<PAGE>
- --------------------------------------------------------------------------------
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)
-------------
<TABLE>
- ------------------------------------------------------------------------------------------------------------
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)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(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.
<PAGE>
(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
<PAGE>
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
<PAGE>
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.
<PAGE>
* 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.
<PAGE>
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)
<PAGE>
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.
<PAGE>
Plan #195
DRESSER INDUSTRIES, INC.
RETIREMENT SAVINGS PLAN - B
EFFECTIVE MAY 31, 1995
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
section 401(a) of the Code, as interpreted by the Secretary of the Treasury.
15 Section 3.7
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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-
<PAGE>
"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-
<PAGE>
"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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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:
<PAGE>
"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-
<PAGE>
"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-
<PAGE>
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-
<PAGE>
DRESSER INDUSTRIES, INC.
UNION PLAN
(PLAN #196)
As Amended and Restated
Effective November 1, 1997
<PAGE>
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)
<PAGE>
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)
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
EXECUTED this ____ day of _______________________, 1997.
DRESSER INDUSTRIES, INC.
By:
---------------------------------
<PAGE>
ALEXANDRIA ADDENDUM
[Text to Come]
<PAGE>
WAUKESHA ADDENDUM
[Text to Come]
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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-
<PAGE>
"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-
<PAGE>
(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-
<PAGE>
(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-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
executed this ______ day of _____________________________, 1996.
DRESSER INDUSTRIES, INC.
By
--------------------------------
-6-
<PAGE>
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:
<PAGE>
"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-
<PAGE>
"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-
<PAGE>
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-
<PAGE>
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
<PAGE>
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-
<PAGE>
"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-
<PAGE>
"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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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:
<PAGE>
"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-
<PAGE>
"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-
<PAGE>
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-
<PAGE>
-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
<PAGE>
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
<PAGE>
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)
