As Filed with the Securities and Exchange Commission on July 22, 1997
Registration No. 333-29541
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
Post-Effective Amendment No. 1
on Form S-8
to
Form S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933*
----------------------
DURCO INTERNATIONAL INC.
(to be renamed Flowserve Corporation)
(Exact name of registrant as specified in its charter)
New York 31-0267900
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
3100 Research Boulevard
Dayton, Ohio, 45402
(Address of Principal Executive Offices)
BW/IP, Inc. 1996 Long-Term Incentive Plan
BW/IP, Inc. 1996 Directors Stock and Deferred Compensation Plan
BW/IP International, Inc. 1992 Long-Term Incentive Plan
BWIP Holding, Inc. Non-Employee Directors' Stock Option Plan
BW/IP International, Inc. Capital Accumulation Plan
(Full title of the plans)
Ronald F. Shuff, Esq.
Vice President, Secretary and General Counsel
Durco International Inc.
3100 Research Boulevard
Dayton, Ohio 45420
(937) 476-1000
(Name, address and telephone number, including area code, of agent for service)
- ------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES: PROMPTLY
AFTER FILING OF THIS POST-EFFECTIVE AMENDMENT.
----------------------
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
<S> <C> <C> <C> <C>
Proposed maximum Proposed maximum
Title of each class of Amount to offering price per aggregate offering Amount of
securities to be registered be registered[F1] security[F2] price[F2] registration fee[F3]
Common Stock, par value $1.25 per share[F4] 19,265,580 $28.25 $544,252,635 $164,925
============================================================================================================
</TABLE>
(F1) Based on the maximum number of shares to be issued in connection
with the Merger, calculated as the product of (a) 26,054,532, the
aggregate number of shares of BW/IP, Inc. Common Stock, par value
$0.01 per share ("BW/IP Common Stock") outstanding on a fully
diluted basis as of June 17, 1997 and (b) an exchange ratio of
0.6968 shares of Common Stock for each share of BW/IP Common
Stock, plus up to an additional 1,110,782 shares for which a
registration fee has not previously been paid that are issuable
upon the exercise of stock options, the lapse of restrictions on
certain restricted stock awards or in satisfaction of certain
deferred compensation obligations under the Plans (as defined
herein) and the 401(k) Plan (as defined herein).
[F2] Estimated solely for purposes of calculating the registration fee
required by Section 6(b) of the Securities Act of 1933, as amended
(the "Securities Act"), and calculated pursuant to Rule 457(f) under
the Securities Act. Pursuant to Rule 457(f)(1) under the Securities
Act, the proposed maximum aggregate offering price of the Common Stock
was calculated in accordance with Rule 457(c) under the Securities Act
as: (a) $19.6875, the average of the high and low prices per share of
BW/IP Common Stock on June 16, 1997 as reported on the New York Stock
Exchange Composite Transaction Tape, multiplied by (b) 26,054,532, the
aggregate number of shares of BW/IP Common Stock outstanding on a
fully diluted basis as of June 17, 1997.
[F3] Pursuant to Rule 457(b) under the Securities Act, $155,439 of the
registration fee was paid as of June 19, 1997 in connection with the
filing of preliminary proxy materials on May 15, 1997 and the original
registration statement on June 19, 1997.
[F4] This Registration Statement also covers the associated preferred stock
purchase rights (the "Rights") issued pursuant to a Rights Agreement
dated as of August 1, 1986 and amended as of August 1, 1996, between
the Registrant and National City Bank, as Rights Agent. Prior to the
occurrence of certain events, the Rights will not be exercisable or
evidenced separately from the Registrant's Common Stock.
* Filed as a Post-Effective Amendment on Form S-8 to such Form S-4
Registration Statement pursuant to the procedure described herein. See
"Introductory Statement."
===========================================================================
<PAGE>
INTRODUCTORY STATEMENT
Durco International Inc. ("Durco" or the "Registrant") hereby
amends its Registration Statement on Form S-4 (No. 333-29541) (the "Form
S-4") by filing this Post-Effective Amendment No. 1 on Form S-8 (the
"Post-Effective Amendment" or the "Registration Statement") relating to the
sale of up to 2,779,756 shares of Common Stock, par value $1.25 per share,
of Durco ("Durco Common Stock") issuable upon the exercise of stock
options, the lapse of restrictions on certain restricted stock awards or in
satisfaction of certain deferred compensation obligations under (i) the
BW/IP, Inc. 1996 Long-Term Incentive Plan, (ii) the BW/IP, Inc. 1996
Directors Stock and Deferred Compensation Plan, (iii) the BW/IP
International, Inc. 1992 Long-Term Incentive Plan and (iv) the BWIP
Holding, Inc. Non-Employee Directors' Stock Option Plan (collectively, the
"Plans") and related to the investment of funds under the BW/IP
International, Inc. Capital Accumulation Plan (the "401(k) Plan").
On July 22, 1997, Bruin Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of Durco, was merged with and into BW/IP,
Inc., a Delaware corporation ("BW/IP"). As a result of such merger (the
"Merger"), BW/IP became a wholly owned subsidiary of Durco and each
outstanding share (other than shares owned by Durco or BW/IP or their
subsidiaries) of common stock, par value $.01 per share ("BW/IP Common
Stock") has been converted into the right to receive 0.6968 shares of Durco
Common Stock. In addition, each outstanding stock-based award granted
pursuant to the Plans will no longer be settled in shares of BW/IP Common
Stock, but instead will be settled on substantially the same terms and
conditions as were applicable immediately prior to consummation of the
Merger in that number of shares of Durco Common Stock (rounded down to the
nearest share) equal to the product of (x) the number of shares of BW/IP
Common Stock which would have been delivered pursuant to such stock-based
award and (y) 0.6968. The exercise price for each outstanding option shall
be equal to the aggregate exercise price for the number of Shares of BW/IP
Common Stock subject to such option before the Merger divided by the number
of shares of Durco Common Stock subject to such option after the Merger.
The designation of the Post-Effective Amendment as Registration
No. 333-29541 denotes that the Post-Effective Amendment relates only to the
shares of Durco Common Stock issuable (i) on the exercise of stock options
under the Plans, (ii) on the lapse of restrictions on restricted stock
awards granted under the Plans, (iii) in connection with the satisfaction
of certain deferred compensation obligations or (iv) in connection with the
investment of funds under the 401(k) Plan and that this is the first
Post-Effective Amendment to the Form S-4 filed with respect to such shares.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Durco hereby incorporates by reference into this Registration
Statement the following documents previously filed with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996;
(b) The Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997;
(c) The Registrant's Current Report on Form 8-K filed May 15,
1997; and
(d) The Registrant's Registration Statement on Form 8-A/A, as
amended, filed with the SEC on July 18, 1997 pursuant to
Section 12 of the Exchange Act, in which there is described
the terms, rights and provisions applicable to the
Registrant's outstanding Common Stock.
(e) The Registrant's Registration Statement on Form 8-A/A, as
amended, filed with the SEC on July 18, 1997 pursuant to
Section 12 of the Exchange Act, in which there is described
the terms, rights and provisions applicable to the
Registrant's Series A Junior Participating Preferred Stock.
All documents subsequently filed by the Registrant 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 incorporated by reference into this Registration Statement and to be a
part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes
of this Registration Statement to the extent that a statement contained
herein or in any subsequently filed document which also is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
None.
<PAGE>
Item 6. Indemnification of Directors and Officers
The Business Corporation Law of the State of New York ("BCL")
provides that if a derivative action is brought against a director or
officer, the Registrant may indemnify him or her against amounts paid in
settlement and reasonable expenses, including attorneys' fees incurred by
him or her in connection with the defense or settlement of such action, if
such director or officer acted on good faith for a purpose which he or she
reasonably believed to be in the best interests of the Registrant, except
that no indemnification shall be made without court approval in respect of
a threatened action, or a pending action settled or otherwise disposed of,
or in respect of any matter as to which such director or officer has been
found liable to the Registrant. In a nonderivative action or threatened
action, the BCL provides that the Registrant may indemnify a director or
officer against judgments, fines, amounts paid in settlement and reasonable
expenses, including attorneys' fees incurred by him or her in defending
such action if such director or officer acted in good faith for a purpose
which he or she reasonably believed to be in the best interests of the
Registrant.
Under the BCL, a director or officer who is successful, either in
a derivative or nonderivative action, is entitled to indemnification as
outlined above. Under any other circumstances, such director or officer may
be indemnified only if certain conditions specified in the BCL are met. The
indemnification provisions of the BCL are not exclusive of any other rights
to which a director or officer seeking indemnification may be entitled
pursuant to the provisions of the certificate of incorporation or the
by-laws of a corporation or, when authorized by such certificate of
incorporation or by-laws, pursuant to a shareholders' resolution, a
directors' resolution or an agreement providing for such indemnification.
The above is a general summary of certain indemnity provisions of
the BCL and is subject, in all cases, to the specific and detailed
provisions of Sections 721-725 of the BCL.
Article IX, Section 1 of the Registrant's By-laws provide that
the Registrant shall indemnify any present or future director or officer
from and against any and all liabilities and expenses to the maximum extent
permitted by the BCL as the same presently exists or to the greater extent
permitted by any amendment hereafter adopted.
Section 726 of the BCL also contains provisions authorizing the
Registrant to obtain insurance on behalf of any such director and officer
against liabilities, whether or not the Registrant would have the power to
indemnify against such liabilities. As permitted by law, the Registrant
maintains and pays premiums for directors' and officers' liability
insurance policies.
Item 7. Exemption from Registration Claimed
Not applicable.
<PAGE>
Item 8. Exhibits
See Index to Exhibits following the signature pages to this
Post-Effective Amendment No. 1.
Item 9. Undertakings
(a) Undertakings Relating to Rule 415 Offerings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(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 the 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;
(iii) To included 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) of this section
do not apply if the Registration Statement is on Form S-8 or Form S-3, and
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the Registrant pursuant to section 13 or section 15(d)
of the 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.
(4) 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.
<PAGE>
(5) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the 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 the requirements for filing this 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 Dayton, State of Ohio, on the
22nd day of July, 1997.
Durco International Inc.
(Registrant)
By: /s/ Ronald F. Shuff
-----------------------
Ronald F. Shuff
Vice President, Secretary and General
Counsel
<PAGE>
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed below by the following persons on
July 22, 1997 in the capacities and on the date indicated.
*
- --------------------------- Chairman of the Board
William M. Jordan President and Chief
Executive Officer
*
- --------------------------- Director
Hugh K. Coble
- --------------------------- Director
Ernest Green
*
- --------------------------- Director
John S. Haddick
*
- --------------------------- Director
Diane C. Harris
*
- --------------------------- Director
Richard L. Molen
*
- --------------------------- Director
James F. Schorr
*
- --------------------------- Director
Kevin E. Sheehan
*
- --------------------------- Director
R. Elton White
*
- --------------------------- Director
James S. Ware
*By: /s/ Ronald F. Shuff
---------------------
Ronald F. Shuff
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
4.1 Restated Certificate of Incorporation of the Registrant, as
amended (filed as Exhibit 3.1 to the Form S-4).*
4.2 By-Laws of the Registrant, as amended (filed as Exhibit 3.2
to the Form S-4).*
4.3 Rights Agreement dated as of August 1, 1986 between the
Registrant and BankOne, N.A., as Rights Agent (filed as
Exhibit 1 to the Registrant's Form 8-A dated August 13,
1986).*
4.4 Amendment dated as of August 1, 1996 to the Rights Agreement
dated as of August 13, 1986 (filed as Exhibit 4.5 to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996).*
4.5 BW/IP, Inc. 1996 Long-Term Incentive Plan (filed as Appendix
A to BW/IP, Inc.'s Proxy Statement for the 1996 Annual
Meeting of Stockholders dated April 9, 1996 (the "1996 BWIP
Proxy Statement").*
4.6 First Amendment to the BW/IP, Inc. 1996 Long-Term Incentive
Plan (filed as Exhibit 99.d of BW/IP, Inc.'s Registration
Statement on Form S-8 (Registration No. 333-21637) as filed
on February 12, 1997 (the "1997 BWIP Form S-8").*
4.7 BW/IP, Inc. 1996 Directors Stock and Deferred Compensation
Plan (filed as Appendix B to the 1996 BWIP Proxy
Statement).*
4.8 First Amendment to the BW/IP, Inc. 1996 Directors Stock and
Deferred Compensation Plan (filed as Exhibit 99.f of the
1997 BWIP Form S-8).*
4.9 BW/IP International, Inc. 1992 Long-Term Incentive Plan
(filed as Appendix A to BW/IP, Inc.'s Proxy Statement for
the 1992 Annual Meeting of Stockholders dated April 17,
1992).*
4.10 BWIP Holding, Inc. Non-Employee Director's Stock Option Plan
(filed as Appendix A to BW/IP, Inc.'s Proxy Statement for
the 1993 Annual Meeting of Stockholders dated April 16,
1993).*
4.11 BW/IP International Inc. Capital Accumulation Plan, as
amended.
5.1 Opinion of Cravath, Swaine & Moore.
23.1 Consent of Cravath, Swaine & Moore (included in Exhibit
5.1).
23.2 Consent of Ernst & Young LLP
* Incorporated by reference to a document previously filed with the SEC.
EXHIBIT 4.11
BW/IP INTERNATIONAL, INC.
CAPITAL ACCUMULATION PLAN
(Restatement as of January 1, 1997)
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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SECTION 1 - INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 General Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.4 Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.5 Administration of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.6 Funding of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.7 Plan Year and Accounting Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2 - ELIGIBILITY AND PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Period of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3 - PARTICIPANT CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1 Participant Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2 Includible Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.3 How Paid or Deducted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.4 Changes in Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.5 Suspension and Resumption of Contributions . . . . . . . . . . . . . . . . . . . . . 15
3.6 Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4 - EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1 Basic Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.2 Discretionary Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3 Time and Manner of Matching Contributions . . . . . . . . . . . . . . . . . . . . . . 17
4.4 Allocation of Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.6 Investment of Company Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.7 Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.8 Interest of Employers in Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5 - INVESTMENT ELECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1 Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2 Investment of Participant Contributions . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6 - ACCOUNTING AND PLAN INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1 Participant's Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
<PAGE>
<TABLE>
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6.2 Transfer of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.3 Crediting and Investing of Contributions, Income and Transfers . . . . . . . . . . . . . 23
6.4 Dividends, Splits, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.5 Plan Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.6 Charging of Withdrawal and Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.7 Annual Statement of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.8 Benefit Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.9 Treatment of Excess Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.10 Limitations on Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.11 Remedial Measures for Excess Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . 40
6.12 Limitation on After-Tax Contributions and Matching Contributions . . . . . . . . . . . . 45
6.13 Remedial Measures for Excess Aggregate Contributions . . . . . . . . . . . . . . . . . . 48
6.14 Limitation on Multiple Use of Alternative Discrimination Tests . . . . . . . . . . . . . 51
6.15 Forfeiture of Matching Contributions Upon Corrective Distribution of
Basic Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 6A LOANS TO PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6A.1 Committee Discretion to Make Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6A.2 Loans to be Made on Nondiscriminatory Basis . . . . . . . . . . . . . . . . . . . . . . . 52
6A.3 Limitations of Loans to Participants . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6A.4 Adequacy of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6A.5 Rate of Interest and Loan Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6A.6 Term of Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6A.7 Remedies in the Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6A.8 Definition of Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6A.9 Loan Application Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6A.10 Loan Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7 - WITHDRAWALS DURING EMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.1 Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.2 Hardship Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.3 Withdrawal Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.4 Distribution of Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 8 - DISTRIBUTION OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.1 Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.2 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.3 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.4 Restoration of Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.5 Manner of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.5A Deferral of Lump Sum Distribution by Beneficiary . . . . . . . . . . . . . . . . . . . . 67
</TABLE>
ii
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8.6 [Intentionally left blank.] . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.7 Election for Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.8 Fractional Interests in Stock and Minimum Shares Distributable . . . . . . . . 69
8.9 Designation of Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.10 Missing Participants or Beneficiaries . . . . . . . . . . . . . . . . . . . . . 70
8.11 Facility of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.12 Commencement of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
8.13 Direct Rollovers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 9 - THE COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.1 Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.2 Committee's General Powers, Rights and Duties . . . . . . . . . . . . . . . . . 74
9.3 Manner of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.4 Interested Committee Members . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.5 Resignation or Removal of Committee Members . . . . . . . . . . . . . . . . . . 77
9.6 Committee Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.7 Information Required by Committee . . . . . . . . . . . . . . . . . . . . . . . 78
9.8 Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
9.9 Uniform Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
9.10 Review of Benefit Determination . . . . . . . . . . . . . . . . . . . . . . . . 79
9.11 Committee's Decision Final . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 10 - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.1 Additional Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.2 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.3 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.4 Controlling Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.5 Employment Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.6 Litigation by Participants . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.7 Interests Not Transferable . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.8 Absence of Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.9 Voting of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.10 Tender Offer for Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
10.11 Limitations on Company Stock Transactions . . . . . . . . . . . . . . . . . . . 83
10.12 Compensation and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 11 - AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.3 Nonforfeitability on Termination . . . . . . . . . . . . . . . . . . . . . . . 88
11.4 Notice of Amendment or Termination . . . . . . . . . . . . . . . . . . . . . . 88
</TABLE>
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<TABLE>
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11.5 Plan Merger, Consolidation, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.6 Discontinuance of a Portion of a Business Unit . . . . . . . . . . . . . . . . . . . 88
11.7 Distribution of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.8 Separate Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 12 - TOP HEAVY RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
12.1 Determination of Top-Heavy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
12.2 Minimum Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
</TABLE>
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BW/IP INTERNATIONAL, INC.
CAPITAL ACCUMULATION PLAN
(Restatement as of January 1, 1997)
SECTION 1 - INTRODUCTION
1.1 Purpose. The BW/IP International, Inc. Capital Accumulation
Plan ("Plan") is maintained by the Company to provide eligible
employees of the companies affiliated with the Company with
capital accumulation opportunities. Notwithstanding that
contributions may be made under the Plan without regard to the
current or accumulated earnings of the Company for the current
or prior Plan Years, the Plan is a profit sharing plan for all
purposes of the Code and ERISA.
1.2 General Definitions. The following terms of general usage
herein shall have the meanings as hereinafter set forth.
(a) "Adjustment Factor" - any cost-of-living increase
adjustment provided for the Plan Year under Section
415(d) of the Code.
(b) "Affiliate" - any corporation which is included in a
controlled group of corporations (within the meaning
of Section 414(b) of the Code) of which the Company
is a member, any trade or business which is under
common control with the Company (within the meaning
of Section 414(c) of the Code), any affiliated
service group (within the meaning of Section 414(m)
of the Code) of which the Company is a member, and
any other entity required to be aggregated with the
Employer pursuant to Section 414(o) of the Code.
(c) "Beneficiary" - subject to Section 8.9 hereof, any
person or persons designated by a Participant (who
may be designated concurrently,
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contingently or successively) to whom such
Participant's benefits under the Plan are to be paid
if he dies before he receives all of such benefits.
(d) "Borg-Warner Plan" - the Borg-Warner Corporation
Investment Plan.
(e) "BW/IP Companies" - the Company and its business
units, subsidiaries and Affiliates.
(f) "Code" - the Internal Revenue Code of 1986, as
amended.
(g) "Committee" - as defined in Section 9 hereof.
(h) "Company" - BW/IP International, Inc.
(i) "Company Stock" - common stock of BW/IP, Inc., the
parent corporation of Company.
(j) "Compensation" - all amounts paid or made available
to a Participant during a Plan Year by the Company or
any Affiliate for personal services actually rendered
to the Company or any Affiliate in the course of
employment by the Participant during such Plan Year
and which are subject to inclusion as gross income
for federal income tax purposes in the calendar year
such amounts are first paid or made available. Such
term shall specifically include:
(i) all wages, salaries, bonuses and commissions;
(ii) taxable fringe benefits;
(iii) reimbursements or other expense allowances
under a nonaccountable plan; and
(iv) all amounts contributed to any plan established
by the Corporation under Section 125 of the Code with
respect to the payment of certain insurance premiums
on a pre-tax basis.
Such term shall specifically exclude:
(v) all employer contributions to this Plan (whether
Company Contributions or Pre-Tax Contributions) and
all other qualified plans of deferred compensation
for the period in question;
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(vi) amounts realized from the exercise of a
non-qualified stock option or when restricted stock
or property held by an employee either becomes freely
transferable or is no longer subject to a substantial
risk of forfeiture;
(vii) amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified
stock option, and
(viii) other amounts which receive special tax
benefits, such as premiums for group-term life
insurance to the extent they are not includible in
the gross income of the employee.
For each employee, the annual compensation which may
be taken into account hereunder shall not exceed the
first one hundred fifty thousand dollars of
Compensation; provided, that said amount shall be
adjusted by the amounts and at such times as
permitted under Section 401(a)(17(B).
Notwithstanding anything herein to the contrary, in
the case of a Participant (i) whose spouse, or lineal
descendant(s) who have not attained age 19 prior to
the end of a Plan Year, are also Participants, and
(ii) who is a five percent owner (as defined in
Section 416(i) of the Code) or one of the ten Highly
Compensated Employees paid the highest compensation
(as defined in Section 414(q)(7) of the Code), then
(iii) all such family members shall be treated as a
single participant for purposes of the $150,000
limitation in the preceding sentence, and (iv) all
Compensation paid to all family members shall be
treated as if paid to the Highly Compensated
Employee.
(k) "Employee" -- an individual in the employ of an
Employer or a Leased Employee of an Employer.
(l) "Employer" or "Employers" - the BW/IP Companies and
as further defined in Section 1.4 hereof.
(m) "ERISA" - Employee Retirement Income Security Act of
1974, as amended.
(n) "Highly Compensated Employee" shall mean an Employee
who, as required by, and as that term shall be
interpreted consistently with, Section 414(q) of the
Code:
(i) is a 5% owner (as defined in Section
416(i)(1)(iii) of the Code) at any time
during the Determination Year or the
Look-Back Year;
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<PAGE>
(ii) receives compensation in excess of
$75,000, as adjusted by the Secretary of
the Treasury, during the Look-Back Year;
(iii) receives compensation in excess of
$50,000, as adjusted by the Secretary of
the Treasury, during the Look-Back Year
and is a member of the Top Paid Group for
the Look-Back Year; or
(iv) is an officer, within the meaning of
Section 416(i) of the Code, during the
Look-Back Year and who receives
compensation greater than 50 percent of
the amount in effect under Section
415(b)(1)(A) of the Code for the calendar
year in which the Look-Back Year begins;
(v) is both (A) described in subparagraphs
(ii), (iii) or (iv) above when these
provisions are modified substituting the
Determination Year for the Look-Back Year
and (B) is among the group consisting of
the 100 Employees with the greatest
compensation during the Determination
Year.
Solely for purposes of this definition, the following
special rules and definitions shall apply:
(vi) "Determination Year" shall mean the Plan
Year with respect to which the
determination is being made.
(vii) "Look-Back Year" shall mean the
twelve-month period immediately preceding
the Determination Year; provided,
however, that the Company may elect to
treat the calendar year ending with the
Determination Year as the Look-Back Year.
(viii) "Top Paid Group" shall mean the group of
Employees consisting of the top 20
percent of all Employees when ranked on
the basis of compensation paid during
each year. For purposes of determining
the number of Employees in the Top Paid
Group, employees described in Section
414(q)(8) of the Code and Q&A 9(b) of
Section 1.414(q)-1T of the Treasury
Regulations shall be excluded.
(ix) The number of officers is limited to 50
(or, if lesser, the greater of 3
Employees or 10 percent of Employees).
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(x) When no officer has Compensation in
excess of 50 percent of the amount in
effect under Section 415(b)(1)(A) of the
Code, the highest paid officer shall be a
Highly Compensated Employee.
(xi) "Compensation" shall mean compensation
within the meaning of Section 415(c)(3)
of the Code including elective or salary
reduction contributions to a cafeteria
plan, cash or deferred arrangement or
tax- sheltered annuity.
(xii) The term "Highly Compensated Employee"
shall include a former Highly Compensated
Employee if such Employee was a Highly
Compensated Employee when such Employee
separated from service, or such Employee
was a Highly Compensated Employee at any
time after attaining age 55.
(xiii) To the extent that any provision of this
definition shall conflict with any
provision of final regulations issued by
the Secretary of the Treasury under
Section 414(q) of the Code, the
provisions hereof shall cease to have
effect to the extent of such conflict.
(o) "Leased Employee" -- shall mean, with respect to
services performed after December 31, 1986, any
individual (other than a common law employee of an
Employer) who, pursuant to an agreement between an
Employer and any other person (the "leasing
organization"), has performed services for such
Employer or for such Employer and related persons
(within the meaning of Section 144(a)(3) of the Code)
on a substantially full-time basis (as defined in
regulations under Section 414(n) of the Code) for a
period of at least one year, and such services are of
a type historically performed by employees in the
business field of such Employer. Contributions or
benefits provided by the leasing organization which
are attributable to the services performed for such
Employer shall be treated as provided by such
Employer. Notwithstanding anything in this Section to
the contrary, an individual shall not be considered a
Leased Employee during any Plan Year in which (i) the
leasing organization sponsors a money purchase
pension plan which provides a nonintegrated employer
contribution of ten percent of compensation, full and
immediate vesting, and immediate participation for
all employees of the leasing organization (other than
employees who perform substantially all of their
services for the leasing organization); (ii) the
individual in question participates in the leasing
organization's plan; and (iii) Leased Employees
(determined without regard to this sentence)
constitute less than twenty percent of the work force
of the Employer and
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<PAGE>
any Affiliates. For purposes of the preceding
sentence, "compensation" shall mean an individual's
compensation as defined under Section 415 of the
Code, except that "compensation" shall exclude
Pre-Tax Contributions hereunder (or any other
elective deferrals under any plan maintained by the
Employer or any Affiliate), and any amount which the
individual would have received in cash but for an
election under a cafeteria plan (within the meaning
of Section 125 of the Code) maintained by the
Employer or any Affiliate.
(p) "Nonhighly Compensated Employee" -- an Employee of
the Employer who is neither a Highly Compensated
Employee nor a family member described in Section
414(q)(6)(B) of the Code.
(q) "Rollover Contribution" - as defined in Section 3.6
hereof.
(r) "SRE" - S.R. Engineering, Inc.
(s) "SRE Plan" - formerly known as the BW/IP
International, Inc. Profit Sharing Plan and Trust and
formerly known as the S.R. Engineering, Inc. Profit
Sharing Plan and Trust.
(t) "Trust Fund", "Trustee" and "Trust Agreement" - as
defined in Section 1.6 hereof.
(u) "UCP" - United Centrifugal Pumps.
(v) "UCP Savings Plan" - the United Centrifugal Pumps Tax
Savings Plan.
1.3 Effective Date. The Plan was adopted as of May 20, 1987 as a
successor plan to the Borg-Warner Plan with respect to
employees of the BW/IP Companies and was formerly known as the
Borg-Warner Industrial Products, Inc. Investment Plan and as
the Borg- Warner Industrial Products, Inc. Capital
Accumulation Plan. It was previously amended and restated as
of October 1, 1987 and January 1, 1992. The Plan, as amended
and restated herein, incorporates Amendments One through Seven
to the Plan as restated as of January 1, 1992. The Plan, as
set forth herein, is
6
<PAGE>
amended and restated effective as of January 1, 1997;
provided, however, that all transfers among investment
alternatives and changes in Participant Contributions as
provided for hereunder shall be limited to the extent
determined necessary by the Committee until not later than
April 30, 1997; provided, further, that the timing of
distributions and withdrawals, valuation of accounts,
accounting, allocation among accounts and investment of funds
among the alternatives provided for under the Plan as in
effect on December 31, 1996 shall be transitioned to the
provisions hereunder during the period from January 1, 1997 to
April 30, 1997.
The Company, effective with the acquisition of
substantially all of the assets of UCP, adopted the UCP
Savings Plan. Effective on January 1, 1989 the UCP Savings
Plan was merged into the Plan. Notwithstanding such merger,
the accounts of participants under the UCP Savings Plan shall
be maintained separately hereunder as a subaccount of each
Participant hereunder who was a participant in the UCP Savings
Plan prior to the merger, but otherwise all amounts held under
the UCP Savings Plan shall be subject to the rules of the Plan
set forth herein; provided, however, that if, immediately
prior to the merger, any Participant in this Plan (i) was a
participant in the UCP Savings Plan, and had the right to
receive benefits under Sections 7.02(e) and/or 7.02(f) of the
UCP Savings Plan, as adopted and amended by UCP, then such
rights shall be preserved under this Plan to the extent they
were available to the Participant under the UCP Savings Plan.
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<PAGE>
The Company, effective with the acquisition of SRE,
adopted the SRE Plan. Effective as of January 1, 1991 the SRE
Plan was merged into the Plan. Notwithstanding such merger,
the accounts of participants under the SRE Plan shall be
maintained separately hereunder as a subaccount of each
Participant hereunder who was a participant in the SRE Plan
prior to the merger, but otherwise all amounts held under the
SRE Plan shall be subject to the rules of the Plan set forth
herein; provided, however, that the distribution criteria and
forms of benefit, contained in Article VI of the SRE Plan
shall be preserved with respect to the amounts transferred to
such subaccounts.
Notwithstanding anything herein to the contrary,
neither the merger of the UCP Savings Plan into this Plan nor
the merger of the SRE Plan into this Plan shall eliminate,
reduce or restrict, either directly or indirectly, the
benefits provided to any participant in the UCP Savings Plan,
the SRE Plan or this Plan immediately prior to either merger.
1.4 Employers. The BW/IP Companies which adopt the Plan are
referred to herein collectively as the "Employers" and
individually as an "Employer". As is provided in Subsection
10.1, any business unit, subsidiary or affiliate of the
Company may adopt the Plan with the consent of the Committee.
Any action required or
8
<PAGE>
permitted to be taken under the Plan by a subsidiary or
affiliate of the Company shall be by resolution of its Board
of Directors or of the Executive Committee of such Board of
Directors, or by a person or persons authorized by resolution
of such Board of Directors or Executive Committee. BW/IP,
Inc. effective as of January 1, 1994 has adopted the Plan and
shall thenceforth be deemed an "Employer" for all purposes
under the Plan.
1.5 Administration of the Plan. The Plan will be administered by
the Committee.
1.6 Funding of Benefits. Funds contributed under the Plan will be
held and invested, until distribution, by a "Trustee"
appointed by the Company, in a "Trust Fund" in accordance with
a "Trust Agreement" between the Company and the Trustee.
Rights and benefits under the Plan are subject to the terms
and provisions of the Trust Agreement which implements and
forms a part of the Plan.
1.7 Plan Year and Accounting Dates. A "Plan Year" is the twelve
month period beginning on January 1 and ending on the
following December 31. A "Regular Accounting Date" is the
last day of each calendar month. A "Special Accounting Date"
is any date specified as such by the Committee. The term
"Accounting Date" includes both a Regular Accounting Date and
a Special Accounting Date.
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SECTION 2 - ELIGIBILITY AND PARTICIPATION
2.1 Eligibility. As used in the Plan, an "Eligible Employee" is
an employee who is:
(a) on the U.S. payroll of an Employer other than an
employee who is a nonresident alien of the United
States and who is on a foreign payroll of an Employer
or any Affiliate of any Employer; and
(b) a member of a group of employees to which the Plan
has been and continues to be extended by the
Committee. The term "Eligible Employee" may also
include any citizen of the United States employed by
a foreign subsidiary of the Company, as to which an
agreement entered into by the Company or a subsidiary
of the Company under Section 3121(1) of the Code is
in effect and as to whom no contributions under a
funded plan of deferred compensation are being
provided with respect to the compensation paid to
such individual by the foreign subsidiary. The term
"Eligible Employee" shall not, however, include an
employee who is covered under a collective bargaining
agreement with an Employer unless such agreement or
ancillary agreement thereto provides for his
inclusion under the Plan.
2.2 Participation. An Eligible Employee shall be eligible to
participate in the Plan on the first day of the calendar
month following the completion of three calendar months of
employment commencing on his date of hire by a BW/IP Company.
Notwithstanding the preceding sentence, if determined by the
Committee in
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connection with a business acquisition, an Eligible Employee
shall be eligible to participate in the Plan on his date of
hire by a predecessor employer. An Eligible Employee who
previously terminated employment with the BW/IP Companies, who
was eligible to participate in the Plan on the date of such
termination, and who did not incur a one-year period of
severance, shall be eligible to participate in the Plan as of
the first day of the calendar month next following the date of
the rehire of such Eligible Employee. An Eligible Employee
shall become a "Participant" in the Plan as of the date he is
first eligible to do so and may commence making Participant
Contributions on the first day of such calendar month or any
subsequent calendar month. All Participants shall complete
such forms as required by the Committee, in the manner and
within the time limits prescribed by the Committee.
2.3 Period of Participation. An Eligible Employee who has become
a Participant in the Plan shall continue as such as long as
he may be entitled to receive a distribution under the Plan
and remains an employee of the BW/IP Companies. Upon the
termination of employment by a Participant in the Plan from
the BW/IP Companies, such Participant shall be an inactive
participant in the Plan until all amounts to which he may be
entitled under the Plan are distributed.
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SECTION 3 - PARTICIPANT CONTRIBUTIONS
3.1 Participant Contributions.
(a) To the extent permitted by his Employer, Basic
Contributions may be made under the Plan as follows:
(i) A Participant may authorize his Employer
to reduce his Includible Compensation by
an amount equal to a whole percentage of
his Includible Compensation and to make
"Pre-Tax Basic Contributions" under the
Plan in equal amount on his behalf; and
(ii) A Participant may elect to make
"After-Tax Basic Contributions" under the
Plan in a whole percentage of his
Includible Compensation; provided,
however, that the aggregate percentage of
Pre-Tax and After-Tax Basic Contributions
shall not exceed six percent of his
Includible Compensation.
(b) To the extent permitted by his Employer, Supplemental
Contributions may be made under the Plan, for each
Participant who is making Basic Contributions at the
maximum rate, as follows:
(i) A Participant may authorize his Employer
to reduce his Includible Compensation by
an amount equal to a whole percentage of
his Includible Compensation and to make
"Pre-Tax
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Supplemental Contributions" under the
Plan in equal amount on his behalf; and
(ii) A Participant may elect to make
"After-Tax Supplemental Contributions"
under the Plan in a whole percentage of
his Includible Compensation; provided,
however, that the aggregate percentage of
Pre-Tax and After-Tax Supplemental
Contributions shall not exceed ten
percent.
(c) Unless otherwise indicated, a reference to:
(i) "Basic Contributions" of a Participant
means both his Pre-Tax and After-Tax Basic
Contributions.
(ii) "Supplemental Contributions" of a
Participant means both his Pre-Tax and
After-Tax Supplemental Contributions.
(iii) "Pre-Tax Contributions" of a Participant
means both his Pre-Tax Basic and
Supplemental Contributions.
(iv) "After-Tax Contributions" of a
Participant means both his After-Tax Basic
and Supplemental Contributions.
(v) "Contributions" of a Participant means
both his Basic and Supplemental
Contributions.
3.2 Includible Compensation. For purposes of determining a
Participant's Contributions, a Participant's "Includible
Compensation" means his total cash
13
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compensation received for services rendered to an Employer or
any foreign subsidiary of the Company described in Subsection
2.1, including his Pre-Tax Contributions under this Plan, but
excluding (i) amounts paid or payable under the Company's
Performance Bonus Plans or any other bonus plan or any payment
found by the Committee to be similar thereto, (ii) any
allowance or premium determined and paid solely by reason of
the location at which the services were rendered and (iii)
such other payments as his Employer uniformly shall exclude
with respect to similarly situated Participants.
3.3 How Paid or Deducted. Pre-Tax Contributions shall be paid to
the Trustee by the Employers no later than thirty (30) days
after the end of the calendar month in which falls the payroll
period to which such contributions relate. After-Tax
Contributions shall be made by regular payroll deductions from
a Participant's Compensation when paid and shall be deposited
with the Trustee no later than thirty (30) days after the end
of the calendar month in which falls the payroll period to
which such contributions relate. Each Participant shall file
with the Committee an appropriate form of authorization with
respect to payroll deduction or reduction of his Compensation
at the time he enrolls in the Plan. Subject to such rules as
the Committee shall determine, such authorization shall
continue in effect until a Participant changes the rate of his
Contributions or his Contributions are suspended.
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3.4 Changes in Contributions. A Participant may elect, in the
manner and within the time limits set by the Committee, to
change the rate of his Contributions (within the limits
specified in Subsection 3.1) effective for the first
administratively feasible next payroll period for the payment
of wages to him by his Employer.
3.5 Suspension and Resumption of Contributions. A Participant may
elect, in the manner and within the time limits set by the
Committee, to suspend his Contributions, as of the first
administratively feasible next payroll period for the payment
of wages to him by his Employer. The Participant may elect to
resume the suspended Contributions as of his first
administratively feasible next payroll period for the payment
of wages by his Employer, provided he is an Eligible Employee
on such day and has elected to do so in the manner and within
the time limits set by the Committee. The Contribution of a
Participant shall be automatically suspended during any period
in which he is not an Eligible Employee.
3.6 Rollover Contributions. Any Employee, with the Employer's
written consent and after filing with the Trustee the form
prescribed by the Committee, may contribute cash or other
property to the Trust other than as a voluntary contribution
if the contribution is a "rollover contribution" which the
Code permits an Employee to transfer either directly or
indirectly from one qualified plan to another qualified plan
("Rollover Contribution"). Before accepting a Rollover
Contribution, the
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Trustee may require the Employee to furnish satisfactory
evidence that the proposed transfer is in fact a "rollover
contribution" which the Code permits an Employee to make to a
qualified plan. If the Employee making such Rollover
Contribution is not otherwise a Participant in the Plan, he
shall become a Participant for the sole purpose of permitting
the Plan to accept such Rollover Contribution but shall have
no other rights as a Participant until such time as he would
otherwise have become a Participant in the Plan. If a
contribution is made to the Trust under this Section, the
Trustee shall hold the amount contributed in a segregated
account for the Participant's sole benefit and in which the
Participant shall be fully vested at all times.
SECTION 4 - EMPLOYER CONTRIBUTIONS
4.1 Basic Matching Contributions. Subject to the limitations
contained in Section 6, the Employers shall make regular basic
matching contributions to the Plan in an amount equal to
twenty-five percent (25%), unless the Board of Directors of
the Company shall fix a different percentage for any given
Plan Year which percentage shall be between twenty-five
percent (25%) and fifty percent (50%), of the amount of the
aggregate Basic Contributions made on behalf of its Employees
to the Plan during the month for which the contribution is
being made.
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4.2 Discretionary Matching Contributions. Subject to the
limitations contained in Section 6, the Employers may (but
shall not be required to) make as of such dates during the
Plan Year as the Company shall determine, but not later than
as of the last day of any Plan Year, additional matching
contributions to the Plan. The Company shall, in its sole
discretion, determine whether, when and in what amount such
Discretionary Matching Contributions will be made.
4.3 Time and Manner of Matching Contributions. All Matching
Contributions shall be made in the common stock of the Company
except when and to the extent determined by the Board of
Directors of the Company that Matching Contributions shall be
made in cash. Matching Contributions shall be transmitted to
the Trustee by the Employers during, or as soon as practicable
after, the month to which they relate, but in no event later
than the date (including extensions thereof) on which the
Company is required to file its Federal income tax return for
the taxable year during which occurred the end of the Plan
Year for which the Matching Contribution is being made.
4.4 Allocation of Matching Contributions. The Company shall
maintain for each Participant a Matching Contributions Account
as part of his Company Contributions Account and as a
subaccount of his Participant Account. Subject to the limits
contained in Section 6, Matching Contributions made for any
period of
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time shall be allocated and credited, as of the date such
contributions are received by the Trustee to the Matching
Contributions Accounts of all Participants who made Basic
Contributions during the period to which the Matching
Contributions relate; provided, however, that Discretionary
Matching Contributions shall be allocated only to those
Participants who are employed by the Employers on the date as
of which such Contributions are made. In the event that any
Matching Contribution is not expressed as a percentage of the
Participant's Basic Contributions, the amount of any such
Matching Contributions to be allocated and credited to each
such Participant's Matching Contributions Account shall equal
the total amount of such Matching Contribution multiplied by a
fraction, the numerator of which shall be the aggregate amount
of Basic Contributions made on behalf of the Participant for
the period to which the Matching Contribution relates and the
denominator of which is the sum all Basic Contributions made
on behalf of all Participants for the period for which the
Matching Contribution relates; provided, however, that the
Company may, at the time a Discretionary Matching Contribution
is made to the Plan provide that the maximum amount so
allocable to each Participant's Matching Contribution Account
shall not exceed a stated dollar amount applicable uniformly
to all Participants.
4.5 Vesting. All Contributions allocated to a Participant's
Company Contributions Account shall be fully vested at all
times; provided, however, that as to a Highly
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Compensated Employee all Matching Contributions allocated to
his Company Contributions Account, and any income thereon, for
any given Plan Year shall be forfeitable solely for purposes
of satisfying the limitations and requirements contained in
Subsections 6.10 through 6.15 for such Plan Year and shall not
be forfeitable for any purpose once such limitations and
requirements have been satisfied.
4.6 Investment of Company Contributions. Notwithstanding
Subsection 6.2, all amounts held in a Participant's Matching
Contributions Account shall be invested in and remain in the
Company Stock Fund and all income and dividends from such
fund shall be allocated to the Matching Contribution Accounts
in the same manner as income from such fund is otherwise
allocated to Participants' accounts under the Plan.
4.7 Contributions. For purposes of distributions from a
Participant's Company Contributions Account (including on
account of hardship) and for purposes of loans, all amounts
held in a Participant's Company Contributions Account,
including earnings thereon (excepting therefrom Company
Contributions attributable to periods prior to January 1,
1992, other than Matching Contributions, and earnings
thereon), shall be treated as his Pre-Tax Contributions. The
Company
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Contributions Account shall be comprised of all Company
Contributions to the Plan, excluding Pre-Tax Contributions,
and the earnings thereon.
4.8 Interest of Employers in Plan. The Employers shall have no
right, title or interest in the Trust Fund, nor will any part
thereof at any time revert or be repaid to an Employer,
directly or indirectly. Provided, however, that all
Contributions made hereunder are conditioned upon the
deductibility of the amount of each Contribution by the
contributing Employer and in the event that Contributions are
made due to a mistake of fact or if the amount of the
Employer's contribution is disallowed as a deduction under
Section 404 of the Code, the amount of such Contributions so
mistakenly made or disallowed as a deduction shall, subject to
the other terms of the Plan concerning contributions made in
excess of legal limitations, be returned to the Employer that
made such Contributions, but not later than one year after:
(a) The date of determination that the Employer
made the contribution by mistake of fact; or
(b) The date of disallowance of the contribution
as a deduction, and then, only to the extent of the
disallowance.
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The amount of the Employer's Contribution returnable under
this Section shall not be increased by any earnings
attributable to the Contribution, but shall be decreased by
any losses attributable to it.
SECTION 5 - INVESTMENT ELECTIONS
5.1 Investment Funds. The following funds, are referred to herein
collectively as the "Funds" and individually as a "Fund".
Each Fund may be comprised of one or more subfunds as
determined by the Committee from time to time in its sole
discretion.
(a) Equity Funds - described in subsection 6.5(a);
(b) Stable Value Fund and Executive Life Fund - described
in subsection 6.5(b);
(c) Balanced Portfolio Fund - described in subsection
6.5(c);
(d) Company Stock Fund - described in subsection 6.5(d);
(e) It is anticipated that the Committee shall provide
additional investment alternatives under the Plan
reflecting varied portfolio and risk profiles and
such other funds shall be provided by the Committee
pursuant to the authority set forth in Subsection
6.5(e).
Investments may be made in one or more of the Equity Funds,
Stable Value Fund, Balanced Portfolio Fund, Company Stock Fund
or other funds provided by the Committee; provided, however,
that unless and to the extent that the Committee shall decide
otherwise, only Contributions made with respect to periods
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commencing on or after January 1, 1992 and earnings thereon
may be invested in the Company Stock Fund.
5.2 Investment of Participant Contributions. A Participant's
Basic and Supplemental Contributions shall be invested at his
election in one or more of the Funds other than the Executive
Life Fund. Any such investment in a Fund shall be made in 1%
increments of his respective Contributions. Each Participant
shall make such election as the time and in the manner as the
Committee shall determine. A Participant may effect a change
in his investment election in the manner and within the time
limits set by the Committee. Any such change shall be given
effect as soon as practicable.
SECTION 6 - ACCOUNTING AND PLAN INVESTMENTS
6.1 Participant's Account. The Committee shall maintain records
to disclose the interest of each Participant under the Plan,
which records shall be in the form of a separate "Account".
The Committee may maintain such other accounts in the name of
Participants, or otherwise, as it may deem advisable.
6.2 Transfer of Investments. Except as otherwise provided in
Subsections 4.6 and 6.5(b) and subject to such rules as the
Committee may adopt, a Participant may elect to transfer
between the Funds, or among subfunds in a Fund, all or part of
the
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<PAGE>
value of the assets attributable to the Contributions in his
Account; provided, that a Participant may not transfer assets
from any other Fund into the Executive Life Fund; and
provided, further, that unless and to the extent that the
Committee shall decide otherwise, only amounts attributable to
Contributions made with respect to periods commencing on or
after January 1, 1992 and earnings thereon may be invested in
the Company Stock Fund. The election shall be made in such
manner and within such time limits as shall be determined by
the Committee and shall be effective as soon as practicable on
or after the date the election is made. Upon the termination
of the availability of any Fund or subfund, the assets from
that terminated Fund or subfund shall be transferred into such
Fund or subfund then available under the Plan and determined
by the Committee to be as similar as possible to the
terminated Fund or subfund, unless the Participant shall
previously have elected to have such assets transferred into
another Fund or subfund into which assets may be transferred.
A Participant will be provided with a written confirmation of
any election changing investments.
6.3 Crediting and Investing of Contributions, Income and
Transfers. Plan investments will be applied to the
Participant's Account as follows:
(a) Participant Contributions made by or on behalf of a
Participant during a calendar month will be deposited
in the Trust no later than thirty (30) days after the
end of such month and in accordance with Section 5
and the
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amounts allocated to any of the Funds or subfunds
will be invested in those Funds or subfunds. The
amounts so invested will be credited to the
Participant's Account.
(b) The value transferred into a Fund or subfund pursuant
to a Participant's election under Subsection 6.2 will
be allocated to the appropriate Fund or subfund as of
the date of the election, or as soon as practicable
thereafter. The amounts transferred to a Fund or
subfund will be invested in the Fund or subfund and
will be credited to the Participant's Account.
(c) The Committee shall maintain Plan records relative to
a Participant's Account so that there may be
determined no less frequently than as of the end of
any calendar month the value of the Equity Funds, the
value of the Stable Value Fund, the value of the
Balanced Portfolio Fund, the value of Company Stock
and the value of cash and other Funds and subfunds
provided by the Committee, if any, attributable to
his Contributions or Contributions made on his
behalf.
6.4 Dividends, Splits, Etc. The Account of each Participant shall
be subject to adjustment as follows:
(a) Cash dividends and the proceeds of the sale of rights
or warrants received by the Trustee with respect to
Company Stock held in the Participant's
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<PAGE>
Account shall be credited to such Account and
reinvested in the Company Stock Fund in the same
manner as contributions to the Plan.
(b) Company Stock received by the Trustee as a stock
dividend or as a result of a stock split, as
applicable, held in the Participant's Account shall
be credited to his Account.
Any cash dividends or other property received by the Trustee
with respect to Company Stock theretofore distributed shall be
paid or distributed to the distributee of such stock in the
form received.
6.5 Plan Investments. Plan Investments shall be made in
accordance with the following:
(a) Equity Funds. The equity funds shall be comprised of
a fund or funds comprised primarily of common stock
or securities convertible into common stock of
corporations with the potential for significant
earnings growth. The Committee shall from time to
time determine which bank or mutual fund or funds
shall constitute the equity funds. Income, gains and
losses of a Participant's Account from its investment
in the Fund or subfunds shall be determined on a
daily basis and shall be allocated to a Participant's
Account as of such date to the greatest extent
practicable. Any contributions made by or on behalf
or a Participant during a month shall be
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<PAGE>
credited to the Participant's Account as of the date
such contribution is made or as soon as practicable
thereafter.
(b) Stable Value Fund and Executive Life Fund.
(i) Stable Value Fund. The Stable Value Fund shall
be comprised of such funds or funds invested
primarily in any combination determined by the
Committee of cash, United States Treasury
obligations, other governmental obligations, whether
or not backed by the full faith or credit of any
governmental entity, group annuity or investment
contracts issued by one or more fully licensed
insurance companies, or deposits, investment
contracts, accounts, certificates of deposit or
common trust funds of fully licensed banks or trust
companies. The Trustee shall determine the total
fair market value of this Fund and its subfunds in
accordance with its established procedures on a daily
basis. Earnings, gains and losses from the Fund and
its subfunds shall be determined based upon the
Fund's fair market value as of the end of each day
and earnings, losses and gains shall be allocated to
a Participant's Account as of such date to the
greatest extent administratively practicable. Any
contributions made by or on behalf or a Participant
during a month shall be credited to the Participant's
Account as of the date such contribution is made or
as soon as practicable thereafter.
(ii) Executive Life Fund. Effective as of April 11,
1991, all assets of the Stable Value Fund (formerly
known as the "Income Fund") then invested in
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<PAGE>
any group annuity contract issued by Executive Life
Insurance Company were segregated into a new fund
known as the Executive Life Fund. Assets of the
Executive Life Fund were and shall be allocated to
Participant's Accounts in the percentage which each
Participant's interest in the Stable Value Fund bears
to the balance of the Stable Value Fund as of April
11, 1991. As of the effective date of such transfer,
the Executive Life Fund shall constitute a Plan
investment separate from the Stable Value Fund, and
all references herein to the Stable Value Fund,
including but not limited to Subsections 6.5 and 6.6,
shall not be deemed to refer to the Executive Life
Fund. The Committee and the Trustee shall not cause
additional funds to be invested in the Executive Life
Fund after such date. Notwithstanding anything in
this Plan to the contrary, no Participant shall be
permitted to elect, pursuant to Subsections 5.2 or
6.2, to transfer or withdraw funds out of the
Executive Life Fund, except under the following
circumstances:
(A) Any cash held in the Executive Life Fund
shall automatically be transferred to the Stable
Value Fund, and each Participant with a portion of
his Account then invested in the Executive Life Fund
shall be allocated a pro rata portion of such cash
equal to the percentage which the Participant's
interest in the Executive Life Fund, as of April 1,
1993, bears to the balance of the Executive Life Fund
determined as of such date, and such Participant
shall be permitted to transfer, effective as soon as
administratively
27
<PAGE>
practicable such amount of cash allocated to his
Account to any other Fund hereunder into which he
would otherwise be permitted to transfer investments.
(B) Any Participant who has previously received,
or who was entitled to receive, a distribution from
the Plan other than with respect to the portion of
his Account invested in the Executive Life Fund, may,
subject to the requirements of Section 8.5 hereof,
elect to receive a distribution of the amounts of
cash allocated to his Account under paragraph (A) in
such manner and at such times as the Committee shall
prescribe .
Any penalties or losses incurred in connection with such
transfer shall be charged against the amount transferred or
withdrawn. No election to transfer funds into or out of the
Stable Value Fund shall be deemed to refer to any funds
invested in the Executive Life Fund. In addition to or in
lieu of permitting Participants to transfer or withdraw funds
out of the Executive Life Fund, the Committee may liquidate
all or part of the Executive Life Fund if, in the Committee's
sole discretion, the Committee determines that such
liquidation is prudent, within the meaning of ERISA. Any
amounts so liquidated, net of any losses or penalties incurred
in connection therewith, shall be invested in the Stable Value
Fund and shall be
28
<PAGE>
credited to each Participant then having an interest in the
Executive Life Fund in the percentage which the Participant's
interest in the Executive Life Fund bears to the balance of
the Executive Life Fund, based on the Executive Life Fund's
fair market value as of the date of such liquidation. Any
penalties or losses incurred in connection with the
liquidation of amounts held in the Executive Life Fund in
connection with a distribution or withdrawal shall be borne by
the recipient.
(c) Balanced Portfolio Fund. The Balanced Portfolio Fund
maintained under the Plan shall be comprised of such
fund or funds invested primarily in a mixture of (i)
common stock, preferred stock and/or securities
convertible into stock of corporations and (ii)
corporate and/or governmental bonds, debentures,
notes, mortgages and other similar types of
investments. The investment goals of the Balanced
Portfolio Fund shall be to reduce the risks and
volatility of investment and return through
diversification and to provide a balance between
capital appreciation and current income through
dividends and interest. The Committee shall from
time to time determine which bank or mutual fund or
funds shall constitute the Balanced Portfolio Fund.
Earnings, gains and losses experienced by the
Participant's investment in the Fund shall be
determined as of the end of each day and shall be
allocated to a Participant's Account as of such date
to the greatest extent administratively practicable.
Any contributions made by or on
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<PAGE>
behalf or a Participant shall be credited to the
Participant's Account as of the date such
contribution is made or as soon as practicable
thereafter.
(d) Company Stock Fund. Contributions in the form of
Company Stock allocated to the Company Stock Fund
shall be valued at the closing market price of the
Company Stock on the date the contribution is made
or, in the event there is no closing market price on
such date, at the average of bid and asked prices for
the Company Stock on such date. With respect to
purchases of Company Stock from contributions in cash
or transfers of Participant investments into the
Company Stock Fund, Company Stock shall be purchased
first from the Trust, to the extent that unallocated
shares are then being held, and second from the
trading market for the Company Stock. All purchases
and contributions of Company Stock shall be allocated
to the Participant's Account on the date made to the
greatest extent administratively feasible on the
basis of the purchase price for such shares or the
value as set forth hereinabove. Stock acquired from
the Company may be either Treasury stock or newly
issued stock. Shares of Company Stock so acquired
shall not be treated as being held for the benefit
of any Participant unless and until allocated to the
Account of a Participant as herein provided.
(e) Other Funds. The Committee is authorized to allow
Participants to invest in such other funds, and to
terminate the Plan's participation in such funds, as
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the Committee shall from time to time determine
appropriate. The Committee shall allow transfers
into and out of such funds as the Committee shall
determine, in keeping with the provisions of the Plan
but subject to such restrictions as may be contained
under such funds. The Committee shall provide
reasonable notice to all Participants of any such new
funds and the termination of the availability
thereof.
6.6 Charging of Withdrawal and Distribution. Withdrawals and
distributions shall be made as soon as practicable following
receipt of instructions from the Participant. Any such
instructions shall be given on any forms and in the manner
prescribed by the Committee and consistent with the terms of
this Plan. The amount to be paid upon such a withdrawal or
distribution shall be based on the value of the Participant's
Account determined when such withdrawal or distribution is to
be made, without taking into effect such withdrawal or
distribution. The appropriate Funds and subfunds shall be
charged as of the day on which the withdrawal or distribution
is made.
6.7 Annual Statement of Account. As soon as practicable after the
last day of each Plan Year, the Committee will deliver to each
Participant a statement of his Account as of that date.
Except as otherwise required by law, unless authorized by
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<PAGE>
the Committee or the Company, no Participant may inspect the
Committee's records.
6.8 Benefit Limitations. Notwithstanding any other provision of
the Plan, the amount of Annual Addition to a Participant's
Account under the Plan for any Plan Year, shall not exceed the
lesser of (i) $30,000 or such larger amount equal to 25% of
the dollar limitation then in effect under Section
415(b)(1)(A) of the Code for defined benefit plans after
giving effect to any cost of living adjustments as permitted
under Section 415(d) of the Code, or (ii) 25 percent of his
Compensation during such Plan Year. The Plan Year shall be
the Limitation Year.
"Annual Addition" for any Plan Year means the sum for that
year of a Participant's:
(A) the Pre-Tax Contributions credited to his
Account;
(B) his After-Tax Contributions;
(C) contributions allocated to his Company
Contributions Account;
(D) any forfeitures allocated to such
Participant;
(E) amounts allocated to a Participant's
individual medical account as defined in
Section 415(l)(2) of the Code, which is part
of a defined benefit plan maintained by an
Employer; and
(F) to the extent required by applicable law or
regulation, amounts allocated to a
Participant's separate account which are
attributable to
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post-retirement medical or life insurance
benefits under a welfare benefit fund, as
defined in Section 415(l) or 419A(d)(2) of
the Code, maintained by an Employer.
If during a Plan Year a Participant is also participating in
one or more "defined contribution plans" (as defined in
Section 414(i) of the Code) maintained by the BW/IP Companies,
the foregoing limitation shall apply to his Annual Additions
for such year under all such plans, and any excess Annual
Addition resulting therefrom shall first reduce contributions
under this Plan. Furthermore, if a Participant in this Plan
is also a participant in a qualified defined benefit pension
plan maintained by any of the BW/IP Companies (or was at any
time a participant in such a defined benefit pension plan
which has since been terminated), the sum of the Defined
Contribution Fraction and the Defined Benefit Fraction for any
Limitation Year (as defined in Code Section 415(e) and as
modified by Code Section 416(h) for any Limitation year in
which the Plan is a Top-Heavy Plan) shall not exceed 1.0.
(i) "Defined Benefit Fraction" shall mean a
fraction, the numerator of which is the sum
of the Participant's projected annual
benefits under all defined benefit plans
(whether or not terminated) maintained by
BW/IP Companies and the denominator of which
is the lesser of (1) 125% of the dollar
limitation in effect for the Limitation Year
under Section 415(b)(1)(A) of the Code or (2)
140% of the Participant's
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average Compensation for the 3 consecutive
Years of Service with the BW/IP Companies in
which his aggregate Compensation was the
highest.
(ii) "Defined Contribution Fraction" shall mean a
fraction, the numerator of which is the sum
of the Annual Additions to the Participant's
Account under all defined contribution plans
(whether terminated or not) maintained by the
BW/IP Companies for the current and all prior
Limitation Years, and the denominator of
which is the lesser of (1) 125% of the dollar
limitation in effect under Section
415(c)(1)(A) of the Code or (2) 25% of the
Participant's Compensation for such year.
(iii) For any Plan Year this Plan is Top-Heavy,
125% shall be replaced where it appears in
(i) and (ii) above with 100%; provided,
however, that such replacement shall not be
required if the Plan is operated as if:
(1) 3% is replaced with 4% where it
appears in Subsection 12.2 for such
Year,
(2) 5% is replaced with 7.5% where it
appears in Subsection 12.2, and
(3) The aggregate value of the Accounts
of Key Employees does not exceed 90%
of the aggregate value of all
Accounts and/or present value of
accrued benefits under all other
defined
34
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contribution or defined benefit plans
maintained (whether terminated or
not) by the BW/IP Companies. If a
restriction on contributions or
benefits is required for any
Employee, such restriction will
first be applied to the benefits
under this Plan.
6.9 Treatment of Excess Additions. Any reduction in contributions
required by Subsection 6.8 shall be applied to reduce first,
the amount of the Participant's After-Tax Contributions, then
(if necessary) the amount of his Pre-Tax Supplemental
Contributions and then (if necessary) his Pre-Tax Basic
Contributions and Matching Contributions, which would have
otherwise been credited to the Participant's Account. Any
reduction in After-Tax Contributions shall be paid to a
Participant in cash as soon as practicable after such
reduction and his Account shall be adjusted in such manner as
shall be determined by the Committee. Any reduction in
Pre-Tax Contributions shall be accomplished as if such
contributions were distributable Excess Contributions under
Subsection 6.11. Any reduction in Matching Contributions
shall be treated as a forfeiture and further treated as a
Discretionary Matching Contribution allocable to all
Participants who do not have Excess Additions.
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<PAGE>
6.10 Limitations on Pre-Tax Contributions.
(a) Dollar Limitation. No Participant shall be permitted
to have Pre-Tax Contributions made under this Plan
during any calendar year in excess the limit imposed
on the Participant by Section 402(g) of the Code for
such calendar year.
(b) Discrimination. As of the first day of each calendar
quarter during each Plan Year, and at such other time
or times throughout each such Plan Year as the
Committee may determine, the Committee shall review
designations made by Participants under Section 3 in
order to determine whether the Actual Deferral
Percentage of those Highly Compensated Employees who
are eligible for Pre-Tax Contributions under any
provision of the Plan for such Plan Year (whether or
not a Pre-Tax Contribution is actually made to the
Plan with respect to each such Participant for such
Plan Year) ("Eligible Participants") meets either of
the following two tests for such Plan Year:
(i) The Average Actual Deferral Percentage for
Eligible Participants who are Highly
Compensated Employees for the Plan Year shall
not exceed the Average Actual Deferral
Percentage for Eligible Participants who are
Nonhighly Compensated Employees for the Plan
Year multiplied by 1.25; or
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<PAGE>
(ii) the Average Actual Deferral Percentage for
Eligible Participants who are Highly
Compensated Employees for the Plan Year shall
not exceed the Average Actual Deferral
Percentage for Eligible Participants who are
Nonhighly Compensated Employees for the Plan
Year multiplied by 2, provided that the
Average Actual Deferral Percentage for
Eligible Participants who are Highly
Compensated Employees does not exceed the
Average Actual Deferral Percentage for
Eligible Participants who are Nonhighly
Compensated Employees by more than two (2)
percentage points or such lesser amount as
the Secretary of the Treasury shall prescribe
to prevent the multiple use of this
alternative limitation with respect to any
Highly Compensated Employee.
The term "Actual Deferral Percentage" shall mean the ratio
(expressed as a percentage) of Pre-Tax Contributions
(including any Excess Deferrals of Highly Compensated
Employees) and, to the extent the Company so elects, the Basic
Matching Contributions and Discretionary Matching
Contributions made on behalf of a Participant for the Plan
Year, to the Participant's Compensation plus his Pre-Tax
Contributions to the Plan for the Plan Year. Any amount of
Pre-Tax Contributions distributed pursuant to Subsection 6.9
shall be disregarded for purposes of applying the Actual
Deferral Percentage tests and the amount of any
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Excess Deferrals of any Nonhighly Compensated Employee shall
also be disregarded.
The Actual Deferral Percentage of a Highly Compensated
Employee shall be calculated by disregarding any Matching
Contributions which are forfeited pursuant to Section 6.15.
In the event that the Committee's calculation pursuant to this
paragraph (b) with respect to a Plan Year indicates that the
Plan may not meet one of the two tests set forth therein for
such Plan Year, the Committee shall then (i) determine the
maximum Actual Deferral Percentage (to the nearest whole or
one-half percent) for Highly Compensated Employees in order
for the Plan to meet one of such tests, (ii) reduce in
intervals of one-half percent the amount of Pre-Tax
Contributions to be made under Section 3 and Matching
Contributions to be made under Section 4 with respect to
Highly Compensated Employees as necessary to cause the Actual
Deferral Percentage of Highly Compensated Employees to equal
such maximum, and (iii) notify the affected Participants of
such reduction.
If an Eligible Participant who is a Highly Compensated
Employee is either a five-percent owner (as defined in
regulations under Section 414(q) of the Code) or one of the
ten Employees receiving the highest Compensation, the combined
Actual
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Deferral Percentage for the group consisting of the Highly
Compensated Employee and his family members (which group is
treated as one Highly Compensated Employee for purposes of
this Subsection 6.10 through Subsection 6.15) shall be
determined by combining the Pre-Tax Contributions and
Compensation of all such family members. If an Employee is
required to be aggregated as a member of more than one family
group, all Eligible Participants who are members of the family
group that include such Employee are treated as one Highly
Compensated Employee for purposes of this Subsections 6.10
through Subsection 6.15. The Actual Deferral Percentage of
the Nonhighly Compensated Employees shall be determined
disregarding the Pre-Tax Contributions, Compensation and
amounts treated as Pre-Tax Contributions for all family
members of a Highly Compensated Employee which are required to
be treated as one Highly Compensated Employee.
For purposes of this paragraph (b), paragraph (b) of
Subsection 6.11 and Section 6.12, the term "family members"
shall mean the spouse and the lineal ascendants and
descendants (and the spouses of such ascendants and
descendants) of any Employee or former Employee, provided that
such family members are Eligible Participants.
39
<PAGE>
(c) For purposes of this Subsection 6.10, all plans
qualified under Section 401(k) of the Code and maintained by
the BW/IP Companies shall be considered one plan.
6.11 Remedial Measures for Excess Pre-Tax Contributions.
(a) Distribution of Excess Deferrals. Notwithstanding
any other provision of this Plan, Excess Deferrals
and income allocable thereto shall be distributed no
later than April 15 of the calendar year following
the close of the Participant's taxable year in which
the Excess Deferral occurred. Basic Pre-Tax
Contributions shall be distributed under this
Subsection 6.11 only if the amount of Excess
Deferrals on behalf of a Participant exceed Pre-Tax
Supplemental Contributions on behalf of the
Participant for such taxable year.
The income allocable to Excess Deferrals is equal to
the gain or loss allocable to Excess Deferrals for
such taxable year. Such income shall be determined
and allocated using the methods set forth herein and
otherwise used to determine the income, gain or loss
allocated to the Participant's Pre-Tax Contributions
which gave rise to the Excess Deferrals, using a
"last-in first-out" methodology.
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The term "Excess Deferral" shall mean any amount
which meets the following requirements:
(i) The amount is an elective deferral (within
the meaning of Section 401(k) of the Code)
made on behalf of a Participant under this
Plan or a plan maintained by an Affiliate
during a taxable year of the Participant in
excess of the limit imposed on the
Participant by Section 402(g) of the Code for
such taxable year;
(ii) The amount is not distributed under
Subsections 6.9 or 6.11(b).
(b) Distribution and/or Recharacterization of Excess
Contributions. In addition to the procedure set
forth in paragraph (b) of Subsection 6.10, the
Committee shall, as of the last day of each Plan
Year, review Pre-Tax Contributions made on behalf of
Participants under Section 3 in order to determine
whether the Actual Deferral Percentage of those
Participants who are eligible for employer
contributions under any provision of the Plan for
such Plan Year (whether or not an employer
contribution is actually made to the Plan with
respect to each such Participant for such Plan Year)
satisfies either of the two tests set forth in
paragraph (b) of Subsection 6.10 for such Plan Year.
In the event the Committee's calculation pursuant to
this paragraph (b) with respect to a Plan Year
indicates the Plan does not meet one of such tests,
the Committee shall (i) recharacterize no later than
March
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15 of the year following the Plan Year in which the
Excess Contributions arose all or a portion of such
Excess Contributions and the income allocable thereto
as After-Tax Contributions and income allocable
thereto of the Participant under this Plan, but only
to the extent such Participant could have made
After-Tax Contributions under the Plan during the
preceding Plan Year, and with such recharacterized
amounts includible in the gross income of the
Participant as of January 1 of the preceding Plan
Year, accounted for as employee contributions under
Sections 72 and 6047 of the Code by the Company, but
otherwise treated as employer contributions for all
other purposes of the Code (except Sections 401(a)(4)
and 401(m)), and (ii) distribute any Excess
Contributions and the income allocable thereto not so
recharacterized in accordance with this paragraph
(b). In the event that any Excess Contributions and
the income allocable thereto are recharacterized as
After-Tax Contributions and income allocable thereto,
the Committee shall timely notify the Internal
Revenue Service and the affected Participant and
otherwise comply with the requirements of the Code
and the regulations issued under Section 401(k)(3) of
the Code. The determination and treatment of the
Pre-Tax Contributions and Actual Deferral Percentage
of any Participant shall also satisfy such other and
additional requirements as may be prescribed in the
regulations issued under Section 401(k)(3) of the
Code.
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<PAGE>
Except as to Excess Contributions recharacterized as
After-Tax Contributions, notwithstanding any other
provision of this Plan, Excess Contributions and
income allocable thereto shall be distributed if
possible no later than March 15, but in no event
later than December 31, of each Plan Year, to
Participants on whose behalf such Excess
Contributions were made for the preceding Plan Year.
Basic Pre-Tax Contributions shall be distributed
under this paragraph (b) only if the amount of Excess
Contributions on behalf of a Participant exceed
Supplemental Pre-Tax Contributions on behalf of the
Participant for the Plan Year.
For each Highly Compensated Employee, the term
"Excess Contributions" means the total Pre-Tax
Contributions on behalf of such employee (determined
prior to the application of this paragraph (b) minus
the amount determined by multiplying such employee's
Actual Deferral Percentage (determined after
application of the remainder of this paragraph (b))
by his Compensation used in determining such
percentage and less any amounts distributed under
Subsection 6.9 and any amounts distributed or
recharacterized as After-Tax Contributions under
Subsection 6.11(a). The Actual Deferral Percentage
of the Highly Compensated Employee with the highest
Actual Deferral Percentage will be reduced to the
extent required to (i) enable the Plan to satisfy one
of the Actual Deferral Percentage tests set
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<PAGE>
forth in paragraph (b) of Subsection 6.10, or (ii)
cause such Highly Compensated Employee's Actual
Deferral Percentage to equal the Actual Deferral
Percentage of the Highly Compensated Employee with
the next highest Actual Deferral Percentage. The
process described in the preceding sentence shall be
repeated (for the Highly Compensated Employee with
the then-highest Actual Deferral Percentage) until
the Plan satisfies one of the Actual Deferral
Percentage tests set forth in paragraph (b) of
Subsection 6.10.
In the case of any Highly Compensated Employee whose
Actual Deferral Percentage is determined by taking
into account the Pre-Tax Contributions of family
members, the Excess Contributions of such family
group shall be allocated to each family member in the
ratio which (i) the Pre-Tax Contributions of each
family member taken into account to determine the
Actual Deferral Percentage of such family group,
bears to (ii) the total Pre-Tax Contributions of all
such family members. However, only those Excess
Contributions allocated to family members who are
Highly Compensated Employees shall be distributed
under this paragraph (b).
The income allocable to Excess Contributions
distributed hereunder is equal to the gain or loss
allocable to such Excess Contributions for the Plan
Year.
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<PAGE>
Such income shall be determined and allocated using
the methods set forth herein and otherwise used to
determine the income, gain or loss allocated to the
Participant's Pre-Tax Contributions and Matching
Contributions treated as Pre- Tax Contributions as to
such Participant for purposes of the Actual Deferral
Percentage test of Section 6.10 for the Plan Year
which gave rise to the Excess Contributions, using a
"last-in first- out" methodology.
6.12 Limitation on After-Tax Contributions and Matching
Contributions.
(a) Discrimination. The Committee shall, as of the last
day of each Plan Year, review After-Tax
Contributions, Basic Matching Contributions and
Discretionary Matching Contributions made on behalf
of Participants to determine whether the Average
Contribution Percentage for Highly Compensated
Employees satisfies one of the following tests:
(i) The Average Contribution Percentage for
Eligible Participants who are Highly
Compensated Employees for the Plan Year shall
not exceed the Average Contribution
Percentage for Eligible Participants who are
Nonhighly Compensated Employees for the Plan
Year multiplied by 1.25; or
(ii) The Average Contribution Percentage for
Eligible Participants who are Highly
Compensated Employees for the Plan Year shall
not exceed the Average Contribution
Percentage for Eligible Partici-
45
<PAGE>
pants who are Nonhighly Compensated Employees
for the Plan Year multiplied by 2, provided
that the Average Contribution Percentage for
Eligible Participants who are Highly
Compensated Employees does not exceed the
Average Contribution Percentage for Eligible
Participants who are Nonhighly Compensated
Employees by more than two (2) percentage
points or such lesser amount as the Secretary
of the Treasury shall prescribe to prevent
the multiple use of this alternative
limitation with respect to any Highly
Compensated Employee.
In the event that this Plan satisfies the
requirements of Sections 401(a)(4) 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 Sections 401(a)(4) or 410(b) of the
Code only if aggregated with this plan, then this
Subsection 6.12 shall be applied by determining the
Contribution Percentages of Eligible Participants as
if all such plans were a single plan.
The combined Contribution Percentage for the group
consisting of a Highly Compensated Employee and his
family members who are required to be treated as one
Highly Compensated Employee under Subsection 6.10,
and who shall therefore be treated as one Highly
Compensated Employee for purposes of this Subsection
6.12, shall be determined by combining the
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Company Contributions and Compensation of all such
family members. The Contribution Percentage of the
Nonhighly Compensated Employees shall be determined
disregarding the After-Tax Contributions, Matching
Contributions, Compensation and amounts treated as
Matching Contributions for all family members of a
Highly Compensated Employee which are required to be
treated as one Highly Compensated Employee.
For purposes of this Subsection 6.12, the term
"Average Contribution Percentage" shall mean the
average (expressed as percentage) of the Contribution
Percentages of the Eligible Participants in a group.
The term "Contribution Percentage" shall mean the
ratio (expressed as a percentage) of (i) the
After-Tax Contributions made by an Eligible
Participant, Pre-Tax Contributions which satisfy the
requirements of Section 401(k)(3) of the Code (i.e.
are not Excess Contributions) of an Eligible
Participant but which are not necessary to be taken
into account to satisfy the Actual Deferral
Percentage Test of Section 6.10 and, to the extent
not taken into account for purposes of satisfying the
Actual Deferral Percentage discrimination tests of
paragraph (b) of Subsection 6.10, Matching
Contributions under the Plan made on behalf of the
Eligible Participant for the Plan Year to (ii) the
Eligible Participant's Compensation for the Plan
Year. The term "Eligible Participant" shall mean any
Participant who is otherwise authorized under
47
<PAGE>
the terms of the Plan to make After-Tax Contributions
or have Matching Contributions allocated to his
Account for the Plan Year. Any amount of
contributions distributed pursuant to Subsection 6.9
shall be disregarded for purposes of applying the
Actual Contribution Percentage tests. The
Contribution Percentage of a Highly Compensated
Employee shall be calculated by disregarding any
Matching Contributions which are forfeited pursuant
to Subsections 6.13 or 6.15. The determination and
treatment of the Contribution Percentage of any
Participant shall satisfy such other requirements as
may be prescribed in the regulations issued under
Section 401(m) of the Code.
6.13 Remedial Measures for Excess Aggregate Contributions.
(a) Correction of Excess Aggregate Contributions.
(i) Determination of Excess Aggregate
Contributions. For each Highly Compensated
Employee, the term "Excess Aggregate
Contributions" means (after the
recharacterization of any Excess
Contributions with respect to a Participant
as After-Tax Contributions of that
Participant) the total After-Tax
Contributions made by and Matching
Contributions not taken into account for
purposes of the Actual Deferral Percentage
test under Subsection 6.10 made on behalf of
such employee (determined prior to the
application of this
48
<PAGE>
subparagraph (i)) minus the amount determined
by multiplying such employee's Contribution
Percentage (determined after application of
the remainder of this subparagraph (i)) by
his Compensation used in determining such
percentage. The Contribution Percentage of
the Highly Compensated Employee with the
highest Contribution Percentage will be
reduced to the extent required to (i) enable
the Plan to satisfy one of the Contribution
Percentage tests set forth in Subsection
6.12, or (ii) cause such Highly Compensated
Employee's Contribution Percentage to equal
the Contribution Percentage of the Highly
Compensated Employee with the next highest
Contribution Percentage. The process
described in the preceding sentence shall be
repeated (for the Highly Compensated Employee
with the then-highest Contribution
Percentage) until the Plan satisfies one of
the Contribution Percentage tests set forth
in Subsection 6.12.
(ii) Family Aggregation. In the case of any Highly
Compensated Employee whose Contribution
Percentage is determined by taking into
account the Company Contributions of family
members, the Excess Aggregate Contributions
of such family group shall be allocated to
each of the Highly Compensated Employee's
family members in the ratio which (A) the
Company Contributions of each family member
taken into account to determine the
Contribution
49
<PAGE>
Percentage, bears to (B) the total Company
Contributions of all such family members.
However, only those Excess Aggregate
Contributions allocated to Highly Compensated
Employees shall be distributed under this
Subsection 6.13.
(iii) Correction of Excess Aggregate Contributions;
Determination of Excess Aggregate
Contribution Income. Excess Aggregate
Contributions attributable to After-Tax
Contributions and income allocable thereto
shall be distributed if possible by March 15,
but no later than December 31, of each Plan
Year to Participants to whose Participant
Accounts Excess Aggregate Contributions were
allocated for the preceding Plan Year.
Excess Aggregate Contributions of a
Participant attributable to Matching
Contributions and income allocable thereto
shall be forfeited by the Participant no
later than December 31 of each Plan Year
following the Plan Year for which the
Matching Contributions were made. Any such
forfeitures shall be treated and allocated as
Discretionary Matching Contributions for the
period to which they relate.
The income allocable to Excess Aggregate
Contributions is equal to the gain or loss
allocable to Excess Aggregate Contributions
for the Plan Year. Such income shall be
determined and allocated using the methods
set forth herein and otherwise used to
determine the
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<PAGE>
income, gain or loss allocated to the
After-Tax Contributions made by a Participant
which gave rise to the Excess Aggregate
Contributions and, to the extent not taken
into account for purposes of satisfying the
Actual Deferral Percentage discrimination
tests of paragraph (b) of Subsection 6.10,
the Matching Contributions made on behalf of
a Participant for the Plan Year, using a
"last-in first-out" methodology.
6.14 Limitation on Multiple Use of Alternative Discrimination
Tests. Notwithstanding anything in this Section 6 to the
contrary, upon completing the discrimination tests under
Subsections 6.10 and 6.12 (including any corrections
necessary under Subsections 6.11 or 6.13), the Committee shall
determine whether the Plan satisfies the multiple use rules of
Section 401(m)(9)(A) of the Code, and the regulations
thereunder, for the Plan Year. For Plan Years beginning
before January 1, 1992, the "aggregate limit," within the
meaning of Treasury Regulation Section 1.401(m)-2(b)(3),
shall be the greater of the limit set forth in such
regulation, or the "new aggregate limit" set forth in Section
5.02 of Revenue Procedure 89-65. In the event that a
prohibited multiple use occurs, the Committee shall correct
the multiple use by distributing and/or forfeiting Excess
Aggregate Contributions in the manner described in Subsection
6.13.
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<PAGE>
6.15 Forfeiture of Matching Contributions Upon Corrective
Distribution of Basic Contributions. In the event a Highly
Compensated Employee receives a corrective distribution of
Basic Contributions under this Section 6 with respect to a
Plan Year or Limitation Year, such Highly Compensated Employee
shall also forfeit any Matching Contributions which were made
on account of the distributed Basic Contributions. Any such
forfeitures shall be treated and allocated as Discretionary
Matching Contributions for the period to which they relate.
SECTION 6A LOANS TO PARTICIPANTS
6A.1 Committee Discretion to Make Loans. Loans to Participants
shall be allowed if, and only if, the Committee determines
that those loans are to be made. The determination as to
whether or not Participant loans are to be allowed shall be
completely within the discretion of the Committee.
6A.2 Loans to be Made on Nondiscriminatory Basis. Loans shall be
available to all Participants on a reasonably equivalent
basis; provided, however, that the Committee may make
reasonable distinctions among prospective borrowers on the
basis of credit worthiness. Loans shall not be made available
to Participants who are Highly Compensated Employees in an
amount greater than the amount available to other
Participants. Thus, for loans secured by the Participant's
vested benefit, the same percentage of Participant's vested
balance in his Accounts may be loaned to
52
<PAGE>
Participants with both large and small amounts of vested
benefits subject to a minimum loan of $1000.
6A.3 Limitations of Loans to Participants. No Participant shall
receive a loan which, when added to the outstanding loan
balance of the Participant under all loans from all qualified
plans sponsored by the Employer, exceeds the lesser of 50% of
the present value of the Participant's nonforfeitable Account
Balance or $50,000.
In determining the maximum amount of loan that may be made to
a Participant, the $50,000 limit must be decreased by the
highest outstanding balance of any loan to the Participant
from all qualified plans maintained by the Employer in the 12
calendar months immediately preceding the date the loan is
made to the Participant. The minimum amount of a loan to a
Participant shall be $1000 and a Participant may have only two
loans outstanding under the Plan at any given time.
6A.4 Adequacy of Security. All loans to Participants made by the
Committee shall be secured by the pledge of the Participant's
vested interest in the Trust Fund in order to assure repayment
of the borrowed amount and all interest payable thereon in
accordance with the terms of the loan. In no event shall the
Participant be permitted to pledge an amount which, when added
to any outstanding security
53
<PAGE>
interest in his vested interest in the Trust Fund, exceeds 50%
of his vested interest in the Trust Fund as of the date of the
pledge.
6A.5 Rate of Interest and Loan Fees. Interest shall be charged at
a reasonable rate as determined by the Committee; and interest
shall be payable at least quarterly. The Committee may charge
Participants, or deduct from the amount of a loan otherwise
payable to Participants, reasonable loan origination fees and
annual loan administration fees.
6A.6 Term of Loan. Loans shall generally be for a term of five
years, or for such lesser term as the Committee determines
appropriate. In the discretion of the Committee, a loan used
to acquire the principal residence of the Participant may have
a term in excess of five years, but not in excess of fifteen
years. To the extent determined by the Committee, loans,
principal and interest, and loan fees shall be payable via
payroll deductions of the Participant or via any other means
acceptable to the Committee.
6A.7 Remedies in the Event of Default. If not paid as and when
due, any outstanding loan or loans by a Participant may be
deducted from any benefit to which that Participant is
entitled at the time that benefit is otherwise distributable
to him, and subject to the consent of the Participant, the
Participant's Account balance may be
54
<PAGE>
liquidated to repay the loan with amounts first applied to
accrued interest and then to principal. The Participant shall
remain liable for any deficiency.
6A.8 Definition of Loan. For purposes of this Article, a loan
includes (a) the direct or indirect receipt of a loan by a
Participant from the Plan, or (b) the assignment (or agreement
to assign) or the pledging (or agreement to pledge) of any
portion of the Participant's interest in the Plan.
6A.9 Loan Application Procedures. Loan Application Procedures,
which are contained in the document 'Specific Plan Provisions
for Loans to Participants', may be revised from time to time
by the Plan Committee without an amendment to the Plan, to the
extent that such provisions do not conflict with any provision
of the Plan. In the event of any conflict between the Plan
and the Loan Application Procedures, the Plan shall govern.
6A.10 Loan Repayments. Amounts repaid by any Participant with respect to
any loan or loans made to such Participant shall be allocated to such
Participant as of the date such payment is received by the Trustee,
or as soon as practicable thereafter and shall be invested in accord
with the current election made by the Participant for investment of
additional Pre-Tax Contributions to his Participant Account.
55
<PAGE>
SECTION 7 - WITHDRAWALS DURING EMPLOYMENT
7.1 Withdrawals. A Participant may elect to make withdrawals of
a specified portion of the then value of his Account, in
accordance with the following:
(a) A Participant may elect to withdraw an amount equal
to all or any part of the value of the assets
attributable to Company Contributions (other than
Matching Contributions) attributable to periods prior
to January 1, 1992, Rollover Contributions into this
Plan, After-Tax Contributions, and "Matching
Contributions" (as such term was defined under the
Borg-Warner Plan on May 20, 1987).
(b) A Participant may elect to withdraw an amount equal
to all or any part of the value of the assets
attributable to his Pre-Tax Contributions and Company
Contributions for periods after December 31, 1991;
provided however, that a Participant may only make
such a withdrawal if he has attained age 59 1/2, or
the withdrawal constitutes a "Hardship Withdrawal" as
described in Subsection 7.2. A Hardship Withdrawal
shall not exceed the amount required to meet the need
created by the hardship and shall not include amounts
attributable to the earnings on the Participant's
Account for periods after December 31, 1988
attributable to Pre-Tax Contributions or Matching
Contributions to the extent they are used to satisfy
the requirements of the Actual Deferral Percentage
tests of Subsection 6.10.
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<PAGE>
Any such withdrawals shall be made as soon as practicable following
receipt of instructions from the Participant. Any such instructions
shall be given on such forms and in the manner prescribed by the
Committee and consistent with the terms of this Plan. The amount to
be paid upon such a withdrawal shall be based on the value of the
Participant's Account determined when such withdrawal is to be made,
without taking into effect such withdrawal. The appropriate Funds and
subfunds shall be charged as of the day on which the withdrawal is
made.
7.2 Hardship Withdrawal. To constitute a "Hardship Withdrawal,"
the withdrawal must be for an immediate and heavy financial
need of the Participant for which funds are not reasonably
available from other resources of the Participant and which is
necessary to satisfy such financial need. The determination
of the existence of such need and the amount necessary to
satisfy it shall be determined by Committee on a
nondiscriminatory basis applying the following criteria:
(a) In order for a distribution to be made on account of
an immediate and heavy financial need of the
Participant, it must be made only on account of:
(1) Medical expenses (determined under Section
213(d) of the Code) incurred by the
Participant, his Spouse or his "Dependents"
(as defined under Section 152 of the Code) or
necessary for these
57
<PAGE>
persons to obtain medical care (as described
in Section 213(d) of the Code).
(2) The purchase (excluding mortgage payments) of
the Participant's principal residence.
(3) Payments of tuition for the next twelve
months of post-secondary education for the
Participant, his Spouse or his Dependents.
(4) Amounts necessary to prevent the eviction of
the Participant from his principal residence
or foreclosure on the mortgage of the
Participant's principal residence.
(5) Other events in the life of a Participant
(such as divorce of the Participant, death of
the spouse of the Participant, loss of
employment by the spouse of the Participant,
natural disaster, funeral expenses of a
family member, or expenses incurred by the
Participant or a Participant's spouse in
order to satisfy a judgment or settlement
involving litigation or the threat of
litigation against the Participant or the
Participant's spouse), determined by the
Committee, based upon all of the facts and
circumstances and on a
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<PAGE>
nondiscriminatory basis, to be of such
magnitude or of such an unexpected nature so
to cause the Participant to be at a
significant risk of not being able to meet
his or her basic living expenses as they
become due in the absence of the Hardship
Withdrawal.
(6) Other events determined by the Commissioner
of Internal Revenue under Section 401(k) of
the Code to constitute hardship.
(b) Amounts shall be determined necessary to satisfy an
immediate and heavy financial need of the Participant
only if the Participant satisfies the Committee that:
(1) The distribution is not in excess of the
amount of the Participant's immediate and
heavy financial need, including the amount
necessary to pay federal, state or local
income taxes and/or penalties reasonably
anticipated to result from the Hardship
Withdrawal.
(2) The Participant has, except to the extent
that such act would result in a hardship or
increase the amount of any Hardship
Withdrawal, exhausted all other reasonable
resources and has obtained all
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<PAGE>
distributions, other than hardship
distributions, and all nontaxable loans then
available under all plans of the Employer.
The Committee shall be entitled to rely upon the
Participant's representation, executed under penalty
of perjury, unless the Committee has facts to the
contrary or it is facially apparent that such is not
the case, that the Participant's need cannot be
relieved through reimbursement or compensation by
insurance or otherwise, by reasonable liquidation of
the Participant's assets or assets of his Spouse and
minor children reasonably available to the
Participant (but only to the extent such liquidation
would not itself cause an immediate and heavy
financial need), by cessation of elective
contributions or employee contributions under any
other plan of the Employer by distributions or
nontaxable loans from other plans or through
borrowing from commercial sources on reasonable
commercial terms.
(c) Upon receiving a "Hardship Withdrawal," a
Participant, notwithstanding any other provision
hereof, shall be suspended for a 12 month period
thereafter from making Pre-Tax Contributions,
After-Tax Contributions and all other elective or
employee contributions under this Plan, and all other
plans maintained by the Employer. Further, such
Participant shall be limited to making Pre-Tax
Contributions, and all other elective
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<PAGE>
contributions under this Plan and all other plans
maintained by the Employer, for the taxable year of
the Participant immediately following the taxable
year in which the Hardship Withdrawal occurs, to the
difference between the limitation under Section
402(g) of the Code for such following year over the
amount of such Pre-Tax Contributions and other
elective contributions made for the taxable year of
the Hardship Withdrawal.
7.3 Withdrawal Limitations. Only two withdrawals by a Participant
shall be permitted in any Plan Year unless otherwise
authorized by the Committee. The Committee may from time to
time establish minimum amounts which may be withdrawn.
7.4 Distribution of Withdrawals. Each withdrawal by a Participant
under Subsection 7.1 shall be distributed as soon as
practicable after the effective date of the withdrawal and
shall be subject to the provisions of Subsections 8.7 and 8.8.
Withdrawals shall be made by liquidating pro rata to the
extent necessary the Funds and subfunds in which the
Participant's Account is invested, other than the Executive
Life Fund. In the event such withdrawal cannot be satisfied
without liquidating all or a portion of the Participant's
Account invested in the Executive Life Fund shall the
Executive Life Fund be liquidated and then only in such amount
necessary to make such withdrawal. Any liquidation of the
Executive Life Fund shall be subject to Subsection 6.5(b)(ii).
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<PAGE>
SECTION 8 - DISTRIBUTION OF BENEFITS
8.1 Termination of Employment. Upon the termination of a
Participant's employment with the BW/IP Companies which
otherwise constitutes a separation from service under Code
Section 401(k), the vested portion of all assets in the
Participant's Account shall thereafter be distributed to him
or his Beneficiary, as the case may be, pursuant to Subsection
8.5 and 8.5A; provided, however, that nothing in this Section
8 shall be deemed to permit a Participant or Beneficiary to
receive a distribution of any part of an Account held in the
Executive Life Fund, whether in the form of a lump sum
distribution or installment payments, except to the extent the
Committee determines, pursuant to Subsection 6.5(b)(ii), that
such amounts may be liquidated from the Executive Life Fund.
Notwithstanding the preceding sentence, if the Committee shall
so determine and permit, upon the sale or other disposition by
any corporation which is an Employer of substantially all of
the assets used in a trade or business of such Employer or of
a subsidiary of any such Employer ("Transferor Employer") to
an unrelated entity (as defined in Treas. Reg. Section
1.401(k)-1(d)(4)(iv)(B)) ("Acquiring Entity"), a Participant
who continues employment with the Acquiring Entity shall be
entitled to receive a lump sum distribution (as defined in
Code Section 401(k)(10)(B)) from the Plan, but only if such
distribution is made in connection with such disposition, the
Acquiring Entity does not maintain the Plan after such
disposition and the Transferor Employer continues as an
Employer with respect to the Plan after such disposition. It
is
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<PAGE>
expressly determined that the preceding sentence shall apply
to a sale of the assets of Fluid Controls Division of the
Company to E-Systems, Inc. on or before December 31, 1994, if
the conditions set forth in such preceding sentence are
satisfied.
8.2 Vesting.
Subject to Subsection 4.5, all portions of a Participant's
Account, whether derived from Participant or Employer
Contributions, shall be fully vested in the Participant at all
times.
8.3 Forfeitures.
(a) If a participant under the Borg-Warner Plan suffered
a "Forfeiture" under such plan and is re-employed by
any of the BW/IP Companies before he incurs a Period
of Severance, the amounts so Forfeited shall be
restored as provided in and subject to Subsection
8.4. Such participant will be considered for
purposes of the Plan to have incurred a "Period of
Severance" if (i) as to a participant in the
Borg-Warner Plan, during the five consecutive year
period commencing on the date his employment is
terminated he did not perform an hour of service
before May 20, 1987 for which he was directly or
indirectly paid or entitled to payment by any of the
"Borg-Warner Companies" (as that term was defined
under the Borg-
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Warner Plan on May 19, 1987) and (ii) does not
perform an hour of service during such five
consecutive year period for which he is directly or
indirectly paid or entitled to payment by any of the
BW/IP Companies. A termination of employment for
this purpose shall occur on the date on which a
Participant ceased to be in the employ of the Borg-
Warner Companies or the BW/IP Companies.
(b) Notwithstanding the foregoing, if a Participant's
termination of employment was due to a "maternity or
paternity leave," then subparagraph (a) of this
Subsection shall be read by substituting "six
consecutive year period" for "five consecutive year
period". For the purposes of this Plan, "maternity
or paternity leave" means termination of employment
or absence from work due to the pregnancy of the
Participant, the birth of a child of the Participant,
the placement of a child in connection with the
adoption of the child by a Participant, or the caring
for a Participant's child during the period
immediately following the child's birth or placement
for adoption. The Committee shall determine, under
rules of uniform application and based on information
provided to the Committee by the Participant, whether
or not the Participant's termination of employment or
absence from work is due to "maternity or paternity
leave."
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8.4 Restoration of Forfeitures. If a Participant is re-employed
by any of the BW/IP Companies before he incurs a Period of
Severance, or the Plan is terminated before the completion of
a Period of Severance, amounts equal to any Forfeitures shall
be restored to his Account first by way of application of any
Forfeitures arising during such Plan Year and then to the
extent necessary by way of a contribution by the Employer of
the Participant to the Plan.
8.5 Manner of Distribution. Subject to the conditions and
limitations set forth below, and subject to any elections made
under Section 6.6, and except as provided in Section 1.2 with
respect to former participants in the UCP Savings Plan or SRE
Plan, on or as soon as practicable after the date of
Participant's termination of employment with the BW/IP
Companies occurs (and after all adjustments then required
under the Plan as of that date have been made and the other
requirements of this section have been satisfied) the vested
balances in his Account will be distributed to or for the
benefit of the Participant or, in the case of his death, to or
for the benefit of his Beneficiary, by either of the following
methods:
(a) by payment in lump sum; or
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(b) by payment in a series of substantially equal annual
installments up to a maximum of ten installments, but
not exceeding:
(i) the Participant's life expectancy, or
(ii) the joint and last survivor life
expectancy of the Participant and a
Beneficiary.
Notwithstanding the previous sentence, a Participant may elect
to defer commencement of such distribution to a date not later
than April 1 of the calendar year next following the calendar
year in which the Participant attains age 70 1/2. Nothing in
this Section 8.5 shall be construed as preventing a
Participant who has terminated employment with the BW/IP
Companies from electing to accelerate or take a distribution
of all or a portion of amounts distributable to him.
The Participant may in such manner as determined by the
Committee select the method of distribution. In the absence
of an election as to the method of distribution a Participant
shall receive his distribution in a lump sum. The
distribution of benefits to a Beneficiary shall be made in a
lump sum, unless the Participant selects another method of
distribution (but at least as rapidly as any installment
payments which commenced prior to his death). The Committee
may direct the Trustee to make distribution in cash or
property, or partly in each, provided the property is
distributed at its value as determined in accordance with the
provisions of the Plan at the date of distribution and, if the
distribution is to be
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in the form of Company Stock in whole or in part, the number
of shares to be distributed equals or exceeds the minimum
number of shares for distribution as determined by the
Committee. No distribution to a Participant will be made if
the Account balance for such Participant exceeds or ever
exceeded immediately before any distribution $3,500, the
Participant does not in writing consent to such distribution,
and the Participant at the time of distribution has not
attained age 65. A Participant who terminates employment with
the BW/IP Companies at or after attaining age 65, and a former
Participant who attains age 65 and has undistributed Account
balances, shall commence to receive benefits hereunder, under
the terms hereof, as soon as practicable after such
termination or attaining such age.
8.5A Deferral of Lump Sum Distribution by Beneficiary.
Notwithstanding anything herein to the contrary, a Beneficiary
who is otherwise entitled to receive a lump sum distribution
may elect to defer such distribution in accordance with this
Subsection 8.5A in the event that, at the time such
Beneficiary becomes entitled to such distribution, any portion
of the Plan Account which the Beneficiary is to receive is
held in the Executive Life Fund. A Beneficiary described in
the preceding sentence may, in such manner prescribed by the
Plan Committee, elect to defer receipt of a lump sum
distribution until such date as the Committee determines, in
its sole discretion, that all amounts of such Account held
under the Executive Life Fund are currently distributable or
that all amounts of the Executive
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Life Fund which were allocable to the Participant's Account
have been transferred out of the Executive Life Fund. If no
portion of the Participant's Account is held in the Executive
Life Fund, and except as provided in Section 1.2 with respect
to former participants in the UCP Savings Plan or SRE Plan, a
Beneficiary who is the surviving spouse of a Participant shall
be permitted to defer receipt of the commencement of the
benefit to which such Beneficiary is entitled.
Notwithstanding anything provision to the contrary, no
Beneficiary other than the Participant's surviving spouse may
elect to defer distribution under this Section 8.5 to any date
later than the day before the fifth anniversary of the
Participant's death; and further no Beneficiary who is the
Participant's surviving spouse may elect to defer distribution
to any date later than the date on which the Participant would
have attained age 70-1/2. The deferral election described in
this Subsection 8.5A shall be made available to Beneficiaries
with amounts invested in the Executive Life Fund at the time
benefits are to commence without respect to the amount of the
lump sum distribution.
8.6 [Intentionally left blank.]
8.7 Election for Stock. A Participant, or a Beneficiary of a
deceased Participant, who is entitled to a distribution of
Company Stock, pursuant to a withdrawal, other than a Hardship
Withdrawal, or termination of employment, may elect to receive
cash in
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lieu of such stock. In such event, the Company Stock covered
by the election shall be sold and the proceeds therefrom shall
be distributed.
8.8 Fractional Interests in Stock and Minimum Shares
Distributable. No distribution of a fractional interest in
any Company Stock held by the Trustee shall be made to any
Participant or his Beneficiary. All fractional interests in
Company Stock shall be valued at the most recent quoted price
as of the date of distribution or withdrawal and a sum equal
thereto shall be distributed in cash. Any fractional shares
remaining after the Trustee has sold all of the shares of
Company Stock required for cash distributions during any month
shall remain unallocated and be sold for the purpose of cash
distributions in any subsequent month. A Participant or
Beneficiary shall be entitled to a distribution of Company
Stock only if the number of shares to be distributed equals or
exceeds the minimum number of shares that may be distributed
as determined from time to time by the Committee.
8.9 Designation of Beneficiaries.
(a) Subject to subparagraph (b) of this Subsection, each
Participant may, from time to time, designate his
Beneficiary. A Beneficiary designation will be
effective only when an acceptable form is signed and
filed by the Participant with this Committee during
his lifetime and will cancel all Beneficiary
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designation forms previously filed by him. If a
Participant failed to designate a Beneficiary before
his death or if all the designated Beneficiaries die
before the Participant, the Committee shall direct
the Trustee to make distribution of the Participant's
benefits to the surviving spouse of the Participant,
or if none, to the legal representative or
representatives of the estate of the Participant.
(b) Any designation of a Beneficiary or change in
designation of a Beneficiary must be consented to by
the Participant's spouse in writing unless:
(i) Such Beneficiary is the Participant's
spouse;
(ii) The Participant has no spouse; or
(iii) The spouse cannot be located.
Such spouse's consent must acknowledge the effect thereof,
must name the designated Beneficiary and the form of payment,
and shall be in writing and be witnessed by a notary public.
8.10 Missing Participants or Beneficiaries. Each Participant and
each Beneficiary must file with the Committee from time to
time in writing his post office address and each change of
post office address. Any communication, statement or notice
addressed to a Participant or Beneficiary at his last post
office address filed with the Committee, or if no address is
filed with the Committee then at his last post office address
as shown on the Employers' records, will be binding on the
Participant and
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his Beneficiary for all purposes of the Plan. Neither the
Committee nor the Trustee nor the Employers shall be required
to search for or locate a Participant or Beneficiary. If the
Committee notifies a Participant or Beneficiary that he is
entitled to a distribution and also notifies him of the
provisions of this Subsection 8.10, or makes a reasonable
effort to so notify such Participant or Beneficiary and the
Participant or Beneficiary fails to claim his benefits under
the Plan or make his whereabouts known to the Committee within
three years after the notification, the benefits under the
Plan of the Participant or Beneficiary will be treated as a
Forfeiture and allocated to each other Participant in uniform
proportion to the Compensation of each such Participant;
provided, however, that if the person entitled to receive such
benefit subsequently claims it, the amount shall be restored
in the same manner as a restoration under Subsection 8.4.
8.11 Facility of Payment. When a person entitled to benefits under
the Plan is under legal disability, or, in the Committee's
opinion, is in any way incapacitated so as to be unable to
manage financial affairs, the Committee may direct the Trustee
to pay the benefits to such person's legal representative, or
to a relative or friend of such person for such person's
benefit, or the Committee may direct the application of such
benefits for the benefit of such person. Any payment made in
accordance with Subsections 8.9, 8.10 or 8.11 shall be a full
and complete discharge of any liability for such payment under
the Plan.
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8.12 Commencement of Benefits. In the absence of an election by a
Participant or Beneficiary, as permitted hereunder, to defer
commencement of receipt of benefits under the Plan to a later
date, payment of benefits under the Plan to or for the benefit
of a Participant or his Beneficiary shall, if not commenced
previously under the terms of Section 8.5, commence not later
than the 60th day after the latest Plan Year in which:
(a) the Participant attains age 65,
(b) the tenth anniversary of the year in which the
Participant commenced participation in the Plan
occurs, or
(c) the Participant terminates his employment with the
BW/IP Companies. Notwithstanding the foregoing,
benefit payments must commence no later than the
April 1 of the calendar year next following the
calendar year in which the Participant attains age 70
1/2 years. All distributions hereunder shall be made
in accordance with Section 401(a)(9) of the Code,
including Section 401(a)(9)(G) and Treasury
Regulation Section 1.401(a)(9)-2 (pertaining to
incidental death benefit distributions).
8.13 Direct Rollovers. A Distributee may elect, at the time and in
the manner prescribed by the Employer, to have any portion of
an Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a Direct
Rollover.
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(a) "Eligible Rollover Distribution":
An Eligible Rollover Distribution is any distribution
of all or any portion of the balance to the credit of
a Distributee, except that an Eligible Rollover
Distribution does not include: any distribution that
is one of a series of substantially equal periodic
payments (not less frequently than annually) made for
the life (or life expectancy) of the Distributee or
the joint lives (or joint life expectancies) of the
Distributee and the Distributee's Beneficiary or for
a specified period of ten years or more; any
distribution to the extent such distribution is
required under Section 401(a)(9) of the code; and the
portion of any distribution that is not includible in
gross income (determined without regard to the
exclusion for net unrealized appreciation with
respect to employer securities).
(b) "Eligible Retirement Plan": An
Eligible Retirement Plan is an individual retirement
account described in Section 408(a) of the Code, an
individual retirement annuity described in Section
408(b) of the Code, an annuity plan described in
Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts
the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover
Distribution to a Participant's surviving spouse, an
Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
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(c) "Distributee": A Distributee is a
Participant or former Participant, a Participant's or
former Participant's surviving spouse, and a
Participant's or former Participant's spouse or
former spouse who is the alternate payee under a
qualified domestic relations order (as defined by
section 414(p) of the Code).
(d) "Direct Rollover": A Direct
Rollover is a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
SECTION 9 - THE COMMITTEE
9.1 Membership. A Committee consisting of at least three persons
(who may but need not be employees of the Employers) shall be
appointed by the Board of Directors of the Company, the
Executive Committee thereof or by such other person, persons
or committee so authorized by the Board of Directors of the
Company. The Secretary of the Company shall certify to the
Trustee from time to time the appointment to (and termination
of) office of each member of the Committee and the person who
is selected as Secretary of the Committee.
9.2 Committee's General Powers, Rights and Duties. Except as
otherwise specifically provided and in addition to the powers,
rights and duties specifically given to the Committee
elsewhere in the Plan and the Trust Agreement, the Committee
shall have the following powers, rights and duties:
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(a) To select a Secretary, if it believes it advisable,
who may but need not be a Committee member.
(b) To determine all questions arising under the Plan,
including the power to determine the rights or
eligibility of employees or Participants and any
other persons, and the amounts of their benefits
under the Plan, and to remedy ambiguities,
inconsistencies or omissions.
(c) To adopt such rules of procedure and regulations as
in its opinion may be necessary for the proper and
efficient administration of the Plan and as are
consistent with the Plan and Trust Agreement.
(d) To enforce the Plan in accordance with the terms of
the Plan and Trust Agreement and the rules and
regulations adopted by the Committee.
(e) To direct the Trustee as respects payments or
distributions from the Trust Fund in accordance with
the provisions of the Plan.
(f) To furnish the Employers with such information as may
be required by them for tax or other purposes in
connection with the Plan.
(g) To employ agents, attorneys, accountants or other
persons (who also may be employed by an Employer) and
to allocate or delegate to them such powers, rights
and duties as the Committee may consider necessary or
advisable to properly carry out administration of the
Plan, provided that such allocation or delegation and
the acceptance thereof by such agents, attorneys,
accountants or other persons, shall be in writing.
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9.3 Manner of Action. During a period in which two or more
Committee members are acting, the following provisions apply
where the context admits:
(a) A Committee member by writing may delegate any or all
of his rights, powers, duties and discretions to any
other member, with the consent of the latter.
(b) The Committee members may act by meeting or by
writing signed without meeting, and may sign any
document by signing one document or concurrent
documents.
(c) An action or a decision of a majority of the members
of the Committee as to a matter shall be as effective
as if taken or made by all members of the Committee.
(d) If, because of the number qualified to act, there is
an even division of opinion among the Committee
members as to a matter, a disinterested party
selected by the Committee shall decide the matter and
his decision shall control.
(e) Except as otherwise provided by law, no member of the
Committee shall be liable or responsible for an act
or omission of the other Committee members in which
the former has not concurred.
(f) The Certificate of the Secretary of the Committee or
of a majority of the Committee members that the
Committee has taken or authorized any action shall be
conclusive in favor of any person relying on the
Certificate.
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9.4 Interested Committee Members. If a member of the Committee
also is a Participant in the Plan, he may not decide or
determine any matter or question concerning distributions of
any kind to be made to him or the nature or mode of settlement
of his benefits unless such decision or determination could be
made by him under the Plan if he were not serving on the
Committee.
9.5 Resignation or Removal of Committee Members. A member of the
Committee may be removed by the Board of Directors of the
Company, the Executive Committee thereof, or by such other
person, persons or committee so authorized by the Board of
Directors of the Company at any time by written notice to him
and the other members of the Committee. A member of the
Committee may resign at any time by giving written notice to
the Company. Any vacancy in the membership of the Committee
may be filled in accordance with Subsection 9.1; provided,
however, that if a vacancy reduces the membership of the
Committee to less than three, such vacancy shall be filled as
soon as practicable. Until any such vacancy is filled, the
remaining members may exercise all of the powers, rights and
duties conferred on the Committee.
9.6 Committee Expenses. All costs, charges, and expenses
reasonably incurred by the Committee will be paid from the
Trust and charged against the Accounts of Participants unless
the same shall, at the election of the Company, have been paid
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previously by the Employers. No compensation will be paid to
a Committee member as such.
9.7 Information Required by Committee. Each person entitled to
benefits under the Plan shall furnish the Committee with such
documents, evidence, data or information as the Committee
considers necessary or desirable for the purpose of
administering the Plan. The Employers shall furnish the
Committee with such data and information as the Committee may
deem necessary or desirable in order to administer the Plan.
The records of an Employer as to an employee's or
Participant's period of employment, termination of employment
and the reason therefore, leave of absence, reemployment and
compensation will be conclusive on all persons unless
determined to the Committee's satisfaction to be incorrect.
9.8 Evidence. Evidence required of anyone under the Plan may be
by certificate, affidavit, document or other information which
the person acting on it considers pertinent and reliable, and
signed, made or presented by the proper party or parties.
9.9 Uniform Rules. The Committee shall administer the Plan on a
reasonable and nondiscriminatory basis and shall apply uniform
rules to all Participants similarly situated.
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9.10 Review of Benefit Determination. The Committee will provide
notice in writing to any Participant or Beneficiary whose
claim for benefits under the Plan is denied and the Committee
shall afford such Participant or Beneficiary a full and fair
review of its decision if so requested.
9.11 Committee's Decision Final. All matters of interpretation of
the terms hereof and all determinations concerning the
entitlement of any person to any benefit or other right
hereunder are hereby reserved exclusively to the Committee, to
be exercised in its sole and absolute discretion, except as
the same may from time to time be delegated by the Committee
to another person or group of persons in which instance such
delegee or delegees shall have all discretionary authority of
the Committee with respect thereto. All such interpretations
and determinations made shall be final and binding on all
persons. A misstatement or other mistake of fact shall be
corrected when it becomes known and the Committee shall make
such adjustment on account thereof as it in its sole and
absolute discretion considers equitable and practicable.
SECTION 10 - GENERAL PROVISIONS
10.1 Additional Employers. Any business unit, subsidiary or
affiliate of the Company that is not an Employer may adopt the
Plan and become an Employer and a party to the Trust Agreement
by:
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(a) Filing with the Company, the Committee and the
Trustee a certified copy of a resolution of its Board
of Directors adopting the Plan or the written
approval of the General Manager of the business unit;
and
(b) Filing with the Trustee and the Company a certified
copy of a resolution of the Committee consenting to
such action.
10.2 Waiver of Notice. Any notice required under the Plan may be
waived by the person entitled to notice.
10.3 Gender and Number. Where the context admits, words in the
masculine gender shall include the feminine and neuter
genders, the singular shall include the plural, and the plural
shall include the singular.
10.4 Controlling Law. Except to the extent superseded by laws of
the United States, the laws of California shall be controlling
in all matters relating to the Plan.
10.5 Employment Rights. The Plan does not constitute a contract of
employment and participation in the Plan will not give any
employee the right to be retained in the employ of the BW/IP
Companies nor any right or claim to any benefit under the
Plan, unless such right or claim has specifically accrued
under the terms of the Plan.
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10.6 Litigation by Participants. If a legal action begun against
the Trustee, one or more Employers, the Committee or any
member or members thereof, by or on behalf of any person
results adversely to that person, or if a legal action arises
because of conflicting claims to Participant's or other
person's benefits, the cost to the Employers, the Committee or
any member or members thereof of defending the action shall be
charged to the extent permitted by law to the sums, if any,
which were involved in the action or were payable to the
Participant or other person concerned.
10.7 Interests Not Transferable. Except as may be required by law,
the interests of Participants and their Beneficiaries under
the Plan are not subject to the claims of their creditors and
may not be voluntarily or involuntarily sold, transferred,
alienated or assigned. The preceding sentence shall also
apply to the creation, assignment, or recognition of a right
to any benefit payable with respect to a Participant pursuant
to a domestic relations order, unless such order (i) is
determined to be a "Qualified Domestic Relations Order" as
such term is defined in Section 414(p) of the Code or (ii) is
permitted to be treated as a "Qualified Domestic Relations
Order" by the Committee under the provisions of the Retirement
Equity Act of 1984. The Committee shall establish a written
procedure to determine the qualified status of domestic
relations orders and to administer distributions under such
qualified orders.
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10.8 Absence of Guaranty. Neither, the Committee, the Company nor
any Employer in any way guarantee the Trust Fund from loss or
depreciation. Neither the Committee, the Company nor any
Employer guarantees any payment to any person. The liability
of the Trustee or the Committee to make any payment under the
Plan will be limited to the assets held by the Trustee which
are available for that purpose.
10.9 Voting of Stock. Before each annual or special meeting of the
stockholders of BW/IP International, Inc., the Committee shall
cause to be sent to each Participant with an investment in the
Company Stock Fund a copy of any proxy solicitation material
received by the Trustee or the Committee, together with any
included forms to provide instructions to the Trustee on how
to vote the shares of Company Stock credited to such
Participant. Upon receipt of such instructions, the Trustee
shall vote the shares of stock as instructed. Instructions
received from individual Participants by the Trustee shall be
held in strictest confidence and shall not be divulged or
released to any person, including officers or employees of any
Employer. The Trustee shall have the right to vote both the
shares of Company Stock for which voting instructions have not
been received and unallocated shares and the Trustee shall
vote such shares in accord with the provisions of the Trust
Agreement.
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10.10 Tender Offer for Stock. Each Participant shall have the right
to instruct the Trustee in writing as to the manner in which
to respond to a tender or exchange offer for any or all shares
of Company Stock credited to such Participant's Account. The
Committee shall notify each Participant and utilize its best
efforts to timely distribute or cause to be distributed to him
such information as shall have been distributed to Company
stockholders in connection with any such tender or exchange
offer. Upon its receipt of such instructions, the Trustee
shall tender such shares of Company Stock to the extent so
instructed. If the Trustee shall not receive instructions
from a Participant regarding any such tender or exchange offer
for Company Stock, the Trustee shall have no discretion in
such matter and shall take no action with respect thereto
except to the extent required by law. Unallocated shares of
Company Stock shall be tendered or exchanged by the Trustee in
the same proportion as shares with respect to which
Participants have the right of direction are tendered or
exchanged.
10.11 Limitations on Company Stock Transactions. Notwithstanding
anything contained herein to the contrary, the Committee may
require that:
(a) any Participant who is an officer or director (an
"Insider") of the Company subject to Section 16
("Section 16") of the Securities and Exchange Act of
1934, as amended (the "Exchange Act"), who receives a
distribution of Company Stock under the Plan must
either (i) have made an irrevocable election to
receive the distribution at least six months prior to
the date of the
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distribution or (ii) cease receiving any further
contributions of, or make any further investment in,
Company Stock for a period of six months from the
date of such distribution; provided, however, that
extraordinary distributions of all of the Company
Stock in the Plan and distributions of Company Stock
in connection with such Participant's death,
retirement, disability or termination of employment
or in connection with a qualified domestic relations
order (as defined in Section 414(p) of the Code) are
not subject to these requirements;
(b) a Participant who is an Insider and ceases
participation in the Plan (within the meaning of Rule
16b-3 of the Exchange Act) may not again participate
in the Plan for at least six months after the date of
such cessation (in accordance with the requirements
of such Rule 16b-3);
(c) with respect to transfers between the Company Stock
Fund and any other Fund or subfund of assets credited
to the Account of a Participant who is an Insider,
the election to make such transfer must be made
either (i) during the period beginning on the third
business day following the date of release of
quarterly or annual summary statements of sales and
earnings of the Company and ending with the twelfth
business day following such date and the actual
transfer must occur as of a Valuation Date which is
at least six months after the last Valuation Date as
of which any assets credited to such Participant's
Account were transferred between such Funds or
subfunds, or
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(ii) pursuant to an irrevocable election made at
least six months prior to the date of the actual
transfer; and
(d) any Participant who is an Insider be limited, to
whatever extent the Committee deems appropriate, in
his ability to direct investments of such
Participant's Account in Company Stock, including
precluding such Participant from making any elections
under Section 5.2 or Section 6.2 to direct
investments into the Company Stock Fund.
10.12 Compensation and Expenses. A reasonable compensation to the Trustee
in such amount as may be agreed upon from time to time between the
Company and the Trustee, all transfer taxes on Company Stock and
(except as provided below in this Subsection and in Subsection 9.6)
all expenses incurred by the Trustee and the Committee in connection
with the Plan and the Trust Fund shall be paid from the assets of the
Trust and charged against the Accounts of Participants unless, at the
election of the Company, such amounts shall have been previously paid
by the Employers.
SECTION 11 - AMENDMENT AND TERMINATION
11.1 Amendment. While the Employers expect and intend to continue
the Plan, the Company reserves the right to amend the Plan
from time to time except as follows:
(a) The duties and liabilities of the Committee under the
Plan cannot be changed substantially without its
consent;
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(b) No amendment shall reduce the value of a
Participant's benefits to less than the amount he
would be entitled to receive if he had resigned from
the employ of the BW/IP Companies on the day of the
amendment; and
(c) Except as provided in Section 4, under no condition
shall any amendment result in the return or repayment
to any Employer of any part of the Trust Fund or the
income therefrom, or result in the distribution of
the Trust Fund for the benefit of anyone other than
employees and former employees of the BW/IP Companies
and any other persons entitled to benefits under the
Plan.
The Board of Directors of the Company, or the Executive
Committee or the Compensation and Benefits Committee thereof,
may amend or modify the Plan and Trust Agreement
(retroactively if required) in such manner as shall be
determined in the best interests of the Company or the
Participants of the Plan or in such manner as deemed necessary
to comply with the Employee Retirement Income Security Act of
1974, Public Law 93-406, to retain the qualification of the
Plan under Section 401(a) or Section 401(k) of the Code, or to
comply with any future legislation which amends, supplements
or supersedes the Employee Retirement Income Security Act of
1974 or Section 401(a) or Section 401(k) of the Code.
Notwithstanding the above, the Plan may not by amended more
than once every six months, other than to comport with changes
in the Internal Revenue Code, the Employee Retirement Income
Security Act or the rules thereunder, to the extent
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such limitation is required to qualify the Plan for exemption
under Rule 16b-3 under the Securities Exchange Act of 1934, as
amended.
11.2 Termination. The Plan will terminate as to all Employers on
any date specified by the Company. The Plan will terminate as
to an individual Employer on the first to occur of the
following:
(a) The date it is terminated by that Employer.
(b) The date that the Employer completely discontinues
its contributions (including Pre-Tax Contributions)
under the Plan.
(c) The dissolution, merger, consolidation or
reorganization of that Employer, or the sale by that
Employer of all or substantially all of its assets,
except that
(i) in any such event arrangements may be made,
with the consent of the Company, whereby the
Plan will be continued by any successor of
that Employer or any purchaser of all or
substantially all of its assets, in which
case the successor or purchaser will be
substituted for that Employer under the Plan,
and
(ii) if an Employer is merged, dissolved or in any other
way reorganized into, or consolidated with any other
Employer, the Plan as applied to the former Employer
will automatically continue in effect without a
termination thereof.
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11.3 Nonforfeitability on Termination. On termination or partial
termination of the Plan as respects any Employer, the rights
of all affected Participants to benefits accrued to that date
of such termination, to the extent funded as of such date,
shall be nonforfeitable.
11.4 Notice of Amendment or Termination. Participants will be
notified of an amendment or termination of the Plan within a
reasonable time.
11.5 Plan Merger, Consolidation, Etc. In the case of any merger or
consolidation with, or transfer of assets or liabilities to,
any other Plan, each Participant's benefit if the Plan
terminated immediately after such merger, consolidation or
transfer shall be equal to or greater than the benefit he
would have been entitled to receive if the Plan had terminated
before the merger, consolidation or transfer.
11.6 Discontinuance of a Portion of a Business Unit. In the event
a portion of the operation of any business unit of the BW/IP
Companies participating hereunder is sold or discontinued, the
Committee, in its sole discretion, may determine that the
rights of the affected employees of said business unit to
benefits accrued to the date of such sale or discontinuance
shall be nonforfeitable.
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11.7 Distribution of Assets. The Committee shall specify the date
of the termination of the Plan as to an individual Employer,
as described in Subsection 11.2, or the date of sale or
discontinuance of a portion of any operation of the BW/IP
Companies, as described in Subsection 11.6, as a "Special
Accounting Date." As soon as practicable after all
adjustments required as of that date have been made to the
Account balances of affected Participants, the Committee shall
direct the Trustee to distribute to each such affected
Participant the vested balance in his Account (unless he then
is employed by an Employer as to which the Plan has not
terminated) by any one or more of the methods described in
Subsection 8.5 as the Committee decides; provided that, in the
event such Special Accounting Date occurs prior to the
Participant's attainment of age 65, the Committee, upon
request by the Participant and in its sole discretion, may
defer the distribution, or commencement of the distribution,
of such interest to such future date as it may select but not
later than the 60th day following the end of the Plan Year
during which the Participant attains, or would have attained,
age 65. All appropriate accounting, transfer, and withdrawal
provisions of the Plan will continue to apply until the
Account balances of all such Participants have been
distributed under the Plan.
11.8 Separate Administration. The Company, from time to time, may
provide for the segregation of Trust assets allocable to the
employees of any one or more
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Employers, or any group of employees of any one or more
Employers, and may provide for the administration and
investment of such assets under a substantially similar Plan
(which Plan meets the requirements of Section 401(a) of the
Code, or any comparable section or sections of any future
legislation which amend, supplement or supersede such
section), and a trust forming a part thereof. No such
segregation or transfer under a substantially similar Plan
shall constitute a termination of this Plan or a permanent
discontinuance of Employer contributions hereunder with
respect to Employees affected thereby.
SECTION 12 - TOP HEAVY RESTRICTIONS
The following provisions shall become effective in any Plan
Year in which the Plan is determined to be a Top-Heavy Plan.
12.1 Determination of Top-Heavy. The Plan will be considered a
"Top-Heavy Plan" for the Plan Year if as of the last day of
the preceding Plan Year:
(a) the aggregate of the Account balances, as determined
in accordance with Section 416(g) of the Code
generally and Sections 416(g)(3), 416(g)(4)(A),
416(g)(4)(B) and 416(g)(4)(E) of the Code and
Treasury Regulation Section 1.416 T- 32 specifically,
of the Participants who are Key Employees (as defined
in Section 416(i) of the Code) exceeds 60% of the
aggregate of the Account balances of all Participants
(the "60% Test"); or
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(b) The Plan is part of a required aggregation group (as
defined under Section 416(g)(2)(A) of the Code and
which includes each plan of the BW/IP Companies in
which a Key Employee is a participant or was a
participant in any of the four preceding years and
each other plan of the BW/IP Companies which enables
any plan in which a Key Employee is a participant to
satisfy the requirements of Section 401(a)(4) or 410
of the Code) and the required aggregation group is
Top Heavy.
However, notwithstanding the results of the 60% Test, the Plan
shall not be considered a Top-Heavy Plan for any Plan Year in
which the Plan is part of a required or permissive aggregation
group (as defined under Section 416(g)(2)(A) of the Code and
which includes any plan of the BW/IP Companies which is not
part of a required aggregation group but which allow such
group to continue to satisfy the requirements of Sections
401(a)(4) and 410 of the Code) which is not Top Heavy.
12.2 Minimum Allocations. Notwithstanding the provisions of any
other provision hereof, for any Plan Year during which the
Plan is deemed a Top-Heavy Plan, the Employers shall
contribute an amount to the Plan, for each Participant who is
other than a Key Employee ("Non-Key Employee") and who is
employed on the last day of the Plan Year, not less than an
amount such that the total allocation of employer
contributions to such Participant's Account (including all
Matching Contributions for such Participant for such year to
the extent they are not used to satisfy the
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Actual Deferral Percentage tests of Subsection 6.10 and the
Actual Contribution Percentage tests of Subsection 6.12, and
excluding all Pre-Tax Contributions of the Participant) will
not be less than the lesser of (a) 3% of such Participant's
Compensation or (b) the percentage of such Compensation
contributed for the Key Employee (including Pre-Tax
Contributions and Matching Contributions) for whom the
percentage is largest after taking into consideration all
other defined contribution plans in the required aggregation
group; provided however that if such Participant is also a
participant in a defined benefit pension plan maintained by
the BW/IP Companies, the amount of such contribution to be
allocated to such Participant's Account shall be
(a) If such defined benefit pension plan provides the
applicable defined benefit minimum for such Top-Heavy
Plan pursuant to the Code and applicable regulations,
the Pre-Tax Contributions for each Participant,
notwithstanding any other provision of this
Subsection 12.2, or
(b) If such defined benefit pension plan does not provide
the defined benefit minimum for such a Top-Heavy Plan
pursuant to the Code and applicable regulations, 5%
of the Compensation paid or accrued to such Employee
during the Plan Year, or
(c) Such other amount as may be prescribed by regulation
under Section 416 of the Code.
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For purposes of the preceding sentence, all Eligible Employees
who must be considered participants to satisfy the coverage
requirements of Section 410(b) of the Code shall be considered
Participants.
IN WITNESS WHEREOF, the Company maintaining the Plan has
caused this restatement to be executed as of the 1st day of January, 1997.
Dated: June 27, 1997 BW/IP INTERNATIONAL, INC.
By /s/ John D. Hannesson
------------------------------
Title Vice President
---------------------------
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AMENDMENT NUMBER ONE
TO THE
BW/IP INTERNATIONAL, INC.
CAPITAL ACCUMULATION PLAN
(AS AMENDED AND RESTATED AS OF JANUARY 1, 1997)
The BW/IP International, Inc. Capital Accumulation Plan, as
amended and restated as of January 1, 1997 (the "Plan"), is hereby amended in
the following respects:
1. Limits on Participation.
Section 2.1 of the Plan is hereby amended by adding the
following to the end thereof:
In addition, the term "Eligible Employee" shall not, however,
include an employee who is employed as a temporary part-time
field service valve technician in connection with the
operations of the Company or its Affiliates in Williamsport,
Pennsylvania.
2. Effective Date.
This Amendment Number One shall be effective as of January 1,
1997.
3. Ratification and Re-Affirmation.
Except as specifically amended hereby, the Plan, as heretofore
amended to date shall remain in full force and effect in accordance with its
terms.
IN WITNESS WHEREOF, the Company has caused this Amendment to
be duly executed at Long Beach, California, as of the ____ day of
________________, 1997.
BW/IP International, Inc.
By _________________________________
Its ________________________________
<PAGE>
AMENDMENT NUMBER TWO
TO THE
BW/IP INTERNATIONAL, INC.
CAPITAL ACCUMULATION PLAN
(AS AMENDED AND RESTATED AS OF JANUARY 1, 1997)
- --------------------------------------------------------------------------------
The BW/IP International, Inc. Capital Accumulation Plan, as
amended and restated as of January 1, 1997 (the "Plan"), is hereby amended in
the following respects:
1. Company Stock.
The definition of Company Stock contained in Section 1.2(i) of
the Plan is hereby amended by deleting the same in its entirety and substituting
the following in lieu thereof:
(i) "Company Stock" - common stock of Flowserve
Corporation, the ultimate parent corporation of
Company.
2. Effective Date.
This Amendment Number Two shall contingent upon and effective
as of the date of the merger of BW/IP, Inc. and a wholly-owned subsidiary of
Durco International Inc. Upon such merger, Durco International Inc., shall then
be known as Flowserve Corporation.
3. Ratification and Re-Affirmation.
Except as specifically amended hereby, the Plan, as heretofore
amended to date shall remain in full force and effect in accordance with its
terms.
IN WITNESS WHEREOF, the Company has caused this Amendment to
be duly executed at Long Beach, California, as of the ____ day of
________________, 1997.
BW/IP International, Inc.
By _________________________________
Its ________________________________
EXHIBIT 5.1
[Letterhead of]
CRAVATH, SWAINE & MOORE
[New York Office]
July 22, 1997
Durco International Inc.
Dear Ladies & Gentlemen:
We have acted as counsel for Durco International Inc., a New York
corporation ("Durco"), in connection with the post-effective amendment (the
"Post-Effective Amendment") on Form S-8 to Durco's registration statement
on Form S-4 (Registration Number 333-29541) (the "Registration Statement")
filed by Durco with the Securities and Exchange Commission on June 19,
1997. The Post-Effective Amendment relates to the issuance of up to
2,779,756 shares of Durco common stock, par value $1.25 per share (the
"Shares"), which will be issuable pursuant to stock-based awards granted
under the BW/IP, Inc. 1996 Long-Term Incentive Plan, BW/IP, Inc. 1996
Directors Stock and Deferred Compensation Plan, BW/IP International, Inc.
1992 Long-Term Incentive Plan, BWIP Holding, Inc. Non-Employee Directors'
Stock Option Plan and BW/IP International, Inc. Capital Accumulation Plan
(collectively, the "Plans"), which have been assumed by Durco in connection
with the merger of Bruin Acquisition Corp. a Delaware Corporation and
wholly owned subsidiary of Durco ("Bruin"), with and into BW/IP, Inc., a
Delaware corporation ("BW/IP"), pursuant to the terms of the Agreement and
Plan of Merger dated as of May 6, 1997 (the "Merger Agreement") among
Durco, Bruin and BW/IP.
We have examined such corporate records, certificates and other
documents as we have considered necessary or appropriate for the purposes
of this opinion. In such examination, we have assumed the genuineness of
all signatures and the authenticity of all documents submitted to us as
originals and the conformity to originals of all documents submitted to us
as copies. We have relied, to the extent that we deemed such reliance
proper, upon certificates of public officials with respect to the
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accuracy of material factual matters contained therein which were not
independently established.
Based on such examination, we are of opinion that the Shares,
when issued and delivered in accordance with the terms of the options
issued under the Plans, as assumed by Durco pursuant to the Merger
Agreement, will be duly authorized, legally issued, fully paid and
nonassessable.
We hereby consent to the inclusion of this opinion as an exhibit
to the Post-Effective Amendment.
Very truly yours,
/s/ CRAVATH, SWAINE & MOORE
Durco International Inc.
3100 Research Boulevard
Dayton, Ohio 45420
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement No. 333-29541, Post-Effective Amendment No. 1 on Form S-8 to Form
S-4, of our report dated February 5, 1997 with respect to the consolidated
financial statements of Durco International Inc. incorporated by reference
in its Annual Report (Form 10-K) for the year ended December 31, 1996,
filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Dayton, Ohio
July 22, 1997
