As Filed with the Securities and Exchange Commission on April 22, 1998
Registration No. 333-
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
Form S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------------
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)
222 Las Colinas Boulevard, Suite 1500
Irving, Texas 75039
(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
----------------------
Ronald F. Shuff, Esq.
Vice President and General Counsel
Flowserve Corporation
222 Las Colinas Boulevard, Suite 1500
Irving, Texas 75039
(972) 443-6500
(Name, address and telephone number, including area code, of agent for service)
----------------------
CALCULATION OF REGISTRATION FEE
===============================================================================
Proposed Proposed
Title of each class maximum maximum Amount of
of securities Amount to offering price aggregate registration
to be registered be registered per security offering price fee
- -------------------------------------------------------------------------------
Common Stock, par
value $1.25
per share(1) 2,779,756(2) N/A $80,264,591 $23,678
===============================================================================
(1) 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.
(2) Includes 553,831; 34,840; 629,349; 61,736; and 1,500,000 shares
registered under the BW/IP, Inc. 1996 Long-Term Incentive Plan, the
BW/IP, Inc. 1996 Directors Stock and Deferred Compensation Plan, the
BW/IP International, Inc. 1992 Long-Term Incentive Plan, the BWIP
Holding, Inc. Non-Employee Directors' Stock Option Plan and the BW/IP
International, Inc. Capital Accumulation Plan, respectively.
(3) Estimated solely for purposes of calculating the registration fee
required by Section 6(b) of the Securities Act of 1933 (the
"Securities Act") and calculated pursuant to Rule 457(f) under the
Securities Act. Pursuant to Rule 457(h)(1) under the Securities Act,
the proposed maximum aggregate offering price of the Registrant's
Common Stock was calculated in accordance with Rule 457(c) and (h)
under the Securities Act as: (a) $31.0625, the average of the high and
low prices per share of the Registrant's Common Stock on April 16,
1998 as reported on The New York Stock Exchange, multiplied by (b)
1,534,840, the number of shares of the Registrant's Common Stock
issuable and not subject to outstanding but unexercised options under
the plans covered by this Registration Statement and (a) the exercise
prices multiplied (b) by a total of 1,244,916, the number of shares of
the Registrant's Common Stock subject to outstanding but unexercised
options under the plans covered by this Registration Statement.
===============================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Flowserve Corporation (the "Registrant") hereby incorporates by
reference into this Registration Statement on Form S-8 (the "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, 1997;
(b) 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; and
(c) 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 which deregisters all such securities then remaining unsold, shall be
deemed to be 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.
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
<PAGE>
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
EXHIBIT
NUMBER DESCRIPTION
------ -----------
4.1 Restated Certificate of Incorporation of the Registrant, as
amended (filed as Exhibit 3.1 to the Registration Statement on
Form S-4 as filed on June 19, 1997 (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 BW/IP 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 BW/IP Form S-8").*
4.7 BW/IP, Inc. 1996 Directors Stock and Deferred Compensation Plan
(filed as Appendix B to the 1996 BW/IP 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
BW/IP 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 BW/IP 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 Ronald F. Shuff.
23.1 Consent of Ronald F. Shuff (included in Exhibit
5.1).
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
23.2 Consent of Ernst & Young LLP
23.3 Consent of Price Waterhouse LLP
* Incorporated by reference to a document previously filed with the
SEC.
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 (the "Act");
(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 include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) 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 Exchange Act that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Act, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual
<PAGE>
report pursuant to section 15(d) of the Exchange Act) 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.
(5) Insofar as indemnification for liabilities arising under the
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the 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
12th day of December, 1997.
Flowserve Corporation
(Registrant)
By: /s/ RONALD F. SHUFF
--------------------------------
Ronald F. Shuff
Vice President, Secretary and General
Counsel
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on
December 12, 1997 in the capacities and on the date indicated.
/s/ BERNARD G. RETHORE
- ---------------------------------
Bernard G. Rethore Chairman of the Board December 12, 1997
/s/ WILLIAM H. JORDAN
- ---------------------------------
William H. Jordan Director December 12, 1997
/s/ HUGH K. COBLE
- ---------------------------------
Hugh K. Coble Director December 12, 1997
/s/ DIANE C. HARRIS
- ---------------------------------
Diane C. Harris Director December 12, 1997
/s/ GEORGE T. HAYMAKER
- ---------------------------------
George T. Haymaker Director December 12, 1997
/s/ MICHAEL F. JOHNSTON
- ---------------------------------
Michael F. Johnston Director December 12, 1997
/s/ JAMES O. ROLLANS
- ---------------------------------
James O. Rollans Director December 12, 1997
/s/ WILLIAM C. RUSNACK
- ---------------------------------
William C. Rusnack Director December 12, 1997
/s/ KEVIN E. SHEEHAN
- ---------------------------------
Kevin E. Sheehan Director December 12, 1997
/s/ R. ELTON WHITE
- ---------------------------------
R. Elton White Director December 12, 1997
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------ -----------
4.1 Restated Certificate of Incorporation of the Registrant, as
amended (filed as Exhibit 3.1 to the Registration Statement on
Form S-4 as filed on June 19, 1997 (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 BW/IP 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 BW/IP Form S-8").*
4.7 BW/IP, Inc. 1996 Directors Stock and Deferred Compensation Plan
(filed as Appendix B to the 1996 BW/IP 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
BW/IP 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 BW/IP 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 Ronald F. Shuff.
23.1 Consent of Ronald F. Shuff (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP 23.3 Consent of Price Waterhouse LLP
* Incorporated by reference to a document previously filed with the
SEC.
<PAGE>
EXHIBIT 4.11
BW/IP INTERNATIONAL, INC.
CAPITAL ACCUMULATION PLAN
(Restatement as of January 1, 1997)
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1 - INTRODUCTION 1
1.1 Purpose...........................................................1
1.2 General Definitions...............................................1
1.3 Effective Date....................................................5
1.4 Employers.........................................................6
1.5 Administration of the Plan........................................6
1.6 Funding of Benefits...............................................6
1.7 Plan Year and Accounting Dates....................................6
SECTION 2 - ELIGIBILITY AND PARTICIPATION 7
2.1 Eligibility.......................................................7
2.2 Participation.....................................................7
2.3 Period of Participation...........................................7
SECTION 3 - PARTICIPANT CONTRIBUTIONS 7
3.1 Participant Contributions.........................................7
3.2 Includible Compensation...........................................8
3.3 How Paid or Deducted..............................................9
3.4 Changes in Contributions..........................................9
3.5 Suspension and Resumption of Contributions........................9
3.6 Rollover Contributions............................................9
SECTION 4 - EMPLOYER CONTRIBUTIONS 10
4.1 Basic Matching Contributions......................................10
4.2 Discretionary Matching Contributions..............................10
4.3 Time and Manner of Matching Contributions.........................10
4.4 Allocation of Matching Contributions..............................10
4.5 Vesting...........................................................11
4.6 Investment of Company Contributions...............................11
4.7 Contributions.....................................................11
4.8 Interest of Employers in Plan.....................................11
SECTION 5 - INVESTMENT ELECTIONS 11
5.1 Investment Funds..................................................11
5.2 Investment of Participant Contributions...........................12
SECTION 6 - ACCOUNTING AND PLAN INVESTMENTS 12
6.1 Participant's Account.............................................12
6.2 Transfer of Investments...........................................12
6.3 Crediting and Investing of Contributions, Income and Transfers....13
6.4 Dividends, Splits, Etc............................................13
6.5 Plan Investments..................................................13
6.6 Charging of Withdrawal and Distribution...........................16
<PAGE>
Page
6.7 Annual Statement of Account.......................................16
6.8 Benefit Limitations...............................................16
6.9 Treatment of Excess Additions.....................................18
6.10 Limitations on Pre-Tax Contributions..............................18
6.11 Remedial Measures for Excess Pre-Tax Contributions................20
6.12 Limitation on After-Tax Contributions and Matching
Contributions.....................................................22
6.13 Remedial Measures for Excess Aggregate Contributions..............24
6.14 Limitation on Multiple Use of Alternative Discrimination Tests....25
6.15 Forfeiture of Matching Contributions Upon Corrective
Distribution of Basic Contributions...............................25
SECTION 6A - LOANS TO PARTICIPANTS 26
6A.1 Committee Discretion to Make Loans................................26
6A.2 Loans to be Made on Nondiscriminatory Basis.......................26
6A.3 Limitations of Loans to Participants..............................26
6A.4 Adequacy of Security..............................................26
6A.5 Rate of Interest and Loan Fees....................................26
6A.6 Term of Loan......................................................26
6A.7 Remedies in the Event of Default..................................26
6A.8 Definition of Loan................................................26
6A.9 Loan Application Procedures.......................................27
6A.10 Loan Repayments...................................................27
SECTION 7 - WITHDRAWALS DURING EMPLOYMENT 27
7.1 Withdrawals.......................................................27
7.2 Hardship Withdrawal...............................................28
7.3 Withdrawal Limitations............................................29
7.4 Distribution of Withdrawals.......................................29
SECTION 8 - DISTRIBUTION OF BENEFITS 30
8.1 Termination of Employment ...............................30
8.2 Vesting...........................................................30
8.3 Forfeitures.......................................................30
8.4 Restoration of Forfeitures........................................31
8.5 Manner of Distribution............................................31
8.5A Deferral of Lump Sum Distribution by Beneficiary.................32
8.6 [Intentionally left blank.].......................................32
8.7 Election for Stock................................................32
8.8 Fractional Interests in Stock and Minimum Shares
Distributable.....................................................33
8.9 Designation of Beneficiaries......................................33
8.10 Missing Participants or Beneficiaries.............................33
8.11 Facility of Payment...............................................34
8.12 Commencement of Benefits..........................................34
8.13 Direct Rollovers..................................................34
SECTION 9 - THE COMMITTEE 35
9.1 Membership........................................................35
9.2 Committee's General Powers, Rights and Duties.....................35
9.3 Manner of Action..................................................36
<PAGE>
Page
9.4 Interested Committee Members......................................36
9.5 Resignation or Removal of Committee Members.......................36
9.6 Committee Expenses................................................37
9.7 Information Required by Committee.................................37
9.8 Evidence..........................................................37
9.9 Uniform Rules.....................................................37
9.10 Review of Benefit Determination...................................37
9.11 Committee's Decision Final........................................37
SECTION 10 - GENERAL PROVISIONS 38
10.1 Additional Employers..............................................38
10.2 Waiver of Notice..................................................38
10.3 Gender and Number.................................................38
10.4 Controlling Law...................................................38
10.5 Employment Rights.................................................38
10.6 Litigation by Participants........................................38
10.7 Interests Not Transferable........................................38
10.8 Absence of Guaranty...............................................38
10.9 Voting of Stock...................................................39
10.10 Tender Offer for Stock............................................39
10.11 Limitations on Company Stock Transactions.........................39
10.12 Compensation and Expenses........................................40
SECTION 11 - AMENDMENT AND TERMINATION 40
11.1 Amendment.........................................................40
11.2 Termination.......................................................41
11.3 Nonforfeitability on Termination..................................41
11.4 Notice of Amendment or Termination................................41
11.5 Plan Merger, Consolidation, Etc...................................41
11.6 Discontinuance of a Portion of a Business Unit....................42
11.7 Distribution of Assets............................................42
11.8 Separate Administration...........................................42
SECTION 12 - TOP HEAVY RESTRICTIONS 42
12.1 Determination of Top-Heavy. . . . . . . . . . . . . . . . . . . . 42
12.2 Minimum Allocations. . . . . . . . . . . . . . . . . . . . . . . .43
<PAGE>
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, 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.
<PAGE>
(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:
(1) all wages, salaries, bonuses and commissions;
(2) taxable fringe benefits;
(3) reimbursements or other expense allowances under a
nonaccountable plan; and
(4) 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:
(5) 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;
(6) 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;
(7) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option, and
(8) 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
<PAGE>
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:
(1) 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;
(2) receives compensation in excess of $75,000, as adjusted
by the Secretary of the Treasury, during the Look-Back
Year;
(3) 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
(4) 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;
(5) 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:
(6) "Determination Year" shall mean the Plan Year with
respect to which the determination is being made.
(7) "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.
<PAGE>
(8) "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.
(9) The number of officers is limited to 50 (or, if lesser,
the greater of 3 Employees or 10 percent of Employees).
(10) 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.
(11) "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.
(12) 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.
(13) 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
<PAGE>
work force of the Employer and 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 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
<PAGE>
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.
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 participate 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 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.
<PAGE>
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 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.
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:
<PAGE>
(1) 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
(2) 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:
(1) 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 Supplemental Contributions" under the Plan in
equal amount on his behalf; and
(2) 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:
(1) "Basic Contributions" of a Participant means both his
Pre-Tax and After-Tax Basic Contributions.
(2) "Supplemental Contributions" of a Participant means
both his PreTax and After-Tax Supplemental
Contributions.
(3) "Pre-Tax Contributions" of a Participant means both his
Pre-Tax Basic and Supplemental Contributions.
(4) "After-Tax Contributions" of a Participant means both
his AfterTax Basic and Supplemental Contributions.
(5) "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 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
<PAGE>
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 this 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.
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 suspending 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 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.
<PAGE>
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.
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 which 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 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 Employees 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 of 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.
<PAGE>
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 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 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.
The amount of the Employer's Contribution returnable under this
Section shall not be increased by any earnings attributable to
the Contribution, but shall not 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
<PAGE>
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
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 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
<PAGE>
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 amounts allocated to any of the
Funds or subfunds will be invested in these 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 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 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
<PAGE>
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 of 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.
(b) Stable Value Fund and Executive Life Fund.
(1) 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 subfund 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 of 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.
(2) 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 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:
<PAGE>
(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 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 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
<PAGE>
made by or on behalf of 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 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 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
<PAGE>
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(1)(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 post-retirement medical or life
insurance benefits under a welfare benefit fund, as defined
in Section 415(1) 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 TopHeavy Plan) shall
not exceed 1.0.
(1) "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
average Compensation for the 3 consecutive Years of Service
with the BW/IP Companies in which his aggregate Compensation
was the highest.
(2) "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
<PAGE>
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.
(3) 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 contribution or defined benefits
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.
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
<PAGE>
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:
(1) 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
(2) 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 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.
<PAGE>
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 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 PreTax 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.
(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
provisions 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.
<PAGE>
The term "Excess Deferral" shall mean any amount which
meets the following requirements:
(1) 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;
(2) 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 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.
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
<PAGE>
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 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 Employee 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.
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
<PAGE>
determine whether the Average Contribution Percentage for Highly
Compensated Employees satisfies one of the following tests:
(1) 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
(2) 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 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
theretofore be treated as one Highly Compensated Employee
for purposes of this Subsection 6.12, shall be determined by
combining the 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 terms "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, PreTax 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
<PAGE>
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 the terms of the Plan to make
AfterTax 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.
(1) Determination of Excess Aggregate Contributions. For each
Highly Compensated Employee, the term "Excess Aggregate
Contributions" means (after the recharacterizations 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
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.
(2) 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
determine the Contribution Percentage, bears to (B) the
total Company Contributions of all
<PAGE>
such family members. However, only those Excess Aggregate
Contributions allocated to Highly Compensated Employees
shall be distributed under this Subsection 6.13.
(3) 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 Amounts 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 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)(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.
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.
<PAGE>
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 creditworthiness. 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 Participants's vested
benefit, the same percentage of Participant's vested balance in his
Accounts may be loaned to 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 of $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 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 15 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.
<PAGE>
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 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.
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 591/2, 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.
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
<PAGE>
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 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 12 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 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.
<PAGE>
(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 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
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
<PAGE>
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).
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 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-
<PAGE>
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."
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/TP 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
(b) by payment in a series of substantially equal annual installments
up to a maximum often installments, but not exceeding:
(1) the Participant's life expectancy, or
(2) 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.
<PAGE>
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 a 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 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
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 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 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
<PAGE>
than a Hardship Withdrawal, or termination of employment, may elect to
receive cash in 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
allocated 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 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 Participants.
(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:
(1) Such Beneficiary is the Participant's spouse;
(2) The Participant has no spouse; or
(3) 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 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
<PAGE>
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.
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.
(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
<PAGE>
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.
(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:
(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.
<PAGE>
(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.
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
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.
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.
<PAGE>
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 the 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 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.
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
<PAGE>
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:
(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.
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
<PAGE>
procedure to determine the qualified status of domestic relations
orders and to administer distributions under such qualified orders.
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.
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
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
<PAGE>
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 (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;
(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
<PAGE>
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 be 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 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
(1) 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
(2) 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.
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.
<PAGE>
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.
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 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 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),
<PAGE>
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
(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 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 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.
<PAGE>
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
<PAGE>
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 be 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
<PAGE>
EXHIBIT 5.1
[FLOWSERVE LETTERHEAD]
April 20, 1998
Flowserve Corporation
222 W. Las Colinas Boulevard
Suite 1500
Irving, Texas 75039
Dear Sirs:
With reference to the registration statement on Form S-8 which Flowserve
Corporation (the "Company") proposes to file with the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933,
registering 2,779,756 shares of common stock, par value $1.25 per share, of
the Company (the "Shares") which may be offered and sold by the Company
under the BW/IP, Inc. 1996 Long-Term Incentive Plan, the BW/IP, Inc. 1996
Directors Stock and Deferred Compensation Plan, the BW/IP International,
Inc. 1992 Long-Term Incentive Plan, the BWIP Holding, Inc. Non-Employee
Directors' Stock Option Plan and the BW/IP International, Inc. Capital
Accumulation Plan (collectively, the "Plans"), I am of the opinion that:
1. the Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York, and
2. all proper corporate proceedings have been taken so that any Shares
to be offered and sold which are of original issuance, upon sale and
payment therefor in accordance with the Plans and the resolutions of the
Board of Directors relating to the offering and sale of the Shares
thereunder, will be legally issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion with the SEC in connection
with the registration statement referred to above.
Very truly yours,
/s/ Ronald F. Shuff
-------------------------
Ronald F. Shuff
Vice President, Secretary &
General Counsel
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Flowserve Corporation's
Registration Statement on Form S-8 pertaining to the BW/IP, Inc. 1996
Long-Term Incentive Plan, the BW/IP, Inc. 1996 Directors Stock and Deferred
Compensation Plan, the BW/IP International, Inc. 1992 Long-Term Incentive
Plan, the BWIP Holding, Inc. Non-Employee Directors' Stock Option Plan and
the BW/IP International, Inc., Capital Accumulation Plan of our reports
dated February 20, 1998, with respect to the consolidated financial
statements of Flowserve Corporation incorporated by reference in its Annual
Report (Form 10-K) for the year ended December 31, 1997 and the related
financial statement schedule included therein, filed with the Securities
and Exchange Commission.
/s/ Ernst & Young LLP
Dallas, Texas
April 17, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report (relating to BW/IP, Inc.
and its subsidiaries) dated January 28, 1997 appearing on page F-2 of
Flowserve Corporation's Annual Report on Form 10-K for the year ended
December 31, 1997.
PRICE WATERHOUSE LLP
Los Angeles, California
April 16, 1998
