EXHIBIT 10.38













                              NL INDUSTRIES, INC.

                            RETIREMENT SAVINGS PLAN

                As Amended and Restated effective April 1, 1996




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                              NL INDUSTRIES, INC.
                            RETIREMENT SAVINGS PLAN


                               TABLE OF CONTENTS


Article

PREAMBLE                                                             Paragraph

ARTICLE I - Purpose

ARTICLE II - Definitions

      Affiliated Company...................................................2.1
      Authorized Leave of Absence..........................................2.2
      Basic Contributions..................................................2.3
      Basic After-Tax Contributions........................................2.4
      Basic Pre-Tax Contributions..........................................2.5
      Beneficiary..........................................................2.6
      Board................................................................2.7
      Break in Service.....................................................2.8
      Code.................................................................2.9
      Committee...........................................................2.10
      Common Stock........................................................2.11
      Company.............................................................2.12
      Compensation........................................................2.13
      Contributing Participant............................................2.14
      Disability..........................................................2.15
      Employee............................................................2.16
      Employer............................................................2.17
      Employer Contributions..............................................2.18
      ERISA...............................................................2.19
      Highly Compensated Employee.........................................2.20
      Hour of Service.....................................................2.21
      Investment Funds....................................................2.22
      Long-Term Disability Plan...........................................2.23
      Month of Service....................................................2.24
      Participant.........................................................2.25
      Plan................................................................2.26
      Plan Year...........................................................2.27
      Predecessor Plan....................................................2.28

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      Prior Plan..........................................................2.29
      Profitability Level.................................................2.30
      Qualified Election..................................................2.31
      Regulations.........................................................2.32
      Retirement..........................................................2.33
      Spouse..............................................................2.34
      Supplemental Contributions..........................................2.35
      Supplemental After-Tax Contributions................................2.36
      Supplemental Pre-Tax Contributions..................................2.37
      Trust...............................................................2.38
      Trustee.............................................................2.39
      Trust Fund..........................................................2.40
      Valuation Date......................................................2.41
      Vesting Service.....................................................2.42

ARTICLE III - Eligibility for Participation

      Eligibility..........................................................3.1
      Method of Becoming a Participant.....................................3.2
      Method of Becoming a Contributing Participant........................3.3
      Termination of Participation in the Plan.............................3.4
      Intra-Company Transfers..............................................3.5

ARTICLE IV - Participant Contributions

      Amount of Basic After-Tax Contributions..............................4.1
      Amount of Basic Pre-Tax Contributions................................4.2
      Supplemental Contributions...........................................4.3
      Separate Accounting..................................................4.4
      Special Provisions Related to Basic and Supplemental Pre-Tax
            Contributions..................................................4.5
      Change in Amount of Contributions....................................4.6
      Suspension of Basic or Supplemental Contributions....................4.7
      Remittance of Contributions to Trustee...............................4.8
      Cessation of Contributions Made by a Contributing
            Participant....................................................4.9
      Participant Rollover Contributions, Direct Rollovers, and
            Trust to Trust Transfers......................................4.10

ARTICLE V - Employer Contributions

      Employer Contributions...............................................5.1
      Average Contributions Test...........................................5.2

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      Remittance of Employer Contributions to Trustee......................5.3
      Allocation of Employer Contributions and Forfeitures.................5.4
      Investment and Administrative Expenses...............................5.5
      Multiple Use.........................................................5.6
      Qualified Non-Elective Contributions.................................5.7

ARTICLE VI - Investment of Contributions

      Investment Funds.....................................................6.1
      Temporary Investments................................................6.2
      Change in Investment Election for Future Contributions...............6.3
      Inter-Fund Transfers.................................................6.4
      Suspension of Investments and Investment Transfers into the
            NL Stock Fund or the Dresser/Tremont Stock Fund................6.5
      Proxy Material for Those Participants For Whom an Investment Has
            Been Made in the NL Stock Fund or the Dresser Tremont
            Stock Fund.....................................................6.6
      Exercise of Tender Rights............................................6.7
      Best Interest of Participants........................................6.8
      Assumption of Investment Risk by Participants........................6.9
      Section 404(c) of ERISA.............................................6.10

ARTICLE VII - Trust Fund Accounts and Allocation of Earnings

      Participant's Account................................................7.1
      Valuation of Investment Funds........................................7.2
      Valuation of Accounts................................................7.3
      Statement of Participant's Account...................................7.4

ARTICLE VIII - Vesting

      Vesting With Respect to Predecessor Plan Contributions, Participant
            Contributions and Pre-Tax Contributions Made After
            December 31, 1973..............................................8.1
      Vesting With Respect to Employer Contributions.......................8.2
      Years of Vesting Service.............................................8.3
      Forfeitures Upon Distribution Prior to Full Vesting and
            Repayment......................................................8.4
      Full Vesting.........................................................8.5
      Other Provisions Affecting Vesting...................................8.6

ARTICLE IX - Distribution of Benefits Other Than Withdrawals


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      Normal Form of Payment...............................................9.1
      Alternative Forms of Payment.........................................9.2
      Notice of Right to Elect Not to Receive Benefits in Form of 
            Qualified Joint and Survivor Annuity...........................9.3
      Distributions Upon Death.............................................9.4
      Commencement of Certain Distributions................................9.5
      Special Distributions................................................9.6
      Minimum Distribution Requirements....................................9.7

ARTICLE X - Withdrawals

      Withdrawals of Contributions........................................10.1
      Suspensions.........................................................10.2
      Withdrawal of Basic and Supplemental Pre-Tax
            Contributions.................................................10.3
      Restrictions on Withdrawal of Employer Contributions................10.4
      Special Rules Affecting Withdrawals.................................10.5
      Hardship Withdrawals................................................10.6

ARTICLE XI - Named Fiduciary and Administration

      Pension and Employee Benefits Committee.............................11.1
      Authority of the Committee..........................................11.2
      Delegation of Authority.............................................11.3
      Administrator.......................................................11.4
      Appeals Procedure...................................................11.5
      Reliance on Reports and Certificates................................11.6
      Member's Own Participation..........................................11.7
      Exemption from Bond.................................................11.8
      Persons Serving in Dual Fiduciary Roles.............................11.9
      Indemnification....................................................11.10
      Liability of Fiduciaries...........................................11.11
      Liability of Named Fiduciaries.....................................11.12

ARTICLE XII - The Trust Fund

      The Trust...........................................................12.1
      Irrevocability of Company Contributions.............................12.2
      Exclusive Benefit...................................................12.3

ARTICLE XIII - Amendment and Termination of Plan

      Right to Amend or Terminate.........................................13.1

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      Mandatory Amendments................................................13.2
      Distribution of Accounts upon Plan Termination......................13.3

ARTICLE XIV - Limitations on Contributions

      Priority of this Article............................................14.1
      Limitation to Annual Additions......................................14.2
      Adjustments of Annual Additions.....................................14.3
      Participant Covered Under Defined Benefit Plan......................14.4

ARTICLE XV - Top-Heavy Provisions

      Applicability of Top-Heavy Provisions...............................15.1
      Definitions.........................................................15.2
      Determination of Top-Heavy Status...................................15.3
      Minimum Vesting.....................................................15.4
      Minimum Contribution................................................15.5
      Maximum Benefit and Contribution Limitations........................15.6
      Coordination of Plans...............................................15.7

ARTICLE XVI - General Provisions

      Employment Relationships............................................16.1
      Benefits Provided Solely From Trust.................................16.2
      Non-Alienation of Benefits..........................................16.3
      Merger, Consolidation or Transfer of Assets or Liabilities..........16.4
      Payments to Minors and Incompetents.................................16.5
      Employee's Records..................................................16.6
      Missing Persons.....................................................16.7
      Severability of Provisions..........................................16.8
      Receipt and Release.................................................16.9
      Fiduciary Capacities...............................................16.10
      Titles and Headings................................................16.11
      Gender and Number..................................................16.12
      Governing Law......................................................16.13
      Counterparts.......................................................16.14


                                      v

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                                   PREAMBLE


      1.  Formation  of the Plan.  The Plan is a  successor  plan to the  former
"Savings Plan for Employees of NL Industries, Inc.", which is referred to herein
as the  "Predecessor  Plan." In connection with the Plan of  Restructuring of NL
Industries,  Inc. which was approved by  shareholders  on December 22, 1988, the
Predecessor   Plan  was  renamed  the  Savings  Plan  for  Employees  of  Baroid
Corporation  and  adopted  and  assumed  by  Baroid  Corporation.   Pending  the
implementation  of the Plan,  eligible  employees  of NL  Industries,  Inc.  and
subsidiaries  formerly eligible to participate in the Predecessor Plan continued
to participate in the  Predecessor  Plan. The Plan was established as of January
1, 1989 to permit eligible  employees of NL Industries,  Inc. and  participating
subsidiaries to continue their  participation  in a tax-qualified  savings plan.
The Plan includes  amendments which reflect the  restructuring and other changes
which were communicated to eligible employees in November of 1988.  Accordingly,
the Plan governs the rights and obligations of the Company and Plan participants
for  all  periods  on  and  after  January  1,  1989,  except  with  respect  to
participants' accounts held in Investment Funds of the Predecessor Plan, pending
their transfer to the Plan. All  participants  who were  participants  under the
Predecessor Plan automatically  become  participants under the new Plan. Account
balances  under the  Predecessor  Plan were  transferred  to the Plan as soon as
practicable after the implementation of the Plan.

      2. Change of Investment Structure.  Effective as of July 1, 1990, the Plan
was amended and restated to restructure the investments  available,  and to make
related and other amendments.

      3. Baroid Stock Fund. Baroid Corporation restructured in 1990, as a result
of which holders of the Common Stock of Baroid Corporation under the Plan became
holders of shares of both Baroid  Corporation  and Tremont  Corporation.  Baroid
Corporation  was later  acquired  by or merged  with  Dresser  Industries,  Inc.
Therefore,  the Baroid Stock Fund was renamed the Dresser/Tremont  Stock Fund to
reflect the names of the companies whose shares are held in that fund.

      4. IRS  Required  changes.  As part of their  review  of the  amended  and
restated Plan in 1991, the Internal  Revenue  Service  required  several wording
changes that had no operational  effect, but also required  substantial  changes
the forfeitures provisions of Section 8.4.

      5. TRA 86 Update.  To meet the  requirements of the Tax Reform Act of 1986
and subsequent legislation and regulations, the Plan was amended and restated in
December, 1994.

      6. Additional Defined Contribution  Feature.  Effective April 1, 1996, the
defined  benefit  plan was frozen and the Savings Plan amended to provide for an
additional Company Contribution,  to be called a "pension feature contribution";
this  contribution is a profit sharing  contribution  not subject to the minimum
funding  standards of Section 412 of the  Internal  Revenue  Code.  The Plan was
renamed the NL Industries,  Inc. Retirement Savings Plan to reflect inclusion of
the new benefit

                                      vi

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formula.  Other minor changes,  including  deleting certain obsolete portions of
the historical plan document, are made at the same time.

                                     vii

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                                   ARTICLE I

                                    PURPOSE

      1.1 The purpose of the NL Industries,  Inc., Retirement Savings Plan is to
provide  eligible  employees  with a  convenient  way to save on a  regular  and
long-term  basis by providing such  employees with a beneficial  interest in the
profits of the  business,  all as set forth  herein  and in the Trust  Agreement
adopted in connection with the Plan. The Plan and its related Trust are intended
to qualify as a plan and trust which meet the  requirements of Sections  401(a),
401(k) and 501(a), respectively, of the Internal Revenue Code of 1986, as now in
effect  or  hereafter  amended,  and  all  other  applicable  provisions  of law
including,  without  limitation,  the Employee Retirement Income Security Act of
1974, as now in effect or hereafter amended.



                                     I-1

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                                  ARTICLE II

                                  DEFINITIONS

      As  used in the  Plan,  the  following  terms  shall  have  the  following
meanings:

      2.1  "Affiliated  Company" means any business entity which (i) is included
within a  controlled  group of  corporations  within  which the Company  also is
included,  (ii) is under common  control with the Company,  or (iii) is included
within an  affiliated  service  group within which the Company is also a member,
all as determined under Sections 414(b), (c) and (m) of the Code,  respectively;
provided,  however,  that for purposes of  determining  the annual  contribution
limitations  set  forth in  Article  XIV,  such  determination  shall be made in
accordance with Section 415(h) of the Code.

      2.2   "Authorized Leave of Absence" means any absence from employment:

            (a) Authorized by the Committee for education  purposes or by reason
      of family  obligations,  sickness,  short  term  disability,  accident  or
      emergency  (including  any  leave of  absence  to which  the  Employee  is
      eligible under the Family and Medical Leave Act of 1993); or

            (b) On account of a period of  military  service  required by law or
      under leave  granted by the  Committee,  provided the Employee  returns to
      employment with the Company or an Affiliated  Company within 90 days after
      his separation  from active duty or within such longer period during which
      his right to reemployment is legally protected.

      In granting  leaves of absence,  the Committee shall accord like treatment
to all Participants in similar circumstances.

      2.3  "Basic   Contributions"   means  the  aggregate  of  a   Contributing
Participant's Basic After-Tax  Contributions and Basic Pre-Tax  Contributions as
defined in Paragraphs 2.4 and 2.5, respectively.

      2.4 "Basic  After-Tax  Contributions"  means  that part of a  Contributing
Participant's  Compensation  which  he  contributes  to  the  Trust  Fund  on an
after-tax basis, as provided in Paragraph 4.1 hereof.

      2.5  "Basic  Pre-Tax  Contributions"  means  that  part of a  Contributing
Participant's  Compensation  which  he  elects  to  reduce  in  accordance  with
Paragraph 4.2 hereof and have contributed to the Trust Fund on his behalf by his
Employer on a pre-tax basis, in compliance with the provisions of Section 401(k)
of the Code.


                                     II-1

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      2.6  "Beneficiary"  means the  Spouse  of the  Participant  if  surviving;
provided,  however,  that if there is no  surviving  Spouse or if the  surviving
Spouse cannot be located, the person or persons designated by the Participant in
the form of a Qualified Election,  as such term is defined in Paragraph 2.31, to
receive any death benefit  payable  hereunder.  A Participant may also designate
any person or persons as his Beneficiary in the form of a written designation to
receive any death benefit payable  hereunder,  provided he obtains the notarized
written  consent  of  his  Spouse.  A  Participant  may  revoke  or  change  his
Beneficiary  designation only with the consent of the Spouse by filing a revised
designation  with the  Committee.  The last  such  designation  received  by the
Committee shall be controlling;  provided, however, that no designation,  change
or revocation thereof, shall be effective unless received by the Committee prior
to the  Participant's  death, and in no event shall it be effective as of a date
prior to such receipt. In the absence of an effective designation or if no named
beneficiary  shall  survive  the  Participant,  the  Beneficiary  shall  be  the
Participant's  Spouse, or, if there is no Spouse, then the following persons (if
then living) in the following order of priority:  (i) children, in equal shares,
(ii) parents, in equal shares, (iii) the persons designated as beneficiary under
the  group  life  insurance  plan of the  Employer,  and (iv) the  Participant's
estate.  If the  Committee  is in doubt as to the right of any person to receive
such amount, the Committee may direct the Trustee to retain such amount, without
liability for any interest thereon, until the rights thereto are determined,  or
the  Committee  may direct  the  Trustee  to pay such  amount  into any court of
appropriate  jurisdiction and such payment shall be a complete  discharge of the
liability of the Plan and the Trust therefor.

      2.7 "Board"  means the Board of  Directors  of the Company as  constituted
from time to time, or the duly appointed delegate of such Board of Directors.

      2.8 "Break in Service"  means any Plan Year during which an Employee fails
to  receive  credit  for at least  three (3)  Months of  Service or 501 Hours of
Service,  except that a Break in Service shall not be deemed to occur on account
of any Authorized Leave of Absence. Solely for purposes of determining whether a
Break in Service has  occurred in any Plan Year,  an Employee who is absent from
work on account of a "maternity or paternity absence" shall be credited with the
number of Hours of Service which would have been completed but for such absence,
or, if the Committee is unable to determine  such Hours of Service,  eight Hours
of Service for each day of such absence;  provided,  however,  that no more than
501 hours  shall be  credited  hereunder  on  account of any such  absence,  and
further  provided  that the  Employee  furnishes  to the  Committee  such timely
information  as may be required by the  Committee  to properly  administer  this
provision.  Hours of Service for a  "maternity  or paternity  absence"  shall be
credited  entirely in the Plan Year in which the absence  begins if necessary to
prevent  the  occurrence  of a Break in Service  in such year,  or, in any other
case, in the immediately following Plan Year. A "maternity or paternity absence"
shall mean any  absence  from work by reason of the  Employee's  pregnancy,  the
birth of the  Employee's  child,  the  placement of a child with the Employee in
connection  with the adoption of such child by the Employee,  or for purposes of
caring  for any such child for the period  immediately  following  such birth or
placement.


                                     II-2

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      2.9 "Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended,  and regulations and other authority issued  thereunder.  All
citations to sections of the Code are to such  sections as they may from time to
time be amended or renumbered.

      2.10 "Committee" means the Pension and Employee  Benefits  Committee of NL
Industries, Inc. as established in accordance with Article XI hereof.

      2.11 "Common Stock" means the presently authorized common stock, par value
$.125 per share, of NL Industries,  Inc., a New Jersey corporation,  as adjusted
for  stock  splits,  stock  dividends,  reclassifications  and  similar  changes
affecting  such  shares,  or other  common  stock with voting power and dividend
rights  no less  favorable  than the  voting  power and  dividend  rights of the
presently authorized common stock of NL Industries, Inc.

      Solely  with  respect  to  common  stock of Baroid  Corporation  which was
allocated  to the  accounts  of  Employees  of  the  Company  or its  Affiliated
Companies  as a result  of the  restructuring  of NL  Industries,  Inc.  into NL
Industries, Inc. and Baroid Corporation and which Participants to whose accounts
such stock was  allocated  elected to retain in lieu of exchanging it for common
stock of the Company,  Common Stock also means the presently  authorized  common
stock, par value $.10 per share, of Baroid Corporation,  a Delaware corporation,
or any successor  corporation,  as adjusted for stock splits,  stock  dividends,
reclassifications  and similar  changes  affecting such shares,  or other common
stock with voting power and dividend  rights no less  favorable  than the voting
power and dividend  rights of the  presently  authorized  common stock of Baroid
Corporation.

      Solely  with  respect  to common  stock of Tremont  Corporation  which was
allocated  to the  accounts  of  Employees  of  the  Company  or its  Affiliated
Companies as a result of the  restructuring  of Baroid  Corporation into Tremont
Corporation  and Baroid  Corporation,  Common  Stock  also  means the  presently
authorized  common stock,  par value $.10 per share, of Tremont  Corporation,  a
Delaware  corporation,  or of any successor  corporation,  as adjusted for stock
splits,  stock dividends,  reclassifications  and similar changes affecting such
shares,  or other common  stock with voting  power and  dividend  rights no less
favorable than the voting power and dividend rights of the presently  authorized
common stock of Tremont Corporation.

      2.12  "Company"  means  NL  Industries,  Inc.  and  any  person,  firm  or
corporation  which  hereafter  may succeed to the  interests  of said company by
merger, consolidation or otherwise and which, by appropriate action, shall adopt
the Plan.

      2.13  "Compensation"  means the first  $150,000  (as  adjusted,  as may be
determined by the  Commissioner  of Internal  Revenue,  at such time and in such
manner  as  is  prescribed  in  Section   401(a)(17)(B)  of  the  Code)  of  all
remuneration  paid to an  Employee by his  Employer  during a Plan Year which is
received  during  the  period  that  such  Employee  is  eligible  to  become  a
Participant  in the Plan under the  provisions  of  Paragraph  3.1, and which is
subject to withholding for federal income tax purposes,  or would have been paid
and been  subject  to  withholding  if the  Employee  (i) had not made any Basic
Pre-Tax Contributions as defined in Paragraph 4.2 or Supplemental

                                     II-3

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Pre-Tax  Contributions as defined in Paragraph 4.3 hereof,  (ii) had not elected
to have his salary  reduced to fund  contributions  to a plan  maintained by his
Employer  pursuant  to Section  125 of the Code,  or (iii) was  employed  in the
United  States.   Compensation  shall  not  include  relocation   allowances  or
relocation bonuses,  hiring or sign-on bonuses,  the imputed value of group life
insurance,  tuition refunds,  foreign service premiums and other similar foreign
service  adjustments,  and any  income  attributable  to  stock  options,  stock
appreciation  rights,  performance  award rights (other than  performance  award
rights which are in the nature of an annual  bonus award) or other  similar cash
or non-cash fringe benefits and  prerequisites  (other than executive  incentive
awards  made in cash or  stock).  To the  extent  that the  remuneration  of any
Employee is paid in a foreign currency, such amount shall be converted to United
States  Dollars  at a rate  to be  determined  by the  Committee  and  uniformly
applicable to all Employees paid in such currency at such time.  With respect to
Plan  Years  commencing  after  December  31,  1993,  Compensation  in excess of
$150,000 (as  adjusted,  as may be determined  by the  Commissioner  of Internal
Revenue,  at  such  time  and  in  such  manner  as  is  prescribed  in  Section
401(a)(17)(B) of the Code) (the "applicable  compensation  limitation") shall be
disregarded.

      For purposes of this definition of "Compensation," and for purposes of the
corresponding   limitations  on  compensation  in  Section  14.2  the  following
provisions shall apply:

            (a) The  cost-of-living  adjustment  in effect for a  calendar  year
      applies to any period, not exceeding 12 months, over which compensation is
      determined  ("determination period") beginning in such calendar year. If a
      determination  period  consists  of fewer than 12 months,  the  applicable
      compensation  limit will be  multiplied  by a fraction,  the  numerator of
      which  is the  number  of  months  in the  determination  period,  and the
      denominator of which is 12;

            (b) If compensation for any prior determination period is taken into
      account in determining an employee's benefits accruing in the current plan
      year, the compensation for that prior  determination  period is subject to
      the applicable  compensation limit in effect for that prior  determination
      period, and for this purpose,  for determination  periods beginning before
      the first day of the first  plan year  beginning  on or after  January  1,
      1994, the applicable compensation limit is $150,000.

      2.14  "Contributing  Participant" means any Participant who elects to make
Basic Contributions to the Trust Fund in accordance with Article IV hereof.

      2.15 "Disability" means, with respect to any Participant, the inability of
such  Participant to perform the normal duties of his employment for which he is
qualified by training or experience,  and which qualifies such Participant for a
benefit under the Long Term  Disability Plan and/or the Social Security Act. The
Committee may secure qualified medical advice and may require the Participant to
submit to a physical examination in determining Disability hereunder.

      2.16  "Employee" means any person employed by the Employer except:

                                     II-4

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            (a) any person,  other than a person whose  conditions of employment
      currently  are  covered  by  a  collective  bargaining  agreement,   whose
      compensation  is  computed  on  an  hourly,  daily,   piecework  or  other
      comparable  basis, or any person who is a "leased  employee" as defined in
      Section  414(n) of the Code,  unless  such  person or leased  employee  is
      included  within a class of employees  which is designated by the Board as
      eligible to  participate  in the Plan and is not  otherwise  excluded from
      participation under subparagraphs (c) or (d) below;

            (b) any person whose conditions of employment  currently are covered
      by a  collective  bargaining  agreement  to which the Employer is a party,
      unless the Employer and the bargaining  agent have come to agreement as to
      the inclusion of such person under the Plan;

            (c) any  person  who is or  becomes  a  participant  under any other
      profit  sharing,   savings  or  similar  type  defined  contribution  plan
      (excluding a tax credit employee stock  ownership  plan)  maintained by an
      Employer or any other nonparticipating Affiliated Company; and

            (d) any  person  employed  by an  Affiliated  Company  which  is not
      organized  under  the laws of the  United  States,  or any  State,  or the
      District of Columbia, unless such person is a citizen of the United States
      or  has  been  designated  as  an  Employee,  either  individually  or  by
      employment classification,  by the Committee in accordance with guidelines
      established by the Committee.

Provided  however,  any person  described in (a) through (b) of the  immediately
preceding  sentence  shall be deemed to be an Employee  for  purposes of Section
2.22.

      2.17 "Employer" means the Company,  Rheox, Inc., and Kronos, Inc., and any
other  Affiliated  Company which is designated by the Board as an Employer under
the Plan and whose  designation  as such has become  effective  and continues in
effect.  The Board may revoke the  designation  of an  Affiliated  Company as an
Employer at any time, but the provisions of the Plan shall otherwise continue to
govern the rights and  obligations  of  Participants  of that Employer and their
Beneficiaries  after  such  revocation.  When  used  in  reference  to  Employer
Contributions for a Participant, the term "Employer" shall refer to the Employer
employing such Participant. When the term "Employer" is used in reference to the
collective  obligations of all Employers  adopting the Plan, the  obligations of
each  such  Employer  shall  be   proportionate   to  the  Compensation  of  its
Participants to the Plan.  Each Employer  appoints the Company and the Committee
as its agents to act for it in all matters  relating to the Plan and Trust,  and
agrees to furnish to the Committee such  information  which may be necessary for
the proper administration of the Plan.

      2.18  "Employer  Contributions"  means the amount which the Employer shall
contribute  to the Trust Fund as  provided in Article V hereof,  including  both
Employer Matching Contributions and Employer Pension Feature Contributions.

                                     II-5

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      2.19 "ERISA" means the Employee Retirement Income Security Act of 1974, as
now in effect or hereafter  amended,  and regulations and other authority issued
thereunder.  All citations to Sections of ERISA are to such sections as they may
from time to time be amended or renumbered.


      2.20 "Highly  Compensated  Employee" or "Highly  Compensated  Participant"
means an Employee or Participant who, during the relevant period is treated as a
highly compensated employee under Section 414(q) of the Code.

      2.21  "Hour of Service" means:

            (a) each hour for which an  Employee  is paid or entitled to payment
      for the  performance  of duties for the Employer or an Affiliated  Company
      during the Plan Year;

            (b) each hour for which an  Employee  is paid or entitled to payment
      by the Employer or an Affiliated  Company  during the Plan Year on account
      of a period of time during which no duties are performed  (irrespective of
      whether the  employment  relationship  has  terminated)  due to  vacation,
      holiday, illness, incapacity (including disability), layoff, jury duty, or
      an Authorized Leave of Absence; provided, however, that an Hour of Service
      shall not include any hour during  which no duties are  performed  and for
      which payment is made solely for the purpose of complying with  applicable
      worker's compensation,  unemployment  compensation or disability insurance
      laws; and

            (c) each hour for which  back pay,  irrespective  of  mitigation  of
      damage,  has been  either  awarded  or  agreed  to by the  Employer  or an
      Affiliated  Company (these hours shall be credited to the Employee for the
      computation  period or  periods to which the award or  agreement  pertains
      rather  than the  computation  period  in which the  award  agreement,  or
      payment was made).

      Hours of Service credited for reasons other than the performance of duties
shall be  computed  and  credited  to  computation  periods in  accordance  with
paragraphs  (b)  and (c) of  Section  2530.200b-2  of the  Department  of  Labor
Regulations.  Hours of Service  shall be credited  for any person  considered  a
"leased  employee"  as  defined  in Section  414(n) of the Code,  regardless  of
whether  such person is an  Employee;  provided,  however,  that no such "leased
employee" shall  participate in the Plan except as provided in subparagraph  (a)
of Paragraph 2.17.

      2.22  "Investment  Funds"  means  the  funds in which  the  Trust  Fund is
invested by the Trustee in accordance with the provisions of Article VI hereof.

      2.23 "Long Term  Disability  Plan" means the long term  disability plan of
the Company, as amended from time to time, which covers enrolled Employees.


                                     II-6

<PAGE>



      2.24 "Month of Service" means each calendar month during which an Employee
or "leased employee" is entitled to credit for at least one Hour of Service. For
purposes of the Plan, credit for one Month of Service shall be the equivalent of
having been  credited  with 190 Hours of Service  during the  relevant  calendar
month.  Months of Service  shall  include  each  calendar  month of service with
Baroid Corporation after the approval of the Plan of Restructuring provided such
service would have been credited as a Month of Service if Baroid Corporation had
been an  Affiliated  Company  during such  period.  Months of Service also shall
include service  accumulated with certain  predecessor  employers if, and to the
extent,  authorized by the Board.  The Committee  shall credit Months of Service
under the preceding two sentences in accordance with nondiscriminatory  rules of
uniform application.

      2.25  "Participant"  means  an  Employee  who  satisfies  the  eligibility
requirements  of Article III hereof and who maintains an account  balance in the
Trust Fund, regardless of whether such Employee is a Contributing Participant.

      2.26 "Plan" means the NL Industries,  Inc. Retirement Savings Plan, as may
be subsequently amended or restated from time to time.

      2.27  "Plan Year" means each calendar year.

      2.28  "Predecessor  Plan" means the Savings  Plan for  Employees of Baroid
Corporation  as in effect on  December  31,  1988 and as  thereafter  amended to
incorporate  changes (i)  approved by the Board with  respect to NL  Industries,
Inc.  participants or (ii) otherwise required to be made effective prior to such
date to comply with the amendments to applicable law.

      2.29 "Prior Plan" means the Savings Plan for  Employees of NL  Industries,
Inc. effective as of July 1, 1990, as amended,  restated and continued under the
form of the  Plan,  without  a gap or lapse in  coverage,  time or  effect  of a
qualified plan under applicable provisions of the Code.

      2.30   "Profitability   Level"   means  the  level  and   measurement   of
profitability  which are approved by the Board with respect to the relevant Plan
Year.

      2.31 "Qualified  Election" shall mean an election made by a Participant in
writing and consented to by the  Participant's  Spouse in writing.  The Spouse's
consent must name a specific beneficiary or class of beneficiaries which may not
be changed without spousal consent,  unless the spouse expressly consents to the
designation by the participant without further consent; and must acknowledge the
effect of such  election and must be witnessed by a member of the  Committee,  a
local  employee  relations  manager  or a  notary  public.  Notwithstanding  the
preceding  sentence,  consent  of  the  Spouse  shall  not  be  required  if the
Participant  establishes to the  satisfaction  of the Committee that there is no
Spouse or that the Spouse  cannot be located.  Except as  otherwise  provided in
Paragraph 2.6, a Participant  may revoke a prior  election  without the Spouse's
consent at any time before the commencement of benefits. The number of elections
and revocations shall not be limited.

                                     II-7

<PAGE>



      2.32 "Regulations" means the applicable regulations issued under the Code,
ERISA or other  applicable  law by the IRS, the Labor  Department,  or any other
governmental authority or any temporary regulations or rules promulgated by such
authorities pending the issuance of such regulations.

      2.33 "Retirement" means, in the case of a Participant  eligible for a then
current  pension  under the  provisions  of any  formal  retirement  plan of the
Company,  the  termination  of  employment  by the  Participant  due  to  actual
retirement in accordance  with the  provisions of such plan,  and in the case of
any other  Participant  not covered by a formal  retirement plan of the Company,
such Participant's termination of employment in accordance with rules of uniform
application maintained by the Company.

      2.34  "Spouse"  means  the  person  to whom the  Participant  was  legally
married,  as  determined  by the  Committee,  for at least  31 days  immediately
preceding the earlier of either (a) the date on which the Participant terminates
employment  under the Plan due to Retirement (or is deemed to have so terminated
his employment) or (b) the Participant's death; provided, however, that a former
Spouse  will be  treated as a Spouse to the extent  provided  under a  qualified
domestic relations order as described in Paragraph 16.2.

      2.35  "Supplemental  Contributions"  means the aggregate of a Contributing
Participant's Supplemental After-Tax and Supplemental Pre-Tax Contributions,  as
defined in Paragraphs 2.37 and 2.38, respectively.

      2.36  "Supplemental   After-Tax   Contributions"  means  that  part  of  a
Contributing  Participant's  Compensation in excess of his Basic  Contributions,
and/or and contributions made by a Contributing Participant by means of personal
check,  which he contributes to the Trust Fund on an after-tax basis as provided
in Paragraph 4.3 hereof.

      2.37   "Supplemental   Pre-Tax   Contributions"   means  that  part  of  a
Contributing  Participant's Compensation which he elects to reduce in accordance
with  Paragraph 4.3 hereof and have  contributed to the Trust Fund on his behalf
by his Employer on a pre-tax basis, in compliance with the provisions of Section
401(k) of the Code.

      2.38 "Trust" means the trust  established  pursuant to and forming part of
the Plan for the investment,  reinvestment and  administration  of contributions
under the Plan.

      2.39  "Trustee"  means  the  bank,   trust  company  or  national  banking
association  having  trust  powers  designated  as Trustee of the Trust under an
agreement  between the Company and such bank,  trust company or national banking
association.

      2.40 "Trust Fund" means the trust fund described in Article XII hereof.


                                     II-8

<PAGE>



      2.41 "Valuation  Date" means the date or dates as may be determined by the
Committee to apply with respect to amounts invested in any Investment Fund.

      2.42  "Vesting Service" means service described in Paragraph 8.3 hereof.



                                     II-9

<PAGE>



                                  ARTICLE III

                         ELIGIBILITY FOR PARTICIPATION

      3.1   Eligibility:

            (a) General Rules:  Effective April 1, 1996, each Employee who was a
      Contributing  Participant in the Prior Plan on the date immediately  prior
      to the date such Prior Plan was amended,  restated and continued under the
      form of the Plan shall  continue as a Contributing  Participant  under the
      provisions of the Plan. Each other Employee shall become a Participant and
      also eligible to participate in the Plan as a Contributing  Participant on
      the later of (a) April 1,  1996,  and (b) the first day of the pay  period
      coincident  with  or next  following  the  date on  which  he  shall  have
      performed  at least  1000  Hours of  Service  or six  Months  of  Service,
      provided he shall have performed such service within a single "eligibility
      computation period." An Employee's "eligibility  computation period" shall
      be the 12-month  period  commencing with his date of employment or, if the
      Employee fails to satisfy the requirements of this subparagraph (a) during
      such period, any Plan Year following his date of employment.

            (b) Rollovers By Non-Participants:  Notwithstanding subparagraph (a)
      immediately  above or any other provision of the Plan to the contrary,  an
      Employee who would  otherwise be eligible to  participate  in the Plan but
      for his failure to satisfy the service  requirement under subparagraph (a)
      may make, with the consent of the Committee,  a Rollover  Contribution (as
      defined in subparagraph  4.10(b)), a Direct Rollover to the Trust Fund (as
      described in subparagraph  4.10(c)) or a direct transfer to the Trust Fund
      (as described in  subparagraph  4.10(d)) in accordance with the procedures
      set forth in subparagraph  4.10(a).  In the event the Committee permits an
      Employee to make such a Rollover Contribution,  Direct Rollover, or direct
      transfer  to the Trust  Fund,  the  Committee  shall  cause the Trustee to
      establish  a  separate  account  for  such  Employee  in  accordance  with
      procedures  set forth in Article  VII  hereof and shall  invest the assets
      involved  in the  manner set forth in  Paragraph  6.1 in  accordance  with
      instructions submitted in writing to the Committee by the Employee. In the
      event  the  Employee  terminates  employment  with the  Employer  prior to
      becoming a  Participant  under the Plan,  such  separate  account shall be
      distributed  to him in the form of a lump sum payment in the manner and at
      the time prescribed in subparagraph 9.1(a).

            (c) Non-Resident Aliens:  Notwithstanding any other provision of the
      Plan to the contrary, an Employee who qualifies as such under subparagraph
      2.17(d) or any other nonresident alien or expatriate shall not be eligible
      to make Basic Pre-Tax  Contributions  as defined in Paragraph 2.5,  unless
      otherwise determined by the Committee in its sole discretion.


                                    III-1

<PAGE>



            (d) Independent Contractors:  Notwithstanding any other provision of
      the Plan to the contrary, but subject to the provisions of this paragraph,
      (i) any individual who was considered by the Employer to be an independent
      contractor,  but  who  is  later  reclassified  as a  common-law  Employee
      (excluding  any Leased  Employee  described  in clause  (ii) below) of the
      Employer  with  respect  to  any  portion  of the  period  in  which  such
      individual was paid by the Employer as an independent contractor,  or (ii)
      any Leased Employee, shall be excluded from participation in the Plan with
      respect to the period in which any individual  described in clause (i) was
      considered  to be an  independent  contractor,  or the period in which any
      individual  described  in  clause  (ii)  is  a  Leased  Employee.  If  any
      individual  who is  described  in  clause  (i) or in  clause  (ii) must be
      covered  with  respect  to a Plan Year (or  portion  thereof)  in order to
      ensure that the Plan is operated in compliance  with  Sections  401(a) and
      410(b) of the Code,  starting with the class of  reclassified  independent
      contractors,  only  such  number of  individuals  within  the class  which
      includes the individual  (beginning with the  individuals  with the lowest
      Considered Compensation determined on an annualized basis) as is necessary
      to ensure  compliance  with the Code shall be covered in the Plan only for
      the Plan Year (or portion  thereof)  that is  necessary to ensure that the
      requirements of the Code are met.

      3.2 Method of  Becoming a  Participant:  An  Employee  who is  eligible to
become a  Participant  in the Plan under the  provisions  of Paragraph 3.1 shall
automatically become a Participant and shall be provided opportunity to:

            (a)  stipulate  the   Investment   Fund(s)  to  which  the  Employer
      Contributions should be allocated as set forth in Paragraph 6.1; and

            (b)   name a Beneficiary.

      3.3 Method of Becoming a  Contributing  Participant:  An  Employee  who is
eligible to become a  Contributing  Participant in the Plan under the provisions
of Paragraph  3.1 shall do so by completing  and  delivering to the Committee at
least 15 days (or any shorter  period  authorized by the  Committee)  before the
date of desired  participation,  a written statement (or other form of direction
authorized by the Committee):

            (a)   enrolling as a Contributing Participant;

            (b)  electing  the  initial  rate  of  his  Basic  and  Supplemental
      Contributions under Article IV;

            (c)  stipulating the Investment  Fund(s) to which his  contributions
      and the  Employer  Contributions  should  be  allocated  as set  forth  in
      Paragraph 6.1;

            (d) providing  such other  information as the Committee may require;
      and


                                    III-2

<PAGE>



            (e)  agreeing  to be bound by all the  terms and  conditions  of the
      Plan.

      Each Participant who does not become a Contributing Participant when first
eligible to do so may become a  Contributing  Participant as of the first day of
any pay period  thereafter by complying  with the  provisions of this  Paragraph
3.2.

      3.4 Termination of  Participation  in the Plan:  Participation in the Plan
shall  cease in the case of any  Participant  whose  entire  account  balance is
distributed.  Any person  whose  participation  is  terminated  pursuant  to the
preceding  sentence may resume  participation in the Plan as of the first day of
the pay period  coincident  with or next  following the date he again becomes an
Employee, provided he satisfies the requirements of Paragraph 3.2. Participation
in the Plan shall continue in the case of any Participant  who, upon termination
of employment for any reason  (including  Disability or  Retirement),  or in the
case of any  Beneficiary  who,  upon the  death of the  Participant,  elects  to
receive a distribution  in a form that would maintain an account  balance in any
one or more of the Investment Funds after termination of employment. Such person
shall  remain a  Participant  or,  in the  case of a  Beneficiary,  be  deemed a
Participant herein, but not a Contributing  Participant,  until such time as the
distribution  in full has been made to him.  Any person whose  participation  is
continued  under this  Paragraph 3.3 shall continue to participate in Investment
Fund  performance but shall be prohibited from making any further  contributions
to the Trust Fund  unless he is  reemployed,  in which  event  again he shall be
eligible to become an active  Participant,  and, at his election a  Contributing
Participant herein.

      3.5 Intra-Company Transfers: Termination of employment shall not be deemed
to occur by reason of:

            (a)   transfer in employment from one Employer to another Employer;

            (b)  transfer  in  employment  from an  Employer  to any  Affiliated
      Company  not  participating  in  the  Plan  or  to a  class  of  employees
      (including  "leased  employees" as defined in Section  414(n) of the Code)
      which is ineligible to participate in the Plan; or

            (c)  transfer  in  employment   from  any  Affiliated   Company  not
      participating in the Plan or from a class of employees  (including "leased
      employees"  as defined in Section  414(n) of the Code) which is ineligible
      to participate  in the Plan to an Employer or class of eligible  Employees
      hereunder.

      Except as provided in Paragraph 10.1, for purposes of subparagraph  (b), a
Participant  shall remain a  Participant  for purposes of  investment  election,
withdrawals,  and  distribution  rights,  under  the  Plan,  but he shall not be
eligible to be a Contributing  Participant or to receive Employer  Contributions
for the period of time  during  which he is employed  by an  Affiliated  Company
which is not  participating in the Plan or during which he is part of a class of
employees  which is  ineligible  to  participate  in the Plan.  For  purposes of
subparagraph   (c),   employment  with  an  Affiliated   Company  which  is  not
participating  in the Plan or as an employee  ineligible to  participate  in the
Plan

                                    III-3

<PAGE>



shall  count as Hours of Service  and Months of Service  toward  satisfying  the
requirement of Paragraph 3.1.

                                    III-4

<PAGE>



                                  ARTICLE IV

                           PARTICIPANT CONTRIBUTIONS

      4.1 Amount of Basic After-Tax Contributions:  Subject to the provisions of
Paragraph  5.2(c)(i)  and Article  XIV,  any  Employee who is, or is eligible to
become, a Contributing  Participant may make through payroll  deductions,  Basic
After-Tax  Contributions,  for any Plan  Year,  equal to any  percentage  of his
Compensation,  in  increments  of 0.5%,  from 1% up to and including 8% (or such
other maximum amount as may be established by the Committee) less the percentage
of  Compensation  elected as Basic Pre-Tax  Contributions  pursuant to Paragraph
4.2, if any.

      4.2   Amount of Basic Pre-Tax Contributions:

            (a) Contribution Limits:  Subject to the provisions of Paragraph 4.5
      and  Article  XIV,  any  Employee  who is, or is  eligible  to  become,  a
      Contributing  Participant may elect, in accordance with procedures adopted
      by the  Company,  to reduce  his  Compensation  by an amount  equal to any
      percentage, in increments of 0.5%, from 1% up to and including 8%, or such
      other maximum amount as may be  established  by the  Committee;  provided,
      however, that the maximum amount elected as Basic Pre-Tax Contributions in
      no event shall exceed the difference between (i) 8% (or such other maximum
      amount as may be  established by the Committee) and (ii) the percentage of
      Compensation  elected  as  Basic  After-Tax   Contributions   pursuant  to
      Paragraph 4.1, if any. Subject to subparagraph  4.5(b),  the amount of any
      such  reduction  shall  be  contributed  to  the  Plan  as  Basic  Pre-Tax
      Contributions on behalf of such Contributing  Participant by his Employer.
      Notwithstanding the foregoing, Basic Pre-Tax Contributions in any calendar
      year shall not exceed the limitation on elective  deferrals  under Section
      402(g)(1)  of the Code  adjusted  for  increases  in the cost of living in
      accordance with Section 402(g)(5) of the Code.

            (b) Refund of Excess Contributions:  In the event that the aggregate
      amount  of Basic  Pre-Tax  Contributions  for a  Participant  exceeds  the
      limitation in the previous sentence, the amount of such excess,  increased
      by any  income and  decreased  by any losses  attributable  thereto  (but,
      effective  January 1, 1992,  before the gap period  between the end of the
      calendar  year and the date of  distribution),  shall be  refunded  to the
      Participant  no later than the April 15th of the calendar  year  following
      the calendar year for which the Basic Pre-Tax  Contributions were made. If
      a Participant also participates,  in any calendar year, in any other plans
      subject to the limitations set forth in Section 402(g) of the Code and has
      made excess  deferrals  under this Plan when combined with the other plans
      subject  to  such  limits,  to the  extent  the  Participant,  in  writing
      submitted to the  Committee no later than the March 1 of the calendar year
      following the calendar year for which the Basic Pre-Tax Contributions were
      made, designates any Basic Pre-Tax Contributions under this Plan as excess
      deferrals,  the amount of such designated excess,  increased by any income
      and decreased by any losses attributable thereto, shall be refunded to the
      Participant  no later than the April 15 of the calendar year following the
      calendar year for which the Basic Pre-Tax Contributions were

                                     IV-1

<PAGE>



      made. Alternatively,  a Participant may request refund of excess deferrals
      before the end of the Plan Year.

      4.3 Supplemental Contributions:  Subject to the provisions of Article XIV,
a Participant who is an Employee and whose Basic  Contributions  are at least 8%
may elect to make Supplemental  After-Tax or Supplemental Pre-Tax  Contributions
through  payroll  deductions.  A Participant  who is an Employee and whose Basic
Contributions  are  less  than  8% may  elect  to  make  Supplemental  After-Tax
Contributions by personal check.  Supplemental  Pre-Tax  Contributions  shall be
made  in  accordance  with  procedures  adopted  by  the  Company.  Supplemental
Contributions  are not  matched by the  Company.  The  amount of a  Contributing
Participant's  Supplemental  Contributions may be made by payroll  deductions in
increments  of 0.5%  from 1% to 4% of  Compensation,  or by  personal  check  in
multiples of $100, or in such other percentages or amounts as may be established
by the Committee.

      If Basic Contributions are reduced below 8%, a Participant's  Supplemental
Contributions  by  payroll  deduction  will  be  suspended.   Such  Supplemental
Contributions  may  resume  once  Basic  Contributions  equal at least  8%.  The
provisions of Section 4.2(b) apply to Supplemental Pre-Tax Contributions, also.

      4.4  Separate   Accounting:   The  Committee  and  the  Trustee  shall  be
responsible for maintaining  separate records of the Basic After-Tax and Pre-Tax
Contributions,  Supplemental  After-Tax and Pre-Tax  Contributions  and Rollover
Contributions  (including  Direct Rollovers and direct  transfers) made by or on
behalf of the Participant and paid over to the Trustee.  All amounts contributed
by or on behalf of the  Participant  to the Trust  Fund with  respect to any pay
period shall be allocated to the  Participant's  account as soon as  practicable
after the end of the pay  period in  respect  of which the  payroll  deductions,
salary reductions or cash payments are effectuated.

      4.5  Special  Provisions   Related  to  Basic  and  Supplemental   Pre-Tax
Contributions:

            (a)  Vesting  and  Withdrawal  Limitation:  Basic  and  Supplemental
      Pre-Tax Contributions, including increments earned thereon, shall be fully
      vested  at all  times  and may not be  withdrawn  by or  distributed  to a
      Participant,  except as permitted by an election  made pursuant to Section
      9.6,  until the earliest to occur of his  Retirement,  death,  Disability,
      separation from service, attainment of age 59 1/2 or hardship.

            (b)  (i) ADP  Test:  Notwithstanding  any  other  provision  of this
            Article  IV, the actual  deferral  percentage  for the Plan Year for
            Highly  Compensated  Employees  shall not exceed the  greater of the
            following actual deferral  percentage tests: (a) the actual deferral
            percentage  for such Plan Year of those  eligible  Employees who are
            not Highly  Compensated  Employees  multiplied  by 1.25;  or (b) the
            actual  deferral  percentage  for the Plan  Year of  those  eligible
            Employees  who are not Highly  Compensated  Employees  multiplied by
            2.0,  provided  that  the  actual  deferral  percentage  for  Highly
            Compensated Employees does not exceed the actual deferral

                                     IV-2

<PAGE>



            percentage  for  such  other  eligible  Employees  by  more  than  2
            percentage  points.  For  purposes  of this  Article IV, the "actual
            deferral percentage" for a Plan Year means, for each specified group
            of employees,  the average of the ratios (calculated  separately for
            each Employee in such group) of (a) the amount of the  Participant's
            Basic and Supplemental  Pre-Tax  Contributions for the Plan Year, to
            (b) the  amount of the  Participant's  Compensation  (as  defined in
            Section  414(s)  of  the  Code)  for  the  Plan  Year.  An  eligible
            Employee's  actual  deferral  percentage  shall  be zero if no Basic
            Pre-Tax Contribution or Supplemental Pre-Tax Contribution is made on
            his behalf for such Plan Year.

                  (ii)  Recharacterization  and Refund  (Leveling  Method):  The
            Committee  shall  determine  as of the end of the Plan Year,  and at
            such  time or times in its  discretion,  whether  one of the  actual
            deferral  percentage  tests specified in  subparagraph  4.5(b)(i) is
            satisfied for such Plan Year. This determination shall be made after
            first  determining  the  treatment  of excess  deferrals  within the
            meaning of Section  402(g) of the Code under  Paragraph  4.2. In the
            event  that  neither of such  actual  deferral  percentage  tests is
            satisfied,  the Committee shall, to the extent permissible under the
            Code   and   the   Regulations,   and  to  the   extent   any   such
            recharacterization  would  not  cause a  violation  of  subparagraph
            5.2(a) or,  together  with Basic  After-Tax  Contributions  actually
            made, exceed the limitations on Basic After-Tax Contributions stated
            in Paragraph 4.1 determined  prior to  application  of  subparagraph
            5.2(a),  if the  Participant so elects,  recharacterize  such excess
            contributions as Basic or Supplemental After-Tax  Contributions,  in
            the manner  described in  subparagraph  4.5(b)(iv) or, to the extent
            such  recharacterization is not possible or the Participant does not
            so elect, refund the excess contributions in the manner described in
            subparagraph  4.5(b)(v).  For purposes of this  Article IV,  "excess
            contributions"  means,  with respect to any Plan Year, the excess of
            the aggregate amount of Basic and Supplemental Pre-Tax Contributions
            (and any  earnings  and  losses  allocable  thereto  but,  effective
            January  1,  1992,  before  the gap  period  between  the end of the
            calendar year and the date of distribution) made on behalf of Highly
            Compensated Participants for such Plan Year, over the maximum amount
            of such  contributions  that  could  be  made  to such  Participants
            without  violating  the  requirements  of  subparagraph   4.5(b)(i),
            determined by reducing Basic and Supplemental Pre-Tax  Contributions
            made on behalf of Highly  Compensated  Participants  in order of the
            actual  deferral  percentages  beginning  with the  highest  of such
            percentages.  The  reduction  shall be  determined  by the  leveling
            method,  under  which  the  actual  deferral  ratio  of  the  Highly
            Compensated  Employee  with the  highest  actual  deferral  ratio is
            reduced to the extent required to (i) enable the Plan to satisfy the
            ADP test, or (ii) cause such Highly  Compensated  Employee's  actual
            deferral ratio to equal the ratio of the Highly Compensated Employee
            with the next highest actual deferral ratio.  This leveling  process
            shall be repeated until the Plan  satisfies the ADP test.  Provided,
            however,  that for years after 1996, if a different  leveling method
            is mandated by the Code,  such  different  leveling  method shall be
            used instead.

                                     IV-3

<PAGE>



                  (iii)  Forfeiture  of  Matching  Contributions:  If any  Basic
            Pre-Tax  Contributions are to be refunded as an excess contribution,
            the corresponding matching contributions that were contributed under
            Section 5.1 (and any  earnings  and losses  attributed  thereto but,
            effective  January 1, 1992, before the gap period between the end of
            the calendar year and the date of distribution) will be forfeited.

                  (iv) Tax Treatment of Recharacterized Deferrals: To the extent
            provided in subparagraph 4.5(b)(ii), in accordance with the Code and
            the Regulations,  if a Highly  Compensated  Participant so elects in
            writing no later than the 15th day of the second  month  immediately
            following   the  end  of  the  Plan  Year  for  which  such   excess
            contributions were made, the Committee shall  recharacterize  excess
            contributions  of  such  Participant  for a Plan  Year as  Basic  or
            Supplemental  After-Tax   Contributions  in  order  to  satisfy  the
            requirements of subparagraph 4.5(b)(i), in which event the amount of
            excess  contributions  so  recharacterized   shall,  to  the  extent
            permitted by the Code and the Regulations, be treated as having been
            refunded to the Participant and then  contributed by the Participant
            as Basic or Supplemental  After-Tax  Contributions,  as appropriate.
            Earnings related to any recharacterized  amount shall not be treated
            as a recharacterized amount.

                  (v) Timing of  Refunds:  If a Highly  Compensated  Participant
            does not elect recharacterization under subparagraph 4.5(b)(iv), or,
            if required in order to comply with the  provisions of  subparagraph
            4.5(b)(i),   and  the  Code,  the  Committee   shall  refund  excess
            contributions  for a Plan  Year.  The  distribution  of such  excess
            contributions  shall be made to Highly  Compensated  Participants to
            the  extent  practicable  before  the  15th day of the  third  month
            immediately   following   the  Plan  Year  for  which  such   excess
            contributions  were made,  but in no event later than the earlier of
            (a) the end of the Plan Year  following such Plan Year or (b) in the
            case of the termination of the Plan in accordance with Article XIII,
            no  later  than  the  end of  the  twelve-month  period  immediately
            following the date of such termination.  Any such distribution shall
            be made to each Highly  Compensated  Participant on the basis of the
            respective portions of such amounts attributable to each such Highly
            Compensated Participant.

                  (vi)  Effect  of  Prior   Distribution  of  Excess  Deferrals:
            Notwithstanding  the  foregoing   provisions  of  this  subparagraph
            4.5(b), the amount of excess  contributions to be recharacterized or
            distributed  pursuant to subparagraph  4.5(b)(iii) with respect to a
            Participant for a Plan Year shall be reduced by any excess deferrals
            previously distributed to such Participant for such Plan Year.

                  (vii)    Continued    Impact    of    Excess    Contributions:
            Notwithstanding  the  foregoing  provisions of this  Paragraph  4.5,
            excess  contributions that are  recharacterized  shall then be taken
            into  account for purposes of Paragraph  5.2,  shall  continue to be
            subject to Paragraph 8.1 and Paragraph 10.3, and shall continue to

                                     IV-4

<PAGE>



            count toward the limits in Paragraph 14.2. Excess contributions that
            are refunded  shall continue to count toward the limits in Paragraph
            14.2.

                  (viii)Family Aggregation Rules: Only to the extent that family
            aggregation  rules are mandated by the Code,  if an eligible  Highly
            Compensated  Employee is subject to the family  aggregation rules of
            Section  414(q)(6)  of the Code  because  such  employee is either a
            five-percent  owner  or one  of  the  ten  most  Highly  Compensated
            Employees,  the combined  actual deferral ratio for the family group
            (which is  treated  as one  Highly  Compensated  Employee)  shall be
            determined   by  combining  the  Basic  and   Supplemental   Pre-Tax
            Contributions,   Compensation  and  amounts  treated  as  Basic  and
            Supplemental  Pre-Tax  Contributions  of  all  the  eligible  family
            members.

                  The Basic and Supplemental Pre-Tax Contributions, Compensation
            and amounts treated as Basic and Supplemental Pre-Tax  Contributions
            of all  family  members  shall be  disregarded  for the  purpose  of
            determining the actual deferral percentage for the group of eligible
            Employees who are not Highly Compensated Employees.

                  If an Employee is  required  to be  aggregated  as a member of
            more than one family group in a plan, all eligible Employees who are
            members of those family groups that include that  Employee  shall be
            aggregated as one family group.

                  (ix) Family  Correction:  The  determination and correction of
            excess  contributions of a Highly Compensated  Employee whose actual
            deferral ratio is determined under  subparagraph  4.5(b)(viii) shall
            be  accomplished  as  follows:  the actual  deferral  ratio shall be
            reduced as required  under  subparagraph  4.5(b)(ii)  and the excess
            contributions  for the  family  unit  shall be  allocated  among the
            family members in proportion to the Basic and  Supplemental  Pre-Tax
            Contributions  of each family  member that are combined to determine
            the actual deferral ratio.

      4.6 Change in Amount of  Contributions:  A  Contributing  Participant  may
change  the rate of his Basic or  Supplemental  Contributions  for any  calendar
month by filing the appropriate Plan form with the local  administrator at least
15 days prior to the first day of any such  calendar  month for which the change
in payroll  deductions is intended to be  effective.  All elections of Basic and
Supplemental  Contribution  rates made  under the Plan  shall  remain in effect,
notwithstanding  any change in Compensation,  until changed as permitted in this
Paragraph 4.6 or Paragraph 4.5.

      4.7  Suspension of Basic or  Supplemental  Contributions:  A  Contributing
Participant may suspend his Basic or Supplemental  Contributions  to the Plan by
filing the appropriate  Plan form with the local  administrator at least 15 days
prior to the first day of the pay period for which such  suspension  is intended
to be effective. Suspension of Basic After-Tax Contributions shall not prevent a
Contributing  Participant  from  continuing  or  increasing  his  Basic  Pre-Tax
Contributions

                                     IV-5

<PAGE>



and suspension of Basic Pre-Tax  Contributions  shall not prevent a Contributing
Participant from continuing or increasing his Basic After-Tax Contributions.

      4.8  Remittance  of  Contributions  to Trustee:  Basic  Contributions  and
Supplemental  Contributions  shall  be  remitted  to  the  Trustee  as  soon  as
practicable after the end of the month in which the payroll deductions, personal
checks,  salary  reductions  or cash payments are  effectuated,  but in no event
later than 90 days from the date such contributions are received by the Employer
(in the case of Basic and Supplemental  After-Tax  Contributions) or the date on
which such contributions  would otherwise have been paid to the Employee in cash
(in the case of Basic and  Supplemental  Pre-Tax  Contributions).  The aggregate
amounts  contributed  hereunder,  shall  be  employed  by the  Trustee  to  make
purchases for the  Investment  Fund or Funds in accordance  with the  respective
investment  elections of each Contributing  Participant for such pay period. All
such  contributions  shall be  allocated  to the  accounts  of each  Participant
established in accordance with Article VII.

      4.9 Cessation of  Contributions  Made by a Contributing  Participant:  All
Contributions of a Contributing Participant shall cease effective with the first
day of the pay period coincident with or next following the date of:

            (a) the timely  filing of a notice of voluntary  suspension of Basic
      Contributions as described in Paragraph 4.7;

            (b) the election to make certain withdrawals pursuant to Article X;

            (c) the involuntary  suspension of Basic Contributions  because of a
      transfer in  employment  or  employment  classification  as  described  in
      subparagraph 3.4(b); or

            (d)  the   termination  of  employment  for  any  reason   including
      Retirement, death or Disability.

      Notwithstanding  the  foregoing,  subparagraph  (b) shall not affect Basic
Pre-Tax Contributions, except as provided in Paragraph 10.2.

      4.10  Participant Rollover Contributions:

            (a)  General:  With  the  consent  of  the  Committee,  an  Employee
      described in subparagraphs  3.1(a) or (b) may contribute cash to the Trust
      Fund  other  than as Basic or  Supplemental  Contributions  provided  such
      contribution   constitutes   a  Rollover   Contribution   (as  defined  in
      subparagraph  (b) of this  Paragraph) or a Direct  Rollover (as defined in
      subsection  (c) of this  Paragraph)  or a direct  transfer  (as defined in
      subparagraph (d) of this Paragraph).  All Rollover  Contributions,  Direct
      Rollovers,  and direct  transfers  to the Trust Fund shall be allocated to
      the  Employee's  account  as of the  Valuation  Date  coincident  with  or
      immediately  preceding  the  date  of  the  contribution.  To  the  extent
      prohibited  under the Code, no Rollover  Contribution,  Direct Rollover or
      direct transfer shall be allowed if the

                                     IV-6

<PAGE>



      assets involved are is  attributable  directly or indirectly to a trust or
      annuity  forming part of a plan under which the Employee was a 5% owner at
      the time the  distribution  from  such  trust or  annuity  was  made.  For
      purposes of the preceding  sentence,  a 5% owner shall mean any individual
      who was a 5% owner  (within  the  meaning of Section  416(i)(1)(B)  of the
      Code) of the employer  maintaining  such other plan at any time during the
      five plan years preceding the plan year in which the distribution is made.
      If an Employee  described in  subparagraphs  3.1(a) or (b) is permitted to
      make such a Rollover Contribution, Direct Rollover or direct transfer, the
      Committee shall obtain such evidence,  assurances or  certifications as it
      may deem  necessary  from such  Employee to establish to its  satisfaction
      that the  amounts to be  contributed  qualify as  Rollover  Contributions,
      Direct  Rollovers or direct  transfers within the meaning of subparagraphs
      (b) or (c) and will not  affect the  qualification  of the Plan or the tax
      exempt  status of the Trust Fund under  Sections  401(a) and 501(a) of the
      Code, respectively,  or substantially increase the administrative expenses
      of the Plan.  The amount so transferred  must consist of cash  distributed
      from such other plan or any portion of the cash  proceeds from the sale of
      distributed  property other than cash, to the extent  permitted by Section
      402(a)(6)(D) of the Code.

            (b) Rollover Contributions: As used in this Paragraph 4.10, the term
      "Rollover Contribution" shall mean the following:

                  (i) all or any portion of a "qualified total distribution" (as
            said term is defined in Section  402(a)(5)(E)(i)(I)  and (II) of the
            Code inclusive of Section 402(a)(6) of the Code, and, after December
            31, 1984, including a rollover distribution  attributable to a trust
            forming  part of a plan under  which the  Employee  was an  employee
            within the meaning of Section  401(c)(1)  at the time  contributions
            were made on his  behalf)  which is  contributed  to the Trust  Fund
            within 60 days or receipt of the distribution from a trust described
            in  Section  401(a) of the Code and  exempt  from tax under  Section
            501(a) of the Code. A qualified total distribution shall not include
            any amount  considered  to be  contributed  by the  Employee  to the
            qualified trust described above;

                  (ii) an  amount  (described  in  Section  408(d)(3)(A)(ii)  or
            Section  409(b)(3)(C) of the Code) which is contributed to the Trust
            Fund  and  represents  all  or any  portion  of  the  amount  of the
            Employee's  distribution  from an individual  retirement  account or
            individual retirement annuity (defined in Sections 408(a) and 408(b)
            of the Code,  respectively) the value of which account or annuity is
            attributable  solely to a qualified total  distribution  received by
            such Employee from a trust  described in Section  401(a) of the Code
            and  exempt  from tax under  Section  501(a) of the Code,  and which
            amount  is  contributed  to the  Trust  Fund  within  60 days of the
            distribution from the Employee's individual account or annuity.


            (c) Direct  Rollovers:  Special Rules  Regarding  Eligible  Rollover
      Distributions:

                                     IV-7

<PAGE>



                  (i) This Section 4.10(c) applies to  distributions  made on or
            after January 1, 1993.  Notwithstanding any provision of the Plan to
            the contrary that would  otherwise  limit a  distributee's  election
            under this Section 4.10(c), a distributee may elect, at the time and
            in the  manner  prescribed  by the  Committee,  to have any  portion
            (provided  that  such  portion  is at  least  $500)  of an  eligible
            rollover  distribution paid directly to an eligible  retirement plan
            specified by the distributee in a Direct  Rollover.  Only one Direct
            Rollover shall be allowed for each eligible rollover distribution.

                  (ii)  Definitions:

                        (a) Eligible rollover distribution: An eligible rollover
                  distribution  is any  distribution of all or any portion (that
                  is at  least  $500)  of  the  balance  to  the  credit  of the
                  distributee,  except  that an eligible  rollover  distribution
                  does not include: (1) any distribution that is one of a series
                  of substantially  equal periodic payments (not less frequently
                  than annually)  made for the life (or life  expectancy) of the
                  distributee or the joint lives (or joint life expectancies) of
                  the distributee and the distributee's  designated beneficiary,
                  or for a  specified  period  of ten  years  or  more;  (2) any
                  distribution to the extent such distribution is required under
                  Section  401(a)(9)  of  the  Code;  (3)  the  portion  of  any
                  distribution   that  is  not   includable   in  gross   income
                  (determined  without regard to the exclusion of new unrealized
                  appreciation with respect to employer securities), and (4) any
                  other amounts that are treated as not being eligible  rollover
                  distributions under Temporary  Regulation Section 1.401(a)(31)
                  - IT or other guidance issued under Section  401(a)(31) of the
                  Code.

                        (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 the surviving  spouse,  an
                  eligible  retirement plan is an individual  retirement account
                  or individual retirement annuity.

                  (iii)  Distributee:  A  distributee  includes  an  Employee or
            former Employee.  In addition,  the Employee's or former  Employee's
            surviving spouse and the Employee's or former  Employee's  spouse or
            former spouse who is the alternate payee under a qualified  domestic
            relations  order,  as  defined in  Section  414(p) of the Code,  are
            distributees  with  regard to the  interest  of the spouse or former
            spouse.


                                     IV-8

<PAGE>



                  (iv) Direct  Rollover:  A Direct  Rollover is a payment by the
            Plan to the eligible retirement plan specified by the distributee.

            (d) Direct Transfers:  Subject to subparagraph  4.10(e), in addition
      to the Rollover  Contribution  described in subparagraphs (a) and (b), and
      the Direct  Rollover  described in  subparagraph  (c), the  Committee,  in
      accordance  with a uniform  and  nondiscriminatory  policy  applicable  to
      Employees  described  in  subparagraphs  3.1(a)  and (b),  may  direct the
      Trustee to accept a cash  contribution  transferred  directly to the Trust
      Fund from the trustee of another trust  described in Section 401(a) of the
      Code and  exempt  from tax under  Section  501(a) of the Code on behalf of
      such Employee who  participated in that trust.  Prior to the acceptance of
      such a contribution  the Committee shall obtain such evidence,  assurances
      or   certifications   as  it  may  deem  necessary  to  establish  to  its
      satisfaction  that  the  amount  to be  contributed  will not  affect  the
      qualification of the Plan or the tax-exempt status of the Trust Fund under
      Sections  401(a) and 501(a) of the Code,  respectively,  or  substantially
      increase the administrative expenses of the Plan.

            (e) Restrictions:  Notwithstanding  anything herein to the contrary,
      the  Committee,  pursuant  to  uniform  and  nondiscriminatory  guidelines
      established by it, shall not permit any direct or indirect  transfers from
      another trust  described in Section 401(a) of the Code and exempt from tax
      under Section  501(a) of the Code,  which provides for a life annuity form
      of payment to the  Employee,  other than the trust  under the  Predecessor
      Plan.




                                     IV-9

<PAGE>



                                   ARTICLE V

                            EMPLOYER CONTRIBUTIONS

      5.1   Employer Contributions:

            (a)  Employer  Matching  Contributions:  For  each  plan  year,  and
      generally  during  the  first  quarter  of the  Plan  Year,  the  Board of
      Directors in its sole  discretion,  shall  establish  three  profitability
      thresholds which are referred to herein as "Level A", "Level B" and "Level
      C". The highest Profitability Level which is attained, as determined at or
      after the end of the Plan Year,  shall  determine the Employer's  matching
      contribution obligations to the Plan.

            Subject  to the  provisions  of Article  XIV,  each  Employer  shall
      contribute to the Trust Fund based upon the  Profitability  Level attained
      in accordance with the following formula:


                  (i)  Twenty-five  cents for each one dollar of a  Contributing
            Participant's Basic Contributions which are based on the first 8% of
            his Compensation,  provided the  Profitability  Level is equal to or
            above Level A but below Level B;

                  (ii)  Fifty  cents  for  each  one  dollar  of a  Contributing
            Participant's  Basic Contributions which is based on the first 8% of
            his  Compensation  provided the  Profitability  Level is equal to or
            above Level B but below Level C;

                  (iii) Seventy-five cents for each one dollar of a Contributing
            Participant's  Basic Contributions which is based on the first 8% of
            his  Compensation  provided the  Profitability  Level is equal to or
            above Level C.

            In a "below A" year,  no  Employer  Matching  Contributions  will be
      contributed to the Plan or allocated to any Participant's account.

            No Employer Matching  Contributions  shall be made with respect to a
      Contributing   Participant's  Supplemental   Contributions.   No  Employer
      matching  contributions  shall  be made  with  respect  to a  Contributing
      Participant's Basic After-Tax  Contributions to the extent that such Basic
      After-Tax Contributions were withdrawn before the end of the calendar year
      in which they were contributed.

            (b) Employer Pension Feature Contributions:  Effective April 1, 1996
      for  periods  after  March  31,  1996,   the  Employer   Pension   Feature
      Contribution  shall be that amount which, in combination with forfeitures,
      provides for a percentage of  Compensation  profit  sharing  allocation as
      calculated  for each  Participant  who is an active  employee  during  the
      calendar year, by adding together two formulas, "A" and "B", where:

                                     V-1

<PAGE>



      "A" is 3% of the Participant's Compensation for the calendar year, and

      "B" is calculated in accordance with the following steps:

            1) The prospective  benefit that would have been earned (starting on
            April 1, 1996) from the Retirement Programs of NL Industries,  Inc.,
            for Salaried  Employees if that plan had not been frozen as of April
            1, 1996,  for service on and after April 1, 1996,  was calculated as
            of March 31, 1996,  using data  available on January 22, 1996.  1996
            annual  compensation  was estimated and was projected to increase at
            3% per year.  Corporate  profitability  was assumed to be "B" level,
            resulting  in 2%  accruals  per year.  Continuous  employment  until
            retirement at age 65 was assumed.  (For anyone  already over age 65,
            the April 1, 1996 age was  used.)  These  assumptions  and data will
            remain  fixed;  they will not be  adjusted in later years to reflect
            actual corporate  profitability rates,  employment  experiences,  or
            changes in other assumptions used to calculate the benefit under the
            Retirement  Programs.  The result of this  calculation is called the
            "Old Plan Benefit."

            2) The value of the Old Plan  benefit  was  converted  to a lump sum
            payable  at age 65 using a  discount  rate of 9% and the 1983  Group
            Annuity Mortality Table (50% male, 50% female).  (For any individual
            not a participant  in the  Retirement  Program as of March 31, 1996,
            the Old Plan Benefit is zero.)

            3)  The  account  balance  that  will  be  provided  by  the  3%  of
            Compensation  contribution  in item A above was projected to the end
            of the year  prior to age 65,  assuming  accruals  start  January 1,
            1996, with an assumed  contribution date at the end of each calendar
            year while the  Participant is under age 65, and an assumed  account
            earnings  rate of 9% per year.  This total amount is called the "New
            Plan Benefit."

            4) The New Plan Benefit  (calculated  in Item 3 above) is subtracted
            from  two-thirds  of the  lump sum  value  of the Old  Plan  Benefit
            (calculated  in  item  2  above).   The  difference  is  called  the
            "Transition Benefit."

            5) If the Transition Benefit (calculated in item 4 above) is zero or
            less,  no additional  contribution  will be added to the amount in A
            above for 1996 or any later year.

            6) If the  Transition  Benefit  (calculated in item 4 above) is more
            than zero, the current value of the Transition Benefit is calculated
            by discounting  the value the Transition  Benefit at age 65 to April
            1, 1996, at 9% interest. This result is called the "Current Value of
            the Transition Benefit."

            7) The Current Value of the  Transition  Benefit was converted to an
            increasing  annuity payable  annually for a number of years equal to
            65 minus the  Participant's  age as of the most  recent  birthday on
            April 1, 1996, assuming 3% annual

                                     V-2

<PAGE>



            compensation  increases and 9% annual asset growth. That annuity was
            converted to a percentage of pay ("Transition  Benefit  Percentage")
            by  dividing  the  annual  1996  payment by  estimated  1996 pay and
            rounding to one decimal place.

            8)  Participants  with a Transition  Benefit  Percentage  of 1.0% or
            greater  will receive the  transition  benefit for 1996,  1997,  and
            later  years,  so long as they remain  employed  and  eligible for a
            benefit under the terms of the Plan governing eligibility to receive
            an allocation.

            9) Participants  with a Transition  Benefit  Percentage of less than
            1.0%  will  receive  the  Current  Value of the  Transition  Benefit
            (calculated  in item 6 above) in 1996 if they  remain  employed  and
            eligible  for a  benefit  for  1996  under  the  terms  of the  Plan
            governing eligibility to receive an allocation,  and will receive no
            transition  benefit  for any year  after  1996  even if they  remain
            employed for future years.

      The purpose of the pension feature  contribution is to help ameliorate the
      effect  of the  freeze  of  the  Retirement  Programs  by  creating  a new
      contribution to the Retirement  Savings Plan equal to not less than 2/3 of
      the  future  benefit  lost due to the freeze of the  Retirement  Programs.
      Therefore,  notwithstanding  the preceding  provisions of this  subsection
      5.1(b), any employee whose compensation  during the period January 1, 1996
      through March 31, 1996 exceeded  $150,000 shall receive no pension feature
      contribution for 1996.

      The contributions  calculated under this subsection 5.1(b) are intended to
      meet the general  test under Code  Section  401(a)(4)  both in 1996 and in
      1997 and later years.

      5.2   Average Contribution Test:

            (a)  ACP:  Subject  to  Paragraph  5.7,  the  average   contribution
      percentage for the Plan Year for Highly  Compensated  Employees  shall not
      exceed the greater of the following average contribution percentage tests:
      (i) the  average  contribution  percentage  for  such  Plan  Year of those
      eligible Employees who are not Highly Compensated  Employees multiplied by
      1.25;  or (ii) the average  contribution  percentage  for the Plan Year of
      those  eligible  Employees  who  are  not  Highly  Compensated   Employees
      multiplied by 2.0, provided that the average  contribution  percentage for
      Highly  Compensated  Employees  does not exceed the  average  contribution
      percentage  for such other  eligible  Employees  by more than 2 percentage
      points. The test in clause (ii) shall not be used if the parallel test was
      used  under  Section  4.5(b)(i),  to  the  extent  such  multiple  use  is
      prohibited  by the Code.  For  purposes  of this  Article V, the  "average
      contribution  percentage" for a Plan Year means,  for each specified group
      of employees,  the average of the ratios  (calculated  separately for each
      Employee  in  such  group)  of  (i)  the  sum  of  (A)  Employer  Matching
      Contributions  described  in Section 5.1 for the Plan Year,  (B) Basic and
      Supplemental  After-Tax  Contributions  for the Plan Year,  and (C) if the
      Committee so elects in accordance with and to the extent  permitted by the
      Regulations,  Basic and Supplemental  Pre-Tax  Contributions,  to (ii) the
      amount of the

                                     V-3

<PAGE>



      Participant's  compensation (as defined in Section 414(s) of the Code) for
      the Plan Year.  In accordance  with  regulation  1.401(m)-1(b)(5)  and the
      related  Example 3, for the purpose of passing the ACP test the  Committee
      may elect to treat as Matching  Contributions some or all of the Basic and
      Supplemental  Pre-Tax  Contributions  of  HCEs as  well  as of  NHCEs.  An
      eligible  Employee's average  contribution  percentage shall be zero if no
      contributions are made on his behalf for such Plan Year.

            (b) Refund  (Leveling  Method) or  Forfeiture:  The Committee  shall
      determine as of the end of the Plan Year, and at such time or times in its
      discretion,  whether  one of the  average  contribution  percentage  tests
      specified in  subparagraph  5.2(a) is satisfied  for such Plan Year.  This
      determination  shall be made after  first  determining  the  treatment  of
      excess  deferrals  within the meaning of Section  402(g) of the Code under
      Paragraph 4.2 and then  determining the treatment of excess  contributions
      under  subparagraph  4.5(b).  In the event  that  neither  of the  average
      contribution percentage tests is satisfied,  the Committee shall refund or
      forfeit the excess  contributions  in the manner described in subparagraph
      5.2(d).  For purposes of this Article V, "excess aggregate  contributions"
      means,  with respect to any Plan Year and with respect to any Participant,
      the excess of the aggregate  amount (and any earnings and losses allocable
      thereto before the gap period between the end of the calendar year and the
      date of distribution) of (a) Employer  Matching  Contributions,  (b) Basic
      and   Supplemental   After-Tax   Contributions   and  (c)  the  Basic  and
      Supplemental  Pre-Tax  Contributions  (if the  Regulations  permit and the
      Committee  elects to take into  account  Basic  and  Supplemental  Pre-Tax
      Contributions  when  calculating the average  contribution  percentage) of
      Highly  Compensated  Participants  for such Plan  Year,  over the  maximum
      amount of such Employer  Contributions,  Basic and Supplemental  After-Tax
      Contributions and Basic and Supplemental Pre-Tax  Contributions that could
      be made to the account of Participants  without violating the requirements
      of   subparagraph   5.2(a).   The  amount  of  each   Highly   Compensated
      Participant's  excess  aggregate  contributions  shall  be  determined  by
      reducing the average  contribution  percentage of each Highly  Compensated
      Participant  whose  average  compensation  percentage  is in excess of the
      percentage  otherwise  permitted under subparagraph  5.2(a) to the maximum
      amount permitted by that paragraph.

            The  reduction  shall be determined  by the leveling  method,  under
      which the actual  contribution  ratio of the Highly  Compensated  Employee
      with the  highest  actual  contribution  ratio is  reduced  to the  extent
      required  to (i) enable the Plan to  satisfy  the ACP test,  or (ii) cause
      such Highly Compensated  Employee's actual contribution ratio to equal the
      ratio of the Highly  Compensated  Employee  with the next  highest  actual
      contribution ratio. This leveling process shall be repeated until the Plan
      satisfies the ACP test. Provided, however, that for years after 1996, if a
      different leveling method is mandated by the Code, such different leveling
      method shall be used instead.

            (c)  Forfeiture  of  Non-vested  Matching  Contributions:   Matching
      contributions that were not forfeited under Section 4.5(b)(iii) may not be
      forfeited  except  to the  extent  that  they are not  vested.  Non-vested
      matching contributions (and any earnings and losses

                                     V-4

<PAGE>



      allocated thereto) may be forfeited,  but such forfeited contributions are
      still counted as annual additions under Sections 404 and 415 of the Code.

            (d) Timing of Refund or Forfeiture:  If the Committee is required to
      refund  or  forfeit  excess   aggregate   contributions   for  any  Highly
      Compensated   Participant  for  a  Plan  Year  in  order  to  satisfy  the
      requirement of subparagraph  5.2(a), then the refund or forfeiture of such
      excess aggregate  contributions  shall be made with respect to such Highly
      Compensated  Participants to the extent practicable before the 15th day of
      the third month immediately  following the Plan Year for which such excess
      aggregate  contributions  were made, but in no event later than the end of
      the Plan Year following such Plan Year, or, in the case of the termination
      of the Plan in accordance  with Article XIII, no later than the end of the
      twelve-month  period  immediately  following the date of such termination.
      For each of such  Participants,  amounts so refunded or forfeited shall be
      made in the following  order of priority:  (A) to the extent  permitted by
      law, by forfeiting nonvested Employer Matching Contributions, and earnings
      thereon; (B) by distributing vested Employer Matching  Contributions,  and
      earnings thereon, of Highly Compensated Participants;  (C) by distributing
      Supplemental or Basic After-Tax  Contributions,  and earnings thereon; and
      (D) by distributing  Supplemental or Basic Pre-Tax  Contributions  (to the
      extent such amounts are included in the average  contribution  percentage)
      and earnings thereon. All such distributions and forfeitures shall be made
      to or be with respect to Highly  Compensated  Participants on the basis of
      the respective  portions of such amounts  attributable to each such Highly
      Compensated  Participant.  The amount of any forfeitures  made pursuant to
      this Paragraph 5.2 shall be used to reduce Employer Matching Contributions
      in accordance with Paragraph 5.4.


            (e)  Family  Aggregation  Rules:  Only  to the  extent  that  family
      aggregation  rules  are  mandated  by  the  Code,  if an  eligible  Highly
      Compensated Employee is subject to the family aggregation rules or Section
      414(q)(6) of the Code because such employee is either a five-percent owner
      or one of the ten most Highly Compensated  Employees,  the combined actual
      contribution  ratio for the family  group  (which is treated as one Highly
      Compensated  Employee)  shall be  determined  by  combining  the Basic and
      Supplemental  After-Tax  Contributions and Employer Matching Contributions
      of all the eligible family members.

            The Basic and Supplemental After-Tax Contributions, Compensation and
      amounts treated as Employer  Matching  Contributions of all family members
      shall be disregarded for purposes of determining  the actual  contribution
      percentage for the group of Highly Compensated Employees, and the group of
      eligible Employees.

            If an Employee is required to be aggregated as a member of more than
      one family  group in a plan,  all  eligible  Employees  who are members of
      those family groups that include that Employee  shall be aggregated as one
      family group.

            (f)  The   determination   and   correction   of  excess   aggregate
      contributions of a Highly Compensated  Employee whose actual  contribution
      ratio is  determined  under the family  aggregation  rules of (e) shall be
      accomplished as follows: the actual contribution ratio shall be reduced as
      required under subparagraph 5.2(b) and the excess aggregate

                                     V-5

<PAGE>



      contributions  for the  family  unit shall be  allocated  among the family
      members   in   proportion   to  the  Basic  and   Supplemental   After-Tax
      Contributions  and Employer  Matching  Contributions of each family member
      that are combined to determine the actual contribution ratio.

      5.3   Remittance   of  Employer   Contributions   to   Trustee:   Employer
Contributions, if any, shall be made solely in cash and shall be remitted to the
Trustee,  as  soon as  practicable  after  the end of the  year  for  which  the
Company's  Profitability Level was attained;  provided,  however,  that Employer
Contributions  to the NL Stock Fund, may be made in shares of Common Stock of NL
or in cash.

      5.4   Allocation of Employer Contributions and Forfeitures:

            (a) General: All Employer Contributions shall be used by the Trustee
      to make purchases for the Investment  Fund or Funds in accordance with the
      respective  investment  elections of the  Participant to whose account the
      Employer Contributions are allocated.  All Employer Contributions shall be
      allocated to the accounts  established  in accordance  with Article VII of
      each Participant entitled to share in such contributions.

            (b) December 31 Rule: Employer Pension Feature Contributions accrued
      on  behalf  of a  Participant  shall be  allocated  to such  Participant's
      account whether or not such  Participant  remains employed on the last day
      of the Plan Year.  Notwithstanding  any other  provision  of the Plan,  no
      Employer Matching  Contributions  shall be made for the benefit of, and no
      Employer Matching  Contributions or forfeitures shall be allocated,  added
      or otherwise  credited to the account of, a Participant under the Plan who
      was not an  Employee  of an  Employer  on the last  day of the Plan  Year;
      provided,  however,  a Participant who terminated  Service during any Plan
      Year on his Retirement Date or by reason of his death or Disability  shall
      be treated as if he was an active Participant on the last day of such Plan
      Year.  In addition,  any  Participant  who is, on the last day of the Plan
      Year on a leave of absence to which such  Employee is  entitled  under the
      Family and Medical Leave Act of 1993 ("FMLA") shall be deemed to be in the
      employ of the  Employer on such last day unless final  regulations  issued
      under the FMLA do not require such treatment for this purpose.

            (c) Use of  forfeitures:  Amounts in the  accounts  of  Participants
      which are  forfeited in accordance  with Article VIII and  Paragraph  16.6
      shall be  applied  during  the  continuance  of the Plan in the  following
      order: (i) to restore the accounts of reemployed  participants pursuant to
      subparagraph  8.4(b),  (ii) to restore  the  accounts of  Participants  or
      Beneficiaries who apply for forfeited  benefits pursuant to Paragraph 16.6
      and (iii) to reduce the amount of Employer Contributions otherwise payable
      by their Employer. If upon complete  discontinuance of contributions under
      the Plan or termination of the Plan any such  forfeitures have not been so
      applied,  such  unapplied  amount shall be allocated  among all  remaining
      Employees who are Participants in accordance with Paragraph 13.2.

                                     V-6

<PAGE>



      5.5 Investment and  Administrative  Expenses:  All brokerage  commissions,
taxes and other expenses related to the purchase and sale of securities shall be
paid out of the assets of the Trust  Fund,  as directed  by the  Committee.  All
other expenses,  including any taxes which may be imposed upon the Trust Fund or
upon the income therefrom,  compensation of the Trustee,  investment  management
fees,  fees for legal and  accounting  purposes and all other costs and expenses
incurred in administering the Plan,  unless paid by the Employer,  shall be paid
out of the Trust Fund, as directed by the Committee.

      5.6   Multiple Use:

            (a)  Notwithstanding  any other  provision  under this Plan,  in the
      event there is multiple use, as defined and determined in accordance  with
      Section  1.401(m)-2  of  the  Regulations,  such  multiple  use  shall  be
      corrected to the extent required by the Regulations by reducing the actual
      contribution  percentage,  as defined in  subparagraph  5.2(a),  of Highly
      Compensated Employees in the manner prescribed in subparagraph 5.6(b).

            (b)  The  amount  of  the  reduction  to  the  actual   contribution
      percentage  of Highly  Compensated  Employees  shall be  calculated in the
      manner described in subparagraph  5.2(b) so that there is no multiple use.
      The reduction shall be treated as an excess aggregate contribution.

      5.7 Qualified Non-Elective Contributions:  At the election of the Board of
the  Plan  Sponsor,  in lieu of  distributing  excess  contributions  to  Highly
Compensated Employees in order to satisfy the actual deferral percentage test or
the  actual  contribution  percentage  test,  the  Employer  may make  Qualified
Non-Elective  Contributions  on  behalf  of one or more  non-Highly  Compensated
Employees who are  Participants in such amounts as are sufficient to satisfy the
actual deferral percentage test or the actual contribution percentage test.

                                     V-7

<PAGE>



                                  ARTICLE VI

                          INVESTMENT OF CONTRIBUTIONS



      6.1  Investment   Funds:  Each  Participant  at  the  time  he  becomes  a
Participant  under the Plan shall submit written  instructions  to the Committee
(unless the Committee  establishes a different way to submit such  instructions)
to  invest  any and all  contributions  made by him or on his  behalf  in  whole
percentages  in any one or a combination  of Investment  Funds (which conform to
any portfolio  standards and  guidelines  established  by the Trustee) as may be
determined  from time to time by the  Committee  and made  available on an equal
basis to all individuals  with accounts in the Plan. The Investment  Funds shall
include at least the following  five,  but may include  additional  funds at the
Committee's discretion:


            (a)  Money  Market  Fund:  an  income  producing   diversified  fund
      comprised of short-term money market  instruments that seeks to maintain a
      constant $1 per share value.  Acceptable  securities include,  but are not
      limited  to,  U.S.  Government  and U.S.  Government  Agency  obligations,
      commercial  paper,  time  deposits,  certificates  of deposit,  Eurodollar
      deposits,  repurchase  agreements,  banker's  acceptances  and  guaranteed
      investment contracts.

            (b) Fixed  Income  Fund:  a  diversified  fund that may  invest in a
      variety of short-,  intermediate-  or long-term fixed income  instruments,
      that may seek a mixture of capital  gains and current  income.  Acceptable
      securities  include,  but are not  limited to,  U.S.  Government  and U.S.
      Government Agency obligations, corporate bonds and notes and mortgage- and
      asset-backed  securities  and other  money  market  instruments.  The fund
      assumes a higher  degree of risk  than a money  market  fund and its share
      value may fluctuate considerably.

            (c) Equity Fund: a diversified fund that invests primarily in equity
      securities  traded in public  markets in the U.S.  or in foreign  markets,
      that seeks growth in asset value and possibly  current income.  The fund's
      investments  can be  comprised  of  common  stock  from a  wide  array  of
      companies and industries.  The fund will typically  assume a higher degree
      of risk  than a money  market  fund and a fixed  income  fund but may also
      achieve a higher long term rate of return.  The fund's  share value can be
      expected to fluctuate considerably.

            (d) NL Stock Fund: A fund invested  primarily in Common  Stock.  All
      dividends  declared  and paid on Common  Stock held in the NL Stock  Fund,
      shall  be  used,  as soon  as  practicable,  by the  Trustee  to  purchase
      additional  Common  Stock,  the value of which shall be  allocated to such
      Participant's account.


                                     VI-1

<PAGE>



            (e) The  Dresser/Tremont  Stock Fund: A fund which shall hold shares
      of Common Stock which were received by the Trustee as a result of the Plan
      of Restructuring of NL Industries,  Inc.,  approved by the shareholders of
      the Company at the special  meeting held on December  22, 1988,  and which
      Participants  elected to retain in the form of Baroid  Corporation  Common
      Stock in lieu of exchanging it for Common Stock of the Company (the Baroid
      Corporation common stock having later been acquired by Dresser Industries,
      Inc.),   and  shares  of  Common  Stock  of  Tremont   Corporation   which
      Participants  received  due to the  subsequent  reorganization  of  Baroid
      Corporation into Tremont Corporation and Baroid Corporation. No additional
      contributions  or  transfers  to the  Dresser/Tremont  Stock  Fund will be
      permitted.  Dividends paid on the securities in the Dresser/Tremont  Stock
      Fund  will be  allocated  to the  respective  Participant's  accounts  and
      invested in accordance  with the  Participant's  most recent  instructions
      directing the  investment of new  contributions  to the Plan. No shares of
      Dresser or Tremont  Common Stock will be purchased on or after  January 1,
      1994.

      6.2  Temporary  Investments:  After the  allocation of assets of the Trust
Fund  to any of the  Investment  Funds,  but  prior  to  investment  or  pending
reinvestment of monies in securities of a type consistent with the objectives of
any such Fund,  the Trustee or  Investment  Manager may  temporarily  invest and
reinvest  any such  assets in  securities  with  maturities  of one year or less
issued or guaranteed by the Government of the United States of America or by any
agency or instrumentality  thereof, or in the name of the Trustee in any savings
accounts or  certificates of deposit in any banks, or may maintain cash balances
consistent with the liquidity needs of the Plan.

      6.3 Change in Investment Election for Future Contributions: Any investment
election filed by a Participant  for investment of current  contributions  shall
continue in effect until changed by the  Participant.  A Participant  may change
his current investment  election as to future  contributions.  Effective July 1,
1990,   changes  in  investment   elections  may  be  made  by  telephoning  the
representative  of the  Trustee  at  the  number  stated  in  the  summary  plan
description of the Plan, and following the instructions of that  representative.
Written  confirmation of the transaction  will be sent to the Participant by the
Trustee  and  such  written  confirmation  is  binding  unless  the  Participant
demonstrates  an error in such  written  confirmation  within the number of days
stated on the written confirmation.

      6.4  Inter-Fund  Transfers:  Effective  July 1, 1990,  a  Participant  may
transfer all or any portion of his account balance in any Fund (in increments of
1%) to any other Fund upon submission to the investment  manager appointed under
Section 11.2 the appropriate  information in the form required by the investment
manager under uniform procedures.

      Transfers may be made as often as daily. Instructions must be received one
business  day in  advance of the  business  day on which the  transfer  is to be
effected.  A business day is a period of time during a calendar day when the New
York financial markets are open.


                                     VI-2

<PAGE>



      Notwithstanding the preceding  paragraph,  only one transfer per month may
affect a  Participant's  accounts in the NL Stock Fund, and only one transfer is
permitted out of a  Participant's  Dresser/Tremont  Stock Fund. No transfer into
the Dresser/Tremont Stock Fund will be permitted. Transfers under this paragraph
are permitted any business day of the quarter  requested by the Participant with
one  business day advance  notice,  and  settlement  will take place within five
business days. Any commissions charged will be paid by the forfeiture account of
the Plan or by the Employer.

      6.5 Suspension of Investments  and Investment  Transfers into the NL Stock
Fund or the  Dresser/Tremont  Stock  Fund:  Notwithstanding  any  election  by a
Participant,  during  any  period  of time  when  (a) a  Registration  Statement
covering the Plan is not in effect,  (b) although in effect,  information in the
Prospectus  forming  part of such  Registration  Statement  does  not  meet  the
requirements of the Securities Act of 1933, as amended,  or is not available for
delivery,  or (c) in the judgment of the Company, a proceeding by the Securities
and  Exchange  Commission  for  the  issuance  of a stop  order  suspending  the
effectiveness  of the Registration  Statement is threatened or contemplated,  no
future Basic, Supplemental, or Employer Contributions may be invested in, and no
such prior  contributions,  or income earned  thereon,  may be  transferred  for
investment  in the NL Stock  Fund or the  Dresser/Tremont  Stock  Fund.  In lieu
thereof,  the Trustee  shall  invest such amounts in short term  investments  in
accordance  with  Paragraph  6.2. At such time as (a) a  Registration  Statement
covering the plan shall become  effective,  (b) the  Prospectus  forming part of
such Registration  Statement shall have been amended to meet the requirements of
the Act or shall be available  for  delivery,  or (c) no stop order  proceedings
shall be threatened or contemplated, such amount shall be invested as previously
directed,  until such prior  direction is changed in accordance  with  Paragraph
6.3.

      6.6 Proxy Material for Those  Participants for Whom an Investment Has Been
Made in the NL Stock Fund or the Dresser/Tremont  Stock Fund: Before each annual
or special  shareholders'  meeting of the applicable company,  the Trustee shall
furnish  to  each  Participant  with  an  account  in the NL  Stock  Fund or the
Dresser/Tremont Stock Fund, a copy of the proxy solicitation material,  together
with a form  requesting  confidential  instructions  to the  Trustee on how such
Common Stock (including fractional shares, to 1/10th of a share) is to be voted.
Such proxy  solicitation  material will be furnished to participants in a timely
manner so as to comply with  applicable  federal and/or state laws.  Upon timely
receipt  of such  instructions,  the  Trustee  shall vote such  Common  Stock as
instructed.  The instructions received by the Trustee from Participants shall be
held by the Trustee in strict  confidence  and shall not be divulged or released
to any person  including  officers or employees of the Company or any Affiliated
Company.  The Trustee shall not make  recommendations to Participants on whether
to vote or how to vote. If voting instructions for Common Stock for a particular
shareholders  meeting are not timely  received  from  Participants,  the Trustee
shall not vote such Common  Stock,  except that  effective  January 1, 1994,  if
timely  instructions  are not  received  from  Participants,  or if the  Trustee
determines that the instructions  received violate ERISA, the trustee shall vote
such Common  Stock for which  valid  instructions  are not  received in the same
proportion as are voted the shares for which valid instructions are received.


                                     VI-3

<PAGE>



      6.7 Exercise of Tender Rights:  Each Participant shall have the right from
time to time with respect to the shares of Common Stock allocated to his account
in the NL Stock Fund or the  Dresser/Tremont  Stock Fund to instruct the Trustee
in writing as to the manner in which to respond to any tender or exchange offers
which shall be pending or which may be made in the future for all such shares of
Common Stock or any portion thereof.  A Participant's  instructions shall remain
in force until  superseded  in writing by the  Participant.  The  Trustee  shall
tender  or  exchange  such  shares  of  Common  Stock  as and to the  extent  so
instructed.  If the Trustee  shall not receive  instructions  from a Participant
regarding  tender or exchange offers for Common Stock, the Trustee shall have no
discretion in such matter and shall take no action in response  thereto.  Unless
and until  shares of Common  Stock are  tendered or  exchanged,  the  individual
instructions  received by the  Trustee  from  Participants  shall be held by the
Trustee  in strict  confidence  and shall not be  divulged  or  released  to any
person,  including  officers  or  employees  of the  Company  or any  Affiliated
Company;  provided,  however,  that the Trustee shall advise the Company, at any
time upon  request,  of the total  number of shares of Common Stock which it has
been  instructed  to tender or exchange  and the total number of such shares not
subject to  instructions  to tender or exchange.  The Trustee  shall notify each
Participant  of each  tender or exchange  offer and utilize its best  efforts to
timely distribute or cause to be distributed to such Participant all information
distributed to shareholders of the Company in connection with any such tender or
exchange offer.

      6.8 Best  Interests  of  Participants:  In the event that the Trustee or a
court of  competent  jurisdiction  determines  that the  Trustee  shall have the
discretion or power to sell,  convey or transfer any shares of Common Stock held
in the NL Stock  Fund or the  Dresser  Tremont  Stock  Fund of the Trust Fund in
response  to a tender or  exchange  offer,  notwithstanding  the  provisions  of
Section 6.7, the Trustee in exercising such discretion or power shall be obliged
to consider not only any increased value in the accounts of the  Participants in
the NL Stock  Fund or the  Dresser  Tremont  Stock  Fund of the Trust  Fund as a
result of a tender or exchange of the shares of Common  Stock in the accounts of
such  Participants,  but also the  impact  of any  change in the  management  or
control of the Company on the status of the  Participants  as  employees  of the
Company  in the  long  run,  not  over a  short  period,  such as  whether  such
Participants will be retained or dismissed as employees of the Company,  whether
such  Participants  will receive  greater or fewer benefits than they receive as
employees of the Company at present,  including coverage under pension,  savings
or thrift,  or employee stock  ownership  plans similar to the Company's  plans,
whether  such  plans are as well  funded as the  Company's  plans,  whether  the
Participants  will receiver  greater or lower levels of compensation and whether
the  Participants  will continue to be covered by a savings or thrift plan, such
as the Plan.  To the maximum  extent  permitted  by law,  the  Trustee  shall be
obliged  to  treat  the   instructions  of  Participants  who  have  given  such
instructions as indicative of whether  tendering shares of Common Stock would be
in the best interests of other Participants.

      6.9 Assumption of Investment Risk by Participants:  Upon the withdrawal or
distribution  of benefits under the Plan, a Participant  or  Beneficiary  may be
entitled  to  receive  shares  of  Common  Stock or cash as  provided  for under
Articles IX and X. The Employer does not guarantee that the current market value
of Common  Stock or any other  investment  will be equal to the  purchase  price
thereof or that the total amount  withdrawn or distributed in cash will be equal
to or greater than the

                                     VI-4

<PAGE>



amount  of  the  Participant's   Basic  or  Supplemental   Contributions.   Each
Participant  assumes  all risks in  connection  with any  decrease in the market
price of any common stocks or other  investments or Investment Funds held on his
behalf in accordance with the provisions of the Plan.

      If a Participant or Employee  submits invalid  instructions  directing the
investment  of his  account,  his  account  shall  continue  to be  invested  in
accordance with the most recent valid instructions  received by the Committee or
in  accordance  with  Section  6.3.  If no valid  instructions  have  ever  been
received, such Participant or Employee shall be deemed to have elected to invest
his account in the Money Market Fund, or if none is offered, the Investment Fund
that the  Committee  determines to be closest to a money market fund in expected
risk.

      6.10 Section 404(c) of ERISA: Except as may otherwise be prescribed by the
Committee, categories of assets, election procedures and other rules relating to
investment  elections  shall comply with the  requirements  of Section 404(c) of
ERISA.



                                     VI-5

<PAGE>



                                  ARTICLE VII

                TRUST FUND ACCOUNTS AND ALLOCATION OF EARNINGS

      7.1 Participant's  Account:  The Committee shall cause to be maintained in
an equitable manner a separate account for each Participant in which there shall
be kept a separate  record of the share of such  Participant in each  Investment
Fund of the Trust  Fund  which is  attributable  to his  Basic and  Supplemental
After-Tax  and Pre-Tax  Contributions,  Roll-over  Contributions,  if any,  made
pursuant to Article IV hereof and the Employer Contributions made on his behalf.

      7.2 Valuation of Investment  Funds:  The Committee shall cause the Trustee
to value  separately  the  Investment  Funds  described in Article VI as of each
Valuation Date by  determining  the fair market value of the Trust Fund's assets
then held in each of the Investment Funds.

      7.3 Valuation of Accounts:  The difference  between the value of each such
Investment  Fund on any  Valuation  Date and its value as of the last  preceding
Valuation  Date  together with  interest,  dividends and other sums received and
accrued but not yet invested,  less expenses,  shall be credited or debited,  as
the case may be,  to the  account  balances  of the  Participants  in each  such
Investment Fund.

      7.4 Statement of Participant's  Account:  As soon as practicable after the
completion of a Plan Year, an individual statement of account shall be issued to
each Participant showing the value of his interest in each Fund.



                                    VII-1

<PAGE>



                                 ARTICLE VIII

                                    VESTING

      8.1 Vesting With Respect to Predecessor  Plan  Contributions,  Participant
Contributions  and  Pre-Tax  Contributions  Made  After  December  31,  1973:  A
Participant  shall at all  times be fully  vested in the  current  value of that
portion  of  his  account  which  is   attributed  to  Basic  and   Supplemental
Contributions, Rollover Contributions, Direct Rollovers, and direct transfers to
the Trust Fund (as described in subparagraph 4.10(c)).

      8.2 Vesting With Respect to Employer  Contributions:  A Participant  shall
have no vested interest with respect to the value of that portion of his account
which is  attributed  to  Employer  Contributions,  unless  he shall  have  been
credited  with at least three years of Vesting  Service (as defined in Paragraph
8.3).  If a  Participant  has been credited with at least three years of Vesting
Service,  he shall be vested in 50% of the value of all Employer  Contributions.
If a Participant has been credited with at least four years of Vesting  Service,
he  shall  be  vested  in 75% of the  value  of all  Employer  Contributions.  A
Participant  who has been credited  with at least five years of Vesting  Service
shall be vested in 100% of the value of all Employer Contributions.

      8.3 Years of Vesting Service: Subject to the last sentence of subparagraph
10.1(c), an Employee shall be credited with one year of Vesting Service for each
Plan Year or part thereof  following his  commencement  of  employment  with the
Employer or with an Affiliated  Company during which he shall have been credited
with at least 1,000 Hours of Service or six Months of Service. For this purpose,
an Employee  shall receive credit for all Hours of Service and Months of Service
with an Employer or an  Affiliated  Company,  whether or not such  Employee  was
eligible to participate in the Plan during each such Plan Year. In addition, any
Employee may be credited  with up to five years of employment  with Valhi,  Inc,
Tremont Corporation, Louisiana Pigment Company, L.P., or Baroid Corporation (but
only if such employment with Baroid Corporation preceded Baroid's acquisition by
or merger with Dresser  Industries,  Inc.) prior to such Employee's date of hire
by the  Employer.  Notwithstanding  the fact that a  Participant  has incurred a
forfeiture  under the rules described in Paragraph 8.4, years of Vesting Service
shall  include  years of Vesting  Service  prior to a one-year  Break in Service
subject to the following rules:

            (a) If a vested  Participant  has a one-year  Break in Service,  his
      pre-break and  post-break  service  shall be used for  computing  years of
      Vesting Service upon his date of reemployment.

            (b)  After  five   consecutive   one-year   Breaks  in  Service,   a
      Participant's  vested interest in the value of his Employer  Contributions
      attributable  to pre-break  service  shall not be increased as a result of
      post-break service.

      8.4  Forfeitures  Upon  Distribution  Prior to Full Vesting and Repayment:
Except as provided in Paragraphs 8.5 and 8.6, any termination of employment of a
Participant, prior to the time

                                    VIII-1

<PAGE>



his account attributable to the Employer  Contributions made with respect to him
is 100%  vested  in  accordance  with  Paragraphs  8.2 or 8.5,  may  result in a
forfeiture  of  the  current  value  of the  nonvested  amounts  subject  to the
following provisions, effective January 1, 1992.

            (a) General Rule: The value of his vested  interest in his Basic and
      Supplemental  After-Tax  Contributions,  and in the Basic and Supplemental
      Pre-Tax  Contributions and Employer  Contributions made on his behalf will
      be paid to him in accordance with Paragraph 9.1. Notwithstanding any other
      provisions  of the Plan to the contrary,  any nonvested  amounts that were
      held under the Plan (as in effect  immediately prior to the Plan Year that
      commenced on January 1, 1992), in Accounts maintained for Participants who
      had incurred at least five (5)  consecutive  one year Breaks in Service on
      or before January 1, 1992,  shall be deemed to have been forfeited  during
      the first Plan Year that commenced immediately after December 31, 1991 and
      shall be applied as herein provided.

            (b) Cashouts Within Two Plan Years After Employment Terminates:  The
      Participant shall not be entitled to the value of the nonvested portion of
      his account attributable to Employer Contributions which nonvested portion
      shall be  forfeited  as of the date  distribution  of his  vested  account
      balance  is  made  or  commenced  (due  to  such  person's   cessation  of
      participation  in the Plan) by the close of the second  complete Plan Year
      following the Plan Year in which his employment terminated, and applied in
      accordance  with Paragraph 5.4.  Otherwise,  with respect to the nonvested
      portion of such account of a Participant  who received a  distribution  of
      all or a portion of the vested  portion of such account  other than by the
      close of the second  complete  Plan Year  following the Plan Year in which
      his  employment  terminated,  such  forfeiture  shall occur on the date on
      which such Participant incurs five consecutive  one-year Breaks in Service
      following the date of termination of employment.  Provided,  however, that
      if the  Participant  (1) received a  distribution  which includes the full
      amount of his  entire  vested  interest  in his  account  attributable  to
      Employer  Contributions as a result of his termination of participation in
      the Plan, which distribution is $3,500 or less, or is more than $3,500 but
      is consented to, (2) returns to active  employment  before  incurring five
      consecutive  one-year  Breaks in Service and (3) not later than the end of
      the  five-year  period   beginning  with  the  Employee's   resumption  of
      employment  covered  by the Plan,  repays to the  Trust  Fund,  in cash or
      shares of  Employer  Stock (but only to the extent of the number of shares
      received upon  distribution),  the entire value of his account  balance at
      the time of  distribution  to him,  the amount  repaid  and the  nonvested
      portion of the Employer Contributions previously made on the Participant's
      behalf shall be restored to such Participant's accounts in an amount equal
      to the  value of his  accounts  on the date of  distribution  and shall be
      invested in accordance  with the option in effect for such  Participant at
      the time of repayment.  In addition,  if such  Participant  (1) received a
      distribution  by the close of the second Plan Year following the Plan Year
      in which his employment  terminated,  which distribution was less than the
      full amount of his entire vested  interest in his account  attributable to
      Employer Contributions,  which interest is $3,500 or less, or is more than
      $3,500 but is consented  to, and (2) returns to active  employment  before
      incurring five consecutive one-year Breaks in Service following the date

                                    VIII-2

<PAGE>



      his  employment   terminated,   the  nonvested  portion  of  the  Employer
      Contributions  previously  made  on  the  Participant's  behalf  shall  be
      restored to such Participant's accounts in an amount equal to the value of
      his  accounts  on  the  date  the  distribution   commenced   without  any
      requirement that he repay to the Trust Fund any amount of the distribution
      attributable  to Employer  Contributions;  provided,  however,  any future
      distributions  attributable to Employer  Contribution  shall be subject to
      offset  by the  amount  of the  prior  distribution  that  was not  repaid
      incident to  restoration  to the  Participant's  account  pursuant to this
      sentence.  There shall be no adjustment  for any gains or losses which may
      be incurred between the date of distribution and the date of repayment.

            (c)  Deemed  Cashouts:  If the  Participant  did not  have a  vested
      interest in any  contributions  credited to his account at the time of his
      termination  of  participation  in the  Plan he shall  be  deemed  to have
      received  distribution of a vested interest in any contributions  credited
      to his account equal to zero (although  actually receiving no distribution
      from his account as a result of his  termination of  participation  in the
      Plan), and his account will be restored if he resumes  employment  covered
      under the Plan prior to  incurring a period of five  consecutive  one-year
      Breaks in Service following the date of the termination.

            (d)  Distribution  Made or Begun  More  Than Two  Plan  Years  After
      Employment Terminates: With respect to a Participant whose vested interest
      in his account  attributable to Employer  Contributions  is less than 100%
      and who receives a termination  distribution from his account attributable
      to Employer  Contributions other than by the close of the second Plan Year
      following  the Plan Year in which his  employment  terminated,  any amount
      remaining  in his account  attributable  to Employer  Contributions  shall
      continue to be maintained  as a separate  account.  At any relevant  time,
      such Participant's  nonforfeitable  portion of such separate account shall
      be determined in accordance with the following formula:

                               X = P(AB + D) - D

      For purposes of applying the formula: X is the  nonforfeitable  portion of
      such separate account at the relevant time; P is the Participant's  vested
      interest in his account  attributable  to  Employer  Contributions  at the
      relevant time; AB is the balance of such separate  account at the relevant
      time; and D is the amount of the  distribution.  For all other purposes of
      the Plan, a Participant's  separate account shall be treated as an account
      attributable to Employer  Contributions.  The forfeitable  portion of such
      terminated  Participant's  separate account shall be forfeited on the date
      on which such  Participant  incurs  five  consecutive  one-year  Breaks in
      Service following the date of termination of employment.

            (e) Deferred Vested Distributions: With respect to a Participant who
      terminates  employment  with the  Employer  with a vested  interest in his
      account  attributable to Employer  Contributions  greater than 0% but less
      than 100% and who is not otherwise subject to the forfeiture provisions of
      paragraph (b) or paragraph (d) above, the forfeitable portion of such

                                    VIII-3

<PAGE>



      terminated  Participant's  account attributable to Employer  Contributions
      shall be  forfeited  on the date on which  such  Participant  incurs  five
      consecutive  one-year Breaks in Service  following the date of termination
      of employment.

            (f)  Investment  of  Forfeitable  Account  Balances:   A  terminated
      Participant  shall be entitled to direct the  investment of his Account up
      until  such  time  as  investments  are  liquidated,  if  applicable,  and
      distribution  of his entire  vested  interest is made in  accordance  with
      Article IX. Thereafter,  the forfeitable  portion of such Account shall be
      invested by the Committee.

      8.5 Full  Vesting:  Notwithstanding  the  provisions  of Paragraph  8.2, a
Participant  shall  be  fully  vested  in  all  Employer  Contributions  if  his
employment is terminated as a result of his  Retirement,  Disability or death. A
Participant  shall also be fully vested upon attainment of his normal retirement
age  regardless  of whether he  actually  retires on such date,  except that for
Participants  first  hired  by an  Employer  on or  after  January  1,  1997,  a
Participant shall be fully vested upon attainment of the later of (i) his normal
retirement age (regardless of whether he actually retires on such date) and (ii)
the completion of five years of Vesting  Service.  For purposes of the preceding
sentence,  a Participant's  normal retirement age shall be the earlier of age 65
or the age  treated as his normal  retirement  age under the  provisions  of any
formal retirement plan the Company under which he may be covered.

      8.6  Other   Provisions   Affecting   Vesting:   If  the   termination  of
participation  of any  Participant is occasioned by a change in ownership of the
outstanding  stock  of an  Affiliated  Company  by  which  such  Participant  is
employed,  or if the  termination of employment of any Participant is occasioned
by  the  sale  or  other  transfer  to  an  acquiring   corporation  of  all  or
substantially  all of the  assets  used by the  Company  in a  division,  plant,
location, or other identifiable unit of the Company by which such Participant is
employed, and if such former Affiliated Company or acquiring corporation, either
prior to or within 60 days from the date of such  change,  evidences  in writing
its intention to continue in effect for its employees a profit  sharing,  thrift
or savings plan for their benefit in accordance  with the terms of the Plan, the
Committee  upon  approval by the Board  shall  direct the Trustee to transfer to
itself, or to such other trustee as such former Affiliated  Company or acquiring
corporation  shall  designate  in a  trust  agreement  containing  the  same  or
substantially  similar  terms and  provisions  as are contained in the agreement
establishing  the Trust  forming part of the Plan,  such assets then held by the
Trustee for such Participant,  without reduction for the nonvested  amounts,  if
any, of his account balance, as the Committee shall determine and certify to the
Trustee, constitute the appropriate share of the Trust Fund then held in respect
of such former Affiliated  Company's or the acquiring  corporation's  employees,
who, prior to the change in ownership, participated under the Plan.


                                    VIII-4

<PAGE>



                                  ARTICLE IX

                DISTRIBUTION OF BENEFITS OTHER THAN WITHDRAWALS

      9.1 Normal Form of Payment: Subject to Paragraphs 5.2, 8.6, 13.2, 17.2 and
17.3, distributions shall be made under the Plan only upon the occurrence of one
of the events  described in Paragraph 10.3. In addition,  to the extent required
by  Section  401(k)  of the  Code and  Regulations  or  other  authority  issued
thereunder  by  the  appropriate  governmental  authority,  the  limits  of  the
immediately  preceding  sentence  shall  continue  to apply even if Trust  Funds
attributable  to any  Participant's  account  are  transferred  to another  plan
pursuant to  applicable  provisions  of Paragraph  4.12(c) or 17.3.  Neither the
Committee,  Trustee nor any  Employer  shall have any duty to ensure  compliance
with the  requirements of the immediately  preceding  sentence after the initial
transfer therein described.

      Unless a Participant  otherwise elects, in the case of a Participant whose
employment is terminated  for any reason,  including  Retirement,  the Committee
shall value his account balance as of the Valuation Date coincident with or next
following the date on which such  termination of employment  occurs (or would be
deemed to have occurred).

            (a) If a  Participant's  termination of employment is for any reason
      other than death, all vested amounts then credited to his account shall be
      distributed  in one  lump-sum  payment;  provided,  however,  that no such
      lump-sum  payment  shall  be  made  without  the  written  consent  of the
      Participant where the portion of the payment  attributable to (i) Employer
      Contributions,  (ii)  Basic  and  Supplemental  Contributions,  and  (iii)
      Rollover  Contributions,  exceeds  $3,500.  Such written  consent shall be
      obtained by the Committee within the 90 day period  commencing  before the
      date the  lump-sum  payment  is to be made to the  Participant.  If such a
      Participant  does not  provide  the  Committee  with the  written  consent
      described  above,  the  Participant  shall be  deemed  to have  elected  a
      deferred distribution and all amounts credited to his account at that time
      shall  remain  in the  Investment  Funds,  subject  to his  right  to make
      inter-fund  transfers  pursuant to Paragraph 6.4,  until such  Participant
      either (i) dies (ii)  attains  age 65 or (iii)  consents  in writing to an
      earlier date for distribution;  provided,  however,  if any Participant or
      Beneficiary  elects a deferred  lump-sum  payment  described in Paragraphs
      9.2(b), such amounts credited to the Participant's account shall remain in
      said  Investment  Funds,  subject  to  inter-fund  transfers  pursuant  to
      Paragraph 6.4, until the Valuation Date  designated by the  Participant or
      the  Beneficiary for  distribution  of benefits,  with payment to occur as
      soon as practicable  thereafter.  If such  Participant dies or attains age
      65,  without  having made a timely  election to defer  distribution  under
      Paragraph  9.2, all amounts  credited to his account at that time shall be
      distributed pursuant to this subparagraph no later than the 60th day after
      the close of the Plan Year in which such  Participant  dies or attains age
      65. Such  Participant's  account balance shall be valued for  distribution
      purposes as of the Valuation Date either (i) designated by the Participant
      for distribution of benefits under this  subparagraph or Paragraph 9.2, or
      (ii)  coincident  with or next following his date of death, as applicable.
      Any such distributions

                                     IX-1

<PAGE>



      shall be made as soon as practicable after the applicable  Valuation Date.
      All amounts  distributable  as a lump-sum  under this  Paragraph  9.1 from
      Investment  Funds  other  than the NL Stock  Fund and the  Dresser/Tremont
      Stock Fund shall be paid in cash. Amounts  distributable from the NL Stock
      Fund and the  Dresser/Tremont  Stock Fund shall be paid either entirely in
      cash,  or  entirely  in whole  shares of  Common  Stock and in cash to the
      extent of any fractional  shares (to 1/10th of a share) as the Participant
      shall elect.  Absent such an election,  amounts  distributable from the NL
      Stock  Fund  and the  Dresser/Tremont  Stock  Fund  shall be paid in whole
      shares of Common Stock (and fractional shares to 1/10th of a share paid in
      cash).

            (b) If the value of a Participant's  vested benefit  attributable to
      any Employer  Contributions,  Basic and  Supplemental  Contributions,  and
      Rollover  Contributions,  is less than $3,500,  the  Committee in its sole
      discretion may distribute  such benefit in a cash lump-sum,  regardless of
      any election to the contrary.

      9.2 Alternative  Forms of Payment:  Each Participant  whose vested account
balance  exceeds  $3,500 shall be given,  not less than 30 days nor more than 90
days before the first day of the first  period for which an amount is to be paid
as a partial or complete distribution, a general description of the distribution
options.  After receiving the notice,  a Participant or his Beneficiary may file
with the Committee an election to have his distribution  paid to the Participant
or his  Beneficiary,  as the case may be, in one or more of the forms  described
below in lieu of the immediate  lump-sum payment  provided in Paragraph  9.1(a);
provided,  however, that in the case of termination of employment for any reason
other than death,  Disability or Retirement,  the  Participant may not elect the
annuity form of  distribution  described in  subparagraph  (a) of this Paragraph
9.2. Any such election may be revoked, by the Participant or the Beneficiary, as
the case may be,  at any time  prior to the  commencement  of  benefits  or,  if
sooner,  the purchase of any annuity  contract  pursuant to subparagraph  (a) of
this Paragraph 9.2. Similarly, a Participant whose Beneficiary is other than his
Spouse may  designate,  at the time he  designates  such  Beneficiary,  that the
distribution to such Beneficiary be paid in one or more of such forms in lieu of
the form prescribed in subparagraph 9.1(a). If the designation  permitted in the
previous  sentence is not made  irrevocably  by a  Participant  with  respect to
actions of his Beneficiary or if the  Participant's  Spouse is his  Beneficiary,
and such Participant dies prior to his Retirement, then his Beneficiary may file
with the  Committee  the same  election not more than 60 days  subsequent to the
date of the Participant's death.
The alternate forms of distribution are:

            (a) Annuity: A nontransferable annuity contract,  provided, however,
      that:  (i)  if  a  Participant's  termination  of  employment  is  due  to
      Retirement  and if  such  Participant  has a  Spouse  at the  time of such
      distribution  then, unless the Participant files a written election not to
      receive his  benefits in this form in the manner  prescribed  in Paragraph
      9.3,  such annuity  shall be paid on a fixed annuity basis with 50% of the
      annuity  continued  after  the  Participant's  death to his  Spouse.  Such
      annuity shall be in the form of a "qualified joint and survivor  annuity",
      as that term is defined in Section 417(b) of the Code, and shall be

                                     IX-2

<PAGE>



      actuarially  equivalent  to the single life annuity which would be payable
      for the life of the Participant.

            All payments under an annuity contract distributed hereunder must be
      payable not less  frequently  than  annually and must be of  approximately
      equal  amounts,  except  that the  earlier  payments  may exceed the later
      payments and no  contingent  annuitant  option may be elected  which would
      allocate to the  Participant  less than 50% of the actuarial  value of the
      benefits  payable under such contract.  This limitation shall not preclude
      the  election  of an annuity for the life of the  Participant  under which
      payments in equal or lesser amounts are  thereafter  made to his surviving
      Spouse;

            (b) Lump Sum: A lump sum payment payable in the manner prescribed in
      subparagraph 9.1(a) valued as of the Valuation Date designated as the date
      for  distribution of benefits by the Participant or the Beneficiary but no
      later than the April 1st of the calendar year  following the calendar year
      in which the  Participant  attains  age 70 1/2;  provided,  however,  if a
      Participant  was born prior to July 1, 1917, and is not a 5% owner subject
      to the rule set forth in subparagraph  9.5(a), any benefit payable to such
      Participant  shall  commence  no later than the April 1st of the  calendar
      year following the later of (i) the calendar year in which the Participant
      attains  age 70 1/2 or (ii) the  calendar  year in which  the  Participant
      retires. The Committee may accelerate the lump-sum payment in the event of
      hardship; or

            (c) Installments:  Approximately  equal annual  installments paid in
      cash over a fixed period of years subject to minimum payment  requirements
      under the Regulations as prescribed by the Committee. Such period of years
      for the payment of  installments  may  commence as of any  Valuation  Date
      after the  Participant's  termination  of  employment,  as  elected by the
      Participant  or the  Beneficiary,  but no later  than the April 1st of the
      calendar year following the calendar year in which the Participant attains
      age 70 1/2; provided,  however, if a Participant attained age 70 1/2 prior
      to January 1, 1988, except as otherwise  provided in subparagraph  9.4(a),
      any benefit payable to such  Participant  shall commence no later than the
      April 1st of the  calendar  year  following  the later of (i) the calendar
      year in which the Participant attains age 70 1/2 or (ii) the calendar year
      in which the Participant retires. Such installments shall be paid over the
      period of years elected by the  Participant  or the  Beneficiary  provided
      that such period shall not exceed the lesser of (i) 15 years,  or (ii) the
      life  expectancy of the  Participant,  the  Beneficiary  or the joint life
      expectancy of the  Participant  and the  Beneficiary  as determined by the
      Committee  in  accordance  with the Code.  In the event of  hardship,  the
      Committee may accelerate the payment of one or more installments or reduce
      the installment payment period.

      Any Participant or Beneficiary  electing an alternate form of distribution
described  in  subparagraphs  (b)  or  (c)  shall  continue  to  participate  in
Investment Fund  performance with respect to all  undistributed  portions of his
account balance.  In no event shall any payment pursuant to subparagraphs (b) or
(c) be permitted after the Participant's attainment of age 65 unless the method

                                     IX-3

<PAGE>



of payment,  on an actuarial basis,  will provide the Participant with more than
50% of the present value of the total payments to be made to the Participant and
the Beneficiary.

      9.3 Notice of Right to Elect Not to Receive  Benefits in Form of Qualified
Joint and Survivor Annuity: Each Participant who elects to have his distribution
paid in the form of an annuity  contract set forth in  Paragraph  9.2(a) and who
would otherwise  receive the qualified  joint and survivor  annuity set forth in
subparagraph  9.2(a)(i)  shall  have a period of 90 days  ending on the  annuity
starting  date to make a  Qualified  Election  not to take such form of  annuity
under the Plan,  and to elect any other  permissible  form of  annuity  or other
optional form of benefit  provided under Paragraph 9.2. A Participant may revoke
his election to take an optional form of benefit at any time during the election
period.  The  Committee  shall  provide to the  Participant  within a reasonable
period prior to the  commencement of benefits a written  explanation of: (i) the
terms  and  conditions  of  qualified  joint  and  survivor  annuity;  (ii)  the
Participant's  right to make,  and the effect of, a Qualified  Election to waive
such form of benefit; (iii) the rights of the Participant's Spouse; and (iv) the
right to make, and the effect of, a revocation of a previous  Qualified Election
to waive the qualified joint and survivor  annuity.  The election of an optional
form of benefit  which  includes  the  payment of an annuity  shall not be given
effect if the  Participant  or any other person who would receive  benefits from
such annuity dies before the purchase of an annuity contract.

      9.4   Distributions Upon Death:

            (a) Except in the case of a Participant  whose  benefits are paid in
      the form of an annuity, as described in subparagraph  9.2(a), in the event
      of the  death  of a  Participant  prior  to  complete  payment  under  any
      allowable form of distribution, the balance of his account under the Trust
      Fund shall be distributed to his Beneficiary in accordance with Paragraphs
      9.1(a) and 9.2; provided,  however,  that such balance will continue to be
      distributed  at least as rapidly as under the  method of  distribution  in
      effect on the Participant's death.

            (b) In the event of the death of a Participant prior to commencement
      of the distribution of his benefit, the Participant's entire benefit shall
      be  distributed  to the  Beneficiary  no later than five  years  after the
      Participant's death; provided,  however, that any such distribution may be
      made in installments  pursuant to subparagraph 9.2(c) if such distribution
      is commenced not later than one year after such Participant's death or, if
      such Beneficiary is the Participant's surviving Spouse, not later than the
      date on which such Participant would have attained age 70 1/2 (or any such
      later date prescribed in the  Regulations.)  If the surviving  Spouse dies
      before payments begin,  subsequent  distributions  shall be made as if the
      Spouse had been the Participant.

            (c) For purposes of this  Paragraph  9.4, any amount paid to a child
      of the  Participant  shall  be  treated  as if it  had  been  paid  to the
      surviving  Spouse if such amount becomes  payable to the surviving  Spouse
      upon  the  child's  attaining  the age of  majority  or such  other  event
      prescribed in the Regulations.

                                     IX-4

<PAGE>



      9.5   Commencement of Certain Distributions:

            (a) If a  Participant  who is a 5% owner  attained age 70 1/2 before
      January 1, 1988, any benefit payable to such Participant shall commence no
      later than the April 1st of the calendar  year  following the later of (i)
      the calendar year in which the Participant  attains age 70 1/2 or (ii) the
      earlier of (A) the calendar year within which the Participant becomes a 5%
      owner or (B) the  calendar  year in which  the  Participant  retires.  For
      purposes of this  Subsection (a), a 5% owner shall mean a 5% owner of such
      Participant's  Employer  as defined in Section  416 (i) of the Code at any
      time  during the Plan Year in which such owner  attains  age 66 1/2 or any
      subsequent Plan Year.

            (b)  Unless  a  Participant  or  Beneficiary   elects  otherwise  in
      accordance   with  this  Article  IX,  the  payment  of  the  value  of  a
      Participant's  vested  interest  under the Plan shall begin not later than
      the 60th day after the latest of the close of the Plan Year in which:  (i)
      the Participant attains age 65; (ii) the Participant terminates employment
      with the  Employer  or  other  Affiliated  Company;  or  (iii)  the  tenth
      anniversary of the year in which the Participant  commenced  participation
      in the Plan occurs.

      9.6   Special Distributions:

            (a) In addition to the  distributions  available  under Sections 9.1
      and 9.2, a Participant or his  Beneficiary may elect, on or after the date
      of occurrence of an event specified in Paragraph  9.5(b),  to receive,  as
      soon as practicable after the filing of an election with the Committee,  a
      distribution  in one  lump-sum  payment  of all  amounts  credited  to his
      account in Investment Funds B,C,E and G or, effective July 1, 1990, in all
      Investment Funds.


            (b) A  Participant  or his  Beneficiary  may make an election  under
      Paragraph  9.5(a) if one of the following events shall have occurred on or
      after  January  1,  1985:   (i)  the  Plan  is   terminated   without  the
      establishment  of or  maintenance  of another  defined  contribution  plan
      (other than a plan defined in Section 4975(e)7 of the Code); (ii) there is
      a disposition  by the Company of  substantially  all of the assets (within
      the  meaning of Section  409(d)(2)  of the Code) used by the  Company in a
      trade or  business,  and the  Participant  continues  employment  with the
      corporation  acquiring the assets;  or (iii) there is a disposition by the
      Company of the Company's  interest in a subsidiary  (within the meaning of
      Section 409(d)(3) of the Code), and the Participant  continues  employment
      with the subsidiary.

      9.7 Minimum Distribution Requirements:  All distributions under Article IX
shall be determined and made in accordance  with Section  401(a)(9) of the Code,
including the minimum  distribution  incidental  benefit  requirement of Section
1.401(a)(9)-2  of the proposed  Income Tax Regulations or any successor or final
regulation issued with respect thereto.


                                     IX-5

<PAGE>



      9.8 Waiver of 30 Day Notice:  If a  distribution  is one to which Sections
401(a)(11) and 417 of the Internal Revenue Code do not apply,  such distribution
may  commence  less  than  30 days  after  the  notice  required  under  Section
1.411(a)-11(c) of the Income Tax Regulations is given, provided that:

            (1) the plan administrator  clearly informs the participant that the
      participant  has a right to a period of at least 30 days  after  receiving
      the  notice  to  consider  the  decision  of  whether  or not to  elect  a
      distribution (and, if applicable, a particular distribution option), and

            (2) the  participant,  after  receiving  the  notice,  affirmatively
      elects a distribution.




                                     IX-6

<PAGE>



                                   ARTICLE X

                                  WITHDRAWALS

      10.1  Withdrawals of Contributions:

            (a) General:  Subject to the limitations set forth in Paragraph 10.3
      with  respect  to  Basic  and  Supplemental   Pre-Tax   Contributions,   a
      Participant may make  withdrawals  from his account balance in the various
      Investment  Funds at any  time  prior to his  termination  of  employment,
      without  the  consent of the  Committee,  as  hereinafter  set forth.  The
      provisions of this Article X shall apply to deferred  vested  Participants
      who are not current employees on the same basis that such provisions apply
      to currently employed Participants.

            (b) Procedure:  All requests for  withdrawals  shall be initiated by
      submission  of the  appropriate  Plan form to the local  administrator  at
      least 5 days  before the 15th of the month or the end of the month that is
      the  Valuation  Date with respect to the proposed  withdrawal,  unless the
      Committee  resolves  that  requests  for  withdrawals  may be initiated by
      telephoning the  representative of the Trustee at the number stated in the
      summary plan  description  of the Plan and following the  instructions  of
      that representative.  Written confirmation of the transaction will be sent
      to  the   Contributing   Participant  by  the  Trustee  and  such  written
      confirmation is binding unless the Contributing  Participant  demonstrates
      an error in such written  confirmation within the number of days stated on
      the written  confirmation.  The value of a Participant's  accounts will be
      valued on the Valuation  Date next following the date on which the request
      is approved.  Distribution shall be made in a lump-sum cash payment within
      15 days or as soon as  practicable.  All such  withdrawals  shall be taken
      proportionately  from each of the Participant's  Investment Funds,  except
      that  if  the  Committee  determines  in its  sole  discretion  that  such
      proportionate   withdrawal  would  violate  any  Securities  and  Exchange
      Commission  ("SEC")  rule  concerning  the sale of stock by an  officer or
      member of the board of directors of any company of which the stock is held
      in the Plan, the withdrawal  shall be taken  proportionately  from each of
      the affected  Participant's  Investment Funds other than the NL Stock Fund
      or the Dresser/Tremont Stock Fund or any other company stock fund in which
      transactions would violate any SEC rule.

            (c) Limitations:  A Participant is not allowed to take more than two
      withdrawals  in any calendar year, nor any withdraw an amount of less than
      one hundred dollars ($100).

            (d) Source of funds: All withdrawals  shall be made in the following
      sequence and for  purposes of this  Paragraph  where  reference is made to
      Basic and  Supplemental  Pre-Tax  Contributions  or Basic and Supplemental
      After-Tax  Contributions,  such terms  shall mean the lesser of the actual
      amount of such  unwithdrawn  contributions  or the  current  market  value
      thereof as of the applicable Valuation Date:


                                     X-1

<PAGE>



                  (i) all of his Basic and Supplemental After-Tax  Contributions
            made prior to 1987;

                  (ii)  all or  part  of his  post-1986  Supplemental  After-Tax
            Contributions,  and  all or  part of the  increments  earned  on all
            Supplemental  After-Tax  Contributions;  

                  (iii)   all  or  part  of  his   post-1986   Basic   After-Tax
            Contributions, and all or part of the increments earned on all Basic
            After-Tax Contributions;

                  (iv)  all or part  of  that  portion  of his  account  balance
            attributable  to  Employer  Contributions  which are  fully  vested,
            including  increments  earned thereon,  subject to the provisions of
            Paragraph 10.4. For purposes of determining his vested percentage at
            the time of such  withdrawal,  a  Participant  who has  completed at
            least 1,000 Hours of Service or six Months of Service at the time of
            the withdrawal shall be deemed to have completed one year of Vesting
            Service;

                  (v)  all or part  of  Employer  Contributions  made  prior  to
            January 1, 1974 to the Predecessor Plan, including increments earned
            thereon,   Rollover  Contributions,   Direct  Rollovers  and  direct
            transfers from another qualified trust as described in subparagraphs
            4.10(b), (c) and (d) including increments earned thereon;

                  (vi)  all  or  part  of his  Basic  and  Supplemental  Pre-Tax
            Contributions,   provided  he  has  satisfied  the  requirements  of
            Paragraphs 10.3 or 10.6.

      10.2 Suspensions:  A Participant who makes a withdrawal shall be suspended
from making any further  Basic  After-Tax or  Supplemental  Contributions  for a
period of three  months,  effective  as of the  Valuation  Date  upon  which the
withdrawal is based. A Participant who makes a withdrawal  pursuant to Paragraph
10.6 shall be suspended from making any further Basic Pre-Tax,  Basic  After-Tax
or Supplemental  Contributions for a period of three months, effective as of the
Valuation Date upon which the withdrawal is based.

      10.3  Withdrawal  of  Basic  and   Supplemental   Pre-Tax   Contributions:
Notwithstanding the provisions of Paragraph 10.1, Basic and Supplemental Pre-Tax
Contributions, including the increments earned thereon, may not be withdrawn by,
or otherwise  distributed  to, a Participant  until the earliest to occur of the
Participant's Retirement, Disability, death, separation from service, attainment
of age 59 1/2 or hardship (as  determined by the  Committee in  accordance  with
Paragraph 10.6).  Notwithstanding the foregoing,  in the case of a withdrawal on
account of hardship,  no  post-1988  earnings on Basic or  Supplemental  Pre-Tax
Contributions  may be withdrawn by, or otherwise  distributed  to, a Participant
except to the extent permitted by Regulations.

      10.4 Restrictions on Withdrawal of Employer Contributions: Notwithstanding
the  provisions  of Paragraphs  10.1,  10.2 and 10.6,  no  Participant  shall be
permitted to make a withdrawal under  subparagraph  10.1(c) until the amounts to
be  withdrawn  have been held in the Trust Fund for a period of 24 full  months.
Such period shall be measured  from the day such amounts are actually  deposited
in  the  Trust  Fund  until  the  day of  withdrawal;  provided,  however,  that
Participants with

                                     X-2

<PAGE>



not less  than 60  months  of  participation  in the Plan  (including,  for this
purpose,  participation  in the Prior  Plan)  may make  withdrawals  subject  to
Paragraph 10.2 under  subparagraph  10.1(c)  without  regard to the  restriction
imposed by this Paragraph 10.4.

      10.5 Special Rules Affecting Withdrawals:  Except as provided in Paragraph
10.6, no withdrawal other than as provided in subparagraph (d) of Paragraph 10.1
may be made by a  Participant  while a suspension  for a prior  withdrawal is in
effect.  If a Participant  was suspended  from making Basic  Contributions  as a
result of a withdrawal  described under  Paragraph 10.1, and thereafter  resumes
making Basic  Contributions,  such Basic Contributions shall be, for a period of
time equal to the period of suspension,  at a rate of  contribution  not greater
than the rate  contributed  as Basic  Contributions  at the time the  suspension
began.

      10.6  Hardship Withdrawals:

            (a)  General  rules:   After  all  withdrawals   permissible   under
      Paragraphs  10.1 and 10.4, a  Participant,  in the case of  immediate  and
      heavy  financial  need,  may apply to the Committee to withdraw all or any
      portion of his vested  account  balance  under the Plan.  If the Committee
      determines in accordance with  nondiscriminatory  and objective guidelines
      promulgated  by  the  Committee   (which  shall  be  consistent  with  the
      Regulations subject to differences in rules and regulations  applicable to
      different  classifications of contributions and increments,  and uniformly
      applicable  to all  Participants),  in accordance  with any  guidelines or
      Regulations issued by the Secretary of the Treasury, and with the facts of
      the particular  case,  that an immediate and heavy  financial need exists,
      the  Committee  may direct the Trustee to  distribute  such portion of the
      Participant's  account balance at such time and subject to such conditions
      as the Committee in its sole  discretion  shall  determine is necessary to
      satisfy  such  immediate  and  heavy  financial  need  and  which  may not
      reasonably  be obtained by other  resources of the  Participant  including
      resources of the Participant's  spouse,  children or dependents reasonably
      available to the  Participant.  The Committee may require any  Participant
      who applies for a withdrawal pursuant to this Paragraph 10.6 to provide it
      with  such  financial   information  as  may  be  required  to  make  such
      determination.

            (b)  Hardship  amounts  and  purposes:  Subject  to the  Committee's
      guidelines,  such withdrawals may be made in the event of an immediate and
      heavy  financial  need  arising  from (i) medical  expenses  described  in
      Section 213(d) of the Code previously  incurred (or,  effective January 1,
      1992, previously incurred or necessary to be incurred) by the Participant,
      his spouse, or dependents, (ii) the purchase (excluding mortgage payments)
      of the  Participant's  primary  residence,  whether  such  residence  is a
      previously existing structure or a proposed structure under contract to be
      newly  constructed (iii) payment of tuition or, effective January 1, 1992,
      related  educational  fees, for the next semester or quarter or, effective
      January 1, 1992, year, of post-secondary education of the Participant, his
      spouse,  or  dependents,  (iv) the need to  prevent  the  eviction  of the
      Participant from his principal residence or foreclosure on the mortgage of
      the Participant's principal residence, or (v) any other event specifically
      identified in  regulations  or other  guidance  from the Internal  Revenue
      Service as a  hardship  for which a  qualified  pension  benefit  plan may
      permit a hardship  withdrawal under Section 401(k) of the Code and related
      regulations.  Effective  January 1, 1992,  the  withdrawal  may include an
      additional  amount  necessary to pay any federal,  state,  or local income
      taxes or penalties (including  additional taxes under Section 72(t) of the
      Code) that are reasonably expected to result from the withdrawal.


                                     X-3

<PAGE>



                                  ARTICLE XI

                      NAMED FIDUCIARY AND ADMINISTRATION

      11.1 Pension and Employee Benefits  Committee:  The Committee shall be the
Pension and Benefits Committee of NL Industries,  which is a committee appointed
by the Board. The charter and bylaws of the Committee shall govern wherever such
investments  are in direct  conflict with the provisions of this Article XI. If,
however, the Pension and Employee Benefits Committee should cease to exist then,
the Board shall  appoint at least three  persons as members of the Committee who
shall be subject to removal by the Board at any time. A member of the  Committee
may resign by giving the Board not less than 30 days written  notice  unless the
Board accepts a lesser period of notice.

      Names of the  current  members of the  Committee  are  available  from the
Secretary of the Committee.  The Committee shall be the Plan's "named fiduciary"
as that term is defined  in ERISA and shall,  except as  provided  in  Paragraph
11.2,  provide for the funding,  maintenance and administration of the Plan. Any
act which the Plan  authorizes  or requires the Committee to do may be done at a
meeting of the  Committee by a majority of the members then voting.  The members
of the Committee  shall serve without  compensation  for their services as such,
but all expenses of the Committee in the  performance  of their duties under the
Plan (including  compensation  for legal counsel,  accountants,  consultants and
agents) shall be paid  proportionately  by each Employer or, at the  Committee's
direction, out of the Trust Fund.

      11.2  Authority of the Committee:

            (a) The  Committee  shall have the  following  powers of the Company
      with respect to the Plan:

                  (i)   to appoint, remove or replace any Trustee;

                  (ii) to appoint,  remove or replace any one or more investment
            advisors or investment managers under the Plan;

                  (iii) to  appoint,  remove or replace any other  fiduciary  or
            named fiduciary of the Plan;

                  (iv) to amend  the Plan and the Trust as may be  necessary  or
            appropriate to facilitate  their  administration  or operation or to
            ensure the continued  qualification  of the Plan and the  tax-exempt
            status of the Trust  under  Sections  401(a) and 501(a) of the Code,
            respectively,  provided such amendment does not increase  materially
            the cost to the Company funding or administering the Plan; and

                  (v) to secure and maintain the qualification of the Plan under
            applicable law.

            (b) The  Board  shall  retain  power  and,  except  as  provided  in
      subparagraph (a)(iv) above, the Committee shall not have the power:

                  (i) to amend, suspend or terminate the Plan, any contributions
            thereunder  or the Trust,  in whole or in part,  at any time and for
            any reason;

                  (ii)  to provide the proper funding of the Plan; and

                  (iii) to monitor periodically the performance of the Committee
            and to determine,  in connection  with such  monitoring,  whether to
            continue any delegation to or  responsibility  of the Committee with
            respect to the Plan.

      11.3 Delegation of Authority: The Committee shall appoint a Secretary, who
need be neither a Participant nor a member of the Committee.  The Secretary,  or
such other person as the Committee may designate, duly shall record all acts and
determinations  of the  Committee  and  maintain  all record  books or documents
necessary  for the  administration  of the Plan.  The  Committee  may  establish
procedures for allocating  fiduciary  responsibilities  among the members of the
Committee  and may  designate  any one or more  persons to  exercise  any of its
powers,  including any of its powers as administrator,  or to execute or deliver
any  instrument or make any payment on its behalf;  provided,  however,  that no
person  other  than a member of the  Committee,  the  Trustee  or an  investment
manager  shall have any  authority  or  control,  whether or not  discretionary,
respecting the management or disposition of the Plan's assets.

      11.4  Administrator:  The Committee shall serve as  "administrator" of the
Plan as that term is defined in ERISA. The Committee,  as  administrator,  shall
have the authority and responsibility to:

            (a)  control  the  operation  and  administration  of  the  Plan  in
      accordance with the terms of the instruments and resolutions governing the
      Plan and any related Trust;

            (b) determine benefit eligibility and to certify such eligibility to
      any other fiduciaries;

            (c) establish  procedures and adopt rules and regulations of uniform
      application  as it  deems  necessary  or  appropriate  for  the  effective
      administration of the Plan;

            (d) hire persons and  organizations  to provide  legal,  accounting,
      investment  advisory and other  services  necessary or  beneficial  to the
      Plan;

            (e) issue directions to the Trustee to pay any fees, taxes,  charges
      or other costs  incidental to the operation and  management of the Plan by
      the administrator pursuant to this Paragraph 11.4;

            (f) issue  directions to the Trustee as to the amount of Plan assets
      to be held in cash to assure proper liquidity;

            (g) prepare and file all reports and returns required to be filed by
      the Plan with any agency of government;

            (h)  comply  with all  disclosure  requirements  imposed by state or
      federal law;

            (i) maintain all records of the Plan other than those required to be
      maintained by the Trustee or by any fiduciary of the Plan; and

            (j) perform all other acts  required by law to be  performed  by the
      administrator of the Plan.

      The Committee shall have all powers  necessary to carry out the provisions
of the Plan and shall have the absolute,  unilateral,  and  exclusive  right and
power to interpret, construe and construct the terms and provisions of the Plan,
including,  without  limitation,  correcting any error or defect,  supplying any
omission or reconciling any inconsistency,  and making all  determinations  that
may impact a claim for benefits,  including factual  determinations.  Subject to
Paragraph 11.5, the Committee's decisions,  interpretations,  determinations and
actions in respect  thereof shall be conclusive  and binding upon each Employer,
Participant, Beneficiary and all other persons and entities.

      11.5 Appeals  Procedure:  The Committee,  as  administrator,  shall act as
claims  fiduciary  except to the extent that the  Committee  has  delegated  the
function to someone else. All claims for benefits under the Plan must be made in
writing and shall be directed to the  attention  of the claims  fiduciary.  Upon
receipt of the claim, the claims fiduciary shall notify the claimant in a timely
fashion of the time periods within which any notice of denial of claim,  request
for review of claim,  or  decision on review of denial of claim must be given in
accordance with subparagraphs (a) through (c) below.

            (a) If the claims  fiduciary  determines that any individual who has
      claimed a right to  receive  benefits  under the Plan is not  entitled  to
      receive  all or any part of the  benefits  claimed,  it shall  inform  the
      claimant in writing of its  determination  and of the reasons  therefor in
      layman's terms,  with specific  reference to pertinent Plan provisions and
      any additional  material  necessary for the claimant to perfect his claim.
      The notice of denial shall also include a summary description or a copy of
      the text of the review  procedures  set forth below.  Such notice shall be
      made within a  reasonable  period of time but not later than 90 days after
      receipt of the claim, unless special circumstances require
      an  extension  of time for  processing.  If such an  extension  of time is
      required,  the  claims  fiduciary  shall  furnish  written  notice  of the
      extension to the claimant  prior to the  termination of the initial 90 day
      period.  In no event shall such extension  exceed a period of 90 days from
      the end of such initial  period.  The extension  notice shall indicate the
      special circumstances requiring an extension of time and the date by which
      the claims fiduciary expects to render a final decision.  If notice of the
      denial of claim is not furnished  within the time limits  specified above,
      the claim shall be deemed  denied and the  claimant  shall be permitted to
      proceed to the  review  process  described  in  subparagraphs  (b) and (c)
      below.

            (b) Within 60 days of the  receipt by the  claimant  of the  written
      notice of denial of the claim,  the  claimant  may file a written  request
      with the claims  fiduciary to conduct a full and fair review of the denial
      of the  claimant's  claim for benefit.  In connection  with the claimant's
      appeal, the claimant may review pertinent  documents and may submit issues
      and comments in writing.

            (c) The claims  fiduciary  shall promptly advise the claimant of its
      decision on the  claimant's  request for review.  Such  decision  shall be
      written in a manner  calculated to be  understood  by the claimant,  shall
      include  specific  reasons for the decision,  and shall  contain  specific
      references to pertinent Plan  provisions upon which the decision is based.
      The  decision  on  review  shall be made no later  than 60 days  following
      receipt of the  claimant's  request for review.  If special  circumstances
      require an extension of time for processing,  a decision shall be rendered
      not later than 120 days  following  receipt  of the  request  for  review.
      Written  notice of any such  extension  shall be furnished to the claimant
      prior to the commencement of the extension.

      11.6 Reliance on Reports and Certificates: The Committee shall be entitled
to rely conclusively  upon all tables,  valuations,  certificates,  opinions and
reports  furnished  by any  Trustee,  accountant,  controller,  counsel or other
person who is employed or engaged for such purposes.

      11.7 Member's Own Participation:  No member of the Committee may act, vote
or otherwise influence a decision of the Committee  specifically relating to his
own participation under the Plan.

      11.8 Exemption from Bond: No member of the Committee  shall be required to
give bond for the  performance of his duties  hereunder,  unless required by law
which cannot be waived.

      11.9  Persons  Serving  in Dual  Fiduciary  Roles:  Any  person,  group of
persons,  corporations,  firm or  other  entity,  may  serve  in more  than  one
fiduciary capacity with respect to the Plan, excluding the ability to serve both
as Trustee and as a member of the Committee.

      11.10  Indemnification:  Each member of the  Committee  and any  Employee,
director  or officer  of an  Employer,  who is  considered  to have  served in a
fiduciary capacity with respect to the Plan, shall be indemnified by the Company
against expenses (including the amount of any liability imposed in the form of a
money  judgment,  civil  penalty,  excise  tax,  as  well  as  amounts  paid  in
settlement)  reasonably  incurred by him in connection with any action,  suit or
proceeding  to which he may be a party or with which he shall be  threatened  by
reason of his being  considered to have served in a fiduciary  capacity,  to the
fullest  extent  permitted  by the  By-Laws of the  Company  and by law. No such
individual  shall be liable with respect to a breach of fiduciary duty if such a
breach  occurred  before  he  became a  fiduciary  or after  he  ceased  to be a
fiduciary.

      11.11  Liability of  Fiduciaries:  No person,  including any Trustee,  who
shall at any time be considered to be or to have been a fiduciary,  as such term
is  defined   under  ERISA,   shall  be  liable  for  the  breach  of  fiduciary
responsibility  of any other  person who is at any time  considered  to be or to
have been a fiduciary, except as provided in Section 405(a) of ERISA.

      11.12  Liability of Named  Fiduciaries:  No  fiduciary  who at any time is
considered to be or to have been a "named fiduciary," as that term is defined in
ERISA, shall be liable for an act or omission of any person,  designated by such
fiduciary  to  carry  out  fiduciary  responsibilities,  or to whom  such  named
fiduciary has allocated the  performance of his own fiduciary  responsibilities,
except as provided in Section 405(c)(2) of ERISA.



                                     XI-1

<PAGE>



                                  ARTICLE XII

                                THE TRUST FUND

      12.1 The Trust: All assets of the Plan, including earnings thereon,  shall
comprise the Trust Fund.  Except as provided in Paragraph  12.2,  no part of the
principal  or income of the  Trust  Fund  shall be used  for,  or  diverted  to,
purposes  other  than  the  exclusive  benefit  of the  Participants  and  their
Beneficiaries.  No person shall have any interest in or right to any part of the
earnings of the Trust Fund, except as and to the extent provided in the Plan and
under federal law. The Trustee shall invest, reinvest,  manage, control and make
disbursements  from the Trust Fund in accordance with the provisions of the Plan
and the Trust,  subject,  however,  to the power of the  Committee to appoint an
investment manager pursuant to subparagraph 11.2(a)(ii).

      12.2  Irrevocability  of Company  Contributions:  All contributions by the
Company or any Employer  shall be  irrevocable  when made, and the Company shall
have no  right,  title or  interest  of any kind in the  Trust  Fund;  provided,
however, that if the Plan and Trust shall not initially, or after any amendment,
be determined by the Internal  Revenue Service to be qualified under  applicable
provisions  of the Code,  or if a  contribution  made by any  Employer  shall be
disallowed  as a deduction  under  applicable  provisions  of the Code,  or if a
contribution  of any  Employer  is  made by  mistake  of  fact,  then  upon  the
Employer's  written  request  such  affected  Employer  contributions  shall  be
returned to the Company or to the  appropriate  Employer  within 30 days of such
request; provided,  however, that no contributions may be returned more than one
year after the date of the  determination of  disqualification,  disallowance of
the deduction of mistaken payment, respectively.

      12.3 Exclusive  Benefit:  Subject to the provisions of Paragraph  12.2, it
shall be  impossible at any time for any part of the Trust Fund to revert to the
Company or to any  Employer,  or to be used for or diverted to any purpose other
than the  exclusive  benefit  of  Participants,  former  Participants  and their
Beneficiaries,  or for defraying  expenses of  administering  the Plan and Trust
Fund.  No person  shall have any  interest  in or right to any part of the Trust
Fund,  except as, and to the extent,  provided in the Plan and under  federal or
state law.



                                    XII-1

<PAGE>



                                 ARTICLE XIII

                       AMENDMENT AND TERMINATION OF PLAN

      13.1 Right to Amend or Terminate:  The Board shall have the right,  at any
time  and  from  time  to  time,  to  amend  in  whole  or in part of any of the
provisions of the Plan or to terminate the Plan, provided that no such amendment
may affect the rights,  duties or  responsibilities  of the Trustee  without its
consent.  Any  amendment  or  termination  of the Plan,  other than an amendment
described in subparagraph  11.2(a)(iv),  shall become effective upon delivery to
the  Committee and the Trustee of a written  instrument  executed by the Company
pursuant to written resolutions of the Board, as of the effective date specified
therein.  To the extent that the Board  delegates  authority to the Committee to
amend the Plan,  the  written  instrument  shall be  executed  by the  Committee
pursuant to written resolution of the Committee. The written instrument may be a
certified copy of the applicable  resolutions.  Amendments of the Plan described
in subparagraph 11.2(a)(iv) shall become effective as of the effective date of a
written  instrument  executed  by the  Committee.  Any  amendment  of  the  Plan
requiring the Trustee's consent shall become effective as of such specified date
immediately  upon such  consent.  Except as may be  necessary  to  maintain  the
qualification of the Plan pursuant to Sections 401(a) and 501(a) of the Code and
subject to the provisions of Paragraph 12.2, no such amendment or termination of
the Plan shall  authorize or permit any part of the Trust Fund to be used for or
directed to purposes other than the exclusive  benefit of Participants and their
Beneficiaries,  or,  except as may be required  by  governmental  authority,  to
affect  adversely either the benefits of Participants  already  retired,  or the
Trust Fund securing such benefit.

      13.2 Mandatory Amendments:  The Contributions of each Employer to the Plan
are intended to be:

            (a)   deductible under the applicable provisions of the Code;

            (b) except as otherwise  prescribed by applicable  law,  exempt from
      the Federal Social Security Act;

            (c) except as otherwise  prescribed by applicable  law,  exempt from
      withholding under the Code; and

            (d) excludible from any  Participant's  regular rate of pay, as that
      term is defined under the Fair Labor Standards Act of 1938, as amended.

      The Company shall make such  amendments to the Plan as may be necessary to
carry out this intention, and all such amendments may be made retroactively.

      13.3 Distribution of Accounts Upon Plan  Termination:  In the event of and
upon the Company's  termination  or partial  termination of the Plan or complete
discontinuance  of  contributions  other than by reason of being merged into, or
consolidated  with, the plan of another Affiliated  Company,  whether or not the
Trust also  terminates  concurrently  therewith,  the interest in the portion of
each  Participant's  account  balance  attributable  to  Employer  Contributions
theretofore  made on behalf  of such  Participant  shall  become  fully  vested.
Subject to the provisions of Article XIV, any unallocated  forfeitures  shall be
reallocated  to the accounts of Employees  who are  Participants  on the date of
such termination or complete  discontinuance  in the proportion that the account
balances of each such individual  Participant  bears to the account  balances of
all persons who are Participants on such date,  provided that such  reallocation
does not discriminate in favor of Employees who are officers,  shareholders,  or
highly  compensated.  Unless  the  Board  directs  otherwise,  such  a  complete
discontinuance  of  contributions or a termination of the Plan shall not, except
as  otherwise   permitted  under  Paragraph  9.5,  accelerate  any  payments  or
distributions to or for the benefit of the  Participants or their  Beneficiaries
or estates,  but the Trust Fund shall continue to be held for  distribution  and
application in the manner to be prescribed by the Board.



                                    XIII-1

<PAGE>



                                  ARTICLE XIV

                         LIMITATIONS ON CONTRIBUTIONS

      14.1  Priority of this Article:  The  provisions of this Article XIV shall
govern notwithstanding any other provisions of the Plan.

      14.2 Limitation to Annual  Additions:  Annual Additions to a Participant's
account in respect of any Plan Year may not exceed the lesser of:

            (a)  $30,000,  or, if greater,  one-fourth  of the  defined  benefit
      dollar  limitation  set forth in  Section  415(b)(1)(A)  of the Code as in
      effect for such Plan Year; or

            (b) 25  percent  of the  Participant's  compensation  as  defined in
      Section  415(c)(3)  of the Code for such Plan  Year,  but in no event more
      than the first $150,000 of compensation, as adjusted for cost of living to
      the extent permitted by the Code and the Regulations.

      For this purpose,  the term "Annual  Additions"  shall mean the sum of the
following  amounts  which,  without  regard to this Article XIV, would have been
credited to the Participant's Account for any Plan Year under the Plan and under
any other  defined  contribution  plans of the  Employer  or an  Affiliate:  (i)
Employer Contributions; (ii) Basic Pre-Tax Contributions;  (iii) Basic After-Tax
Contributions;  (iv) Supplemental Contributions; (v) forfeitures, if applicable;
and, with respect to any plan  maintained by the Employer or an Affiliate;  (vi)
contributions  allocated to any individual  medical  account  defined in Section
415(l)(1)  of the  Code;  and (vii) in the case of a  Participant  who is a "key
employee," as defined in Section 416(i) of the Code,  the amount  allocated to a
separate  account  established  for  postretirement  medical  or life  insurance
benefits  or such  Participant  described  in  Section  419A(d)(1)  of the Code.
Without  limiting  the  scope of the  immediately  preceding  sentence,  for the
purpose of clarity,  in addition to other  amounts set forth in  regulations  or
other  guidance  issued  under  Section  415 of  the  Code  by  the  appropriate
governmental  authority,  amounts  paid to the Trust  pursuant  to the terms and
provisions  of the Plan to pay brokerage  commissions  on purchases and sales of
Employer  Stock  shall not be  treated  as  annual  additions.  The term  Annual
Additions  shall  not  include  any  Rollover  Contributions  made  pursuant  to
Paragraph  4.10.  Solely  for  the  purposes  of  subparagraph  14.4(a),  Annual
Additions  shall  include  a  participant's   contributions  under  a  qualified
cost-of-living   arrangement   described  in  Section  415(k)(2)  of  the  Code.
Contributions  shall continue to be treated as Annual Additions  notwithstanding
that such contributions are excess deferrals,  excess  contributions,  or excess
aggregate contributions or notwithstanding that such excess deferrals and excess
contributions have been corrected through distribution or recharacterization.

      14.3 Adjustments of Annual Additions:  In the event that the amounts which
would  otherwise  be  allocated  to a  Participant's  account must be reduced by
reason of the limitations of Paragraph 14.2, such reduction shall be made in the
following order of priority, but only to the extent necessary:

            (1)  The  amount  of  the   Participant's   Supplemental   After-Tax
      Contributions,  exclusive of any  earnings of the Trust Fund  attributable
      thereto, shall be refunded to the Participant; then

            (2) The amount of the Participant's  Basic After-Tax  Contributions,
      exclusive of any earnings of the Trust Fund attributable thereto, shall be
      refunded to the Participant; then

            (3) To the extent  permitted  by the Code and the  Regulations,  the
      amount of Basic and Supplemental Pre-Tax  Contributions,  exclusive of any
      earnings of the Trust Fund attributable thereto,  shall be refunded to the
      Participant or, to the extent required by law shall be held unallocated in
      a suspense  account and shall be applied,  as directed by the Committee in
      accordance  with  the law and  regulations,  as a  credit  to  reduce  the
      contributions  of the  Employer for the next Plan Year and in the event of
      termination of the Plan shall be returned to the Employer; and then

            (4)  Employer  Pension  Feature  Contributions   allocable  to  such
      Participant  in respect of such Plan Year shall be reduced  and the amount
      of such reduction  shall be utilized to reduce  Employer  Pension  Feature
      Contributions which would otherwise be made to the Plan.

            (5) Employer Matching Contributions allocable to such Participant in
      respect  of such  Plan  Year  shall  be  reduced  and the  amount  of such
      reduction  shall be utilized  to reduce  Employer  Matching  Contributions
      which would otherwise be made to the Plan.


      14.4  Participant Covered Under Defined Benefit Plan:

            (a) Subject to subparagraphs 14.4(c) and 14.4(d), in the event that,
      in any Plan  Year  and with  respect  to any  Participant,  the sum of the
      "Defined  Contribution  Fraction" (as defined in subparagraph 14.4(b)) and
      the "Defined Benefit Fraction" (as defined in subparagraph  14.4(b)) would
      otherwise  exceed 1.0, then the benefit  payable under the defined benefit
      plan or plans shall be reduced in accordance  with the  provisions of that
      plan or those plans,  but only to the extent necessary to ensure that such
      limitation is not  exceeded.  If this  reduction  does not ensure that the
      limitation  set forth in this  Paragraph  14.4 is not  exceeded,  then the
      Annual  Addition to any defined  contribution  plan,  other than the Plan,
      shall be reduced in accordance  with the  provisions of that plan but only
      to the extent necessary to ensure that such limitation is not exceeded.

            (b) For purposes of Paragraph  14.4, the following  terms shall have
      the following meanings:

                  (1)  "Defined  Contribution  Fraction"  shall mean,  as to any
            Participant  for any Plan Year,  a fraction,  (A) the  numerator  of
            which is the sum of  Annual  Additions,  for the  Plan  Year and all
            prior  Plan  Years,  as of the  close of the  Plan  Year and (B) the
            denominator  of  which  is the sum of the  lesser  of the  following
            amounts,  determined  for such Plan Year and for each  prior Year of
            Service (i) the product of 1.25 multiplied by the dollar  limitation
            in  effect  for such year  under  subparagraph  14.2(a)  or (ii) the
            product  of 1.4  multiplied  by the  amount  which may be taken into
            account under  subparagraph  14.2(b) with respect to the Participant
            for such year;  provided,  however,  that for years  ending prior to
            January 1, 1976, the numerator of such fraction shall in no event be
            deemed to exceed the  denominator  of such  fraction;  and,  further
            provided,   that  the   Committee,   in   determining   the  Defined
            Contribution  Fraction  may  elect to use the  special  transitional
            rules  permitted  by  Section  415 of the Code  and the  Regulations
            thereunder; and

                  (2)  "Defined   Benefit   Fraction"  shall  mean,  as  to  any
            Participant  for any Plan Year,  a fraction,  (A) the  numerator  of
            which is the projected annual benefit (determined as of the close of
            the  Plan  Year  and in  accordance  with  the  Regulations)  of the
            Participant  under any defined  benefit plan (as defined in Sections
            414(j) and 415(k) of the Code)  maintained  by the Company or any of
            its  Affiliates  and (B) the  denominator  is the  lesser of (i) the
            product of 1.25 multiplied by the dollar  limitation in effect under
            Section  415(b)(1)(A)  of the Code for  such  Plan  Year or (ii) the
            product of 1.4  multiplied  by an amount equal to 100 percent of the
            Participant's  average  compensation for his high 3 years within the
            meaning of Section 415(b)(3) of the Code for such Plan Year.

            (c) In the case of a Participant with respect to whom the sum of the
      Defined Contribution Fraction and the Defined Benefit Fraction exceeds 1.0
      with respect to the last Plan Year  beginning  before  January 1, 1983, an
      amount,  determined in accordance with the Regulations,  may be subtracted
      from the numerator of the Defined  Contribution  Fraction  (not  exceeding
      such numerator) so that the sum of such Participant's Defined Contribution
      Fraction and his Defined Benefit Fraction  computed under paragraph (a) of
      this  Paragraph  14.4 does not exceed 1.0 for the last Plan Year beginning
      before January 1, 1983.

            (d) Notwithstanding the foregoing provisions of this Paragraph 14.4,
      in  determining  the maximum  Annual  Addition for any Plan Year beginning
      before  January 1, 1987,  the Annual  Addition  shall not be recomputed to
      treat  all  Basic  After-Tax   Contributions  and  Supplemental  After-Tax
      Contributions as an Annual Addition.



                                    XIV-1

<PAGE>



                                  ARTICLE XV

                             TOP-HEAVY PROVISIONS

      15.1  Applicability of Top-Heavy  Provisions:  If the Plan is or becomes a
Top-Heavy  Plan  in any  Plan  Year,  the  provisions  of this  Article  XV will
supersede any conflicting  provisions in the Plan during each Plan Year in which
the Plan is a Top-Heavy Plan. In the event that any provision of this Article XV
is no longer  necessary for the Plan to meet the  requirements of Section 401(a)
or other  applicable  sections of the Code,  such  provision  shall  immediately
become null and void and shall no longer apply  without the necessity of further
amendment of the Plan.

      15.2  Definitions:  As used in this Article XV, the following  terms shall
have the meanings set forth below:

            (a) "Determination  Date" shall mean, with respect to any Plan Year,
      the last day of the preceding Plan Year.

            (b) "Key  Employee"  shall  have the  meaning  set forth in  Section
      416(i) of the Code. For purposes of determining Key Employees  pursuant to
      this  subparagraph,  "compensation"  shall have the meaning  prescribed in
      Section 414(s) of the Code or, to the extent  required by the Code and the
      Regulations, Section 1.415-2(d) of the Regulations.

            (c) "Non-Key Employee" shall mean a "Non-Key Employee" as defined in
      Section 416(i)(2) of the Code and the Regulations promulgated thereunder.

            (d)   "Top-Heavy Plan" shall mean a "top-heavy plan" as defined in
      Section 416(g) of the Code.

            (e)  "Aggregation  Group"  shall  mean the  group  composed  of each
      qualified  retirement  plan of the Company or an  Affiliate in which a Key
      Employee is a participant and each other qualified  retirement plan of the
      Company  or an  Affiliate  which  enables  a  plan  of the  Company  or an
      Affiliate in which a Key  Employee is a  participant  to satisfy  Sections
      401(a)(4) or 410 of the Code. In addition, the Company may choose to treat
      any other qualified  retirement plan as a member of the Aggregation  Group
      if such Aggregation Group will continue to satisfy Sections  401(a)(4) and
      410 of the Code with such plan being taken into account.

      15.3 Determination of Top-Heavy Status: The Plan shall be a Top-Heavy Plan
for  any  Plan  Year  if it is  determined  to be a  Top-Heavy  Plan  as of  the
Determination Date applicable to such year. For purposes of determining  whether
the Plan is a Top-Heavy Plan, all qualified  retirement  plans maintained by the
Company or an  Affiliated  Company  shall be  aggregated to the extent that such
aggregation is required  under the  applicable  provisions of Section 416 of the
Code.  All other  qualified  retirement  plans  maintained  by the Company or an
Affiliated  Company shall be aggregated  only if elected by the Company and only
to the extent  permitted by Section 416 of the Code. In determining  whether the
Plan is a Top-Heavy  Plan,  the  provisions  of Section 416 of the Code shall be
applied.

      15.4 Minimum  Vesting:  For any Plan Year in which the Plan is a Top-Heavy
Plan,  each  Participant who is credited with at least one Hour of Service on or
after the date the Plan becomes a Top-Heavy Plan shall have his vested  interest
in his account attributable to Employer Contributions determined as follows:

  Years of Vesting Service    Vested Interest

      less than 2                    0%
      2 but less than 3             20%
      3 but less than 4             50%
      4 but less than 5             75%
      5 or more                    100%

      If in any subsequent  Plan Year,  the Plan ceases to be a Top-Heavy  Plan,
the above vesting schedule shall continue to apply.

      15.5 Minimum Contribution:  The aggregate Employer Contributions allocable
to the account of each  Employee  (other than a Key  Employee) who has satisfied
the  eligibility  requirements  of Paragraph 3.1,  whether or not a Contributing
Participant in the Plan, and who is in Service at the end of the Plan Year shall
not be less  than  the  lesser  of (i) 3% of such  Employee's  compensation  (as
defined in Section  414(s) of the Code or to the extent  required by the Code or
the  Regulations,  Section  1.415-2(d) of the  Regulations)  or (ii) the largest
percentage of Employer Contributions, as a percentage of Compensation, allocated
to the  accounts  of any Key  Employee  for such  Plan  Year.  For  purposes  of
determining  the percentage  under clause (ii), all defined  contribution  plans
required  to be included  in an  Aggregation  Group shall be treated as a single
plan. Clause (ii) shall not be applicable if the Plan is required to be included
in an Aggregation Group which enables a defined benefit plan also required to be
included in said Aggregation  Group to satisfy Sections  401(a)(4) or 410 of the
Code.  Any  required  minimum   contribution  shall  be  made  even  though  the
Participant would not be eligible otherwise to receive a contribution,  or would
have  received  a lesser  contribution  in such  Plan  Year as a  result  of the
Participant's  failure to make Basic  Contributions to the Plan. For the purpose
of clarity and without  limiting the scope of the  preceding  provisions of this
paragraph,  with respect to Plan Years  beginning  after  December 31, 1988, any
elective deferral (described in Section 402(g)(3) of the Code) under the Plan or
any other defined  contribution  plan that is aggregated with the Plan under the
provisions  stated above on behalf of any  Participant who is not a Key Employee
shall not be treated as Employer  Contributions  for purposes of this paragraph,
but will be treated as an Employer  Contribution for purposes of determining the
percentage at which  Employer  Contributions  are made for the Key Employee with
the highest percentage.

      15.6 Maximum Benefit and Contribution  Limitations:  If for any Limitation
Year the Plan is a Top-heavy  Plan,  then for  purposes of applying  the overall
limitations on benefits and  contributions  under Paragraph 14.4(a) of the Plan,
"1.0" shall be substituted for "1.25" in each applicable  place in subparagraphs
14.4(b)(1)  and  14.4(b)(2) of the Plan unless the Plan would not be a Top-Heavy
Plan if 90% were  substituted for 60% in each applicable place in Section 416(g)
of the Code and 4% were substituted for 3% in each applicable place in Paragraph
15.6 of the Plan.

      15.7  Coordination  of Plans:  If, with respect to a Non-Key  Employee who
benefits  in a Plan Year  under both a defined  contribution  plan and a defined
benefit  plan which are  determined  to be  Top-Heavy  Plans  maintained  by the
Employer,  a top-heavy  minimum benefit is not provided for such Plan year under
both  plans,  then  such  determination  for  such  Plan  Year  shall be made in
conformity  with the  comparability  analysis  described  in Q&A M-12 of Section
1.416-1 of the Regulations.

      Such  analysis  shall be modified,  where a factor of 1.25 is utilized for
such Plan Year in connection with the  satisfaction of the limitations set forth
in Section 415(e) of the Code, in accordance  with the last sentence of Q&A M-14
of Section 1.416-1 of the Regulations.



                                     XV-1

<PAGE>


                                  ARTICLE XVI

                              GENERAL PROVISIONS

      16.1 Employment Relationships. Nothing contained herein shall be deemed to
give any  Employee the right to be retained in the service of any Employer or to
interfere with the right of an Employer to discharge any Employee at any time.

      16.2 Benefits  Provided Solely From Trust:  All benefits payable under the
Plan shall be paid or provided  for solely from the Trust;  no Employer  assumes
any liability or responsibility therefor.

      16.3  Non-Alienation  of Benefits.  Except as otherwise may be required by
law or  pursuant  to the terms of a  "qualified  domestic  relations  order," no
amount  payable  under the Plan shall be subject in any manner to  anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance,  charge or seizure.
Except with respect to any indebtedness owing to the Trust by a Participant or a
Beneficiary,  no amount payable under the Plan shall be liable in any manner for
or subject to the debts,  contracts,  liabilities,  engagements  or torts of any
Employee  or  Beneficiary.  For  purposes  of the Plan,  a  "qualified  domestic
relations order" means any judgment,  decree, or order (including  approval of a
property  settlement  agreement) which has been determined by the Committee,  in
accordance  with  procedures  established  by it,  to  constitute  a  "qualified
domestic  relations  order" ("QDRO") within the meaning of Section 414(p) of the
Code.  The  Committee  shall comply with the terms and  provisions  of any order
which  requires  distribution  to an  alternate  payee  prior  to  the  affected
Participant's  "earliest  retirement  age," as such term is  defined  in Section
206(d)(3)(E)(ii)  of the Act and Section  414(p)(4)(B) of the Code, if the order
would  have  been  determined  to be  valid  QDRO  if  the  order  had  required
distribution at or after the  Participant's  "earliest  retirement date." If the
Committee receives notice that a domestic relations order that is intended to be
a QDRO is being prepared and will be provided to the Committee within 30 days or
such other short time as the Committee deems reasonable, the Committee may put a
temporary  hold on the  distribution  of benefits under the Plan to the affected
Participant,  pending (a) the determination of whether such order is a QDRO, and
(b) the rights of the alternate payee under such order.

      16.4 Merger,  Consolidation  or Transfer of Assets or Liabilities.  In the
event of any merger or consolidation  with, or transfer of assets of the Plan to
another  plan,  each  Participant  in the Plan  shall  receive a benefit  in the
surviving plan (if such plan were then terminated) at least equal to the benefit
which  he  would  have  been  entitled  to  receive  immediately  prior  to  the
transaction if the Plan had then terminated.

      16.5 Payments to Minors and Incompetents.  If a Participant or Beneficiary
entitled to receive any  benefits  hereunder  is deemed by the  Committee  or is
adjudged to be legally  incapable of giving valid receipt and discharge for such
benefits or is a minor,  such benefit shall be paid to such person or persons as
the Committee may designate or to a duly appointed guardian.

      16.6  Employee's  Records.   Each  of  the  Employers  and  the  Committee
respectively shall keep such records, and shall give the other reasonable access
to such  information  as is necessary or desirable to effectuate the purposes of
the Plan and the Trust including,  without  limiting the foregoing,  records and
information  with respect to the employment  date, date of  participation in the
Plan  and  Compensation  of  Employees,  elections  by  Participants  and  their
Beneficiaries  and consents granted and  determinations  made under the Plan and
the  Trust.  Neither  the  Employers  nor the  Committee  shall be  required  to
duplicate any records kept by the other.

      16.7 Missing  Persons.  Each  Participant and  Beneficiary  shall keep the
Committee advised of his current address. If amounts become  distributable under
the Plan and the Committee is unable,  after reasonable  efforts,  to locate the
Participant or Beneficiary to whom  distribution  is payable for a period of two
years from the time such  distribution  first becomes payable,  all such amounts
shall be  forfeited  and  applied  in  accordance  with  Paragraph  5.4.  If the
Participant  or  his  Beneficiary   thereafter  applies  for  the  Participant's
distributable  account,  the amount  forfeited  shall be paid to him pursuant to
Article IX.

      16.8  Severability  of  Provisions.  If any  provision of the Plan is held
invalid or unenforceable,  such invalidity or unenforceability  shall not affect
any other  provisions,  and the Plan shall be construed  and enforced as if such
provision had not been included.

      16.9 Receipt and Release.  As a condition  precedent to the payment to any
Participant or to his legal  representative  or Beneficiary,  such  Participant,
legal  representative  or  Beneficiary  may be  required  to  execute  a receipt
therefor and a release in such form as shall be determined by the Committee.

      16.10  Fiduciary  Capacities.  Any person or group of persons may serve in
more than one fiduciary capacity with respect to the Plan.

      16.11  Titles  and  Headings.  The  titles to  Articles  and  headings  of
Paragraphs of the Plan are for  convenience  of reference.  In case of conflict,
the text of the Plan, rather than such titles and headings, shall control.

      16.12 Gender and Number.  Wherever used herein, the masculine gender shall
include the feminine  gender and the singular  shall include the plural,  unless
the context indicates otherwise.

      16.13  Governing  Law.  To the  extent  that New  Jersey  law has not been
preempted by federal law,  the  provisions  of the Plan shall be governed by and
construed in accordance with the laws of the State of New Jersey.

      16.14 Counterparts:  If this Agreement is executed,  it may be executed in
two or more  counterparts,  each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.


                                    XVI-1

<PAGE>