounts under the Plan would cause the Annual Additions for the Limitation Year to exceed the Maximum Permissible Amount, then the amount contributed or allocated shall be reduced so that the Annual Additions for the Limitation Year shall equal the Maximum Permissible Amount. (b) Prior to determining a Participant's actual Compensation for any Limitation Year, the Plan Administrator may determine the Participant's Maximum Permissible Amount for the Limitation Year on the basis of a reasonable estimation of the Participant's Compensation for the Limitation Year, uniformly determined for all Participants similarly situated. As soon as is administratively feasible after the end of the Limitation Year, the Maximum Permissible Amount for such Limitation Year shall be determined on the basis of the Participant's actual Compensation for the Limitation Year. (c) If, pursuant to (b) above or as a result of the allocation of Forfeitures or a reasonable error in determining the amount of Employee Pre-Tax Contributions which may be made by a Participant, there exists an Excess Amount with respect to the Participant as of the end of a Limitation Year, such Excess Amount shall be disposed of as follows: (i) Any Employee After-Tax Contributions or Employee Pre-Tax Contributions by the Participant, to the extent they would reduce the Excess Amount, shall be returned to the Participant. (ii) If, after the application of subparagraph (i) above, an Excess Amount still exists and the Participant is covered by the Plan at the end of the Limitation Year, then such Excess 71 Amount, plus any investment gains or other income or less any investment losses attributable thereto, shall be used to reduce the Employer contributions on behalf of the Participant for the next Limitation Year and each succeeding Limitation Year, if necessary. (iii) If, after the application of subparagraph (i) above, an Excess Amount still exists and the Participant is not covered by the Plan at the end of a Limitation Year, then such Excess Amount shall be held unallocated in a suspense account and applied to reduce future Employer contributions to the Plan for all remaining Participants in the next Limitation Year and each succeeding Limitation Year, if necessary. (iv) If a suspense account is in existence at any time during a Limitation Year pursuant to this Article 11.2, such account shall participate in the allocation of the Trust's investment gains and losses. If a suspense account is in existence at any time during a particular Limitation Year, all amounts in the suspense account must be allocated and reallocated to Participants' accounts before any Employer contributions may be made to the Plan for that Limitation Year. Except as otherwise provided in (i) above, Excess Amounts may not be distributed to Participants or former Participants. 11.3 EMPLOYERS WHO MAINTAIN OTHER QUALIFIED MASTER OR PROTOTYPE DEFINED CONTRIBUTION PLANS. (a) This Article 11.3 applies if, in addition to this Plan, a Participant is covered under another qualified Master or Prototype defined contribution plan maintained by the Employer, a welfare benefit fund maintained by the Employer, an individual medical account maintained by the Employer, or a simplified employee pension maintained by the Employer which provides an Annual Addition during any Limitation Year. The Annual Additions which may be credited to the Participant's separate accounts under this Plan for any such Limitation Year shall not exceed the Maximum Permissible Amount reduced by the total Annual Additions credited to the Participant's accounts under all such other defined contribution plans, welfare benefit funds, individual medical accounts, and simplified employee pensions for the Limitation Year. If the Annual Additions with respect to the Participant under all other defined contribution plans, welfare benefit funds, individual medical accounts, and simplified employee pensions maintained by the Employer are less than the Maximum Permissible Amount and the Employer Contributions that would otherwise be contributed or allocated to the Participant's separate accounts under this Plan would cause the Annual Additions for the Limitation Year to exceed the Maximum Permissible Amount, then the amount contributed or allocated under this Plan shall be reduced so that the Annual Additions under all such plans and funds for the Limitation Year shall equal the Maximum Permissible Amount. If the Annual Additions with respect to the Participant under 72 such other defined contribution plans, welfare benefit funds, individual medical accounts, and simplified employee pensions in the aggregate are equal to or greater than the Maximum Permissible Amount, then no amount shall be contributed or allocated to the Participant's separate accounts under this Plan for the Limitation Year. (b) Prior to determining a Participant's actual Compensation for any Limitation Year, the Plan Administrator may determine the Maximum Permissible Amount for the Participant in the manner described in Article 11.2(b). As soon as is administratively feasible after the end of the Limitation Year, the Maximum Permissible Amount for the Limitation Year shall be determined on the basis of the Participant's actual Compensation for the Limitation Year. (c) If, pursuant to Article 11.3(b) or as a result of the allocation of forfeitures, a Participant's Annual Additions under this Plan and such other defined contribution plans maintained by the Employer that are Master or Prototype Plans would result in an Excess Amount for a Limitation Year, then the Excess Amount shall be deemed to consist of the Annual Additions last allocated, except that Annual Additions attributable to a simplified employee pension shall be deemed to have been allocated first, followed by Annual Additions attributable to a welfare benefit fund or individual medical account, regardless of the actual allocation date. (d) If an Excess Amount was allocated to a Participant's account under this Plan on an allocation date which coincides with an allocation date of another plan, the Excess Amount attributed to this Plan shall be the product of: (i) the total Excess Amount allocated as of such date, times (ii) the ratio of (1) the Annual Additions allocated to the Participant's separate accounts under this Plan for the Limitation Year as of such date to (2) the total Annual Additions allocated to the Participant's accounts for the Limitation Year as of such date under this Plan and all other qualified defined contribution Master or Prototype Plans maintained by the Employer. (e) Any Excess Amount attributable to this Plan shall be disposed of in the manner described in Article 11.2(c). 11.4 EMPLOYERS WHO MAINTAIN A QUALIFIED DEFINED CONTRIBUTION PLAN OTHER THAN A MASTER OR PROTOTYPE PLAN. If a Participant is covered under another qualified defined contribution plan maintained by the Employer which is not a Master or Prototype Plan, the Annual Additions which may be credited to 73 the Participant's separate accounts under this Plan for any Limitation Year shall be limited in accordance with Article 11.3 as though the other plan were a Master or Prototype Plan unless the Employer designates other limitations in the section on "Limitations on Allocations" in the Adoption Agreement. 11.5 EMPLOYERS WHO MAINTAIN A QUALIFIED DEFINED BENEFIT PLAN. If the Employer maintains, or has at any time maintained, a qualified defined benefit plan covering any Participant in this Plan, then the sum of the Participant's Defined Benefit Plan Fraction and Defined Contribution Plan Fraction shall not exceed 1.0 for any Limitation Year. The Annual Additions which may be credited to the Participant's separate accounts under this Plan for any Limitation Year shall be limited in accordance with the limitations designated by the Employer in the section on "Limitations on Allocations" in the Adoption Agreement. ARTICLE 12 TOP-HEAVY PROVISIONS 12.1 APPLICATION. If the Plan is or becomes a Top-Heavy Plan in any Plan Year, the provisions of this Article 12 shall supersede any conflicting provision in the Plan or Adoption Agreement. 12.2 DEFINITIONS. For purposes of this Article 12, the following terms shall be defined as follows: (a) KEY EMPLOYEE. Any Employee or former Employee (and the Beneficiary of any such Employee) who at any time during the determination period was an officer of the Employer whose annual compensation exceeds 50 percent of the dollar limitation under Section 415(b)(1)(A) of the Code, an owner (or considered an owner under Section 318 of the Code) of one of the ten largest interests in the Employer if such individual's annual compensation exceeds 100 percent of the dollar limitation under Section 415(c)(1)(A) of the Code, a 5-percent owner of the Employer, or a 1-percent owner of the Employer who has annual compensation of more than $150,000. For the purposes of this definition, the term "annual compensation" means compensation as defined in Section 415(c)(3) of the Code, but including amounts contributed by the Employer pursuant to a salary reduction agreement which are excludable from the Employee's gross income under Section 125, Section 74 402(a)(8), Section 402(h), or Section 403(b) of the Code. The term "determination period" is the Plan Year containing the Determination Date and the four preceding Plan Years. The determination of who is a Key Employee shall be made in accordance with Section 416(i)(1) of the Code and the regulations thereunder. (b) TOP-HEAVY PLAN. For any Plan Year beginning after December 31, 1983, the Plan is a Top-Heavy Plan if any of the following conditions exists: (i) the Top-Heavy Ratio for the Plan exceeds 60 percent and the Plan is not part of any Required Aggregation Group or Permissive Aggregation Group; (ii) the Plan is a part of a Required Aggregation Group but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for the Required Aggregation Group exceeds 60 percent; or (iii) the Plan is a part of a Required Aggregation Group and a Permissive Aggregation Group and the Top-Heavy Ratio for both Groups exceeds 60 percent. (c) TOP-HEAVY RATIO. (i) If the Employer maintains one or more defined contribution plans (including any Simplified Employee Pension Plan), and the Employer has not maintained any defined benefit plan which during the 5-year period ending on the Determination Date has accrued any benefits for any Participant in the Plan, the Top-Heavy Ratio for this Plan alone, or for any Required Aggregation Group or Permissive Aggregation Group, is a fraction, the numerator of which is the sum of the account balances of all Key Employees under the plan(s) as of the Determination Date (including any part of any account balance distributed in the 5-year period ending on the Determination Date), and the denominator of which is the sum of all account balances (including any part of any account balance distributed in the 5-year period ending on the Determination Date) of all Participants under the plan(s) as of the Determination Date, both computed in accordance with Section 416 of the Code and the regulations thereunder. Both the numerator and denominator of the Top-Heavy Ratio shall be increased to reflect any contribution which is due but unpaid as of the Determination Date, but which is required to be taken into account on that date under Section 416 of the Code and the regulations thereunder. 75 (ii) If the Employer maintains one or more defined contribution plans (including any Simplified Employee Pension Plan) and the Employer maintains one or more defined benefit plans which, during the 5-year period ending on the Determination Date, has accrued any benefits for any Participant in this Plan, the Top-Heavy Ratio for any Required Aggregation Group or Permissive Aggregation Group is a fraction, the numerator of which is the sum of the account balances under the defined contribution plans for all Key Employees, determined in accordance with (i) above, and the Present Value of accrued benefits under the defined benefit plans for all Key Employees, and the denominator of which is the sum of the account balances under the defined contribution plans for all participants and the Present Value of accrued benefits under the defined benefit plans for all participants. Both the numerator and denominator of the Top-Heavy Ratio shall be increased for any distribution of an account balance or an accrued benefit made in the five-year period ending on the Determination Date and any contribution due but unpaid as of the Determination Date. (iii) For purposes of (i) and (ii) above, the value of account balances and the Present Value of accrued benefits will be determined as of the most recent Valuation Date that falls within or ends with the 12-month period ending on the Determination Date, except as provided in Section 416 of the Code and the regulations thereunder for the first and second plan years of a defined benefit plan. The account balances and accrued benefits of a participant (1) who is not a Key Employee but who was a Key Employee in a prior year, or (2) who has not been credited with at least one hour of service with the Employer at any time during the five-year period ending on the Determination Date, will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to which distributions, rollovers, and transfers are taken into account, shall be made in accordance with Section 416 of the Code and the regulations thereunder. Deductible employee contributions shall not be taken into account for purposes of computing the Top-Heavy Ratio. When aggregating plans, the value of account balances and accrued benefits shall be calculated with reference to the Determination Dates that fall within the same calendar year. The accrued benefit of a Participant other than a Key Employee shall be determined under (1) the method, if any, that uniformly applies for accrual purposes under all defined benefit plans maintained by the Employer, or (2) if there is no such method, as if such benefit accrued not more rapidly than the slowest 76 accrual rate permitted under the fractional rule of Section 411(b)(1)(C) of the Code. (d) PERMISSIVE AGGREGATION GROUP. The Required Aggregation Group plus any other qualified plans of the Employer or an Affiliated Employer which, when considered as a group with the Required Aggregation Group, would continue to satisfy the requirements of Sections 401(a)(4) and 410 of the Code. (e) REQUIRED AGGREGATION GROUP. (i) Each qualified plan of the Employer or an Affiliated Employer in which at least one Key Employee participates or has participated at any time during the determination period (regardless of whether the plan has terminated), and (ii) any other qualified plan of the Employer or an Affiliated Employer which enables a plan described in (i) above to meet the requirements of Sections 401(a)(4) or 410 of the Code. (f) DETERMINATION DATE. For any Plan Year of the Plan subsequent to the first Plan Year, the last day of the preceding Plan Year. For the first Plan Year of the Plan, the last day of that Plan Year. (g) VALUATION DATE. The Determination Date, unless the Employer designates a different Valuation Date in the Adoption Agreement as the date as of which account balances or accrued benefits shall be valued for purposes of calculating the Top-Heavy Ratio. (h) PRESENT VALUE. Present value shall be based on the interest rate and mortality table specified in the Adoption Agreement. 12.3 MINIMUM ALLOCATION. (a) Except as otherwise provided in (c) and (d) below, the Employer contributions on behalf of any Participant who is not a Key Employee shall not be less than the lesser of three percent of such Participant's Compensation or, in the case where the Employer has no defined benefit plan which designates this Plan to satisfy Section 401 of the Code, the largest percentage of Employer contributions and forfeitures, as a percentage of a Key Employee's Compensation, allocated on behalf of any Key Employee for that year. The minimum allocation under this 77 Article 12.3 shall be determined without regard to any Social Security contribution, and shall be made even though, under other Plan provisions, the Participant would not otherwise be entitled to receive an allocation, or would have received a lesser allocation for the year, because: (1) the Participant failed to complete 1,000 Hours of Service; (2) the Participant failed to make mandatory employee contributions to the Plan; or (3) the Participant's Compensation was less than a stated amount. Employee Pre-Tax Contributions and Employer Matching Contributions to the Plan shall not be taken into account for purposes of satisfying the minimum allocation required under this Article 12.3. (b) For purposes of computing the minimum allocation required under (a) above, Compensation shall mean Compensation as defined in Article 2.5 except, however, that any exclusions designated by the Employer in the Adoption Agreement shall not be taken into account. (c) The provisions of (a) above shall not apply to any Participant who was not employed by the Employer on the last day of the Plan Year. (d) The provisions of (a) above shall not apply to any Participant to the extent the Participant is covered under any other qualified plan or plans of the Employer and the Employer has provided in the Adoption Agreement that the minimum benefits requirement applicable to Top-Heavy Plans under Section 4l6(c) of the Code shall be satisfied through the other plan or plans maintained by the Employer. (e) The minimum allocation required under (a) above (to the extent required to be nonforfeitable under Section 416(b) of the Code) may not be forfeited under Section 411(a)(3)(B) or 411(a)(3)(D) of the Code. 12.4 MINIMUM VESTING SCHEDULES. (a) For any Plan year in which this Plan is a Top-Heavy Plan, one of the minimum vesting schedules designated by the Employer in the Adoption Agreement shall automatically apply to the Plan. This minimum vesting schedule shall apply to all benefits within the meaning of Section 411(a)(7) of the Code except those attributable to employee contributions, benefits that accrued before the effective date of Section 416 of the Code, and benefits that accrued before the Plan became a Top-Heavy Plan. No reduction in a Participant's vested 78 benefits may occur in the event the Plan's status as a Top-Heavy Plan changes for any Plan Year. (b) This Article 12.4 does not apply to the account balances of any Employee who does not have an Hour of Service after the Plan has initially become a Top-Heavy Plan, and such Employee's account balance attributable to Employer Contributions and Forfeitures shall be determined without regard to this Article. ARTICLE 13 ADMINISTRATION 13.1 DUTIES AND RESPONSIBILITIES OF FIDUCIARIES; ALLOCATION OF FIDUCIARY RESPONSIBILITY. A fiduciary for the Plan shall have only those specific powers, duties, responsibilities and obligations which are explicitly assigned to the fiduciary under the Plan and Trust Agreement. In general, the Employer shall have the responsibility for determining the provisions of the Plan by completing the Adoption Agreement; appointing the Plan Administrator and Trustee; making the contributions to the Plan required under Article 4; and determining the procedures for the investment of Trust assets in accordance with Article 6. The Plan Administrator shall have the responsibility for the administration of the Plan, as more fully described in Article 13.2. The Trustee shall have the responsibility for the administration of the Trust and the management of the assets held thereunder, as specifically provided in the Trust Agreement. It is intended that each fiduciary shall be responsible only for the proper exercise of his or her own powers, duties, responsibilities and obligations under the Plan and Trust Agreement, and shall not be responsible for any act or failure to act of another fiduciary. A fiduciary may serve in more than one fiduciary capacity with respect to the Plan. 13.2 POWERS AND RESPONSIBILITIES OF THE PLAN ADMINISTRATOR. (a) ADMINISTRATION OF THE PLAN. The Plan Administrator shall have all powers necessary to administer the Plan, including the power to construe and interpret the Plan documents; to decide all questions relating to an individual's eligibility to participate in the Plan; to determine the amount, form and timing of any distribution of benefits or withdrawal under the Plan; to approve and enforce the repayment of any loan to a Participant under the Plan; to resolve any claim for benefits in accordance with Article 13.6; and to appoint or employ advisors, including legal counsel, to render advice with respect to any of the Plan Administrator's responsibilities under the Plan. Any construction, interpretation or 79 application of the Plan by the Plan Administrator shall be final, conclusive and binding. All actions by the Plan Administrator shall be taken pursuant to uniform standards consistently applied to all persons similarly situated. The Plan Administrator shall have no power to add to, subtract from, or modify any of the terms of the Plan, or to change or add to any benefits provided by the Plan, or to waive or fail to apply any requirements of eligibility for a benefit under the Plan. (b) RECORDS AND REPORTS. The Plan Administrator shall be responsible for maintaining sufficient records to reflect the Years of Service completed by each Employee for purposes of determining the Employee's eligibility to participate in the Plan and vested percentage under Article 7, and the Compensation of each Participant for purposes of determining the amount of contributions which may be made by or on behalf of the Participant under the Plan. The Plan Administrator shall be responsible for submitting all required reports and notifications relating to the Plan to Participants or their beneficiaries, the Internal Revenue Service and the Department of Labor. (c) FURNISHING RECORDKEEPER WITH INFORMATION. The Plan Administrator shall be responsible for furnishing the Recordkeeper with sufficient information to enable the Recordkeeper to establish and maintain separate accounts on behalf of Participants in accordance with Article 6, including information with respect to the allocation of Plan contributions to Participants, disposition of Plan Forfeitures, payment of Plan distributions and withdrawals, and accounting for Plan loans and loan repayments. In addition, the Plan Administrator shall be responsible for furnishing the Recordkeeper with any further information respecting the Plan which the Recordkeeper may reasonably request for the performance of its duties or for the purpose of making any returns to the Internal Revenue Service or Department of Labor as may be required of the Recordkeeper. (d) FURNISHING TRUSTEE WITH INSTRUCTIONS. The Plan Administrator shall be responsible for furnishing the Trustee with instructions with respect to the investment of all Plan contributions to the Trust in accordance with Article 6, all distributions to Participants (including any purchases of annuity contracts) in accordance with Article 8, all withdrawals by Participants in accordance with Article 9 and all loans to Participants in accordance with Article 10. In addition, the Plan Administrator shall be responsible for furnishing the Trustee with any further information respecting the Plan which the Trustee may reasonably request for the performance of its duties or for the purpose of making any returns to the Internal Revenue Service or Department of Labor as may be required of the Trustee. 80 (e) RULES AND DECISIONS. The Plan Administrator may adopt such rules as the Plan Administrator deems necessary, desirable, or appropriate in the administration of the Plan. All rules and decisions of the Plan Administrator shall be applied uniformly and consistently to all Participants in similar circumstances. When making a determination or calculation, the Plan Administrator shall be entitled to rely upon information furnished by a Participant or Beneficiary, the Employer, legal counsel of the Employer, the Recordkeeper, or the Trustee. (f) APPLICATION AND FORMS FOR BENEFITS. The Plan Administrator may require a Participant, former Participant or Beneficiary to complete and file with it an application for a benefit, and to furnish all pertinent information requested by the Plan Administrator. The Plan Administrator may rely upon all such information so furnished, including the Participant's, former Participant's or Beneficiary's current mailing address. (g) FACILITY OF PAYMENT. Whenever, in the Plan Administrator's opinion, a person entitled to received any payment of a benefit or installment thereof is under a legal disability or is incapacitated in any way so as to be unable to manage his or her financial affairs, the Plan Administrator may direct the Trustee to apply the payment for the benefit of such person in such manner as the Plan Administrator considers advisable. (h) LOST OR MISSING PARTICIPANTS. Any benefits payable under the Plan to a Participant or Beneficiary shall be forfeited in the event the Participant or Beneficiary cannot be located by the Plan Administrator after reasonable efforts. Such benefits shall be reinstated if a claim is made by the Participant or Beneficiary for the forfeited benefits, with the exception that any benefits lost by reason of escheat under applicable state law shall not be reinstated. 13.3 ALLOCATION OF DUTIES AND RESPONSIBILITIES. The Plan Administrator may by written instrument designate other persons to carry out any of the Plan Administrator's duties and responsibilities under the Plan. Any such duties or responsibilities thus allocated must be described in the written instrument. If a person other than an Employee of the Employer is so designated, such person must acknowledge in writing his or her acceptance of the allocated duties and responsibilities. All such instruments shall be attached to, and made a part of, the Plan. 13.4 EXPENSES. The Employer shall pay all expenses authorized and incurred in the administration of the Plan except to the extent such expenses are paid from the Trust. 81 13.5 LIABILITIES. The Plan Administrator and each person to whom duties and responsibilities have been allocated pursuant to Article 13.3 may be indemnified and held harmless by the Employer to an extent determined by the Board of Directors with respect to any alleged breach of responsibilities performed or to be performed hereunder. The Employer shall indemnify and hold harmless the Sponsor against all claims, liabilities, fines and penalties, and all expenses reasonably incurred by or imposed upon the Sponsor (including, but not limited to, reasonable attorney's fees) which arise as a result of actions or failure to act by another party, including the Employer, Plan Administrator, Recordkeeper or Trustee, in connection with the operation and administration of the Plan. 13.6 CLAIMS PROCEDURE. (a) FILING OF CLAIM. Any Participant or Beneficiary under the Plan may file a written claim for a Plan benefit with the Plan Administrator or with a person named by the Plan Administrator to receive claims under the Plan. (b) NOTICE OF DENIAL OF CLAIM. In the event of a denial or limitation of any benefit or payment due to or requested by any Participant or Beneficiary under the Plan ("claimant"), claimant shall be given a written notification containing specific reasons for the denial or limitation. The written notification shall contain specific reference to the pertinent Plan provisions on which the denial or limitation of the claimant's benefit is based. In addition, it shall contain a description of any other material or information necessary for the claimant to perfect a claim, and an explanation of why such material or information is necessary. The notification shall further provide appropriate information as to the steps to be taken if the claimant wishes to submit his or her claim for review. This written notification shall be given to a claimant within 90 days after receipt of the claim by the Plan Administrator unless special circumstances require an extension of time for process of the claim. If such an extension of time for processing is required, written notice of the extension shall be furnished to the claimant prior to the termination of said 90-day period, and such notice shall indicate the special circumstances which make the postponement appropriate. (c) RIGHT OF REVIEW. In the event of a denial or limitation of the claimant's benefit, the claimant (or his or her duly authorized representative) shall be permitted to review pertinent documents and to submit to the Plan Administrator issues and comments in writing. In addition, the claimant may make a written request for a full and fair review of the claimant's claim and its denial by the Plan Administrator; provided, however, that such written request must be received by the Plan Administrator within 60 days after receipt by the claimant of 82 written notification of the denial or limitation of the claim. The 60-day requirement may be waived by the Plan Administrator in appropriate cases. (d) DECISION ON REVIEW. A decision shall be rendered by the Plan Administrator within 60 days after the receipt of the request for review, provided that where special circumstances require an extension of time for processing the decision, it may be postponed on written notice to the claimant (prior to the expiration of the initial 60-day period) for an additional 60 days, but in no event shall the decision by rendered more than 120 days after the receipt of such request for review. Any decision by the Plan Administrator shall be furnished to the claimant in writing and shall set forth the specific reasons for the decision and the specific plan provisions on which the decision is based. ARTICLE 14 AMENDMENT, TERMINATION AND MERGER 14.1 AMENDMENT OF PLAN. (a) AMENDMENT BY SPONSOR. The Employer, by executing the Adoption Agreement, has thereby delegated to the Sponsor the power to amend the Plan at any time, including any retroactive amendment necessary to assure that the Plan will qualify or continue to be qualified under the applicable provisions of the Code. The Sponsor shall promptly furnish written notice of any such amendment to the Employer. (b) AMENDMENT BY EMPLOYER. The Employer may at any time: (i) amend any elective or optional provision of the Adoption Agreement; (ii) amend the Plan by adding certain model amendments published by the Internal Revenue Service which specifically provide that their adoption will not cause the Plan to be treated as an individually-designed plan; (iii) amend the Plan by adding overriding Plan language to the Adoption Agreement where such language is necessary to satisfy Section 415 or 416 of the Code because of the required aggregation of multiple plans. Any Employer that amends the Plan for any other reason shall cause the Plan as adopted by the Employer to no longer represent a prototype plan covered by an opinion letter issued by the Internal Revenue Service to the Sponsor, but rather to represent an individually-designed plan. The Employer shall furnish an executed copy of any 83 amendment to the Adoption Agreement or Plan to the Sponsor, which amendment shall become effective no earlier than the date of receipt by the Sponsor, unless the Sponsor specifically consents to an earlier effective date. (c) LIMITATIONS ON AMENDMENT. (i) Neither the Sponsor nor the Employer shall amend the Plan so as to cause or permit any part of the assets of the Plan to be used for, or diverted to, purposes other than for the exclusive benefit of Participants or their Beneficiaries, or so as to cause or permit any part of the assets of the Plan to revert to or become the property of the Employer. (ii) No amendment to the Plan shall be effective to the extent that it has the effect of decreasing a Participant's accrued benefit. For purposes of this Article 14.1(c)(ii), a Plan amendment which has the effect of decreasing a Participant's account balance or eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment, shall be treated as reducing an accrued benefit. Furthermore, if the vesting schedule of the Plan is amended, in the case of an Employee who is a Participant as of the later of the date such amendment is adopted or the date it becomes effective, the vested percentage (determined as of such date) of such Employee in his or her Employer Matching Contribution Account and Employer Nonelective Contribution Account will not be less than the percentage computed under the Plan without regard to such amendment. (iii) Any amendment to the Plan or Adoption Agreement which alters the Plan's vesting schedule (including any automatic amendment to the Plan vesting schedule resulting from a change to or from Top-Heavy Plan status) or any amendment which directly or indirectly affects the computation of a Participant's vested percentage in his or her Employer Contribution Account and Employer Nonelective Contribution Account under Article 7.2 shall be deemed to include the following terms: 84 (1) Each Participant having not less than three Years of Service for vesting purposes at the later of the date such amendment is adopted or the date such amendment becomes effective shall be permitted to elect to have his or her vested percentages computed under the Plan without regard to such amendment. Such election must be made within 60 days from the latest of: (i) the date the amendment is adopted, (ii) the date the amendment becomes effective, or (iii) the date the Participant is issued written notice of such amendment by the Plan Administrator or the Employer. Notwithstanding the preceding sentence, no election need be provided for any Participant whose vested percentage in his or her Employer Matching Contribution Account and Employer Nonelective Contribution Account under the Plan, as amended, at any time cannot be less than such percentage determined without regard to such amendment. (2) No decrease in a Participant's vested percentage in his or her Employer Contribution Account and Employer Nonelective Contribution Account may occur in the event that the Plan's status as Top-Heavy changes for any Plan Year. 14.2 TERMINATION OF PLAN; SUSPENSION OF CONTRIBUTIONS. (a) PLAN TERMINATION. The Employer, by duly adopted resolution, may terminate the Plan at any time. In the event of the dissolution, merger, consolidation or reorganization of the Employer, the Plan shall automatically terminate unless it is continued by a successor employer in accordance with Article 14.3. Upon the termination or partial termination of the Plan, the separate accounts of all Participants affected thereby shall immediately become fully vested and nonforfeitable. (b) SUSPENSION OF CONTRIBUTIONS. The Employer, by duly adopted resolution, may discontinue all further contributions to the Plan. Upon the complete suspension of contributions to the Plan by the Employer, the separate accounts of all Participants affected thereby shall immediately become fully vested and nonforfeitable. The Employer and 85 Trustee shall continue to maintain the Plan and Trust in accordance with the requirements of Sections 401(a) and 501(a) of the Code, and the Plan Administrator shall direct the Trustee to distribute the separate accounts of Participants only at such times and in such manner as specifically provided in Article 8. 14.3 SUCCESSOR EMPLOYER. In the event of the dissolution, merger, consolidation or reorganization of the Employer, provision may be made by which the Plan and Trust shall be continued by the successor employer, in which case such successor employer shall be substituted for the Employer under the Plan. The substitution of the successor employer shall constitute an assumption of Plan liabilities by the successor employer, and the successor employer shall have all powers, duties and responsibilities of the Employer under the Plan. 14.4 MERGER, CONSOLIDATION OR TRANSFER. There shall be no merger or consolidation of the Plan with, or transfer of assets or liabilities of the Plan to, any other plan maintained or to be established for the benefit of all or some of the Participants in the Plan, unless each Participant would (if either this Plan or such other plan then terminated) receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit the Participant would have been entitled to receive immediately before the merger, consolidation or transfer (if this Plan had then terminated). 14.5 DISTRIBUTION UPON TERMINATION OF PLAN OR DISPOSITION OF ASSETS OR SUBSIDIARY. If so directed by the Plan Administrator, the Trustee shall distribute to each Participant the amounts credited to the Participant's separate accounts under the Plan in a lump-sum payment (unless such amount is required to be paid in the form of a qualified joint and survivor annuity under Article 8 or except as otherwise required under Article 8.3(b)) if: (a) the Plan is terminated under Article 14.2 without the establishment or maintenance by the Employer of another defined contribution plan; (b) the Employer is a corporation and the Employer disposes of substantially all the assets (within the meaning of Section 409(d)(2) of the Code) used in its trade or business to an unrelated corporation, provided that the Participant continues employment with the corporation acquiring such assets and the Employer continues to maintain the Plan after the disposition; or 86 (c) the Employer is a corporation and the Employer disposes of its interest in a subsidiary (within the meaning of Section 409(d)(3) of the Code), provided that the Participant continues employment with such subsidiary and the Employer continues to maintain the Plan after the disposition. ARTICLE 15 MISCELLANEOUS 15.1 EXCLUSIVE BENEFIT OF PARTICIPANTS AND BENEFICIARIES. (a) The corpus or income of the Trust shall not be used for, or diverted to, purposes other than for the exclusive benefit of Participants, former Participants and their Beneficiaries. The assets of the Trust shall not revert to the benefit of the Employer, except as otherwise specifically provided in subsection (b) below. (b) Employer Contributions to the Plan may be returned to the Employer under the following conditions: (i) If the Employer Contribution was made by mistake of fact, such contribution may be returned to the Employer within one year of the payment of such contribution. (ii) Employer Contributions to the Plan are specifically conditioned upon their deductibility under the Code. To the extent a deduction is disallowed for any such contribution, it may be returned to the Employer within one year after the disallowance of the deduction. (iii) Employer contributions to the Plan are specifically conditioned on the initial qualification of the Plan under the Code. If the Plan is determined by the Internal Revenue Service to not be initially qualified, any Employer contributions made incident to that initial qualification may be returned to the Employer within one year 87 after the date the initial qualification is denied, but only if the application for qualification is made by the time prescribed by law for filing the Employer's return for the taxable year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe. 15.2 LEASED EMPLOYEES. For purposes of this Plan, any leased employee of the Employer shall be treated as an Employee of the Employer and shall be otherwise eligible for coverage and benefits under the Plan, unless: (1) the leased employee is covered by a money purchase pension plan providing (i) a non-integrated employer contribution of at least 10 percent of compensation (as defined in Section 415(c)(3) of the Code, but including amounts contributed pursuant to a salary reduction agreement which are excludable from the employee's gross income under Section 125, 402(e)(3), 402(h)(1)(B) or 403(b) of the Code), (ii) immediate participation, and (iii) full and immediate vesting; and (2) leased employees do not constitute more than 20 percent of the Employer's non-highly compensated workforce. For purposes of this Article 15.2, the term "leased employee" means any person (other than an employee of the recipient) who, pursuant to an agreement between the recipient and any other person ("leasing organization"), has performed services for the recipient (or for the recipient and any related persons determined in accordance with Section 414(n)(6) of the Code) on a substantially full time basis for a period of at least one year and such services are of a type historically performed by employees in the business field of the recipient employer. Contributions or benefits provided to the leased employee by the leasing organization which are attributable to services performed for the recipient employer shall be treated as provided by the recipient employer. 15.3 CREDITING SERVICE WITH PREDECESSOR EMPLOYER. If the Employer maintains this Plan as the plan of a predecessor employer, service with the predecessor employer shall be treated as service with the Employer under this Plan in accordance with Articles 3.4(b) and 7.3(b). 15.4 SPECIAL REQUIREMENTS FOR CONTROLLED BUSINESS BY OWNER-EMPLOYEES 88 (a) If this Plan provides contributions or benefits for one or more Owner- Employees who control both the trade or business with respect to which this Plan is established and one or more other trades or businesses, this Plan and any plan established with respect to such other trades or businesses must, when looked at as a single plan, satisfy Section 401(a) and (d) of the Code with respect to the employees of this and all such other trades or businesses. (b) If this Plan provides contributions or benefits for one or more Owner- Employees who control one or more other trades of businesses, the employees of each such other trade or business must be included in a plan which satisfies Sections 401(a) and (d) of the Code and which provides contributions and benefits not less favorable than provided for Owner- Employees under this Plan. (c) If an individual is covered as an Owner-Employee under the plans of two or more trades or businesses which are not controlled and the individual controls a trade or business, then the contributions or benefits of the employees under the plan of the trades or businesses which are controlled must be as favorable as those provided for the Owner-Employee under the most favorable plan of the trade or business which is not controlled. (d) For purposes of the preceding paragraphs, an Owner-Employee, or two or more Owner-Employees, shall be considered to control a trade or business if such Owner-Employee, or such two or more Owner-Employees together: (1) own the entire interest in a unincorporated trade or business; or (2) in the case of a partnership, own more than 50 percent of either the capital interest or the profits interest in such partnership. For purposes of the preceding sentence, an Owner-Employee, or two or more Owner-Employees, shall be treated as owning any interest in a partnership which is owned, directly or indirectly, by a partnership which such Owner- Employee, or such two or more Owner-Employees, are considered to control within the meaning of the preceding sentence. 89 15.5 NONGUARANTEE OF EMPLOYMENT. Nothing contained in this Plan shall be construed as a contract of employment between the Employer and any Employee, or as a right of any Employee to be continued in the employment of the Employer, or as a limitation of the right of the Employer to discharge any of its Employees, with or without cause. 15.6 RIGHT TO TRUST ASSETS. No Employee, Participant, former Participant or Beneficiary shall have any right to, or interest in, any assets of the Trust upon termination of employment or otherwise, except as specifically provided under the Plan. All payments of benefits under the Plan shall be made solely out of the assets of the Trust. 15.7 NONALIENATION OF BENEFITS. Except as provided under Article 10 with respect to Plan loans, benefits payable under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, whether voluntary or involuntary; provided, however, that the Trustee shall not be hereby precluded from complying with any qualified domestic relations order as defined in Section 414(p) of the Code or any domestic relations order entered before January 1, 1985. Any attempt by a Participant, former Participant or Beneficiary to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder shall be void. The Trustee shall not in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any person entitled to benefits hereunder. 15.8 FAILURE OF QUALIFICATION. If the Employer fails to attain or retain this Plan as a plan which qualifies under Section 401 of the Code, then the Plan as adopted by the Employer will no longer represent a prototype plan covered by an opinion letter issued by the Internal Revenue Service to the Sponsor as to the acceptability of the form of the Plan and Trust Agreement under Sections 401 and 501(a) of the Code, but rather will be considered an individually-designed plan. 15.9 APPLICABLE LAW. The Plan shall be construed and enforced in accordance with and by the laws of the state in which the Employer's principal place of business is located, as specified in the Adoption Agreement, to the extent permitted by ERISA. 90 EX-4.9 5 1ST & 2ND AMENDMENT TO DEFERRED SAVINGS PLAN FIRST AMENDMENT TO DRESSER INDUSTRIES, INC. DEFERRED SAVINGS PLAN WHEREAS, DRESSER INDUSTRIES, INC. ("Dresser") and certain Affiliated Companies have heretofore adopted the DRESSER INDUSTRIES, INC. DEFERRED SAVINGS PLAN (the "Plan"); and WHEREAS, Dresser Industries, Inc. desires to amend the Plan on behalf of itself and all Affiliated Companies; NOW, THEREFORE, the Plan shall be amended as follows: 1. Effective as of May 31, 1995, the following shall be added to Paragraph (a) of Section 2.3: "A person employed by an Affiliated Company which has not adopted the Plan who transfers to employment with the Company shall join the Plan on the date of such transfer, unless the individual has earned less than three months of Service at the time of the transfer. A person with less than three months of Service who is so transferred shall join the Plan as provided in Section 2.2." 2. Effective as of May 31, 1995, the first sentence of Section 3.3 shall be deleted and the following shall be substituted therefor: "The Plan shall accept cash Rollover Contributions (within the meaning of Code section 402(c), including optional direct transfers under Code section 401(a)(31) and transfers of Rollover Contributions which were originally deposited in conduit individual retirement accounts pending rollover) on behalf of a Member from any plan qualified under section 401(a) of the Code." 3. Effective as of May 31, 1995, the third sentence of item (1) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "This distribution of excess deferrals shall be adjusted for income or loss allocated thereto in the manner determined by the Committee in accordance with any method permissible under applicable Treasury regulations." 4. Effective as of May 31, 1995, the following shall be added to item (2) of Paragraph (b) of Section 3.6: "For purposes of determining whether the annual additions under this Plan exceed the limitations of section 415 of the Code, all defined contribution plans of the Company and the Affiliated Companies are to be treated as one defined contribution plan. For purposes of this Section only, an "Affiliated Company" (other than an affiliated service group member within the meaning of section 414(m) of the Code) shall be determined by application of a more than 50% control standard in lieu of an 80% control standard. If the annual additions credited to a Member's Account for any Limitation Year under this Plan plus the additions credited on his behalf under other defined contribution plans required to be aggregated pursuant to the foregoing would exceed the maximum annual additions permitted for such Limitation Year under section 415 of the Code for such Member for such Limitation Year, the annual additions under this Plan and the additions under such other plans shall be reduced and allocated, reallocated, or returned in accordance with applicable plan provisions regarding excess additions. Such reductions shall be effected first from this Plan, second, from the Dresser Industries, Inc. Retirement Savings Plan-B and, finally, from any other such defined contribution plans. In the case of a Member who also participated in a defined benefit plan of the Company or an Affiliated Company (as defined above), the Company shall reduce the annual additions credited to the Account of such Member under this Plan to the extent necessary to prevent the limitation set forth in section 415(e) of the Code from being exceeded. Notwithstanding the foregoing, the provisions of the preceding sentence shall apply only if such defined benefit plan does not provide for a reduction of benefits thereunder to ensure that the limitation set forth in section 415(e) of the Code is not exceeded." 5. Effective as of May 31, 1995, the last sentence of item (3) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "Such excess deferral amounts shall be distributed within two and one- half months after the close of the Plan Year or as soon thereafter as is practicable. Such distribution of excess deferral amounts shall be adjusted for income or loss allocated thereto in the manner determined by the Committee in accordance with any method permissible under applicable Treasury regulations." 6. Effective as of May 31, 1995, the last sentence of item (4) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "Such excess contributions shall be distributed or forfeited, as applicable, within two and one-half months after the close of the Plan Year or as soon thereafter as is practicable. Such distribution or forfeiture of excess contributions shall be adjusted for income or loss allocated thereto in the manner determined by the Committee in accordance with any method permissible under applicable Treasury regulations." 7. Effective as of May 31, 1995, the following shall be added to item (6) of Paragraph (b) of Section 3.6 of the Plan: -2- "Such forfeitures of excess contributions shall be adjusted for income or loss allocated thereto in the manner determined by the Committee in accordance with any method permissible under applicable Treasury regulations." 8. Effective as of June 1, 1996, reference in Paragraph (b) of Section 6.4 to "on such April 1" shall be deleted and reference to "on or before such April 1" shall be substituted therefor. 9. Effective as of June 1, 1996, item (2) of Paragraph (b) of Section 6.4 of the Plan shall be deleted and the following shall be substituted therefor: "(2) The life expectancy of the Member as determined under applicable Treasury regulations." 10. Effective as of June 1, 1996, Section 15.23 of the Plan shall be deleted and the following shall be substituted therefor: "SECTION 15.23. NON-GRANDFATHERED MEMBER. For purposes of determining eligibility for Medisave Contributions pursuant to Section 3.2.(c) and Appendix B for a Plan Year, a Member is an employee who is not at any time during a semi-monthly payroll period eligible for coverage under a Dresser retiree medical plan. A Member shall be deemed to be eligible for coverage under a Dresser retiree medical plan if either: (a) he or she would qualify for subsidized coverage under a Dresser retiree medical plan upon his or her retirement or other termination of employment without the need for completion of any age, service or other conditions imposed as a condition for such coverage; or (b) he or she would qualify for subsidized coverage under a Dresser retiree medical plan upon his or her retirement or other termination of employment provided that he or she has, as of the date of such retirement or other termination of employment, completed applicable age, service or other conditions imposed as a condition for such coverage." 11. Effective as of June 1, 1996, the existing Appendix A to the Plan shall be deleted and the following new Appendix A shall be substituted therefor: "APPENDIX A MEDISAVE CONTRIBUTIONS SECTION A.1. GENERAL MEDISAVE CONTRIBUTION ELIGIBILITY. In order to qualify to receive Medisave Contributions for all or a portion of a Plan Year, a Member must satisfy all of the following criteria: -3- (a) the Member must be a Non-grandfathered Member; (b) the Member must be eligible to participate in the Dresser group medical plan, or be an eligible U.S. Expatriate; and (c) the Member must have been employed by Dresser Industries, Inc. or an Affiliated Company for at least one year. For purposes of the criteria described in item (c) above, eligibility to participate in a Predecessor Plan or the Dresser Industries, Inc. Retirement Savings Plan B shall count toward the one year participation eligibility requirement for qualification to receive Medisave Contributions. Members of the Bentonite union are specifically excluded from receiving Medisave Contributions. SECTION A.2. STANDARD FLAT MEDISAVE CONTRIBUTION FORMULA. A Member who has satisfied the general Medisave Contribution eligibility requirements of Section A.1. above and who is not described in Section A.3. below shall be eligible to receive Medisave Contributions pursuant to the standard flat Medisave Contribution formula described in this Section A.2 for each semi- monthly payroll period during a Plan Year during which such Member is eligible to participate in the Plan. The standard flat Medisave Contribution for a Member for a semi-monthly period in a Plan Year shall be $400 divided by the number of semi-monthly payroll periods during such Plan Year. If at the end of a Plan Year, the aggregate Medisave Contributions made on behalf of a Member who is eligible for such Medisave Contributions pursuant to Section 3.2 for all semi-monthly payroll periods in such Plan Year are less than $400, then a final Medisave Contribution shall be made on behalf of such Member so that the Medisave Contributions on his behalf for such Plan Year shall be equal to $400. In the event that the Medisave Contributions made on a Member's behalf during a Plan Year should equal $400 at a time prior to the end of such Plan Year, no further semi-monthly payroll period contributions of Medisave Contributions shall be made on behalf of such Member for such Plan Year. A Member who was initially entitled to Medisave Contributions pursuant to the standard flat Medisave Contribution formula described in this Section A.2. and who, as a result of an employment transfer within the Company, becomes a Member who is described in Section A.3. below shall continue to receive Medisave Contributions pursuant to this Section A.2. SECTION A.3. MATCH CONTRIBUTION MEDISAVE CONTRIBUTION AMOUNTS. A Member who has satisfied the general Medisave Contribution eligibility requirements of Section A.1. above shall be eligible to receive Medisave Contributions pursuant to the match contribution Medisave Contribution formula described in this Section A.3 for each semi-monthly payroll period during such Plan Year that such Member makes Pretax or After-Tax Contributions to the Plan pursuant to Section 3.1 if: (a) such Member was hired on or before May 31, 1996 and works for a non-Dresser Drilling and Production or Energy Valve Operation: -4- (b) such Member was hired on or before May 31, 1995 and worked for either Security or Guiberson/AVA Operations or such Member was hired on or before April 1, 1994 and worked for TK Valve Operations; or (c) such Member was, prior to an employment transfer or reorganization within the Company, entitled to Medisave Contributions pursuant to the matching contribution Medisave Contribution formula described in this Section A.3. The matching contribution Medisave Contribution amount for a semi-monthly payroll period within a Plan Year for a Member pursuant to this Section A.3. shall be equal to 50% of the Pretax and After-tax Contributions of the Member for such semi-monthly payroll period which are not in excess of 4% of the Member's Earnings for such semi-monthly payroll period. SECTION A.4. ALLOCATIONS AND FORFEITURES. Medisave Contributions made to the Plan for a Plan Year on behalf of a Member shall be allocated upon receipt by the Trustee to such Member's Medisave Account. Medisave Contributions allocated to a Member's Medisave Account shall be forfeited or returned, whichever may be applicable, in accordance with the provisions of Section 3.6(b) and Section 9.1." 12. Effective November 1, 1995, the existing Appendix C shall be deleted and the following new Appendix C shall be substituted therefor: "APPENDIX C NEGOTIATED BENEFIT FOR THE BENTONITE UNION The Company shall make Matching Contributions during the Plan Year on behalf of each Member described in Section 3.2(a) for each semi-monthly payroll period during such Plan Year that such Member makes Pretax or After-Tax Contributions to the Plan. The amount of a Matching Contribution made on behalf of a Member shall be equal to 50% of the Member's eligible employee contribution which is not in excess of 4% of such Member's Earnings for the period for which such Matching Contribution is being made." 13. As amended hereby, the Plan is specifically ratified and reaffirmed. -5- IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed this ______ day of _____________________________, 1996. DRESSER INDUSTRIES, INC. By -------------------------------- -6- SECOND AMENDMENT TO DRESSER INDUSTRIES, INC. DEFERRED SAVINGS PLAN WHEREAS, DRESSER INDUSTRIES, INC. ("Dresser") and certain Affiliated Companies have heretofore adopted the DRESSER INDUSTRIES, INC. DEFERRED SAVINGS PLAN (the "Plan"); and WHEREAS, Dresser Industries, Inc. desires to amend the Plan on behalf of itself and all Affiliated Companies; NOW, THEREFORE, the Plan shall be amended as follows, effective as of May 31, 1995 except as otherwise specifically provided herein: 1. The second sentence of Item (3) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "If the test is not met, the Committee shall determine the amount of excess Pretax Contributions of Highly Compensated Members in accordance with the leveling method described in Treas. Reg. Section 1.401(k)-1(f)(2) and shall return the excess Pretax Contributions of Highly Compensated Members until the maximum deferral percentage permitted under the test is reached. In the case of any Highly Compensated Member whose actual deferral percentage for purposes of such ADP test is determined under the family aggregation rules of Treas. Reg. Section 1.401(k)-1(g)(1)(ii)(C), the determination and correction of such excess Pretax Contributions shall be accomplished by reducing the ADP test deferral percentage in accordance with the preceding sentence and allocating the excess aggregate Pretax Contributions for the family group among the family members in proportion to the Pretax Contribution of each family member that is combined to determine the ADP test actual deferral percentage." 2. The next-to-last sentence of Item (3) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "Such excess deferral amounts shall be distributed within two and one-half months after the close of the Plan Year or as soon thereafter as is practicable in accordance with the provisions of Code section 401(k)(8)(A) and Treasury Regulations promulgated thereunder." 3. The second sentence of Item (4) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "If the test is not met, the Committee shall determine the amount of excess After-Tax Contributions, Medisave Contributions and Matching Contributions of Highly Compensated Members in accordance with the leveling method described in Treas. Reg. Section 1.401(m)-1(e)(2) and shall return the excess After-Tax Contributions, Medisave Contributions and Matching Contributions of Highly Compensated Members until the maximum contribution percentage permitted under the test is reached. In the case of any Highly Compensated Member whose actual contribution percentage for purposes of such ACP test is determined under the family aggregation rules of Treas. Reg. Section 1.401(m)-1(f)(1)(ii)(C), the determination and correction of such excess After-Tax Contributions, Medisave Contributions and Matching Contributions shall be accomplished by reducing the ACP test actual contribution percentage in accordance with the preceding sentence and allocating the excess aggregate After-Tax Contributions, Medisave Contributions and Matching Contributions for the family group among the family members in proportion to the After-Tax Contributions, Medisave Contributions and Matching Contributions of each family member that are combined to determine the ACP test actual contribution percentage." 4. The next-to-last sentence of Item (4) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "Such excess contributions shall be distributed or forfeited, as applicable, within two and one-half months after the close of the Plan Year or as soon thereafter as is practicable in accordance with the provisions of Code section 401(m)(6)(A) and Treasury Regulations promulgated thereunder." 5. The following shall be added to Item (c) of Section 6.1 of the Plan: "Notwithstanding the foregoing, a Member's Pretax Account may only be distributed pursuant to this item (c) if the transaction satisfies the criteria described in Code section 401(k)(10)(A)(i) or (ii) and the Treasury Regulations promulgated thereunder, as determined by the Committee, and the Member's distribution is paid in the form of a lump sum distribution no later than the end of the second calendar year after the calendar year in which such transaction occurred." 6. The following shall be added to Section 6.1 of the Plan: "The provisions of this Section 6.1 of the Plan and any other provision of the Plan notwithstanding, a Member's Pretax Account may not be distributed at a time when such distribution would violate the distribution restrictions of Code section 401(k)(2)(B) and the Treasury Regulations promulgated thereunder." 7. The last paragraph of Section 15.13 of the Plan shall be deleted and the following shall be substituted therefor: -2- "The Earnings of any Member taken into account for purposes of the Plan shall be limited to $150,000 for any Plan Year with such limitation to be: (1) adjusted automatically to reflect any amendments to Code section 401(a)(17) and any cost-of-living increases authorized by Code section 401(a)(17); (2) prorated for a Plan Year of less than twelve months and to the extent otherwise required by applicable law; and (3) in the case of a Member who is either a five-percent owner of the Company (within the meaning of Code section 416(i)(1)(A)(iii)) or is one of the ten most Highly Compensated Employees for the Plan Year and who has a spouse and/or lineal descendants who are under the age of nineteen as of the end of a Plan Year who receive Earnings during such Plan Year, prorated and allocated among such Member, his spouse, and/or lineal descendants under the age of nineteen based on the Earnings for such Plan Year of each such individual." 8. The last two sentences of Section 15.29 of the Plan shall be deleted and the following shall be substituted therefor: "However, the Test Compensation of any Member taken into account for purposes of the Plan shall be limited to $150,000 for any Plan Year with such limitation to be: (1) adjusted automatically to reflect any amendments to Code section 401(a)(17) and any cost-of-living increases authorized by Code section 401(a)(17); (2) prorated for a Plan Year of less than twelve months and to the extent otherwise required by applicable law; and (3) in the case of a Member who is either a five-percent owner of the Company (within the meaning of Code section 416(i)(1)(A)(iii)) or is one of the ten most Highly Compensated Employees for the Plan Year and who has a spouse and/or lineal descendants who are under the age of nineteen as of the end of a Plan Year who receive Test Compensation during such Plan Year, prorated and allocated among such Member, his spouse, and/or lineal descendants under the age of nineteen based on the Test Compensation for such Plan Year of each such individual." 9. Each of the instrument providing for the merger of the Savings Plan for Employees of Baroid Corporation with and into the Dresser Industries, Inc. Retirement Savings Plans and Appendix B to the Plan shall be amended by redenominating Subitem "(i)" of Item 8 thereof as Subitem "(j)" and inserting the following new Subitem (i) into such Item 8: "(i) A Baroid Plan Participant who has terminated employment may elect to leave his Baroid Plan Account in the Dresser Plans for so long as and to the extent that such distribution deferral election does contravene the required -3- distribution requirements of Code section 401(a)(9) and Treasury Regulations promulgated thereunder." 10. As amended hereby, the Plan is specifically ratified and reaffirmed. IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed this _____ day of _____________________, 1996. DRESSER INDUSTRIES, INC. By --------------------------------- -4- EX-4.10 6 1ST & 2ND AMENDMENT TO RETIREMENT SAVINGS FIRST AMENDMENT TO DRESSER INDUSTRIES, INC. RETIREMENT SAVINGS PLAN - A WHEREAS, DRESSER INDUSTRIES, INC. ("Dresser") and certain Affiliated Companies have heretofore adopted the DRESSER INDUSTRIES, INC. RETIREMENT SAVINGS PLAN - A (the "Plan"); and WHEREAS, Dresser Industries, Inc. desires to amend the Plan on behalf of itself and all Affiliated Companies; NOW, THEREFORE, the Plan shall be amended as follows: 1. Effective as of May 31, 1995, the following shall be added to Paragraph (a) of Section 2.3: "A person employed by an Affiliated Company which has not adopted the Plan who transfers to employment with the Company shall join the Plan on the date of such transfer, unless the individual has earned less than three months of Service at the time of the transfer. A person with less than three months of Service who is so transferred shall join the Plan as provided in Section 2.2." 2. Effective as of May 31, 1995, the first sentence of Section 3.3 shall be deleted and the following shall be substituted therefor: "The Plan shall accept cash Rollover Contributions (within the meaning of Code section 402(c), including optional direct transfers under Code section 401(a)(31) and transfers of Rollover Contributions which were originally deposited in conduit individual retirement accounts pending rollover) on behalf of a Member from any plan qualified under section 401(a) of the Code." 3. Effective as of May 31, 1995, the third sentence of item (1) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "This distribution of excess deferrals shall be adjusted for income or loss allocated thereto in the manner determined by the Committee in accordance with any method permissible under applicable Treasury regulations." 4. Effective as of May 31, 1995, the following shall be added to item (2) of Paragraph (b) of Section 3.6: "For purposes of determining whether the annual additions under this Plan exceed the limitations of section 415 of the Code, all defined contribution plans of the Company and the Affiliated Companies are to be treated as one defined contribution plan. For purposes of this Section only, an "Affiliated Company" (other than an affiliated service group member within the meaning of section 414(m) of the Code) shall be determined by application of a more than 50% control standard in lieu of an 80% control standard. If the annual additions credited to a Member's Account for any Limitation Year under this Plan plus the additions credited on his behalf under other defined contribution plans required to be aggregated pursuant to the foregoing would exceed the maximum annual additions permitted for such Limitation Year under section 415 of the Code for such Member for such Limitation Year, the annual additions under this Plan and the additions under such other plans shall be reduced and allocated, reallocated, or returned in accordance with applicable plan provisions regarding excess additions. Such reductions shall be effected first from this Plan, second, from the Dresser Industries, Inc. Retirement Savings Plan-B and, finally, from any other such defined contribution plans. In the case of a Member who also participated in a defined benefit plan of the Company or an Affiliated Company (as defined above), the Company shall reduce the annual additions credited to the Account of such Member under this Plan to the extent necessary to prevent the limitation set forth in section 415(e) of the Code from being exceeded. Notwithstanding the foregoing, the provisions of the preceding sentence shall apply only if such defined benefit plan does not provide for a reduction of benefits thereunder to ensure that the limitation set forth in section 415(e) of the Code is not exceeded." 5. Effective as of May 31, 1995, the last sentence of item (3) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "Such excess deferral amounts shall be distributed within two and one- half months after the close of the Plan Year or as soon thereafter as is practicable. Such distribution of excess deferral amounts shall be adjusted for income or loss allocated thereto in the manner determined by the Committee in accordance with any method permissible under applicable Treasury regulations." 6. Effective as of May 31, 1995, the last sentence of item (4) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "Such excess contributions shall be distributed or forfeited, as applicable, within two and one-half months after the close of the Plan Year or as soon thereafter as is practicable. Such distribution or forfeiture of excess contributions shall be adjusted for income or loss allocated thereto in the manner determined by the Committee in accordance with any method permissible under applicable Treasury regulations." 7. Effective as of May 31, 1995, the following shall be added to item (6) of Paragraph (b) of Section 3.6 of the Plan: -2- "Such forfeitures of excess contributions shall be adjusted for income or loss allocated thereto in the manner determined by the Committee in accordance with any method permissible under applicable Treasury regulations." 8. Effective as of June 1, 1996, reference in Paragraph (b) of Section 6.4 to "on such April 1" shall be deleted and reference to "on or before such April 1" shall be substituted therefor. 9. Effective as of June 1, 1996, item (2) of Paragraph (b) of Section 6.4 of the Plan shall be deleted and the following shall be substituted therefor: "(2) The life expectancy of the Member as determined under applicable Treasury regulations." 10. Effective as of June 1, 1996, Section 15.25 of the Plan shall be deleted and the following shall be substituted therefor: "SECTION 15.25. NON-GRANDFATHERED MEMBER. For purposes of determining eligibility for Medisave Contributions pursuant to Section 3.2.(c) and Appendix B for a Plan Year, a Member is an employee who is not at any time during a semi-monthly payroll period eligible for coverage under a Dresser retiree medical plan. A Member shall be deemed to be eligible for coverage under a Dresser retiree medical plan if either: (a) he or she would qualify for subsidized coverage under a Dresser retiree medical plan upon his or her retirement or other termination of employment without the need for completion of any age, service or other conditions imposed as a condition for such coverage; or (b) he or she would qualify for subsidized coverage under a Dresser retiree medical plan upon his or her retirement or other termination of employment provided that he or she has, as of the date of such retirement or other termination of employment, completed applicable age, service or other conditions imposed as a condition for such coverage." 11. Effective as of June 1, 1996, the existing Appendix B to the Plan shall be deleted and the following new Appendix B shall be substituted therefor: -3- "APPENDIX B MEDISAVE CONTRIBUTIONS SECTION B.1. GENERAL MEDISAVE CONTRIBUTION ELIGIBILITY. In order to qualify to receive Medisave Contributions for all or a portion of a Plan Year, a Member must satisfy all of the following criteria: (a) the Member must be a Non-grandfathered Member; (b) the Member must be eligible to participate in the Dresser group medical plan, or be an eligible U.S. Expatriate; and (c) the Member must have been employed by Dresser Industries, Inc. or an Affiliated Company for at least one year. For purposes of the criteria described in item (c) above, eligibility to participate in a Predecessor Plan or the Dresser Industries, Inc. Retirement Savings Plan B shall count toward the one year participation eligibility requirement for qualification to receive Medisave Contributions. SECTION B.2. STANDARD FLAT MEDISAVE CONTRIBUTION FORMULA. A Member who has satisfied the general Medisave Contribution eligibility requirements of Section B.1. above and who is not described in Section B.3. below shall be eligible to receive Medisave Contributions pursuant to the standard flat Medisave Contribution formula described in this Section B.2 for each semi- monthly payroll period during a Plan Year during which such Member is eligible to participate in the Plan. The standard flat Medisave Contribution for a Member for a semi-monthly period in a Plan Year shall be $400 divided by the number of semi-monthly payroll periods during such Plan Year. If at the end of a Plan Year, the aggregate Medisave Contributions made on behalf of a Member who is eligible for such Medisave Contributions pursuant to Section 3.2 for all semi-monthly payroll periods in such Plan Year are less than $400, then a final Medisave Contribution shall be made on behalf of such Member so that the Medisave Contributions on his behalf for such Plan Year shall be equal to $400. In the event that the Medisave Contributions made on a Member's behalf during a Plan Year should equal $400 at a time prior to the end of such Plan Year, no further semi-monthly payroll period contributions of Medisave Contributions shall be made on behalf of such Member for such Plan Year. A Member who was initially entitled to Medisave Contributions pursuant to the standard flat Medisave Contribution formula described in this Section B.2. and who, as a result of an employment transfer within the Company, becomes a Member who is described in Section B.3. below shall continue to receive Medisave Contributions pursuant to this Section B.2. SECTION B.3. MATCH CONTRIBUTION MEDISAVE CONTRIBUTION AMOUNTS. A Member who has satisfied the general Medisave Contribution eligibility requirements of Section B.1. above shall be eligible to receive Medisave Contributions pursuant to the match contribution Medisave Contribution formula described in this Section B.3 for each semi-monthly payroll -4- period during such Plan Year that such Member makes Pretax or After-Tax Contributions to the Plan pursuant to Section 3.1 if: (a) such Member was hired on or before May 31, 1996 and works for a non-Dresser Drilling and Production or Energy Valve Operation: (b) such Member was hired on or before May 31, 1995 and worked for either Security or Guiberson/AVA Operations or such Member was hired on or before April 1, 1994 and worked for TK Valve Operations; or (c) such Member was, prior to an employment transfer or reorganization within the Company, entitled to Medisave Contributions pursuant to the matching contribution Medisave Contribution formula described in this Section B.3. The matching contribution Medisave Contribution amount for a semi-monthly payroll period within a Plan Year for a Member pursuant to this Section B.3. shall be equal to 50% of the Pretax and After-tax Contributions of the Member for such semi-monthly payroll period which are not in excess of 4% of the Member's Earnings for such semi-monthly payroll period. SECTION B.4. ALLOCATIONS AND FORFEITURES. Medisave Contributions made to the Plan for a Plan Year on behalf of a Member shall be allocated upon receipt by the Trustee to such Member's Medisave Account. Medisave Contributions allocated to a Member's Medisave Account shall be forfeited or returned, whichever may be applicable, in accordance with the provisions of Section 3.6(b) and Section 9.1." 12. Effective as of December 31, 1995, the instrument providing for the merger of a portion of the Grove Employees' Savings and Incentive Plan into the Plan, a copy of which instrument is labeled as Appendix G and is attached hereto, is hereby added to the Plan as Appendix G. 13. As amended hereby, the Plan is specifically ratified and reaffirmed. IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed this ______ day of _____________________________, 1996. DRESSER INDUSTRIES, INC. By ------------------------------- -5- APPENDIX G MERGER OF GROVE EMPLOYEES' SAVINGS AND INCENTIVE PLAN WITH AND INTO THE DRESSER INDUSTRIES, INC. RETIREMENT SAVINGS PLANS WHEREAS, Grove Valve and Regulator Company ("Grove") has heretofore adopted the Grove Employees' Savings and Incentive Plan (the "Grove Plan"); and WHEREAS, Dresser Industries, Inc. ("Dresser") sponsors and maintains the Dresser Industries Inc. Retirement Savings Plan-A (the "Dresser Plan-A") and the Dresser Industries, Inc. Retirement Savings Plan-B (the "Dresser Plan-B") (jointly, the "Dresser Plans"); and WHEREAS, Grove was acquired by Dresser and the parties hereto desire that the employees of Grove become covered by the Dresser Plans; and WHEREAS, the Board of Directors of Grove has approved and the Employee Benefits Committee of Dresser Industries, Inc. (the "Committee") hereby provides for a simultaneous split-up of the Grove Plan into functional group components and for the mergers of the resulting group components of the Grove Plan into the Dresser Plan-A and the Dresser Plan-B: NOW, THEREFORE, the parties hereto agree as follows: 1. Effective as of December 31, 1995, the accounts under the Grove Plan of Grove employees eligible to participate in the Dresser Plan-A and the accounts under the Grove Plan of Grove employees eligible to participate in the Dresser Plan-B are hereby transferred to and merged with and into, respectively, the Dresser Plan-A and the Dresser Plan-B with the result that the provisions of the Dresser Plans replace the provisions of the Grove Plan in their entirety except as otherwise herein provided. Former employees with account balances in the Grove Plan will be transferred to the Dresser Plans in accordance with their eligibility status immediately prior to termination. Pursuant to such merger, the Grove Plan Trustee is instructed hereby that assets held under the Grove Plan shall be transferred as soon as practicable after December 31, 1995 to the Dresser Plans to be held under the existing trusts maintained under said Dresser Plans. Such transfers shall be in cash except that outstanding participant loans shall be transferred in kind. 2. Immediately after the merger of the relevant group component of the Grove Plan with and into the Dresser Plan-A, each Member of the Dresser Plan-A shall, if the Dresser Plan-A were then terminated, be entitled to a benefit which is at least equal to the benefit such Member -1- would have been entitled to immediately prior to the merger if the Grove Plan and the Dresser Plan-A had then terminated. Immediately after the merger of the group component of the Grove Plan with and into the Dresser Plan-B, each member of the Dresser Plan-B shall, if the Dresser Plan-B were then terminated, be entitled to a benefit which is at least equal to the benefit such Member would have been entitled to immediately prior to the merger if the Grove Plan and Dresser Plan-B had then terminated. The provisions of this instrument shall be construed under and in accordance with section 208 of the Employee Retirement Income Security Act of 1974, as amended, and sections 401(a)(12) and 414(1) of the Internal Revenue Code of 1986, as amended, and federal regulations promulgated thereunder. 3. As soon as practicable after the merger of the Grove Plan with and into the Dresser Plans, the appropriate officers of Dresser and Grove shall determine if Grove had or is projected to have Net Profits for the period of November 1, 1994 through October 31, 1995. If it is determined that Grove had or is projected to have, as applicable, net profits for such period, Dresser shall make a Profit-Sharing Contribution to the applicable Dresser Plan (as successor to the portion of the Grove Plan which was merged into it) pursuant to Section 4.3 of the Grove Plan for the period of January 1, 1995 through December 31, 1995 as determined by the appropriate officers of Dresser and Grove. Any such Profit-Sharing Contributions shall be made as soon as practicable after the determination of the amount thereof to and shall be allocated as of December 31, 1995 to the Grove Plan Accounts of the Grove Plan Participants in accordance with the provisions of Section 5.2 of the Grove Plan based upon Compensation earned by the Grove Plan Participants during 1995. All Profit Sharing Contributions made in accordance with this Item 3 shall be treated as having been made to the Grove Plan as of December 31, 1995. 4. The provisions if Items 5 through 8 of this instrument shall be applicable to the accounts (the "Grove Plan Accounts") transferred to the Dresser Plans pursuant to the merger of the Grove Plan with and into the Dresser Plans of an individual ("Grove Participant") who was a participant in the Grove Plan prior to such mergers. 5. Except as provided specifically herein, Grove Plan Accounts shall be governed by the provisions of the Dresser Plans in the same manner as any other account under the Dresser Plans as follows: (a) The portion of a Grove Plan Account which is attributable to Salary Deferrals made to the Grove Plan shall be treated in the same manner as a Pre-Tax Account; (b) The portion of a Grove Plan Account which is attributable to Employer Matching Contributions made to the Grove Plan shall be treated in the same manner as a Matching Account; (c) The portion of a Grove Plan Account which is attributable to Employer Basic Contributions and Employer Profit-Sharing Contributions made to the Grove Plan shall be treated in the same manner as a Basic Account; and (d) The portion of a Grove Plan Account which was attributable to a rollover into the Grove Plan shall be treated in the same manner as a Rollover Account. -2- 6. Incident to the transfer to the Dresser Plans of the Grove Plan Accounts, the Investment Funds of the Grove Plan shall be liquidated and the proceeds invested in the investment funds of the Dresser Plans with the proceeds from the liquidation of a Grove Plan Investment Fund being invested by the Committee in the investment fund of the applicable Dresser Plan which is most comparable thereto in terms of type of investments and nature of investment goals except that Grove Plan outstanding Participant loans shall be continued as outstanding participant loans subject, however, to such adjustments as may be appropriate or necessary to conform to the Dresser Plans' loan procedures and administration. From and after such initial transfer and subject to the provision of this Item 5, Grove Plan Participants may direct as to the investment of their Grove Plan Accounts in accordance with the then applicable provisions of the Dresser Plans. 7. Provisions of the Dresser Plans notwithstanding the nonforfeitable percentage in the Dresser plans of any Grove Plan Participant in his Grove Plan Account shall be 100%. The non-forfeitable percentage in the Dresser Plans of any Grove Plan Participant who had completed at least three years of service as of December 31, 1995 shall be 100% as to all of his accounts in the Dresser Plans. 8. Distribution and withdrawal provisions of the Dresser Plan to the contrary notwithstanding and in addition to the other in-service withdrawal rights available pursuant to the Dresser Plan, a Grove Plan Participant who has attained the age of 591/2 may withdraw any portion of the then value of his Grove Plan Account which is attributable to Salary Deferral Contributions. 9. For purposes of this instrument, capitalized terms shall have the meanings ascribed to them in the Dresser Plans or the Grove Plan, as applicable, unless otherwise defined herein. 10. As amended hereby, the Dresser Plans are specifically ratified and reaffirmed. -3- SECOND AMENDMENT TO DRESSER INDUSTRIES, INC. RETIREMENT SAVINGS PLAN - A WHEREAS, DRESSER INDUSTRIES, INC. ("Dresser") and certain Affiliated Companies have heretofore adopted the DRESSER INDUSTRIES, INC. RETIREMENT SAVINGS PLAN - A (the "Plan"); and WHEREAS, Dresser desires to amend the Plan on behalf of itself and all Affiliated Companies; NOW, THEREFORE, the Plan shall be amended as follows, effective as of May 31, 1995 except as otherwise specifically provided herein: 1. The second sentence of Item (3) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "If the test is not met, the Committee shall determine the amount of excess Pretax Contributions of Highly Compensated Members in accordance with the leveling method described in Treas. Reg. Section 1.401(k)-1(f)(2) and shall return the excess Pretax Contributions of Highly Compensated Members until the maximum deferral percentage permitted under the test is reached. In the case of any Highly Compensated Member whose actual deferral percentage for purposes of such ADP test is determined under the family aggregation rules of Treas. Reg. Section 1.401(k)-1(g)(1)(ii)(C), the determination and correction of such excess Pretax Contributions shall be accomplished by reducing the ADP test deferral percentage in accordance with the preceding sentence and allocating the excess aggregate Pretax Contributions for the family group among the family members in proportion to the Pretax Contribution of each family member that is combined to determine the ADP test actual deferral percentage." 2. The next-to-last sentence of Item (3) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "Such excess deferral amounts shall be distributed within two and one-half months after the close of the Plan Year or as soon thereafter as is practicable in accordance with the provisions of Code section 401(k)(8)(A) and Treasury Regulations promulgated thereunder." 3. The second sentence of Item (4) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "If the test is not met, the Committee shall determine the amount of excess After-Tax Contributions, Medisave Contributions and Matching Contributions of Highly Compensated Members in accordance with the leveling method described in Treas. Reg. Section 1.401(m)-1(e)(2) and shall return the excess After-Tax Contributions, Medisave Contributions and Matching Contributions of Highly Compensated Members until the maximum contribution percentage permitted under the test is reached. In the case of any Highly Compensated Member whose actual contribution percentage for purposes of such ACP test is determined under the family aggregation rules of Treas. Reg. Section 1.401(m)-1(f)(1)(ii)(C), the determination and correction of such excess After-Tax Contributions, Medisave Contributions and Matching Contributions shall be accomplished by reducing the ACP test actual contribution percentage in accordance with the preceding sentence and allocating the excess aggregate After-Tax Contributions, Medisave Contributions and Matching Contributions for the family group among the family members in proportion to the After-Tax Contributions, Medisave Contributions and Matching Contributions of each family member that are combined to determine the ACP test actual contribution percentage." 4. The next-to-last sentence of Item (4) of Paragraph (b) of Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor: "Such excess contributions shall be distributed or forfeited, as applicable, within two and one-half months after the close of the Plan Year or as soon thereafter as is practicable in accordance with the provisions of Code section 401(m)(6)(A) and Treasury Regulations promulgated thereunder." 5. The following shall be added to Item (c) of Section 6.1 of the Plan: "Notwithstanding the foregoing, a Member's Pretax Account may only be distributed pursuant to this item (c) if the transaction satisfies the criteria described in Code section 401(k)(10)(A)(i) or (ii) and the Treasury Regulations promulgated thereunder, as determined by the Committee, and the Member's distribution is paid in the form of a lump sum distribution no later than the end of the second calendar year after the calendar year in which such transaction occurred." 6. The following shall be added to Section 6.1 of the Plan: "The provisions of this Section 6.1 of the Plan and any other provision of the Plan notwithstanding, a Member's Pretax Account may not be distributed at a time when such distribution would violate the distribution restrictions of Code section 401(k)(2)(B) and the Treasury Regulations promulgated thereunder." 7. The last paragraph of Section 15.14 of the Plan shall be deleted and the following shall be substituted therefor: -2- "The Earnings of any Member taken into account for purposes of the Plan shall be limited to $150,000 for any Plan Year with such limitation to be: (1) adjusted automatically to reflect any amendments to Code section 401(a)(17) and any cost-of-living increases authorized by Code section 401(a)(17); (2) prorated for a Plan Year of less than twelve months and to the extent otherwise required by applicable law; and (3) in the case of a Member who is either a five-percent owner of the Company (within the meaning of Code section 416(i)(1)(A)(iii)) or is one of the ten most Highly Compensated Employees for the Plan Year and who has a spouse and/or lineal descendants who are under the age of nineteen as of the end of a Plan Year who receive Earnings during such Plan Year, prorated and allocated among such Member, his spouse, and/or lineal descendants under the age of nineteen based on the Earnings for such Plan Year of each such individual." 8. The last two sentences of Section 15.32 of the Plan shall be deleted and the following shall be substituted therefor: "However, the Test Compensation of any Member taken into account for purposes of the Plan shall be limited to $150,000 for any Plan Year with such limitation to be: (1) adjusted automatically to reflect any amendments to Code section 401(a)(17) and any cost-of-living increases authorized by Code section 401(a)(17); (2) prorated for a Plan Year of less than twelve months and to the extent otherwise required by applicable law; and (3) in the case of a Member who is either a five-percent owner of the Company (within the meaning of Code section 416(i)(1)(A)(iii)) or is one of the ten most Highly Compensated Employees for the Plan Year and who has a spouse and/or lineal descendants who are under the age of nineteen as of the end of a Plan Year who receive Test Compensation during such Plan Year, prorated and allocated among such Member, his spouse, and/or lineal descendants under the age of nineteen based on the Test Compensation for such Plan Year of each such individual." 9. Each of the instrument providing for the merger of the Savings Plan for Employees of Baroid Corporation with and into the Dresser Industries, Inc. Retirement Savings Plans and Appendix D to the Plan shall be amended by redenominating Subitem "(i)" of Item 8 thereof as Subitem "(j)" and inserting the following new Subitem (i) into such Item 8: "(i) A Baroid Plan Participant who has terminated employment may elect to leave his Baroid Plan Account in the Dresser Plans for so long as and to the extent that such distribution deferral election does contravene the required -3- distribution requirements of Code section 401(a)(9) and Treasury Regulations promulgated thereunder." 10. As amended hereby, the Plan is specifically ratified and reaffirmed. IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed this _____ day of _____________________, 1996. DRESSER INDUSTRIES, INC. By -4- EX-5.1 7 FORM OF OPINION OF REBECCA R. MORRIS -Company Letterhead- November 10, 1997 Dresser Industries, Inc. 2001 Ross Avenue Dallas, Texas 75201 Ladies and Gentlemen: This opinion of counsel is given in connection with a Registration Statement on Form S-8 (the "Registration Statement") filed by Dresser Industries, Inc. (the "Company") with the Securities and Exchange Commission (the "Commission") pursuant to the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration of 550,005 shares of common stock of the Company (which includes 550,000 shares of common stock registered but not issued in connection with the Dresser Industries, Inc. Stock Purchase Plan) to be issued pursuant to The Dresser Industries, Inc. Retirement Savings Plan - A, Dresser Industries, Inc. Retirement Savings Plan - B, The Dresser Industries, Inc. Union Plan, The Savings Plan for Bargaining Unit Employees of Texsteam Operations of Dresser Industries, Inc. and The Dresser Industries, Inc. Deferred Savings Plan (collectively, the "Qualified Plans"). As a Vice President-Corporate Counsel and Secretary of the Company, I am familiar with the affairs of the Company, including the action taken by the Company in connection with the Qualified Plans and the common stock expected to be issued thereunder. Based upon the foregoing, it is my opinion that the 550,005 shares of common stock of the Company, when issued and delivered in accordance with the terms of the Qualified Plans and applicable Delaware General Corporation Law, will be duly authorized, validly issued, fully paid and nonassessable. I hereby consent to the use of this opinion as an exhibit to the above referenced Registration Statement. Very truly yours, /s/ Rebecca R. Morris Rebecca R. Morris Vice President-Corporate Counsel and Secretary EX-23.2 8 CONSENT OF PRICE WATERHOUSE EXHIBIT 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated November 27, 1996, appearing page 29 of Dresser Industries, Inc.'s Annual Report on Form 10-K for the year ended October 31, 1996. /s/ PRICE WATERHOUSE LLP PRICE WATERHOUSE LLP Dallas, Texas November 10, 1997 EX-24 9 POWER OF ATTORNEY POWER OF ATTORNEY WITH RESPECT TO THE REGISTRATION STATEMENTS COVERING SECURITIES AND DERIVATIVE SECURITIES ISSUED BY DRESSER INDUSTRIES, INC. PURSUANT TO VARIOUS EMPLOYEE AND NON-EMPLOYEE DIRECTOR BENEFIT PLANS Each of the undersigned, a director and/or officer of DRESSER INDUSTRIES, INC. (the "Company"), appoints each Rebecca R. Morris and Alice (Ande) Hinds, his or her true and lawful attorney-in-fact and agent to do any and all acts and things and execute any and all instruments which the attorney-in-fact and agent may deem necessary or advisable in order to enable the Company to comply with the Securities Act of 1933, as amended (the "Act"), and any requirements of the Securities and Exchange Commission (the "Commission") in respect thereof, in connection with a Registration Statement or Registration Statements and any and all amendments thereto relating to the issuance and sale of the above-captioned Securities and derivative Securities as authorized at a meeting of the Board of Directors of the Company held on September 18, 1997, including but not limited to, power and authority to sign his or her name (whether on behalf of the Company, or otherwise) to such Registration Statement or Registration Statements and any amendments thereto, or any of the exhibits, financial statements and schedules, filed therewith, and to file them with the Commission. Each of the undersigned further authorizes the attorneys-in-fact and agents to prepare for distribution one or more Prospectuses in conformity with the provisions of the Act and in connection with the Registration Statement or Registration Statements hereby authorized to file with the Commission. Each of the undersigned ratifies and confirms all that any of the attorneys-in-fact and agents shall do or cause to be done by virtue hereof. Any one of the attorneys-in-fact and agents individually shall have, and may exercise, all the powers conferred by this instrument. Each of the undersigned has signed his or her name as of the 18th day of September, 1997. /s/ WILLIAM E. BRADFORD /s/ RAY L. HUNT ------------------------------------------------- ------------------------ (William E. Bradford, Director, Chairman of (Ray L. Hunt, Director) the Board and Chief Executive Officer) /s/ SAMUEL B. CASEY, JR. /s/ J. LANDIS MARTIN ------------------------------------------------- ------------------------ (Samuel B. Casey, Jr., Director) (J. Landis Martin, Director) /s/ LAWRENCE S. EAGLEBURGER /s/ LIONEL H. OLMER ------------------------------------------------- ------------------------ (Lawrence S. Eagleburger, Director) (Lionel H. Olmer, Director) /s/ SYLVIA A. EARLE, PH.D. /s/ JAY A. PRECOURT ------------------------------------------------- ------------------------ (Sylvia A. Earle, Ph.D., Director) (Jay A. Precourt, Director) /s/ RAWLES FULGHAM /s/ DONALD C. VAUGHN ------------------------------------------------- ------------------------ (Rawles Fulgham, Director) (Donald C. Vaughn, Director, President and Chief Operating Officer) /s/ JOHN A. GAVIN /s/ RICHARD W. VIESER ------------------------------------------------- ------------------------ (John A. Gavin, Director) (Richard W. Vieser, Director) -----END PRIVACY-ENHANCED MESSAGE-----