ELJER

                          TAX REDUCTION INVESTMENT PLAN



                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                              Page No.
                                                                                                              ---------
<S>                        <C>                                                                                  <C>
ARTICLE I - INTRODUCTION
         1.1               Introduction.........................................................................  2

ARTICLE II - DEFINITIONS
         2.1               Account..............................................................................  2
         2.2               Administrator........................................................................  3
         2.3               Affiliated Company...................................................................  3
         2.4               Allocation Date......................................................................  3
         2.5               Alternate Payee......................................................................  3
         2.6               Annuity Starting Date................................................................  3
         2.7               Beneficiary..........................................................................  3
         2.8               Board of Directors...................................................................  5
         2.9               Code.................................................................................  5
         2.10              Committee............................................................................  5
         2.11              Company..............................................................................  5
         2.12              Company Stock........................................................................  5
         2.13              Compensation.........................................................................  5
         2.14              Disability or Disabled...............................................................  6
         2.15              Effective Date.......................................................................  6
         2.16              Employee.............................................................................  7
         2.17              Employer.............................................................................  7
         2.18              Entry Date...........................................................................  7
         2.19              ERISA................................................................................  7
         2.20              Family Member........................................................................  7
         2.21              Former Participant...................................................................  8
         2.22              Highly Compensated Employee..........................................................  8
         2.23              Highly Compensated Participant....................................................... 10
         2.24              Hour of Service...................................................................... 10
         2.25              Investment Fund or Fund.............................................................. 10
         2.26              Investment Plan Contributions........................................................ 10
         2.27              Investment Plan Contribution Account................................................. 11
         2.28              Interactive Telephone Communication.................................................. 11
         2.29              Key Employee......................................................................... 11
         2.30              Leased Employee...................................................................... 12
         2.31              Limitation Year...................................................................... 12
         2.32              Matching Company Contributions....................................................... 12
         2.33              Matching Company Contribution Account................................................ 13
         2.34              Named Fiduciary...................................................................... 13
         2.35              Non-Highly Compensated Employee...................................................... 13
         2.36              Non-Highly Compensated Participant................................................... 13
         2.37              Non-Key Employee..................................................................... 13
         2.38              Normal Retirement Date............................................................... 13
         2.39              Notice............................................................................... 13
         2.40              Participant.......................................................................... 13
         2.41              Plan................................................................................. 13
         2.42              Plan Year............................................................................ 13
         2.43              Prior Plan........................................................................... 13

                                       -i-

<PAGE>



         2.44              Qualified Domestic Relations Order................................................... 14
         2.45              Quarterly Valuation Date............................................................. 14
         2.46              Recordkeeper......................................................................... 14
         2.47              Rollover Account..................................................................... 14
         2.48              Rollover Contribution................................................................ 14
         2.49              Tax Reduction Contributions.......................................................... 14
         2.50              Tax Reduction Contribution Account................................................... 15
         2.51              Trust................................................................................ 15
         2.52              Trust Agreement...................................................................... 15
         2.53              Trust Fund........................................................................... 15
         2.54              Trustee.............................................................................. 15
         2.55              Valuation Date....................................................................... 15
         2.56              Year of Service...................................................................... 15

ARTICLE III - PARTICIPATION AND YEARS OF SERVICE
         3.1               Eligibility to Participate........................................................... 15
         3.2               Commencement of Participation........................................................ 16
         3.3               Waiver of Participation.............................................................. 16
         3.4               Transfers from Eligible Employment................................................... 16
         3.5               Hour of Service...................................................................... 17
         3.6               Year of Service...................................................................... 17
         3.7               Participation and Service Upon Reemployment.......................................... 18
         3.8               Predecessor Service.................................................................. 18

ARTICLE IV - CONTRIBUTIONS
         4.1               Tax Reduction Contributions.......................................................... 19
         4.2               Investment Plan Contributions........................................................ 21
         4.3               Matching Company Contributions....................................................... 23
         4.4               Employer Qualified Non-Elective Contributions
                            .................................................................................... 23
         4.5               Time of Contributions................................................................ 23
         4.6               Maximum Combined Tax Reduction
                            and Investment Plan Contributions................................................... 24
         4.7               Manner of Making Contributions....................................................... 24
         4.8               Reduction of Employer Contributions.................................................. 24
         4.9               Rollover Contributions............................................................... 24
         4.10              Transfers from Other Plans........................................................... 25

ARTICLE V - LIMITATIONS AND RESTRICTIONS ON
                           TAX REDUCTION CONTRIBUTIONS
         5.1               Dollar Limitation.................................................................... 25
         5.2               Actual Deferral Percentage Tests..................................................... 28
         5.3               Adjustments Required to Satisfy
                            an Actual Deferral Percentage Test.................................................. 30
         5.4               Election of Applicable Correction
                            Methods By Highly Compensated Employees............................................. 32
         5.5               Additional Adjustments of Tax
                            Reduction Contributions............................................................. 32
         5.6               Other Permissible Methods of Testing
                            and Correction...................................................................... 33


                                      -ii-

<PAGE>



ARTICLE VI - LIMITATIONS AND RESTRICTIONS ON INVESTMENT
                            PLAN CONTRIBUTIONS AND MATCHING
                            COMPANY CONTRIBUTIONS
         6.1               Contribution Percentage Tests........................................................ 33
         6.2               Adjustments Required to Satisfy a
                            Contribution Percentage Test........................................................ 36
         6.3               Procedures Applicable to Tax Reduction
                            Contributions Recharacterized As
                            Investment Plan Contributions....................................................... 38
         6.4               Additional Adjustments and
                            Prospective Reductions of
                            Investment Plan Contributions....................................................... 38
         6.5               Testing of Tax Reduction Contributions
                            Under Contribution Percentage Test.................................................. 39
         6.6               Other Permissible Methods of
                            Testing and Corrections............................................................. 39

ARTICLE VII - AGGREGATE LIMIT ON ACTUAL DEFERRAL
                           AND CONTRIBUTION PERCENTAGES
         7.1               General Rules........................................................................ 40
         7.2               Multiple Use Limitation.............................................................. 40
         7.3               Prospective Reduction of Contributions............................................... 41

ARTICLE VIII - LIMITATION ON ALLOCATIONS
         8.1               Limitation on Allocations............................................................ 42
         8.2               Definitions.......................................................................... 42
         8.3               Excess Annual Additions.............................................................. 45
         8.4               Combined Plan Limits................................................................. 46
         8.5               Special Rules........................................................................ 47

ARTICLE IX - PARTICIPANT'S ACCOUNTS
         9.1               Establishment of Accounts............................................................ 49
         9.2               Allocation of Contributions to
                            Participant's Accounts.............................................................. 49
         9.3               Trust Fund Valuation................................................................. 50
         9.4               Adjustments to Participant's Accounts................................................ 51
         9.5               Participant-Directed Investments..................................................... 52
         9.6               Investment of Matching Company
                            Contributions....................................................................... 55
         9.7               Age 50 Diversification Election...................................................... 56
         9.8               Special Investment Rules for
                            1989 Plan Year...................................................................... 57
         9.9               Qualified Domestic Relations Orders.................................................. 57
         9.10              Special Rules Relating to Transactions
                            By Certain Officers, Directors
                            and Shareholders.................................................................... 57

ARTICLE X - PARTICIPANT VESTING
         10.1              Vesting of Accounts.................................................................. 58
         10.2              Termination of Service Prior to
                            Normal Retirement Date, Disability
                            or Death............................................................................ 58

                                      -iii-

<PAGE>



         10.3              Forfeiture of Non-Vested
                            Portion of Account.................................................................. 59
         10.4              Restoration of Non-Vested Interest................................................... 59

ARTICLE XI - PAYMENT OF BENEFITS
         11.1              Withdrawals During Employment........................................................ 60
         11.2              Amounts Payable Following
                            Termination of Service.............................................................. 63
         11.3              Time of Payment...................................................................... 63
         11.4              Method of Payments................................................................... 67
         11.5              Minority or Legal Disability
                            of Distributee...................................................................... 69
         11.6              Additional Requirements Relating
                            to Benefit Payments................................................................. 69
         11.7              Claims Procedure..................................................................... 69
         11.8              Committee's Duty to Trustee.......................................................... 71
         11.9              Duty to Keep Committee Informed
                            of Distributee's Current Address.................................................... 71
         11.10    Distribution Pursuant to Qualified
                            Domestic Relations Orders........................................................... 71
         11.11    Tax Withholding and Participant's
                            Direct Rollover Election............................................................ 72
         11.12    Application of Forfeitures.................................................................... 73
         11.13    Restrictions on Distributions................................................................. 73

ARTICLE XII - NOTICES
         12.1              Notice............................................................................... 73
         12.2              Modification of Notice............................................................... 74
         12.3              Reliance on Notice................................................................... 74

ARTICLE XIII - LOANS
         13.1              General Provisions Regarding Loans................................................... 74
         13.2              Amount and Limitations
                            Applicable to Loans................................................................. 74
         13.3              Security for Loans................................................................... 75
         13.4              Interest Rate for Loans.............................................................. 75
         13.5              Repayment of Loans................................................................... 75
         13.6              Default on Loans..................................................................... 76
         13.7              Acceleration of Loans Upon
                            Termination of Employment........................................................... 76
         13.8              Manner of Making Loans............................................................... 77
         13.9              Additional Loan Procedures........................................................... 77

ARTICLE XIV - ADMINISTRATION OF THE PLAN
         14.1              Allocation of Responsibilities
                            Among Fiduciaries................................................................... 77
         14.2              Management of Plan Assets............................................................ 78
         14.3              Powers and Responsibilities
                            of the Committee.................................................................... 79
         14.4              Operation of Committee............................................................... 81

                                      -iv-

<PAGE>



         14.5              Compensation and Expenses of
                            Employees and Directors
                            Serving as Fiduciaries.............................................................. 81
         14.6              Indemnification of Employees
                            and Directors....................................................................... 81
         14.7              Action Taken in Good Faith........................................................... 82
         14.8              Expenses of the Plan................................................................. 82

ARTICLE XV - TRUST FUND
         15.1              Establishment of Trust Fund.......................................................... 82
         15.2              Investments in Company Stock......................................................... 82
         15.3              Title of Trust Assets................................................................ 83

ARTICLE XVI - AMENDMENT AND TERMINATION
         16.1              Amendment............................................................................ 83
         16.2              Termination or Discontinuance
                            of Contributions.................................................................... 83
         16.3              Distribution on Plan Termination..................................................... 84
         16.4              Distributions upon Certain Sales..................................................... 85
         16.5              Merger or Consolidation of Plan...................................................... 85
         16.6              Merger and Other Reorganization
                            of Employer......................................................................... 85

ARTICLE XVII - MISCELLANEOUS
         17.1              No Employment or Compensation
                            Agreement........................................................................... 85
         17.2              Spendthrift Provision................................................................ 86
         17.3              Construction......................................................................... 86
         17.4              Titles............................................................................... 86
         17.5              Texas Law Applicable................................................................. 86
         17.6              Successors and Assigns............................................................... 86
         17.7              Payments Only from Trust Fund........................................................ 86
         17.8              Plan Controls........................................................................ 86
         17.9              Effect of Mistakes................................................................... 86

ARTICLE XVIII - TOP HEAVY PROVISIONS
         18.1              Application and Purpose.............................................................. 87
         18.2              Minimum Allocation Requirements...................................................... 87
         18.3              Adjustment to Limitation on Allocations.............................................. 87
         18.4              Vesting Schedule..................................................................... 88
         18.5              Definitions.......................................................................... 88
</TABLE>

                                       -v-

<PAGE>



                                      ELJER
                          TAX REDUCTION INVESTMENT PLAN


         WHEREAS,  effective  April 1, 1989, in connection with a transaction in
which Eljer  Manufacturing,  Inc. (the  "Company")  ceased to be a subsidiary of
Household  International,  Inc., the Company established the Eljer Tax Reduction
Investment Plan (hereinafter  referred to as the "Plan") as a savings and profit
sharing plan  designed to  constitute  a "qualified  plan" within the meaning of
Section  401(a) of the Internal  Revenue Code of 1986,  as amended (the "Code");
and

         WHEREAS,  the Plan was amended,  generally  effective April 1, 1989, to
incorporate  certain  changes  required  by  the  Internal  Revenue  Service  in
connection with its issuance of a favorable determination letter with respect to
the initial adoption of the Plan and amended further, effective January 1, 1991,
to expand the categories of employees eligible to participate in the Plan; and

         WHEREAS,  the Company now desires (i) to amend  further and restate the
Plan,  effective as set forth herein, to bring the Plan into compliance with the
Tax Reform Act of 1986, as amended,  as well as all other applicable laws, rules
and regulations enacted or promulgated since the date the Plan last was amended,
(ii) to continue the  qualification of the Plan under Sections 401(a) and 401(k)
of the Code, and (iii) to make certain other  necessary or desirable  changes to
the Plan;

         NOW, THEREFORE,  the Plan is hereby amended and restated,  effective as
provided herein, as follows:

                                      -vi-

<PAGE>



                                    ARTICLE I

                                  INTRODUCTION


         1.1      Introduction.

         The Company,  in order to aid  Employees  accumulate  capital for their
retirement,  hereby  completely  amends  and  restates  the Eljer Tax  Reduction
Investment Plan (the "Plan"). The assets of the Plan are held,  administered and
managed in accordance with the terms and conditions of the Trust Agreement which
is an integral part of the Plan.  The Company  intends that the Plan continue to
be a plan qualified  under Section 401(a) of the Code (as  hereinafter  defined)
with a cash or deferred  arrangement  qualified under Section 401(k) of the Code
and a trust exempt from taxation under Section  501(a) of the Code.  Pursuant to
the requirements of Section  401(a)(27)(B) of the Code, the Company also intends
that the Plan be a profit-sharing plan.

         The Plan may be amended further from time to time.  Except as otherwise
provided  in the  Plan  or any  amendment  to the  Plan,  the  provisions  of an
amendment  shall apply solely to an Employee,  former  Employee,  Participant or
Former  Participant  whose employment with an Employer is terminated on or after
the effective date of the amendment. The rights of an Employee, former Employee,
Participant  or  Former   Participant  whose  employment  with  an  Employer  is
terminated  prior to the  effective  date of an  amendment  shall be  determined
solely by the provisions of the Plan as in effect on the date of his termination
of employment.

         The benefits payable from this Plan are independent of any benefits the
Employee is or may become  entitled to under any other  funded  pension,  profit
sharing or savings plan.

                                   ARTICLE II

                                   DEFINITIONS


         The  following  words and phrases when used in this Plan shall have the
respective  meanings  set forth  below  unless  the  context  clearly  indicates
otherwise:

         2.1 Account  means the account or record  maintained  by the Trustee or
the Recordkeeper  reflecting the monetary value of the undivided interest in the
Trust Fund of each Participant, each Former Participant and each Beneficiary and
shall  include  the  Tax  Reduction   Contribution   Account,   Investment  Plan
Contribution Account,  Matching Company Contribution  Account,  Rollover Account
and such additional Accounts as the Company may establish from time to time.

                                       -2-

<PAGE>



         2.2 Administrator means, with respect to the administration of the Plan
as herein  described,  the  Committee.  However,  for  purposes of applying  the
applicable   provisions  of  ERISA  to  the  Plan,  the  Company  shall  be  the
"administrator" as described in Section 3(16)(A) of ERISA.

         2.3 Affiliated Company means the Company and any other entity which is,
along with the Company,  a member of a  controlled  group of  corporations  or a
controlled group of trades or businesses [as defined in Section 414(b) or (c) of
the Code],  any entity which along with the Company is included in an affiliated
service  group as defined in Section  414(m) of the Code,  and any other  entity
which is required to be aggregated  with the Company  pursuant to Section 414(o)
of the Code.

         2.4  Allocation  Date  means  the  last  day of each  month;  provided,
however,  that the Allocation Date for Matching Company  Contributions  shall be
the last day of each calendar quarter, as provided in Section 9.2(c).

         2.5 Alternate  Payee means a person  defined in Code Section  414(p)(8)
who is  entitled  to benefits  under the Plan  pursuant to a Qualified  Domestic
Relations Order.

         2.6 Annuity  Starting  Date means (i) the first day of the first period
with respect to which an amount is payable as an annuity, or (ii) in the case of
a benefit  not  payable  in the form of an  annuity,  the first day on which all
events  have  occurred  that  entitle the  Participant,  Former  Participant  or
Beneficiary to such benefit in accordance with Article XI.

         2.7  Beneficiary  means  any  person  or  fiduciary   designated  by  a
Participant  or Former  Participant  in  accordance  with the terms  hereof  and
Section 401(a)(9) of the Code to receive benefits hereunder  following the death
of  such  Participant  or  Former  Participant.   Each  Participant  and  Former
Participant may, from time to time, select one or more  Beneficiaries to receive
benefits in the event of the death of such  Participant  or Former  Participant.
Such selection  shall be made in writing by Notice to the Committee.  Unless the
provisions  of  this  Plan  or a  Qualified  Domestic  Relations  Order  provide
otherwise,  the last such selection  filed with the Committee prior to the death
of the Participant or Former  Participant  shall determine to whom Plan benefits
shall be paid.

         If the Participant or Former  Participant is married at the date of his
death,  the  Beneficiary  shall be his  surviving  spouse  unless the spouse has
consented  in  writing  to the  designation  of some  other  Beneficiary,  which
designation  may  not be  changed  without  consent  of the  spouse  unless  the
voluntary  consent of the  spouse  (i)  expressly  permits  designations  by the
Participant or Former Participant without any requirement of further consent by

                                       -3-

<PAGE>



the  spouse  and (ii)  acknowledges  that the  spouse has the right to limit the
consent to a specific  Beneficiary.  Such written  consent must  acknowledge the
effect of the Participant's or Former  Participant's  Beneficiary  selection and
must be witnessed by a Plan  representative or a notary public.  Spousal consent
is not required if it is established to the  satisfaction  of the Committee that
the consent may not be obtained (i) because the Participant has no spouse,  (ii)
because  the  spouse   cannot  be  located  or  (iii)   because  of  such  other
circumstances as the Secretary of Treasury may by regulations prescribe.

         If the Committee cannot  determine  readily whether a Participant has a
spouse under the laws of the state in which the  Participant  resides  resulting
from an  individual's  claim to be a "common  law"  spouse of a  Participant  or
similar circumstances,  the Committee may request such individual to provide the
Committee with a legal opinion  satisfactory  to the Committee or other evidence
demonstrating  the  individual's  status  as  a  spouse  of a  Participant.  The
Committee  has the sole and absolute  authority  to  determine  an  individual's
status as a spouse of a Participant and any such  determination  shall be final,
binding and conclusive on all parties ever claiming an interest in the Plan. Any
consent by a spouse (or establishment  that the consent of the spouse may not be
obtained)   shall  be  effective  only  with  respect  to  that  spouse.   If  a
Participant's  or  Former  Participant's  Beneficiary  selection  is not made in
compliance with these  provisions or if all designated  persons shall predecease
the Participant or Former  Participant,  Beneficiary shall mean the first of the
following classes of successive  preference  beneficiaries  then surviving,  the
Participant's or Former Participant's:  (a) spouse, (b) descendants, per stirpes
(including  adopted  children),  (c)  parents,  (d) brothers and sisters and (e)
executors or administrators.

         If  more  than  one  Beneficiary  of a  particular  class  (primary  or
secondary)  is entitled to benefits,  payments  shall be made in equal shares to
such  Beneficiaries,   unless  some  other  specific   proportions  are  clearly
designated  by  the  Participant  or  Former  Participant.   If  more  than  one
Beneficiary of a particular  class (primary or secondary) is named, the interest
of  any  deceased  Beneficiary  of  that  class  shall  pass  to  the  surviving
Beneficiary  or  Beneficiaries  of that  class  except  to the  extent  that the
designation  provides for payment to any secondary  Beneficiary or Beneficiaries
upon the death of a primary Beneficiary. In determining whether any person named
as  a  Beneficiary  is  living  at  the  time  of  a  Participant's   or  Former
Participant's  death, if such person and the  Participant or Former  Participant
die in a common disaster and there is  insufficient  evidence to determine which
person died first, then it shall be deemed that the Beneficiary died first.


                                       -4-

<PAGE>



         2.8      Board of Directors means the Board of Directors of the
Company, or any committee of the Board of Directors authorized to
act on its behalf.

         2.9 Code means the Internal  Revenue Code of 1986, as it may be amended
from  time to time.  Reference  to a  section  of the Code  shall  include  that
section,   applicable  Treasury  regulations   promulgated  thereunder  and  any
comparable  section  of any  future  legislation  that  amends,  supplements  or
supersedes said section.

         2.10 Committee  means the  Administrative  and Investment  Committee as
from time to time  constituted.  The  Committee  shall consist of at least three
members who will be employees,  officers or directors of an  Affiliated  Company
appointed  by the Chief  Executive  Officer of the  Company,  and serving at the
pleasure of the Company.

         2.11     Company means Eljer Manufacturing, Inc., or any successor
thereto.

         2.12     Company Stock means common stock par value $1.00 per
share of Eljer Industries, Inc.

         2.13     Compensation means, unless defined otherwise herein:
         (a)      for purposes of making contributions and allocations
hereunder, the sum of (i) compensation for services performed by an Employee for
an Employer that is required to be reported as wages on the Employee's  Form W-2
(or  its  equivalent)  for  Federal  income  tax  purposes,   and  (ii)  amounts
contributed by the Employer  pursuant to a salary  reduction  agreement that are
not includible in gross income of the Employee  under  Sections 125,  402(a)(8),
402(h) or 403(b) of the Code, but less per diem allowances,  expense allowances,
moving expense  allowances  and excess group term life  insurance  premium costs
includible  by  the  Employee  as  "PS-58  costs";   provided,   however,   that
Compensation  shall include only amounts  actually  paid an Employee  during the
period he is a Participant for services performed as an Employee;

         (b) for purposes of the Actual Deferral  Percentage tests under Section
5.2 and the Contribution  Percentage tests under Section 6.1, amounts paid to an
Employee  for the Plan Year that are  required to be  reported  by the  Employer
pursuant to Sections  6041(d) and  6051(a)(3)  of the Code,  plus Tax  Reduction
Contributions  and other  amounts  representing  elective  contributions  by the
Employer on behalf of the Employee that are excluded  from an  Employee's  gross
income by reason of Sections 125,  402(a)(8),  402(h)(1)(B) and/or 403(b) of the
Code;  provided,   however,  that  the  Committee,  in  its  sole  and  absolute
discretion, may limit Compensation under this Section 2.13(b) taken into account
for a Plan Year to only that  Compensation  received with respect to the portion
of the Plan Year during which an Employee is eligible to participate in the Plan
under Article III, provided such limitation

                                       -5-

<PAGE>



is applied uniformly to all eligible Employees under the Plan for
such Plan Year; and

         (c) for other purposes of the Plan, including determining the limits on
Annual  Additions  imposed  by  Section  415 of the Code as set forth in Article
VIII, the special  top-heavy rules of Article XVIII and determining the identity
of Highly Compensated  Employees,  amounts paid to an Employee for the Plan Year
(or  Limitation  Year for  purposes  of Article  VIII) that are  required  to be
reported pursuant to Sections 6041(d) and 6051(a)(3) of the Code.

         For (i) each Plan Year beginning before January 1, 1994, only the first
$200,000  of an  individual's  Compensation  shall be  taken  into  account  for
purposes of the Plan [or such other amount as the  Secretary of the Treasury may
prescribe  at the same time and in the same  manner as  provided  under  Section
415(d) of the Code for adjusting  the dollar  limitation in effect under Section
415(b)(1)(A)  of the Code] and (ii) each Plan Year beginning  after December 31,
1993,  only the first $150,000 of an  individual's  Compensation  shall be taken
into  account for  purposes  of the Plan [or,  beginning  January 1, 1995,  such
larger amount as may be determined  under  Section  401(a)(17)(B)  of the Code].
Each  limitation on  Compensation  described in the preceding  sentence shall be
referred  to  herein  as  the  "Compensation  Limitation".  In  determining  the
Compensation of each Participant who is (i) a more than five percent owner of an
Employer or (ii) a Highly  Compensated  Employee in the group  consisting of the
ten Highly Compensated  Employees paid the greatest Compensation during the Plan
Year  (without  regard  to  this   sentence),   for  purposes  of  applying  the
Compensation  Limitation  (as it may be  adjusted),  the  spouse  of  each  such
Participant  and each of his lineal  descendants  who have not  attained  age 19
before the close of the Plan Year  shall not be  treated as a separate  Employee
for that Plan Year and the  Compensation  of each such  family  member  shall be
aggregated  with the  Compensation  of the Participant as if it were paid to the
Participant.  If, as a result of the application of the preceding sentence,  the
Compensation Limitation (as it may be adjusted) is exceeded, then the limitation
shall be prorated  among the affected  individuals  in  proportion  to each such
individual's  Compensation  as  determined  under this Section 2.13 prior to the
application of this limitation.

         2.14 Disability or Disabled means the physical or mental  incapacity of
a Participant  that, in the opinion of the Committee,  based on medical evidence
satisfactory  to the Committee,  renders him unfit to perform any employment for
the Employer.
         2.15  Effective  Date of this Plan,  as  amended  and  restated,  shall
generally be April 1, 1989; provided,  however, that as necessary to comply with
the effective  dates of the applicable  provisions of the Tax Reform Act of 1986
and subsequent laws, certain provisions of the Plan shall be effective as of the
dates such provisions are required to be effective with respect to the

                                       -6-

<PAGE>



Plan under the Code or, if later, under administrative  pronouncements issued by
the  Internal  Revenue  Service  or  the  Treasury  Department  [subject  to the
provisions    of   Treasury    Regulation    Sections    1.401(k)-1(h)(3)    and
1.401(m)-2(d)(2)].  Notwithstanding  the general effective date set forth above,
certain  provisions  of the Plan  shall be  effective  as of the dates set forth
herein.

         2.16 Employee means,  for Plan Years beginning  before January 1, 1991,
any  salaried  individual  employed  by an  Employer.  Effective  for Plan Years
beginning  on and after  January 1,  1991,  the term  Employee  means any person
employed by the Employer who is included on the Federal Insurance  Contributions
Act  rolls of the  Employer;  provided,  however,  the term  Employee  shall not
include (i) any individual  employed on an hourly basis at the Company's  Nampa,
Idaho plant and employees of the Fiberglass  Products Division at Wilson,  North
Carolina or at the GlasTec  Division of the Company and (ii) any employees of an
Affiliated  Company  who  are  included  in a unit  of  employees  covered  by a
collective  bargaining  agreement.  The term Employee includes a Leased Employee
that Section  414(n) of the Code  requires the Employer to treat as an employee,
but such Leased Employee shall not be eligible to participate in the Plan.

         2.17 Employer means the Company and any other Affiliated Company,  with
respect to its Employees,  provided such Affiliated Company is designated by the
Committee as an Employer under the Plan and whose designation as such has become
effective and has continued in effect.  The designation  shall become  effective
only when it shall have been accepted by the governing body of the Employer.  An
Employer may revoke its  acceptance of such  designation  at any time, but until
such  acceptance  has  been  revoked,  all of the  provisions  of the  Plan  and
amendments  thereto shall apply to the  Employees of the Employer.  In the event
the  designation of the Employer as such is revoked by the governing body of the
Employer,  such  revocation  will not be deemed a termination  of the Plan.  The
Committee  shall have the exclusive  right to determine  whether any  Affiliated
Company shall become an Employer for purposes of the Plan.

         2.18     Entry Date means the first day of each January, April,
July and October.

         2.19 ERISA means the Employee  Retirement  Income Security Act of 1974,
as it may be amended from time to time, and applicable  regulations  promulgated
thereunder.

         2.20 Family Member means with respect to any Employee,  such Employee's
spouse and lineal  ascendants  or  descendants  and the  spouses of such  lineal
ascendants or descendants.


                                       -7-

<PAGE>



         2.21 Former Participant means any individual who has been a Participant
in the Plan, who is no longer in the employ of an Affiliated Company and who has
not yet received the entire benefit to which he is entitled under the Plan.

         2.22     Highly Compensated Employee means any Employee who is
determined to be included in subsection (a) after applying the
special rules in subsection (b):

         (a) any Employee who, during the Plan Year for which the  determination
is being made or the immediately preceding Plan Year:

                  (i)      was, at any time, a more than five percent owner of
                  any Employer;

                  (ii)     received Compensation from all Employers in excess
                  of $75,000;

                  (iii)  received  Compensation  from all Employers in excess of
                  $50,000 and was in the top 20% of Employees  for the Plan Year
                  (when ranked on the basis of Compensation for such Plan Year);
                  or

                  (iv) was at any time an officer of any  Employer  and received
                  Compensation  greater  than 50% of the  dollar  limitation  in
                  effect  under  Section  415(b)(1)(A)  of the Code for the Plan
                  Year.

         (b)      For purposes of determining the Employees who are to be
included in subsection (a) above, the following special rules shall
apply to this Section 2.22:

                  (i) Any Employee not described in subsection (a)(ii), (iii) or
                  (iv) of  this  Section  2.22  for the  Plan  Year  immediately
                  preceding the Plan Year of determination  shall not be treated
                  as  described  in  subsection  (a)(ii),  (iii) or (iv) of this
                  Section  2.22 for the Plan Year of  determination  unless,  in
                  addition to meeting the  requirements  of subsection  (a)(ii),
                  (iii)  or  (iv)  for the  Plan  Year  of  determination,  such
                  Employee  is a  member  of the  group  consisting  of the  one
                  hundred  Employees paid the highest  Compensation  during that
                  Plan Year.

                  (ii)  In  determining  the top 20% of  Employees  pursuant  to
                  subsection  (a)(iii),  Employees who (A) have not completed at
                  least six  months of  service,  (B)  normally  work fewer than
                  17-1/2 hours per week,  (C) normally work during not more than
                  six months during any Plan Year,  (D) have not attained age 21
                  or (E) are covered  under a  collective  bargaining  agreement
                  (except  to  the  extent   provided  in  applicable   Treasury
                  regulations) shall be excluded from such determination.

                                       -8-

<PAGE>



                  (iii) In determining  officers under  subsection  (a)(iv),  no
                  more than fifty (50)  Employees  (or, if less,  the greater of
                  three  Employees  or ten  percent of the  Employees)  shall be
                  treated  as  officers,  and if in such Plan Year no officer is
                  described in subsection  (a)(iv),  the highest paid officer of
                  any  Employer  during  such Plan Year  shall be  treated as an
                  officer for purposes of subsection (a)(iv).

                  (iv) If any Employee is a Family  Member of an Employee who is
                  a more than five  percent  owner of any  Employer  or a Highly
                  Compensated Employee in the group consisting of the ten Highly
                  Compensated  Employees paid the greatest  Compensation  during
                  the Plan Year  [without  regard to this  subsection  (b)(iv)],
                  then (A) such Family Member shall not be considered a separate
                  Employee and (B) any  Compensation  paid to such Family Member
                  (and any applicable  contribution or benefit on behalf of such
                  Employee) shall be treated as if it were paid to (or on behalf
                  of) the Employee  who is the five percent  owner or one of the
                  ten   Highly   Compensated   Employees   paid   the   greatest
                  Compensation during the Plan Year.

                  (v) A former Employee whose employment terminates prior to the
                  Plan  Year of  determination  shall  be  treated  as a  Highly
                  Compensated  Employee  for the Plan Year of  determination  if
                  such   Employee  was  a  Highly   Compensated   Employee  upon
                  termination of employment  with an Employer,  or such Employee
                  was a Highly Compensated  Employee at any time after attaining
                  age 55.

                  (vi)  "Compensation"  for  purposes  of  determining  who is a
                  Highly  Compensated  Employee shall have the meaning set forth
                  in Section 2.13(c), but prior to any reduction on account of a
                  Participant's  Tax  Reduction   Contributions  and  any  other
                  contributions  not  treated  as  taxable  income by reasons of
                  Sections 125, 402(a)(8) or 402(h)(1)(B) of the Code.

                  (vii) The dollar  amounts  in  subsections  (a)(ii)  and (iii)
                  shall be adjusted to such other amount as the Secretary of the
                  Treasury  shall  prescribe  at the  same  time and in the same
                  manner  as  provided  under  Section  415(d)  of the  Code for
                  adjusting  the  dollar  limitation  in  effect  under  Section
                  415(b)(1)(A) of the Code.  (viii) In determining the number of
                  Employees  pursuant to this  Section,  any  Employee  who is a
                  non-resident  alien and who receives no earned income  [within
                  the  meaning  of  Section  911(d)(2)  of the  Code]  from  any
                  Employer  which  constitutes  income from  sources  within the
                  United States [within the meaning of Section  861(a)(3) of the
                  Code] shall be excluded from such determination.

                                       -9-

<PAGE>



         2.23     Highly Compensated Participant means a Highly Compensated
Employee who has met the eligibility requirements in accordance
with Article III.

         2.24 Hour of  Service  means each hour  credited  to an  individual  in
accordance with the provisions of Section 3.5.

         2.25  Investment  Fund or Fund means a fund designated by the Committee
pursuant  to Section  9.5 from time to time and  maintained  for the  purpose of
providing a vehicle for the investment of the Trust Fund, in accordance with the
directions of each Participant,  Former  Participant or Beneficiary with respect
to his Account,  until such Investment Fund shall be eliminated by action of the
Committee and shall, effective as set forth below, include the following funds:

         (a)      Effective as of the Effective Date of the Plan:
                  (i)               Eljer Industries, Inc. Common Stock Fund;
                  (ii)              Household International, Inc. Common Stock
                                    Fund (Frozen Fund);
                  (iii)    Fixed Income Fund; and
                  (iv)              Equity Income Fund (Frozen Fund, effective
                                    June 30, 1991).

         (b)      Effective as of July 1, 1991:
                  (i)               Eljer Industries, Inc. Common Stock Fund;
                  (ii)              Household International, Inc. Common Stock
                                    Fund (Frozen Fund);
                  (iii)             Fixed Income Fund;
                  (iv)              Equity Income Fund (Frozen Fund); and
                  (v)               Equity Index Fund.

         (c)      Effective as of January 1, 1992:
                  (i)               Eljer Industries, Inc. Common Stock Fund;
                  (ii)              Household International, Inc. Common Stock
                                    Fund (Frozen Fund);
                  (iii)             Fixed Income Fund;
                  (iv)              Equity Income Fund (Frozen Fund);
                  (v)               Equity Index Fund; and
                  (vi)              Fidelity Intermediate Bond Fund.

         (d)      Effective as of July 1, 1993:
                  (i)               Eljer Industries, Inc. Common Stock Fund;
                  (ii)              Household International, Inc. Common Stock
                                    Fund (Frozen Fund);
                  (iii)             Fixed Income Fund;
                  (iv)              Equity Fund; and
                  (v)               Balanced Fund.

         2.26  Investment  Plan  Contributions  mean  contributions  paid by the
Participant on an after-tax basis in accordance with Section 4.2 of the Plan and
contributions which were paid on an after-tax

                                      -10-

<PAGE>



basis  pursuant to the terms of the Plan prior to the amendment and  restatement
of the Plan as set forth herein.

         2.27  Investment  Plan  Contribution  Account  means the portion of the
individual  Account  maintained  by the  Trustee  or the  Recordkeeper  for each
Participant, each Former Participant and each Beneficiary,  showing the monetary
value of the  person's  individual  interest in the Trust Fund  attributable  to
Investment Plan  Contributions and  contributions  made on an after-tax basis to
the Prior Plan.

         2.28 Interactive Telephone  Communication means a communication between
a Participant,  Former Participant or Beneficiary and the Recordkeeper  pursuant
to a system maintained by the Recordkeeper and communicated to each Participant,
Former  Participant  and  Beneficiary  whereby  each  such  individual  may make
elections and exercise  options as described  herein with respect to his Account
through  the use of such  system  and a  personal  identification  number.  If a
Participant,  Former  Participant  or  Beneficiary  in writing  (i)  consents to
participate in Interactive  Telephone  Communication  procedures  adopted by the
Committee and (ii) acknowledges  that actions taken by such Participant,  Former
Participant or Beneficiary through the use of his personal identification number
pursuant to the Interactive  Telephone  Communication  procedure  constitute his
signature for purposes of initiating Investment Fund changes,  participant loans
and Plan withdrawals, the Participant, Former Participant or Beneficiary, as the
case  might  be,  will  be  deemed  to  have  given  his  written   consent  and
authorization  to any such  action  resulting  from  the use of the  Interactive
Telephone  Communication  system  by  the  Participant,  Former  Participant  or
Beneficiary.

         2.29 Key Employee  means, as of any  Determination  Date [as defined in
Section  18.5(b)],  any  Employee or Former  Employee  (or  Beneficiary  of such
Employee) who, at any time during the Plan Year that includes the  Determination
Date, or during the preceding four Plan Years, is:

         (a)      an officer of any Employer having Compensation greater
than 50% of the amount in effect under Section 415(b)(1)(A) of the
Code for any such Plan Year;

         (b) one of the ten Employees having  Compensation  from any Employer of
more than the dollar limitation in effect under Section 415(c)(1)(A) of the Code
and owning the largest interests in such Employer;

         (c)      a more than five percent owner of any Employer; or

         (d)      a more than one percent owner of any Employer having
Compensation from all Employers of more than $150,000.


                                      -11-

<PAGE>



         For purposes of this Section 2.29,  Compensation shall have the meaning
set forth in Section 2.13(c),  but including amounts contributed by the Employer
pursuant  to  a  salary  reduction  agreement  which  are  excludable  from  the
Participant's  gross income under Sections 125,  402(a)(8),  402(h) or 403(b) of
the Code.  For  purposes  of  subsection  (a) of this  Section,  no more than 50
Employees (or, if lesser,  the greater of three or ten percent of the Employees)
shall be treated as officers. For purposes of subsection (b) of this Section, if
two  Employees  have the same interest in an Employer,  the Employee  having the
greater  Compensa  tion shall be treated  as having  the  larger  interest.  The
construc tive  ownership  rules of Section 318 of the Code (or the principles of
that section, in the case of an unincorporated Employer) will apply to determine
ownership in each Employer.

         2.30 Leased Employee means an individual who is not in the employ of an
Employer and who,  pursuant to a leasing  agreement  between an Employer and any
other person ("leasing  organization"),  has performed  services for an Employer
[or for an  Employer  and any other  person  related to an  Employer  within the
meaning of Section 144(a)(3) of the Code] on a substantially full-time basis for
at least one year and who performs services of a type historically  performed by
employees in the Employer's  business field.  Leased Employee shall also include
any  individual  who is deemed to be an employee of an  Employer  under  Section
414(o) of the Code.  Notwithstanding  the  preceding  sentence,  if  individuals
described in the preceding  sentence  constitute  less than 20% of an Employer's
non-highly compensated work force within the meaning of Section 414(n)(5)(C)(ii)
of the Code, the Plan shall not treat an individual as a Leased  Employee if the
leasing  organization  covers the  individual in a money  purchase  pension plan
providing   immediate   participation,   full  and   immediate   vesting  and  a
non-integrated  contribution  formula  equal  to at  least  ten  percent  of the
individual's  annual  compensation [as defined in Section 415(c)(3) of the Code,
but including amounts  contributed by an Employer pursuant to a salary reduction
agreement that are excludable from the individual's  gross income under Sections
125,  402(a)(8),  402(h) or 403(b) of the Code]. If any Leased Employee shall be
treated as an  Employee  of an  Employer,  however,  contributions  or  benefits
provided by the leasing  organization  which are attributable to services of the
Leased  Employee  performed for an Employer  shall be treated as provided by the
Employer.

         2.31     Limitation Year means the calendar year.

         2.32 Matching Company Contributions mean contributions paid to the Plan
on  behalf  of a  Participant  in  accordance  with  Section  4.5  based  on the
Participant's Tax Reduction Contributions and Investment Plan Contributions made
pursuant to Sections 4.1 and 4.2 of the Plan.


                                      -12-

<PAGE>



         2.33  Matching  Company  Contribution  Account means the portion of the
individual   Account   maintained  by  the  Trustee  or  Recordkeeper  for  each
Participant, each Former Participant and each Beneficiary,  showing the monetary
value of that person's  individual  interest in the Trust Fund  attributable  to
Matching Company  Contributions and employer matching  contributions made to the
Prior Plan.

         2.34     Named Fiduciary means the Committee.

         2.35 Non-Highly  Compensated Employee means any Employee who is neither
a Highly  Compensated  Employee  nor a Family  Member  who is not  treated  as a
separate Employee under Section 2.22(b)(iv).

         2.36     Non-Highly Compensated Participant means a Participant
who is not a Highly Compensated Participant.

         2.37     Non-Key Employee means any Employee who is not a Key
Employee.

         2.38     Normal Retirement Date means a Participant's or Former
Participant's 65th birthday.

         2.39 Notice means, unless otherwise provided specifically in this Plan,
(i) written  Notice on an  appropriate  form provided by the  Committee  that is
properly  completed  and  executed by the party  giving such Notice and which is
delivered by hand or by mail to the Committee or to such other party  designated
by the  terms of the Plan or by the  Committee  to  receive  the  Notice or (ii)
Notice by Interactive Telephone Communication to the Recordkeeper. Notice to the
Committee,  the  Recordkeeper or to any other person as provided herein shall be
deemed  to be  given  when it is  actually  received  (either  physically  or by
Interactive  Telephone  Communication,  as the case may be) by the party to whom
such Notice is given.

         2.40     Participant means an Employee who has met the eligibility
requirements of the Plan as provided in Article III hereof and who
has begun participating in the Plan.

         2.41 Plan means the salary  reduction and savings  retirement  plan and
trust embodied  herein,  as the same may be amended from time to time, and shall
be known as "Eljer Tax Reduction Investment Plan".

         2.42 Plan Year  means the  twelve  (12) month  period  commencing  each
January 1 and ending the  following  December 31;  provided,  however,  that the
first  Plan Year  shall be the short  year  commencing  April 1, 1989 and ending
December 31, 1989.

         2.43     Prior Plan means the Household International Tax
Reduction Investment Plan.


                                      -13-

<PAGE>



         2.44 Qualified Domestic Relations Order means any judgment,  decree, or
order (including approval of a property  settlement  agreement) that (i) relates
to the provision of child support,  alimony payments, or marital property rights
to a spouse,  former spouse, child or other dependent of a Participant or Former
Participant,  (ii) is made pursuant to a state  domestic  relations  law,  (iii)
creates or recognizes the existence of an Alternate Payee's right to, or assigns
to an  Alternate  Payee the right to,  receive all or a portion of the  benefits
payable with respect to a Participant or Former  Participant  under the Plan and
(iv) complies with the requirements of Code Section 414(p).

         2.45     Quarterly Valuation Date means the last day of each
calendar quarter.

         2.46     Recordkeeper means any person or entity appointed by the
Committee to perform recordkeeping and other administrative
services on behalf of the Plan.

         2.47 Rollover  Account  means the portion of the Account  maintained by
the Trustee or the Recordkeeper for each Employee, each Participant, each Former
Participant  and each  Beneficiary,  showing the monetary value of such person's
individual interest in the Trust Fund attributable to his Rollover  Contribution
and amounts contributed as a rollover to the Prior Plan.

         2.48  Rollover  Contribution  means,  in  addition  to a contribu  tion
described in the last sentence of this Section 2.48,  any amount  transferred to
the Plan that would  constitute  a rollover  contribution  within the meaning of
Section  402(a)(5),  403(a)(4)  or  408(d)(3)  of the  Code.  Any such  rollover
contribution  must  consist of either (i) all or a portion of the  property  (in
excess of employee  contributions)  that the Employee received in a distribution
from an employee's trust described in Section 401(a) of the Code which is exempt
from tax under Section  501(a)  thereof or an annuity plan  described in Section
403(a) of the Code and any earnings thereon  (whether such  contribution is paid
directly  by the  Employee,  from such other trust or annuity  plan,  or from an
individual retirement account or individual retirement annuity) or (ii) all or a
portion  of  the  proceeds  from  the  sale  of  property  received  in  such  a
distribution pursuant to Section 402(a)(6)(D) of the Code. Commencing January 1,
1993, a Rollover Contribution shall include an eligible rollover contribution as
described  in Code  Section  402(c)(4)  transferred  to the Plan  pursuant to an
Employee's election as described in Code Section 401(a)(31)(A).

         2.49 Tax Reduction Contributions mean contributions paid to the Plan on
behalf of a Participant on a before-tax  basis in accordance with Section 4.1 of
the Plan and contributions which were paid on a before-tax basis pursuant to the
terms of the Plan  prior to the  amendment  and  restatement  of the Plan as set
forth herein.

                                      -14-

<PAGE>



         2.50 Tax  Reduction  Contribution  Account  means  the  portion  of the
individual  Account  maintained  by the  Trustee  or the  Recordkeeper  for each
Participant, each Former Participant and each Beneficiary,  showing the monetary
value of that person's individual interest in the Trust Fund attributable to Tax
Reduction  Contributions,  contributions made by an Employer pursuant to Section
4.4 as  "qualified  non-elective  contributions"  within the  meaning of Section
401(m)(4)(C)  of the Code and  contributions  made on a before-tax  basis to the
Prior Plan.

         2.51 Trust means the fund  maintained by the Trustee for the investment
of Plan  assets  in  accordance  with the  terms  and  conditions  of the  Trust
Agreement.

         2.52 Trust  Agreement  means the agreement  between the Company and the
Trustee under which the assets of the Plan are held, administered and managed by
the Trustee.  The  provisions  of the Trust  Agreement  shall be  considered  an
integral part of this Plan as if set forth fully herein.

         2.53 Trust Fund means all  assets of  whatsoever  kind and nature  from
time to time held by the Trustee  pursuant  to the terms of the Trust  Agreement
without  distinction as to income or principal out of which benefits of the Plan
are provided.  The Trust Fund shall be divided into Investment Funds as provided
in Section 9.5.

         2.54     Trustee means NationsBank of Texas, N.A. or any successor
trustee and any additional trustee or trustees.

         2.55 Valuation Date means the close of business on the last day of each
month, or such other date or dates as the Committee shall establish from time to
time.

         2.56     Year of Service has the meaning set forth in Section 3.6.

Except as otherwise  indicated by the context,  any masculine  terminology  used
herein also includes the feminine and neuter, and vice versa, and the definition
of any term herein in the  singular  shall also  include  the  plural,  and vice
versa.

                                   ARTICLE III

                       PARTICIPATION AND YEARS OF SERVICE


         3.1      Eligibility to Participate.

         (a)      Prior Plan Participants.  An individual who was eligible
to participate in the Prior Plan on March 31, 1989 and who is an
Employee of an Employer on April 1, 1989 shall be eligible to
participate in this Plan as of April 1, 1989.


                                      -15-

<PAGE>



         (b)      Other Employees.  Each other Employee shall be eligible
to participate in the Plan on the Entry Date (if he is employed by
the Employer on that date) that coincides with or that next follows
the earlier of:

                  (i)      the date he completes three Years of Service; or
                  (ii)     the date he attains age 21 and completes one Year
                           of Service.

         3.2 Commencement of Participation. Any Employee eligible to participate
in the Plan may elect to become a  Participant  by executing and filing with his
Employer  an  enrollment  form,  in such form and  manner as the  Committee  may
prescribe,  on which he (i) authorizes Tax Reduction Contributions pursuant to a
tax  reduction  agreement as described in Section  4.1(b),  or  Investment  Plan
Contributions  pursuant to an investment  plan agreement as described in Section
4.2(b),  or both,  (ii)  designates  a  contribution  rate,  (iii)  designates a
Beneficiary, and (iv) elects the Investment Funds to which his contributions are
to be allocated.  Participation in the Plan shall commence on the effective date
of the Employee's  agreement in accordance with the provisions of Section 4.1(b)
or Section 4.2(b), whichever date is earlier, and shall continue in effect until
amended or terminated.  By signing such an enrollment  form, the Employee agrees
to be bound by all  terms  and  conditions  of the Plan as then in  effect or as
thereafter amended.

         3.3 Waiver of  Participation.  Any Employee  eligible to participate in
the Plan who chooses not to  participate  in the Plan as of the first Entry Date
following the date he becomes  eligible to participate  shall waive his right to
participate until any subsequent Entry Date.

         3.4 Transfers from Eligible Employment. If a Participant is transferred
to a class  of  employment  not  eligible  for  participation  in this  Plan but
continues to be employed by an Affiliated Company,  no further  contributions to
the Trust shall be made by or on behalf of the  Participant  under the Plan with
respect  to  periods  on and  after  the  transfer  unless  the  Participant  is
subsequently  transferred back to eligible  employment and a new enrollment form
containing  a tax  reduction  agreement is executed in  accordance  with Section
4.1(b) or a new  enrollment  form  containing  an investment  plan  agreement is
executed in accordance with Section 4.2(b).  During the period of his employment
in such transferred position:

         (a)      vesting shall continue in Matching Company Contributions;
and

         (b) he may make  withdrawals,  transfer  his  Account  among the Funds,
apply for loans pursuant to Article XIII, and change Beneficiaries in accordance
with the provisions of the Plan.


                                      -16-

<PAGE>



         3.5      Hour of Service.  An "Hour of Service" means:

         (a)      Performance of Duties.  Each actual hour for which an
individual is paid or entitled to be paid for the performance of
duties for an Affiliated Company;
         (b) Nonworking  Paid Time. Each hour for which an individual is paid or
entitled  to be paid by an  Affiliated  Company  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,
disability,  layoff,  jury duty,  military  duty or leave of absence:  provided,
however,  that no credit  shall be given for  payments  made or due under a plan
maintained  solely for the  purpose of  complying  with  applicable  worker's or
unemployment  compensation  or disability  insurance  laws or for payments which
solely  reimburse  an  individual  for  medical or  medically  related  expenses
incurred by the individual; and

         (c)      Back Pay.  Each hour for which back pay, irrespective of
mitigation or damages, is either awarded or agreed to by an
Affiliated Company.

         Notwithstanding  any other  provision of this Plan to the contrary,  an
individual  shall not be  credited  with  Hours of  Service  more than once with
respect to the same period of time.

         3.6      Year of Service.

         (a) In  General.  A  "Year  of  Service"  means  each  365  day  period
(disregarding  fractional  years),  measured during the period  beginning on the
date on which an employee of an Affiliated Company (whether or not in a class of
employment  eligible  to  participate  in the Plan) first  completes  an Hour of
Service (or the first day of the month in which he is employed and  completes an
Hour of Service,  if his employment  commences on the first regularly  scheduled
work day of a month)  and ending on the  earlier  of (i) the date such  employee
quits, is discharged,  retires or dies or (ii) the first anniversary of the date
such employee is absent from active  employment for any other reason  including,
but not limited to, short-term disability, vacation, leave of absence or layoff.
The applicable date under (i) or (ii) is such employee's "severance from service
date".

         (b)  Service  Spanning  Rules.  Notwithstanding  the  foregoing,  if an
employee  is  severed  from  service  with an  Affiliated  Company  by reason of
quitting,  discharge or retirement but returns to employment  with an Affiliated
Company and performs an Hour of Service  within the 365 day period ending on the
first  anniversary  of his severance from service date, the interim period shall
count  towards  the  computation  of  Years of  Service.  If an  employee  of an
Affiliated  Company is absent for a reason  described in (a)(ii) of this Section
3.6 and then quits, is discharged or retires but

                                      -17-

<PAGE>



subsequently  returns to employment and performs an Hour of Service, the interim
period of absence  shall  count  towards  the  computation  of Years of Service,
provided that the date on which such employee  again performs an Hour of Service
occurs within the 365 day period ending on the first anniversary of the date the
employee was first absent from  employment for a reason  described in (a)(ii) of
this Section 3.6.

         (c) Leaves of Absence.  In accordance with uniform rules, the Committee
may, in its sole and absolute discretion,  count certain periods of absence from
active employment with an Affiliated  Company toward the computation of Years of
Service,  even if not required pursuant to paragraphs (a) or (b) of this Section
3.6.

         3.7  Participation  and Service Upon  Reemployment.  If an individual's
employment  with an Affiliated  Company is terminated but he is reemployed as an
Employee,  the following  rules shall apply in  determining  his  eligibility to
participate in the Plan and his Years of Service:

         (a) If the  reemployed  employee was a  Participant  in the Plan or had
satisfied  the  service  and age  requirements  of Section  3.1 during his prior
period  of  employment,  he shall be  entitled  upon  reemployment  to  become a
Participant  in the  Plan  (if he is  then  included  in a class  of  employment
eligible to participate in the Plan). In order to make  contributions,  he shall
be  required  to  execute  a new  enrollment  form  containing  a tax  reduction
agreement  in  accordance  with  Section  4.1(b)  and/or a new  investment  plan
agreement in accordance with Section 4.2(b).

         (b) If the reemployed employee was not a Participant in the Plan or had
not satisfied the service and age  requirements  of Section 3.1 during his prior
period of employment,  such service and age  requirements  must be satisfied and
the employee must be included in a class of employment  eligible to  participate
in the Plan  before  he  becomes  a  Participant  upon  reemployment;  provided,
however,  that any  Years  of  Service  credited  during  his  prior  period  of
employment shall be automatically reinstated as of the date of his reemployment.

         3.8  Predecessor  Service.  Credit  towards  Hours and Years of Service
shall be  given  for  periods  of  employment  with  any  corporation  that is a
predecessor corporation of an Employer, or a corporation merged, consolidated or
liquidated  into an Employer or a predecessor of an Employer,  or a corporation,
substantially all of the assets of which have been acquired by an Employer,  but
only to the extent  required by Section 414(a) of the Code;  provided,  however,
that even if not  required by the Code,  the  Committee  on a  nondiscriminatory
basis may, in its sole and absolute discretion, grant credit for Hours and Years
of Service with a predecessor corporation.  Without limitation of the foregoing,
all service credited to an employee of an Affiliated Company as of March 31,

                                      -18-

<PAGE>



1989 for  eligibility  and  vesting  purposes  under the terms of the Prior Plan
shall be credited as of April 1, 1989 for such purposes hereunder.

                                   ARTICLE IV

                                  CONTRIBUTIONS


         4.1      Tax Reduction Contributions.

         (a) Amount of  Contributions.  Any Employee  eligible to participate in
the Plan may elect to have the Company make Tax Reduction  Contributions  to the
Trust on his behalf by executing an enrollment  form  containing a tax reduction
agreement  as  described  in  Section  4.1(b).   The  amount  of  Tax  Reduction
Contributions  made on behalf of a  Participant  for any payday shall equal that
whole  percentage of his  Compensation  per payday selected by the  Participant,
subject to the restrictions and limitations of Section 4.6 and Article V hereof.

         (b)      Tax Reduction Agreement.

                  (i) Nature of Agreement.  The tax reduction agreement referred
                  to in Section 4.1(a) shall be a legally binding  agreement (on
                  a  form   prescribed  by  the   Committee)   whereby  (A)  the
                  Participant  agrees  that,  as of the  effective  date  of the
                  agreement,   the   Compensation   otherwise   payable  to  him
                  thereafter shall be reduced by a whole percentage (as selected
                  by the  Participant)  not to  exceed  the  maximum  percentage
                  permitted  under  Section 4.6, and (B) the Employer  agrees to
                  contribute the total amount of such reduction in  Compensation
                  to the Trust on behalf of the  Participant  as a Tax Reduction
                  Contribution  under Section 4.1(a).  Such contributions may be
                  made by the Employer to the Trust on a monthly basis, provided
                  that in no event shall the Company's aggregate contribution on
                  behalf of the  Participant  under Section  4.1(a) for any Plan
                  Year be made to the Trust  later  than 90 days after the close
                  of the Plan Year to which  such  contribution  relates or such
                  later date  prescribed by the Code or  applicable  Treasury or
                  Department of Labor regulations.  Subject to the provisions of
                  paragraph (v) of this Section  4.1(b) and Article V hereof,  a
                  Participant's  tax reduction  agreement shall remain in effect
                  until  modified or terminated in  accordance  with  paragraphs
                  (iii) or (iv) of this Section 4.1(b).

                  (ii)     Effective Date of Agreement.  The effective date of
                  a Participant's tax reduction agreement shall be no
                  earlier than the first Entry Date commencing at least 30
                  days after such agreement is received in executed form by

                                      -19-

<PAGE>



                  the Committee (provided such effective date is no earlier than
                  the date the Participant first becomes eligible to participate
                  in the Plan).

                  (iii) Amendment of Agreement.

                  (A)      A Participant may amend his tax reduction agreement
                           with respect to Compensation not yet paid to
                           provide a new lower whole percentage to be used to
                           determine his reduced Compensation amount;
                           provided, however, the amended tax reduction
                           agreement shall be effective no earlier than the
                           first Entry Date commencing at least 30 days after
                           Notice is received.  A Participant may not amend
                           his tax reduction agreement to lower his percentage
                           more often than two times in any Plan Year.

                  (B)      A Participant may amend his tax reduction agreement
                           with respect to Compensation not yet paid to
                           provide a new higher percentage (within the limits
                           of Section 4.6) to be used to determine his reduced
                           Compensation amount.  A Participant who is a Non-
                           Highly Compensated Employee may increase his Tax
                           Reduction Contributions effective as of any Entry
                           Date, provided that the Committee has received an
                           amended tax reduction agreement at least 30 days
                           prior to such Entry Date.  A Participant who is a
                           Highly Compensated Employee may increase his Tax
                           Reduction Contributions effective only as of the
                           first day of a Plan Year, provided that the
                           Committee has received an amended tax reduction
                           agreement at least 30 days prior to the first day
                           of such Plan Year.  The Committee may, in its sole
                           and absolute discretion, shorten the 30-day prior
                           notice periods required under this paragraph (iii).

                  (iv) Termination of Agreement. A Participant may terminate his
                  tax   reduction   agreement   at  any  time  with  respect  to
                  Compensation  not yet paid.  The effective date of termination
                  shall  be as  soon  as  administratively  possible  after  the
                  Participant's  notice of  termination  is received in executed
                  form by the Committee.  Any Participant who terminates his tax
                  reduction  agreement  shall be  permitted to execute a new tax
                  reduction  agreement and resume having  contributions  made to
                  the Trust on his behalf under  Section  4.1(a),  provided that
                  the effective date of such new tax reduction  agreement  shall
                  be  determined  in the same  manner as the  effective  date is
                  determined  for increased Tax  Reduction  Contributions  under
                  paragraph (iii) of this Section 4.1(b).


                                      -20-

<PAGE>



                  (v)  Transfer  to  Ineligible  Employment  or  Termination  of
                  Employment.  A  Participant's  tax reduction  agreement  shall
                  terminate  automatically  if the  Participant  transfers  to a
                  class of  employment  not eligible for  participation  in this
                  Plan or if he  terminates  his  employment  with the Employer.
                  Upon return of the  Participant  to eligible  employment,  the
                  Participant  shall be permitted to execute a new tax reduction
                  agreement and resume having contributions made to the Trust on
                  his behalf under Section  4.1(a),  provided that the effective
                  date of the new tax  reduction  agreement  shall be no earlier
                  than the later of (A) the first Entry Date commencing at least
                  30 days after the  agreement  is received in executed  form by
                  the Committee or (B) the date the Participant resumes eligible
                  employment.  Transfers of  Participants  to different  payroll
                  systems  among  the  Employers   shall  be   administered   by
                  procedures established by the Committee.

         4.2      Investment Plan Contributions.

         (a) Amount of  Contributions.  Any Employee  eligible to participate in
the Plan  may  elect  to make  Investment  Plan  Contributions  to the  Trust by
executing  an  enrollment  form  containing  an  investment  plan  agreement  as
described in Section 4.2(b). The amount of Investment Plan Contributions made by
a  Participant  for  any  payday  shall  equal  that  whole  percentage  of  his
Compensation per payday selected by the Participant, subject to the restrictions
and limitations contained in Section 4.6 and Article VI hereof.

         (b)      Investment Plan Agreement.

                  (i)  Nature  of  Agreement.   The  investment  plan  agreement
                  referred  to in  Section  4.2(a)  shall be a  legally  binding
                  agreement (on a form prescribed by the Committee)  whereby (A)
                  the  Participant  agrees that, as of the effective date of the
                  agreement,   the   Compensation   otherwise   payable  to  him
                  thereafter  shall  be  adjusted  by  a  whole  percentage  (as
                  selected  by  the  Participant)  not  to  exceed  the  maximum
                  percentage permitted under Section 4.6 and (B) the Participant
                  agrees to  contribute  the total amount of said  adjustment in
                  Compensation  upon each  payday to the Trust as an  Investment
                  Plan  Contribution  under Section 4.2(a).  Each  Participant's
                  Investment  Plan  Contributions  shall  be  paid  over  to the
                  Trustee for deposit in the Trust Fund at such time or times as
                  may be  convenient  to the Employer but not later than the end
                  of the month next  following  the month in which the deduction
                  is made or such  later date  prescribed  under  Department  of
                  Labor regulations.  Subject to the provisions of paragraph (v)
                  of this Section 4.2(b) and Article VI

                                      -21-

<PAGE>



                  hereof, a Participant's investment plan agreement shall remain
                  in effect until  modified or  terminated  in  accordance  with
                  paragraphs (iii) or (iv) of this Section 4.2(b).

                  (ii)  Effective  Date of Agreement.  The  effective  date of a
                  Participant's  investment  plan agreement  shall be no earlier
                  than the first  Entry Date  commencing  at least 30 days after
                  such  agreement is received in executed  form by the Committee
                  (provided  such effective date is no earlier than the date the
                  Participant  first  becomes  eligible  to  participate  in the
                  Plan).

                  (iii)  Amendment of  Agreement.  A  Participant  may amend his
                  investment   plan  agreement  at  any  time  with  respect  to
                  Compensation not yet paid to increase or to decrease the whole
                  percentage of his  Compensation  (within the limits of Section
                  4.6) to be used to determine his Investment Plan Contribution.
                  The amended  investment  plan agreement  shall be effective no
                  earlier than the first Entry Date  commencing at least 30 days
                  after  Notice is  received.  A  Participant  may not amend his
                  investment plan agreement under this Section  4.2(b)(iii) more
                  often than two times in any Plan Year.

                  (iv) Termination of Agreement. A Participant may terminate his
                  investment   plan  agreement  at  any  time  with  respect  to
                  Compensation  not yet paid.  The effective date of termination
                  shall  be as  soon  as  administratively  possible  after  the
                  Participant's  notice of  termination  is received in executed
                  form by the  Committee.  Any  Participant  who  terminates his
                  investment  plan agreement shall be permitted to execute a new
                  investment plan agreement and resume making  contributions  to
                  the Trust under  Section  4.2(a),  provided that the effective
                  date of such new investment plan agreement shall be no earlier
                  than a  subsequent  Entry Date  (and,  in the case of a Highly
                  Compensated Participant, the first Entry Date in the following
                  Plan Year),  in any case commencing at least 30 days after the
                  new investment  plan agreement is received in executed form by
                  the Committee.

                  (v)  Transfer  to  Ineligible  Employment  or  Termination  of
                  Employment.  A  Participant's  investment plan agreement shall
                  terminate  automatically  if the  Participant  transfers  to a
                  class of  employment  not eligible for  participation  in this
                  Plan or if he  terminates  his  employment  with the Employer.
                  Upon return of the  Participant  to eligible  employment,  the
                  Participant  shall be  permitted  to execute a new  investment
                  plan  agreement and resume making  contributions  to the Trust
                  under Section 4.2(a), provided that the effective date of the

                                      -22-

<PAGE>



                  new  investment  plan  agreement  shall be no earlier than the
                  later of (A)  first  Entry  Date  commencing  at least 30 days
                  after  the  agreement  is  received  in  executed  form by the
                  Committee  or (B) the date the  Participant  resumes  eligible
                  employment.  Transfers of  Participants  to different  payroll
                  systems  among  the  Employers   shall  be   administered   by
                  procedures established by the Committee.

         4.3      Matching Company Contributions.

         (a)  Contributions.  In  addition  to the  contributions  described  in
Sections  4.1, 4.2 and 4.4 hereof,  the  Employer  shall make  Matching  Company
Contributions  to the  Trust on  behalf of each  Participant  for each  calendar
quarter  in the  amount,  if any,  determined  by it,  in its sole and  absolute
discretion,  subject to the limitations of Section 6.1; provided,  however, that
no Matching  Company  Contributions  will be made with respect to Tax  Reduction
Contributions or Investment Plan  Contributions  that in the aggregate exceed 6%
of a Participant's Compensation.

         (b) Timing of Matching  Company  Contributions.  The  Matching  Company
Contributions made to the Trust under Section 4.3(a) for any Plan Year generally
shall be made  quarterly,  and in no event  later  than  the date  described  in
Section 4.5.

         (c)  Waiver  of  Matching  Contributions.   In  accordance  with  rules
prescribed by the Committee, a Participant may waive in advance of any Plan Year
or other prescribed  period the allocation of Matching Company  Contributions to
his Matching Company Contri bution Account that otherwise would be made thereto.

         4.4 Employer Qualified Non-Elective  Contributions.  To insure that the
Actual Deferral  Percentage  tests of Section 401(k) of the Code as described in
Section 5.2 hereof or the Contribution Percentage tests of Section 401(m) of the
Code as described in Section 6.1 hereof are met for any Plan Year,  an Employer,
under such rules and regulations as the Secretary of the Treasury may prescribe,
may make additional  contributions that shall constitute "qualified non-elective
contributions"  within the meaning of Section 401(m)(4)(C) of the Code on behalf
of Non-Highly  Compensated Employees selected by the Company who are eligible to
make Tax Reduction  Contributions or Investment Plan  Contributions for the Plan
Year.  Each Plan Year an Employer  shall  designate the portion,  if any, of the
qualified  non-elective  contributions that it made for the Plan Year that shall
be considered under Section 5.2 for the Actual Deferral Percentage tests and the
portion, if any, that shall be considered under Section 6.1 for the Contribution
Percentage test.

         4.5      Time of Contributions.  In addition to any other require
ments hereunder relating to the timing of contributions, contribu
tions made by an Employer pursuant to Sections 4.1, 4.3 or 4.4 if

                                      -23-

<PAGE>



any,  for any fiscal year of the  Employer  shall be paid in full not later than
the time prescribed by law to enable the Employer to obtain a deduction therefor
on its  Federal  income tax return for said year.  Contributions  made after the
last day of the Plan Year but within the time for filing an  Employer's  Federal
income tax return (including  extensions  thereof) for the fiscal year that ends
with or within the last day of the Plan Year shall be deemed made as of the last
day of that Plan Year if so directed by the Employer,  except such contributions
shall not share in  increases,  decreases,  or income to the Trust Fund prior to
the date  actually  made.  Notwithstanding  the  foregoing,  upon an  Employer's
request,  a  contribution  that  was  made  upon  a  mistake  of  fact  or  upon
deductibility of the  contribution  shall be returned to the Employer within one
year after the payment of the  contribution or disallowance of the deduction (to
the  extent  disallowed),  as the case may be;  provided,  however,  the  amount
returned to an Employer due to mistake of fact or denial of deductibility  shall
not be  increased  by any  earnings  thereon  and shall be reduced by any losses
attributable to such amount.

         4.6 Maximum  Combined Tax Reduction and Investment Plan  Contributions.
Notwithstanding  any  provision  of  Sections  4.1 and 4.2 to the  contrary,  no
Participant  may  make  Tax  Reduction   Contributions  and/or  Investment  Plan
Contributions in an amount, when combined for any Plan Year, in excess of 15% of
such Participant's  Compensation or such other percentage as the Committee shall
determine for purposes of complying with any  restriction or limitation  imposed
by the Code.

         4.7      Manner of Making Contributions.  All contributions to the
Trust shall be paid directly to the Trustee.  In connection with
each contribution, the Employer shall provide the Recordkeeper with
the following information:

         (a)      the identity of each Participant on whose behalf the
contribution is being made and the amount thereof; and

         (b)      whether the amount contributed on behalf of the
Participant is a Tax Reduction Contribution, an Investment Plan Contribution ,or
a Rollover Contribution.  The Recordkeeper shall provide the Trustee with any of
the information received by it which is necessary for the Trustee to perform its
duties and obligations with respect to the Trust.

         4.8 Reduction of Employer Contributions. The aggregate contributions of
each Employer pursuant to Sections 4.3 and 4.4 in any Plan Year shall be reduced
by the value of Accounts  forfeited  under the  provisions of Sections 5.1, 5.3,
6.2, 8.3, 10.3 and 11.9 after payment of expenses pursuant to Section 14.8.

         4.9      Rollover Contributions.  Any Participant or Employee
(including an Employee who has not satisfied the eligibility

                                      -24-

<PAGE>



requirements  of Article III),  with the  Committee's  written consent and after
complying  with  all  applicable  laws and  filing  with  the  Trustee  the form
prescribed  by the  Committee,  may make or have made on his  behalf a  Rollover
Contribution  as described in Section 2.48.  The  Committee  may adopt  rollover
procedures  and,  before  permitting  a Rollover  Contribution,  may  require an
Employee to furnish such information  regarding the amount proposed to be rolled
over as the  Committee  determines  is necessary or  appropriate.  If a Rollover
Contribution  is made by or on behalf of an Employee who has not  satisfied  the
eligibility  requirements  of Article III, the  provisions  of the Plan shall be
generally  applicable  to such  Employee and the Rollover  Contribution,  unless
expressly  provided  otherwise herein. The Committee shall allocate and credit a
Rollover  Contribution to the contributing party's Rollover Contribution Account
as of the Valuation  Date  immediately  following the date on which the Rollover
Contribution is made. A Rollover  Contribution  shall be nonforfeitable  and the
value thereof  shall be paid to the  Participant  in the manner the  Participant
(or, if applicable,  the Participant's  Beneficiary)  elects pursuant to Section
11.4 upon retirement,  termination of employment,  Disability or death. Rollover
Contributions  shall be made in cash and not in stock or other property,  unless
otherwise  permitted  by  the  Committee.  An  investment  election  on  a  form
prescribed  by the  Committee  shall be submitted  with an  Employee's  Rollover
Contribution  and  shall  direct  that  such  contribution  be  invested  in the
Investment  Funds in multiples  described  in Section  9.5(d).  Thereafter,  the
Employee may change the  investment of his Rollover  Contribution  in accordance
with Section 9.5(d)(ii).

         4.10 Transfers from Other Plans. The Committee, in its discretion,  may
accept a direct  transfer to the Plan from another plan qualified  under Section
401(a) of the Code of all or a portion of the amount  credited  under such other
plan to an  Employee;  provided,  however,  that the  Plan  shall  not  accept a
transfer from any plan that is subject to the survivor  annuity  requirements of
Sections  401(a)(11)  or 417 of the Code.  The  Committee  may adopt  rules with
respect to any such transfer  including,  but not limited to, rules with respect
to accounting for, and the investment of, amounts transferred. In the event that
an amount  transferred to the Plan pursuant to this Section 4.10 is attributable
to a cash or deferred  election that was made pursuant to Section  401(k) of the
Code,  such amount  shall be subject to the same rules that apply under the Plan
to Tax Reduction Contributions.

                                    ARTICLE V

                         LIMITATIONS AND RESTRICTIONS ON
                           TAX REDUCTION CONTRIBUTIONS


         5.1      Dollar Limitation.  For any taxable year of a Partici
pant, the aggregate amount of (i) contributions made to the Plan

                                      -25-

<PAGE>



pursuant to Section 4.1 on behalf the  Participant  for that taxable  year,  and
(ii) amounts  deferred by the  Participant  for that taxable year under a salary
reduction  agreement  under any other plan,  contract or agreement  described in
Sections  401(k),  403(b)  or  408(k)  of the Code  sponsored  by an  Affiliated
Company,  shall not exceed $7,000 or such other dollar limitation  prescribed by
Code Section  402(g) for that  taxable year as adjusted by the  Secretary of the
Treasury  at the same time and in the same  manner  as  provided  under  Section
415(d) of the Code for adjusting  the dollar  limitation in effect under Section
415(b)(1)(A) of the Code (such dollar limitation, as adjusted, shall hereinafter
be referred to as the "Annual Deferral Limitation").

         If Tax Reduction  Contributions  made on behalf of a Participant  for a
taxable year exceed the Annual Deferral  Limitation for that year, the amount of
such excess shall be referred to as "Excess Elective Deferrals." Excess Elective
Deferrals  (adjusted for the income or loss  attributable to such excess amount)
shall be distributed to the  Participant not later than the April 15 immediately
following  the taxable  year of the  Participant  for which the Excess  Elective
Deferrals  were made to the Plan.  The  Company  shall  reduce the amount of the
Excess  Elective  Deferrals  under  this  Section  5.1 by the  amount  of Excess
Contributions (as determined under Section 5.3), if any, previously  distributed
to the Participant for the Plan Year beginning in that taxable year. The Company
shall  determine  the net income or net loss in the same manner as  described in
Section 5.3 for Excess  Contributions,  except the  numerator of the  allocation
fraction shall be the amount of the Participant's  Excess Elective Deferrals for
the taxable year under this Section 5.1 and the  denominator  of the  allocation
fraction shall be the balance of the  Participant's  Tax Reduction  Contribution
Account attributable to Tax Reduction Contributions as of the end of the taxable
year (without  regard to the net income or net loss for the taxable year on that
portion of the  Participant's  Tax Reduction  Contribution  Account);  provided,
however,  if there is a loss  attributable to such excess amount,  the amount of
the distribution adjusted for such loss shall be limited to an amount which does
not exceed  the lesser of (i) the  aggregate  balance of the  Participant's  Tax
Reduction  Contribution Account or (ii) the Tax Reduction  Contributions made on
behalf of the  Participant  for that taxable year. In adjusting a  Participant's
Excess  Elective  Deferrals for the income or loss  attributable  to such Excess
Elective Deferrals, the income or loss attributable to such excess contributions
for the "gap period" shall not be considered.  For purposes of this Section 5.1,
"gap period" shall mean the period  beginning  with the first day of the taxable
year next  following  the taxable year for which the Excess  Elective  Deferrals
were made on behalf of the  Participant  and ending on the date of the  distribu
tion. If the Excess Elective Deferrals are distributed to a Participant from the
Plan pursuant to this Section 5.1, the Matching Company Contribution, if any, to
which such Excess Elective Deferrals relate (plus any income and minus any loss

                                      -26-

<PAGE>



attributable thereto), determined after the application of Section 6.2, shall be
forfeited  (whether or not vested) at the time the Excess Elective Deferrals are
distributed, and the forfeitures shall be applied as set forth in Section 11.12.
         If the Participant also (i) participates in one or more other qualified
cash or deferred  arrangements within the meaning of Section 401(k) of the Code,
(ii)  has  employer  contributions  made  on his  behalf  pursuant  to a  salary
reduction  agreement  under Section 408(k) of the Code, or (iii) has an employer
contribution made on his behalf pursuant to a salary reduction  agreement toward
the purchase of an annuity  contract  under Section  403(b) of the Code, and the
sum of the elective deferrals [as defined in Section 402(g)(3) of the Code] that
are made for the Participant during a taxable year under such other arrangements
and this Plan exceeds the Annual Deferral  Limitation for that taxable year, the
Participant shall, not later than the March 1 following the close of his taxable
year for  which  the  Excess  Elective  Deferrals  have been  made,  notify  the
Committee  in writing of the portion of the Excess  Elective  Deferrals  that he
wishes to be allocated to this Plan,  if any, and request that the Tax Reduction
Contributions  made on his behalf  under  this Plan be reduced by the  allocable
amount  specified by the  Participant.  If all plans,  contracts and  agreements
described in Sections  401(k),  403(b) and 408(k) of the Code  pursuant to which
the  Participant  is able to defer  amounts for a taxable  year for which Excess
Elective  Deferrals have been made are sponsored by an Affiliated  Company,  the
Company  shall  determine to which plan,  contract or agreement  (including  the
Plan) the Excess Elective Deferrals shall be allocated for that taxable year and
if the Excess  Elective  Deferrals are to be allocated to the Plan,  the Company
shall notify the Committee in writing not later than March 1 following the close
of that taxable year. Such notification  shall be deemed to be a notification by
the Partici pant to the Committee. The portion of Excess Elective Deferrals that
is allocated to this Plan, if any,  shall be adjusted for income and loss in the
same manner as  described  in Section 5.3 and shall then be  distributed  to the
Participant  no later  than  the  immediately  following  April  15.  If the Tax
Reduction  Contributions  made on behalf of a Participant  for a taxable year do
not  exceed  the  Annual  Deferral  Limitation  for  that  taxable  year and the
Committee has not received any written Notice from the Participant (or deemed to
have  received  such  Notice as  described  above)  by the  March 1  immediately
following  that  taxable  year  notifying  the  Committee  that the  Participant
allocates a portion of the Excess Elective  Deferrals,  if any, for that taxable
year to the Plan,  the  Committee  may  assume  that  none of the Tax  Reduction
Contributions made on behalf of the Participant for that taxable year constitute
Excess  Elective  Deferrals and that no distribution is required to be made from
the  Participant's Tax Reduction  Contribution  Account pursuant to this Section
5.1.  Notwithstanding the fact that Excess Elective Deferrals have been (or will
be) distributed to a Highly  Compensated  Employee as provided above, the excess
amount of such Tax Reduction Contributions or the portion of such Tax Reduction

                                      -27-

<PAGE>



Contributions  that are deemed to constitute Excess Elective Deferrals by reason
of the Company's or Participant's  written Notice of allocation  hereunder shall
still be treated as a Tax  Reduction  Contribution  for purposes of applying the
Actual  Deferral  Percentage  test  described in Section 5.2 hereof for the Plan
Year in which such Excess  Elective  Deferrals  were made,  except to the extent
provided under rules prescribed by the Secretary of Treasury.

         5.2 Actual Deferral  Percentage Tests. For each Plan Year, the Employer
shall determine whether the aggregate amount allocated to each Participant's Tax
Reduction Contribution Account attributable to Tax Reduction Contributions,  and
qualified  nonelective  contributions (that are designated under Section 4.4 for
consideration  under this Section 5.2) made for that Plan Year shall satisfy one
of the following tests, in addition to the test set forth in Article VII:

         (a) the "Actual  Deferral  Percentage" for the group  consisting of all
eligible  Highly  Compensated  Employees (as defined below) shall not exceed the
"Actual Deferral Percentage" for the group consisting of all eligible Non-Highly
Compensated Employees (as defined below) multiplied by 1.25; or

         (b) the "Actual  Deferral  Percentage" for the group  consisting of all
eligible Highly Compensated Employees shall not exceed the lesser of (i) 200% of
the  "Actual  Deferral  Percentage"  for the group  consisting  of all  eligible
Non-Highly  Compensated  Employees or (ii) the "Actual Deferral  Percentage" for
the group consisting of all eligible Non-Highly  Compensated  Employees plus two
percentage  points or such lesser amount as the Secretary of the Treasury  shall
prescribe.

         For  purposes  of this  Article V, the  following  terms shall have the
following meanings:

         (a) "Actual Deferral Percentage" for a Plan Year means, with respect to
the group consisting of the eligible Highly Compensated  Employees and the group
consisting  of  the  eligible  Non-Highly  Compensated  Employees,  the  average
(expressed  as a  percentage)  of the  ratios,  calculated  separately  for each
Employee  in each such group and  rounded to the  nearest  one-hundredth  of one
percent, of the amount of Tax Reduction Contributions and qualified non-elective
contributions  (which are designated under Section 4.4 for  consideration  under
this  Section 5.2)  allocated  to each  Employee's  Tax  Reduction  Contribution
Account (unreduced in the case of Highly Compensated  Employees by distributions
made to such Employee pursuant to Section 5.1 hereof) for such Plan Year to such
Employee's Compensation as defined in Section 2.13(c) for the Plan Year.


                                      -28-

<PAGE>



         For aggregated  Family Members  treated as a single Highly  Compensated
Employee under Section 2.22(b)(iv),  the ratio of the family unit is the greater
of  (i)  the  ratio   determined   by  combining  the  aggregate  Tax  Reduction
Contributions  and  qualified   nonelective   contributions   (described  above)
allocated to each Employee's Tax Reduction  Contribution  Account  (unreduced by
distributions  made to such  Employee  pursuant  to Section 5.1 hereof) for such
Plan Year and dividing  such sum by the  Compensation  for such Plan Year of the
Family Members who are Highly  Compensated  Employees without family aggregation
or  (ii)  the  ratio   determined  by  combining  the  aggregate  Tax  Reduction
Contributions  and  qualified  non-elective   contributions   (described  above)
allocated to each Employee's Tax Reduction  Contribution  Account  (unreduced by
distributions  made to such  Employee  pursuant  to Section 5.1 hereof) for such
Plan Year and dividing  such sum by the  Compensation  for such Plan Year of all
aggregated  Family  Members.   Each  Family  Member  aggregated  with  a  Highly
Compensated  Employee  for  purposes  of the  preceding  sentence  shall  not be
considered a separate Employee in determining the Actual Deferral Percentage for
either eligible Highly Compensated Employees or eligible Non-Highly  Compensated
Employees.

         (b)      "Actual Deferral Ratio" means each separately calculated
ratio under subparagraph (a) above.

         An Employee  who is  considered  a Highly  Compensated  Employee  under
Section 2.22 or a Non-Highly  Compensated  Employee  under Section 2.35 shall be
considered an "eligible Highly Compensated  Employee" or an "eligible Non-Highly
Compensated  Employee" for purposes of this Section 5.2 for each Plan Year he is
employed by an Employer if he has  satisfied  the  eligibility  requirements  of
Article  III and  reached  an  Entry  Date on  which  he  could  have  become  a
Participant, regardless of (i) whether he has elected to have an Employer make a
Tax Reduction  Contribution to the Plan on his behalf under Section 4.1 for that
Plan Year,  (ii) whether his right to make Tax  Reduction  Contributions  to the
Plan for that Plan Year has been suspended under Section 11.1 due to his receipt
of a hardship distribution,  or (iii) he is suspended from further contributions
during  the  Plan  Year due to the  limitations  of  Section  415 of the Code as
described in Article VIII.  Consequently,  for purposes of this Section 5.2, the
Actual  Deferral  Ratio for each  Highly  Compensated  Employee  and  Non-Highly
Compensated  Employee who is eligible to, but does not elect to have an Employer
make an Employee Tax Reduction Contribution on his behalf to the Plan for a Plan
Year,  shall be zero for that Plan Year,  unless the Employer  makes a qualified
nonelective  contribution  to the Plan for a Plan  Year to  satisfy  the  Actual
Deferral Percentage tests, in which case the Actual Deferral Ratio for each such
Non-Highly  Compensated  Employee  shall  be the  ratio of that  portion  of the
qualified  non-elective  contribution  attributable to contributions made by the
Employer to satisfy the Actual  Deferral  Percentage  tests that is allocated to
his Tax

                                      -29-

<PAGE>



Reduction Contribution Account for the Plan Year to his Compensa tion as defined
in Section 2.13(c) for the Plan Year.

         If any Employee  who is an eligible  Highly  Compensated  Employee is a
participant  in two or more cash or deferred  arrangements  described in Section
401(k) of the Code that are maintained by an Affiliated  Company,  excluding any
such arrangement that is part of an employee stock ownership plan [as defined in
Section 4975(e)(7) of the Code] for purposes of determining his ratio under this
Section 5.2, all such cash or deferred arrangements shall be treated as one cash
or deferred arrangement to the extent required under Section 401(k) of the Code.
For purposes of this Section 5.2, if two or more plans or arrangements described
in  Section  401(k)  of the Code are  considered  one plan for the  purposes  of
Sections  401(a)(4) or 410(b) of the Code, such arrangements shall be treated as
a single  arrangement,  and if the plans use different  plan years,  the Company
shall  determine the combined cash or deferred  contributions  and ratios on the
basis of the plan years ending in the same calendar  year.  The Committee  shall
maintain  records to  demonstrate  compliance  with the tests under this Section
5.2,  including  the  extent  to  which  the  Plan  used  qualified  nonelective
contributions pursuant to Section 4.4 to satisfy a test.

         5.3 Adjustments Required to Satisfy an Actual Deferral Percentage Test.
If Tax Reduction  Contributions made for any Plan Year do not satisfy one of the
tests set forth in Section  5.2,  the excess  amount that would result in a test
being  satisfied for that Plan Year if it had not been made to the Plan shall be
referred to as an "Excess Contribution" and the Committee shall, in its sole and
absolute  discretion and  notwithstanding any other provision of the Plan to the
contrary  (but subject to the  provisions  of Sections  5.4, 5.5 and 5.6),  make
appropriate adjustments pursuant to one or more of the following provisions:

         (a) Within 2-1/2 months  following the close of the Plan Year for which
an Excess  Contribution was made, Tax Reduction  Contribu tions representing the
Excess  Contribution may be  recharacterized  as Investment Plan  Contributions,
subject to the conditions set forth in this Section 5.3;

         (b) Within 2-1/2 months  following the close of the Plan Year for which
an Excess  Contribution was made, if  administratively  possible,  and within 12
months after the close of such Plan Year at the latest, the Excess  Contribution
(plus any income and minus any loss  attributable  thereto) shall be distributed
to the Highly Compensated Employees to whose Tax Reduction  Contribution Account
all or a portion of such  Excess  Contribution  was made first from such  Highly
Compensated  Employees'  unmatched  Tax  Reduction  Contributions,  and  then if
necessary,  from the such Highly  Compensated  Employees'  matched Tax Reduction
Contributions;  provided,  however, that if matched Tax Reduction  Contributions
are distributed to correct an Excess Contribution, the Matching Company

                                      -30-

<PAGE>



Contributions  to which such Excess  Contribution  relates  (plus any income and
minus any loss attributable  thereto) shall be forfeited (whether or not vested)
at the time the Excess  Contribution is distributed and the forfeiture  shall be
applied as set forth in Section 11.12; or
         (c) Within the time prescribed by law to enable an Employer to obtain a
deduction for a contribution  on its federal income tax return for the Plan Year
for which an Excess Contribution was made, the Employer shall, if the conditions
applicable  to  qualified   nonelective   contributions   under  final  Treasury
Regulations  issued by the  Secretary  of the  Treasury  are  satisfied,  make a
qualified  nonelective  contribution  pursuant  to Section  4.4 on behalf of the
eligible Non-Highly  Compensated  Employees (as defined in Section 5.2) who meet
the  requirements  of Section 4.4 in an amount  sufficient to satisfy one of the
tests set forth in Section 5.2 [before or after the  application  of subsections
(a) and/or (b) above].

         Tax Reduction Contributions that are recharacterized as Investment Plan
Contributions  pursuant  to  subsection  (a)  hereof  shall be  reported  to the
Internal  Revenue  Service and to the affected  Highly  Compensated  Employee as
income for the taxable year in which the Highly Compensated  Employee would have
received the  recharacterized  Tax Reduction  Contributions  in cash, had he not
elected  to have  such  amounts  contributed  to the Plan.  The  recharacterized
amounts  shall be treated as  Investment  Plan  Contributions  for  purposes  of
Sections  72,  401(a)(4)  and 6047 of the Code and for  purposes of applying the
Contribution Percentage tests of Section 6.1 (for the Plan Year when included as
income by the Highly  Compensated  Employee),  but such amounts shall be treated
for all  other  purposes  under  the Plan as Tax  Reduction  Contributions.  The
Employer  shall  notify  each  affected  Highly  Compensated   Employee  of  the
recharacterization  within  2-1/2  months  following  the Plan Year to which the
recharacterization occurs.

         The amount of the Excess  Contributions  to be distributed  pursuant to
subsection (b) hereof shall be determined by a 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  (i) to enable the Plan to
satisfy one of the Actual Deferral  Percentage tests set forth in Section 5.2 or
(ii) to cause such Highly Compensated  Employee's Actual Deferral Ratio to equal
the Actual  Deferral  Ratio of the  Highly  Compensated  Employee  with the next
highest Actual Deferral  Ratio.  This procedure shall be repeated until the Plan
satisfies one of the Actual Deferral  Percentage tests set forth in Section 5.2.
Once the Plan satisfies one of the Actual Deferral  Percentage tests, the amount
of the Excess  Contributions  for each Highly  Compensated  Employee who had his
Actual Deferral Ratio reduced under the preceding  sentences shall be determined
for each  such  Employee  by first  subtracting  from the  total  Tax  Reduction
Contributions made on his behalf (without regard to this

                                      -31-

<PAGE>



Section 5.3) the product of such  Employee's  Actual  Deferral Ratio (as reduced
under this Section 5.3) and his  Compensation and then subtracting the amount of
Excess  Deferrals  for  the  Plan  Year,  if  any,  that  have  been  previously
distributed  under  Section 5.1 to the  Employee  for the taxable year ending in
that Plan Year.
         Excess Contributions of each Highly Compensated Employee subject to the
family member  aggregation  rules under Section  2.22(b)(iv)  shall be allocated
among the Highly  Compensated  Employee  and his  aggregated  Family  Members in
proportion  to  the  Tax  Reduction  Contributions  and  qualified  non-elective
contributions  that are considered  under Section 5.2 of the Highly  Compensated
Employee  and each such  Family  Member  aggregated  with him to  determine  the
combined Actual Deferral Ratio.

         The  income  or  loss   attributable  to  the  portion  of  the  Excess
Contributions for a Plan Year that are to be distributed to a Highly Compensated
Employee  hereunder  shall be determined by multiplying the amount of the income
or loss allocable to the  Participant's Tax Reduction  Contribution  Account for
the Plan Year by a fraction, the numerator of which is the portion of the Excess
Contributions  for the Plan Year that is to be distributed  to that  Participant
and the denominator of which is the balance of the  Participant's  Tax Reduction
Contribution  Account  on the last day of the Plan Year after  adjustment  as of
such date under Section 9.4. In adjusting a Participant's  Excess  Contributions
for the income or loss attributable to such Excess Contributions,  the income or
loss attributable to such Excess Contributions for the "gap period" shall not be
considered. For purposes of this Section 5.3, "gap period" shall mean the period
beginning  with the fist day of the Plan Year next  following  the Plan Year for
which the Excess Contributions were made on behalf of the Participant and ending
on the date of the distribution.

         5.4 Election of  Applicable  Correction  Methods By Highly  Compensated
Employees.  For purposes of satisfying the Actual Deferral Percentage tests, the
Committee,  in its sole discretion,  may permit a Highly Compensated Employee to
elect whether the appropriate method of correcting Excess Contributions shall be
recharacterization  pursuant to Section 5.3(a), distribution pursuant to Section
5.3(b) or a combination of both.

         5.5 Additional Adjustments of Tax Reduction Contributions. For purposes
of assuring  compliance with the Actual Deferral Percentage tests of Section 5.2
hereof,  the  Committee  may,  in its sole and  absolute  discretion,  make such
adjustments,  reductions or suspensions to Tax Reduction  Contribution  rates of
Participants  who are  Highly  Compensated  Employees  at such times and in such
amounts as the Committee shall reasonably deem necessary,  including prospective
reductions of Tax Reduction  Contributions at any time prior to or within a Plan
Year. The Committee shall make such adjustments, reductions or suspensions based
upon  periodic  reviews  of the  Tax  Reduction  Contribution  rates  of  Highly
Compensated

                                      -32-

<PAGE>



Employees  during  the Plan Year and may make such  adjustments,  reductions  or
suspensions  in any  amount  notwithstanding  any other  provisions  hereof.  In
addition,  the Committee  shall take any other action to assure  compliance with
the Actual Deferral  Percentage tests as shall be prescribed by the Secretary of
the Treasury.

         5.6      Other Permissible Methods of Testing and Correction.  The
provisions of this Article V are intended to conform with Sections
401(k) and 402(g) of the Code.  In the event that the Committee
determines, based on changes to the Code or interpretations or
guidance issued by the Internal Revenue Service, that the
requirements of such Code sections may be applied in a manner
different from that prescribed in this Article V, the Committee may
make appropriate adjustments to the administration of the Plan to
incorporate such changes to the Code or interpretations or
guidance.  If a change to the Code or interpretations or guidance
issued by the Internal Revenue Service results in more than one
additional option in the manner in which this Article V may be
administered, the Committee shall have the limited discretion to
select the option to be used, provided that such option, when
compared to the other option or options, results in the smallest
adjustment to Participant's Accounts.

                                   ARTICLE VI

                 LIMITATIONS AND RESTRICTIONS ON INVESTMENT PLAN
                CONTRIBUTIONS AND MATCHING COMPANY CONTRIBUTIONS


         6.1 Contribution  Percentage  Tests.  Subject to the provisions of this
Section  6.1,  for each Plan Year,  the Employer  shall  determine,  after first
applying the  provisions of Section  5.3(b),  whether the sum of (i) the amounts
allocated  to  each   Participant's   Investment   Plan   Contribution   Account
attributable   to  Investment  Plan   Contributions   [including  Tax  Reduction
Contributions  recharacterized  as  Investment  Plan  Contributions  pursuant to
Section 5.3(a)] for that Plan Year, (ii) amounts allocated to each Participant's
Matching  Company   Contribution   Account   attributable  to  Matching  Company
Contributions (including Tax Reduction Contributions treated as Matching Company
Contributions  pursuant to Section 6.5) for that Plan Year, and (iii) the amount
allocated to each Participant's Tax Reduction  Contribution Account attributable
to qualified  non-elective  contributions (that are designated under Section 4.4
for  consideration  under this Section 6.1) for that Plan Year shall satisfy one
of the following tests, in addition to the test set forth in Article VII:

         (a) the  "Contribution  Percentage"  for the  group  consisting  of all
eligible  Highly  Compensated  Employees (as defined below) shall not exceed the
"Contribution  Percentage" for the group  consisting of all eligible  Non-Highly
Compensated Employees (as defined below) multiplied by 1.25; or

                                      -33-

<PAGE>



         (b) the  "Contribution  Percentage"  for the  group  consisting  of all
eligible Highly Compensated Employees shall not exceed the lesser of (i) 200% of
the  "Contribution   Percentage"  for  the  group  consisting  of  all  eligible
Non-Highly  Compensated Employees or (ii) the "Contribution  Percentage" for the
group  consisting  of all eligible  Non-Highly  Compensated  Employees  plus two
percentage  points or such lesser amount as the Secretary of the Treasury  shall
prescribe.

         For  purposes of this  Article VI, the  following  terms shall have the
following meanings:

         (a)  "Contribution  Percentage" for a Plan Year means,  with respect to
the group consisting of the eligible Highly Compensated  Employees and the group
consisting  of  the  eligible  Non-Highly  Compensated  Employees,  the  average
(expressed  as a  percentage)  of the  ratios,  calculated  separately  for each
Employee in each such  group,  of the sum of (i) the amount of  Investment  Plan
Contribu tions allocated to each Investment Plan  Contribution  Account for such
Plan Year, (ii) the amount of Matching Company  Contributions  allocated to each
Employee's  Matching  Company  Contribution  Account  for such Plan Year,  after
reduction for forfeited matching contributions, if any, under Section 5.3(b) and
(iii) the amount allocated to each Employee's Tax Reduction Contribution Account
attributable to qualified non-elective contributions (which are designated under
Section 4.4 for consideration under this Section 6.1) for such Plan Year to such
Employee's Compensation as defined in Section 2.13(c) for the Plan Year in which
the Employee was an eligible Highly Compensated  Employee or eligible Non-Highly
Compensated Employee.

         For aggregated  Family Members  treated as a single Highly  Compensated
Employee under Section 2.22(b)(iv),  the ratio of the family unit is the greater
of  (i)  the  ratio  determined  by  combining  the  aggregate  Investment  Plan
Contributions  allocated to each Employee's Investment Plan Contribution Account
for such Plan Year, Matching Company Contributions  allocated to each Employee's
Matching  Company   Contribution  Account  for  such  Plan  Year  and  qualified
non-elective  contributions  (described  above)  allocated to his Tax  Reduction
Contribution   Account  for  such  Plan  Year  and  dividing  such  sum  by  the
Compensation for such Plan Year of the Family Members who are Highly Compensated
Employees  without family  aggregation or (ii) the ratio determined by combining
the  aggregate  Investment  Plan  Contributions  allocated  to  each  Employee's
Investment  Plan  Contribution  Account  for such Plan  Year,  Matching  Company
Contributions allocated to each Employee's Matching Company Contribution Account
for such Plan Year and qualified  non-elective  contributions  (described above)
allocated  to his Tax  Reduction  Contribution  Account  for such  Plan Year and
dividing such sum by the Compensation  considered in the preceding  sentence for
such Plan Year of all aggregated  Family Members.  Each Family Member aggregated
with a Highly Compensated Employee for purposes of the

                                      -34-

<PAGE>



preceding  sentence  shall not be considered a separate  Employee in determining
the Contribution  Percentage for either eligible Highly Compensated Employees or
eligible Non-Highly Compensated Employees.

         (b)      "Actual Contribution Ratio" means each such separately
calculated ratio under paragraph (a) above.

         An Employee  who is  considered  a Highly  Compensated  Employee  under
Section 2.22 or a Non-Highly  Compensated  Employee  under Section 2.35 shall be
considered an "eligible Highly Compensated  Employee" or an "eligible Non-Highly
Compensated  Employee" for purposes of this Section 6.1 for each Plan Year he is
employed by an Employer if he has  satisfied  the  eligibility  requirements  of
Article  III and  reached  an  Entry  Date on  which  he  could  have  become  a
Participant,  regardless  of  whether he  elected  to have an  Employer  make an
Investment Plan  Contribution to the Plan on his behalf under Section 4.2 and is
eligible  to receive an  allocation  of an  Investment  Plan  Contribution  or a
Matching Company Contribution for that Plan Year. Consequently,  for purposes of
this  Section  6.1, the Actual  Contribution  Ratio for each Highly  Compensated
Employee and  Non-Highly  Compensated  Employee who is eligible to, but does not
elect to have an Employer make an Investment Plan  Contribution on his behalf to
the Plan for a Plan Year and who does not  receive an  allocation  of a Matching
Company Contribution for the Plan Year, shall be zero for that Plan Year, unless
an Employer makes a qualified  non-elective  contribution to the Plan for a Plan
Year to satisfy  the  Contribution  Percentage  tests,  in which case the Actual
Contribution  Ratio for each such Non-Highly  Compensated  Employee shall be the
ratio of that portion of the qualified non-elective contribution attributable to
contributions  made by an Employer to satisfy the Contribution  Percentage tests
that is allocated to his Tax Reduction Contribution Account for the Plan Year to
his Compensation as defined in Section 2.13(c) for the Plan Year.

         For  purposes of this  Section 6.1, if two or more plans of an Employer
to which matching  contributions  within the meaning of Section  401(m)(4)(A) of
the Code,  employee  voluntary  after-tax  contributions  or elective  deferrals
within the meaning of Section  401(m)(4)(B)  of the Code are made are treated as
one plan for  purposes  of Section  410(b) of the Code  [other  than the average
benefit test, and excluding  allocations  under an employee stock ownership plan
described  in Section  4975(e)(7)  or 409 of the Code,  or the portion of a plan
that constitutes an employee stock ownership plan],  such plans shall be treated
as one plan for purposes of this Section  6.1,  and, if the plans use  different
plan years,  the Committee shall determine such combined  contributions  and the
Actual  Contribution   Ratios  of  Highly  Compensated   Employees  eligible  to
participate  in the  Plan on the  basis  of the plan  years  ending  in the same
calendar year. The Committee  shall maintain  records to demonstrate  compliance
with the tests under this  Section 6.1,  including  the extent to which the Plan
used qualified non-elective contributions pursuant to Section 4.4 to satisfy a

                                      -35-

<PAGE>



test.  In  addition,  if any  Employee  who is an  eligible  Highly  Compensated
Employee  participates  in two or more plans  described in Section 401(a) of the
Code that are  maintained by an Affiliated  Company to which such  contributions
are made,  all such  contributions  shall be  aggregated  for  purposes  of this
Section 6.1 to the extent required under Section 401(m) of the Code.

         6.2 Adjustments Required to Satisfy a Contribution  Percentage Test. If
Investment Plan  Contributions and Matching Company  Contributions  made for any
Plan Year do not satisfy one of the tests set forth in Section  6.1,  the excess
amount that would  result in a test being  satisfied  for the Year if it had not
been made to the Plan shall be referred to as an "Excess Aggregate Contribution"
and the Committee shall, in its sole and absolute discretion and notwithstanding
any other  provision  hereof,  make  appropriate  adjustments in accordance with
Sections 401(a)(4) and 401(m) of the Code (and Treasury regulations  thereunder)
pursuant to one or more of the  following  provisions  in the  following  order,
provided  that  adjustments  under  subsection  (c)  may  be  made  without  any
adjustments first being made under subsections (a) or (b):

         (a)  Any  Investment  Plan  Contributions  made by  Highly  Compensated
Employees  during  the  Plan  Year  that are not  matched  by  Matching  Company
Contributions in accordance with Section 4.3 (plus any income and minus any loss
attributable thereto) shall be distributed (according to the method specified in
this Section 6.2 below) to the Highly Compensated  Employees to whose Investment
Plan Contribution Accounts all or a portion of Excess Aggregate Contribution was
made  within  2-1/2   months   following   the  close  of  the  Plan  Year,   if
administratively  possible,  and  within 12 months  after the close of such Plan
Year,  at the latest until either (i) the limits of Section 6.1 are satisfied or
(ii) all such contributions are distributed.

         (b) To the extent that the portion of the Excess Aggregate Contribution
for the Plan Year is allocable to a Matching Company Contribution and Investment
Plan  Contributions  that are  matched  in  accordance  with  Section  4.3,  the
Committee  shall  eliminate the Excess  Aggregate  Contribution  by  alternately
applying  paragraphs (i) and (ii) below [beginning with paragraph (i)], on a pro
rata basis.
                  (i) If the Matching Company Contribution is fully vested, such
                  vested   portion,   plus  any   income   and  minus  any  loss
                  attributable  thereto,  shall be distributed to the applicable
                  Highly Compensated Employees within 2-1/2 months following the
                  close of that Plan Year,  if  administratively  possible,  and
                  within 12 months  after  the close of such Plan  Year,  at the
                  latest, and if such Matching Company Contribution is not fully
                  vested,  within 2-1/2 months  following the close of that Plan
                  Year, if administratively possible, and within 12-months after
                  the close of such Plan Year, at the latest, (A) the non-vested


                                      -36-
<PAGE>
                  portion of such Matching Company Contribution, plus any income
                  and minus any loss  attributable  thereto,  shall be forfeited
                  from  the  Matching  Company  Contribution   Accounts  of  the
                  applicable Highly Compensated Employees at the time the Excess
                  Aggregate  Contribution  is  distributed  and the  forfeitures
                  shall be  applied  as set forth in  Section  11.12 and (B) the
                  vested portion of such Matching Company Contribution, plus any
                  income  and  minus  any loss  attributable  thereto,  shall be
                  distributed to the applicable  Highly  Compensated  Employees.
                  (ii) Any Investment  Plan  Contributions  that were matched or
                  would  have  been  matched  but  for the  application  of this
                  Section  6.2 (plus any income and minus any loss  attributable
                  thereto)  shall  be  distributed   (according  to  the  method
                  specified in this Section 6.2 below) to the applicable  Highly
                  Compensated Employees, within 2-1/2 months following the close
                  of that Plan Year, if administratively possible, and within 12
                  months after the close of such Plan Year, at the latest.

         (c) Within the time prescribed by law to enable an Employer to obtain a
deduction for a contribution  on its federal income tax return for the Plan Year
for which an Excess Aggregate  Contribution was made, the Employer shall, if the
conditions  applicable  to  qualified  non-elective  contributions  under  final
Treasury Regulations issued by the Secretary of the Treasury are satisfied, make
a qualified  nonelective  contribution  pursuant to Section 4.4 on behalf of the
eligible Non-Highly  Compensated  Employees (as defined in Section 6.1) who meet
the  requirements  of Section 4.4 in an amount  sufficient to satisfy one of the
tests set forth in Section 6.1 [before or after the  application  of subsections
(a) and/or (b) above].

         The amount of the Excess  Aggregate  Contributions to be distributed or
forfeited  pursuant to  subsections  (a) and (b) hereof shall be determined by a
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  (i) to enable the Plan to satisfy one of the  Contribution
Percentage  tests  set  forth  in  Section  6.1 or (ii)  to  cause  such  Highly
Compensated   Employee's   Actual   Contribution   Ratio  to  equal  the  Actual
Contribution  Ratio of the Highly  Compensated  Employee  with the next  highest
Actual  Contribution  Ratio.  This  procedure  shall be repeated  until the Plan
satisfies  one of the  Contribution  Percentage  tests set forth in Section 6.1.
Once the Plan satisfies one of the Contribution  Percentage tests, the amount of
the Excess Aggregate Contributions for each such Highly Compensated Employee who
had his Actual Contribution Ratio reduced under the preceding sentences shall be
determined for each such Employee by subtracting  from the total Investment Plan
Contributions  and Matching  Company  Contributions  made on his behalf (without
regard to this Section

                                      -37-

<PAGE>



6.2) the product of such Employee's Actual  Contribution Ratio (as reduced under
this Section 6.2) and his Compensation.

         Excess  Aggregate  Contributions  of each Highly  Compensated  Employee
subject to the family member  aggregation rules of Section  2.22(b)(iv) shall be
allocated  among the  Highly  Compensated  Employee  and his  aggregated  Family
Members in proportion to the Investment Plan  Contributions and Matching Company
Contributions  (and  qualified  non-elective  contributions  that are considered
under  Section  6.1) of the Highly  Compensated  Employee  and each such  Family
Member aggregated with him to determine the combined Actual Contribution Ratio.

         The income or loss  attributable to the portion of the Excess Aggregate
Contributions for a Plan Year that are to be distributed to a Highly Compensated
Employee or forfeited  from his Account shall be determined by  multiplying  the
amount of the income or loss  allocable to the  Participant's  Matching  Company
Contribution  Account and his Investment Plan Contribution  Account for the Plan
Year by a  fraction,  the  numerator  of  which  is the  portion  of the  Excess
Aggregate  Contributions  for the Plan Year that are to be  distributed  to that
Participant  and the  denominator  of which is the balance of the  Participant's
Matching Company  Contribution  Account and Investment Plan Contribution Account
on the last day of the Plan Year after  adjustment as of such date under Section
9.4.

         In adjusting a Participant's  Excess  Aggregate  Contributions  for the
income or loss  attributable  to such excess  contributions,  the income or loss
attributable  to such excess  contributions  for the "gap  period"  shall not be
considered. For purposes of this Section 6.2, "gap period" shall mean the period
beginning  with the first day of the Plan Year next  following the Plan Year for
which the Excess Aggregate  Contributions were made on behalf of the Participant
and ending on the date of the distribution.

         6.3    Procedures    Applicable   to   Tax   Reduction    Contributions
Recharacterized  As Investment  Plan  Contributions.  The  determination  of the
amount of Excess  Aggregate  Contributions  with respect to a Plan Year shall be
made  after  determining  the  Excess  Contributions,  if any,  to be treated as
Investment  Plan  Contributions  due to  recharacterization  pursuant to Section
5.3(a).  The income allocable to Excess Aggregate  Contributions  resulting from
the  recharacterization  of Tax Reduction  Contributions shall be determined and
distributed  as if such  recharacterized  Tax Reduction  Contributions  had been
distributed  pursuant to Section 5.3(b) instead of  recharacterized  pursuant to
Section 5.3(a).

         6.4 Additional  Adjustments  and  Prospective  Reductions of Investment
Plan  Contributions.  In the event that it is determined at any time prior to or
within a Plan Year that the Contribution  Percentage tests of Section 6.1 hereof
could be exceeded with respect to such Plan Year, the Committee, in its sole and
absolute

                                      -38-

<PAGE>



discretion,  may make such adjustments,  reductions or suspensions to Investment
Plan Contribution rates of Highly Compensated  Participants at such times and in
such  amounts  as the  Committee  shall  reasonably  deem  necessary,  including
prospective  reductions of Investment Plan Contributions at any time prior to or
within a Plan Year.  The Committee  shall make such  adjustments,  reductions or
suspensions  based upon periodic  reviews of the  Investment  Plan  Contribution
rates of Highly Compensated  Participants during the Plan Year and may make such
adjustments,  reductions or suspensions in any amount  notwithstanding any other
provisions  hereof.  In addition,  the Committee  shall take any other action to
assure compliance with the Contribution  Percentage tests as shall be prescribed
by the Secretary of the Treasury. If the Investment Plan Contributions of Highly
Compensated  Participants  are reduced,  the amount of such  reduction  shall be
determined by (i) reducing the maximum allowable  Investment Plan  Contributions
under  Section 4.2 to such  percentage  which will,  when  applied to all Highly
Compensated  Participants  (and taking into  account any  reduction  in Matching
Company  Contributions  as  a  consequence  of  a  reduction  in  Tax  Reduction
Contributions under Section 5.5 and a reduction in Investment Plan Contributions
hereunder)  result in the maximum  contribution  percentage set forth in Section
6.1 not being  exceeded,  and (ii)  reducing  accordingly  the  Investment  Plan
Contributions  that may be made in the remainder of the Plan Year in the case of
each Highly  Compensated  Participant  with respect to whom such reduced maximum
percentage is exceeded.  Notwithstanding the foregoing,  the Committee may round
off or estimate the prospective reductions hereunder.  Once a reduction has been
made hereunder,  it shall remain in effect unless the Committee  determines that
it is no longer necessary in order for the maximum contribution percentage to be
met.

         6.5  Testing  of  Tax  Reduction   Contributions   Under   Contribution
Percentage Test.  Notwithstanding the foregoing provisions of this Article VI or
of Article V, all or a portion of the Tax Reduction Contributions made on behalf
of eligible Non-Highly  Compensated Employees may be treated as Matching Company
Contributions made on behalf of such eligible Non-Highly  Compensated  Employees
for the purpose of meeting the Contribution Percentage test set forth in Section
6.1,  provided that the Actual  Deferral  Percentage  test of Section 5.2 can be
met,  both when the Tax  Reduction  Contributions  treated as  Matching  Company
Contributions   hereunder  are  included  in  performing  such  Actual  Deferral
Percentage  test and when  such Tax  Reduction  Contributions  are  excluded  in
performing such Actual Deferral  Percentage test. Except for purposes of meeting
the  Contribution  Percentage  test  of  Section  6.1  to the  extent  described
hereunder,  any such Tax Reduction Contributions shall continue to be treated as
Tax Reduction Contributions for all other purposes of the Plan.

         6.6      Other Permissible Methods of Testing and Corrections.
The provisions of this Article VI are intended to conform with

                                      -39-

<PAGE>



Section 401(m) of the Code. In the event that the Committee determines, based on
changes  to the Code or  interpretations  or  guidance  issued  by the  Internal
Revenue Service,  that the requirements of such Code section may be applied in a
manner different from that prescribed in this Article VI, the Committee may make
appropriate  adjustments to the  administration  of the Plan to incorporate such
changes to the Code or interpretations  or guidance.  If a change to the Code or
interpretations  or guidance  issued by the Internal  Revenue Service results in
more than one  additional  option in the manner in which this  Article VI may be
administered,  the  Committee  shall have the limited  discretion  to select the
option to be used,  provided that such option, when compared to the other option
or options, results in the smallest adjustment to Participant's Accounts.

                                   ARTICLE VII

                       AGGREGATE LIMIT ON ACTUAL DEFERRAL
                          AND CONTRIBUTION PERCENTAGES


         7.1  General  Rules.  If at least one Highly  Compensated  Employee  is
included in the Actual  Deferral  Percentage  test under  Section 5.2 and in the
Contribution  Percentage  test under Section 6.1, in addition to satisfaction of
the Actual Deferral  Percentage test and the  Contribution  Percentage test, the
sum of the Highly Compensated  Group's Actual Deferral  Percentage under Section
5.2 and  Contribution  Percentage under Section 6.1 may not exceed the aggregate
limit (the  "multiple  use  limitation")  of this  Article VII. The multiple use
limitation  of this  Article VII does not apply,  however,  unless  prior to the
application of the multiple use limitation,  the Actual Deferral  Percentage and
the Contribution Percentage of the Highly Compensated Group each exceeds 125% of
the respective percentages for the Non-Highly Compensated Group.

         7.2      Multiple Use Limitation.  The multiple use limitation is
the greater of:

         (a)      the sum of (i) and (ii), where:

         (i)      is 1.25 times the greater of:

         (A)      the Actual Deferral Percentage of the Non-Highly
         Compensated Group under Section 5.2 for the Plan Year or

         (B)      the Contribution Percentage of the Non-Highly Compensated
         Group under Section 6.1 for the Plan Year and

         (ii)  is  equal  to  two  percentage  points  plus  the  lesser  of the
         percentage  in  subsection  (i)(A) or (i)(B)  above,  but not more than
         twice the lesser of the percentage in subsection (i)(A) or (i)(B); or

                                      -40-

<PAGE>



         (b) the sum of (i) and (ii), where:

         (i)      is equal to 1.25 times the lesser of:

         (A) the Actual Deferral Percentage of the Non-Highly  Compensated Group
         under Section 5.2 for the Plan Year or

         (B) the Contribution Percentage of the Non-Highly Compensated
         Group under Section 6.1 for the Plan Year and

         (ii)  is  equal  to two  percentage  points  plus  the  greater  of the
         percentage  in  subsection  (i)(A) or (i)(B)  above,  but not more than
         twice the greater of the percentage in subsection (i)(A) or (i)(B).

The  Committee  shall  determine  whether the Plan  satisfies  the  multiple use
limitation after applying the Actual Deferral  Percentage test under Section 5.2
and the Contribution  Percentage test under Section 6.1 and after any corrective
distributions,   the   use  of   qualified   non-elective   contributions,   any
recharacterization of Excess Contributions, or any other adjustments required or
permitted  by  Articles  V and VI.  If after  applying  this  Section  7.2,  the
Committee  determines  that the Plan has  failed to  satisfy  the  multiple  use
limitation,  the Committee will correct the failure (i) for Plan Years beginning
before   January  1,  1994,  by  alternately   reducing  the   Investment   Plan
Contributions  and  the  Tax  Reduction   Contributions  of  Highly  Compensated
Employees in whole percentages (or fractional percentages, if applicable) to the
extent  necessary to satisfy the multiple use limitation and (ii) for Plan Years
beginning on and after  January 1, 1994, by treating the excess amount as Excess
Aggregate  Contributions  under  Section  6.2. For purposes of this Article VII,
"Highly Compensated Group" and "Non- Highly Compensated Group" mean the group of
Employees who are eligible Highly Compensated  Employees and eligible Non-Highly
Compensated Employees, respectively, for the year as defined in Sections 5.2 and
6.1.

         7.3  Prospective  Reduction of  Contributions.  In the event that it is
determined  by the Committee at any time prior to or within a Plan Year that the
aggregate limit prescribed in Section 7.2 could be exceeded with respect to such
Plan  Year,  then the amount of Tax  Reduction  Contributions,  Investment  Plan
Contributions  or both (as  determined by the Committee in its sole and absolute
discretion) made on behalf of Participants who are Highly Compensated  Employees
may be reduced in a manner similar to the  procedures  described in Sections 5.5
and 6.4.


                                      -41-

<PAGE>



                                  ARTICLE VIII

                            LIMITATION ON ALLOCATIONS


         8.1      Limitation on Allocations.  Notwithstanding any other
provision of the Plan, the following provisions shall be applicable
to the Plan:

         (a) If this Plan is the only plan maintained by an Employer that covers
the class of Employees  eligible to  participate  hereunder and the  Participant
does not  participate  in and has  never  participated  in a  Related  Plan or a
welfare  benefit fund, as defined in Section  419(e) of the Code,  maintained by
the Employer,  or an individual medical account, as defined in Section 415(l)(2)
of the Code,  maintained by the Employer,  which provides an Annual  Addition as
defined in Section 8.2(a), the Annual Additions that may be allocated under this
Plan to a  Participant's  Account  for a  Limitation  Year  shall not exceed the
lesser of:

                  (i)      the Maximum Permissible Amount; or

                  (ii)     any other limitation contained in this Plan.

         (b) If an Employer  maintains,  in addition to this Plan, (i) a Related
Plan that covers the same class of Employees eligible to participate  hereunder,
(ii) a welfare  benefit fund, as defined in Section 419(e) of the Code, or (iii)
an  individual  medical  account,  as defined in Section  415(l)(2) of the Code,
which provides an Annual  Addition,  the Annual  Additions that may be allocated
under  this Plan to a  Participant's  Account  for a  Limitation  Year shall not
exceed the lesser of:

                  (A) the Maximum Permissible Amount,  reduced by the sum of any
                  Annual Additions  allocated to the Participant's  accounts for
                  the same  Limitation  Year  under  this  Plan  and such  other
                  Related Plan and the welfare  plans  described in clauses (ii)
                  and (iii) above; or

                  (B)      any other limitation contained in this Plan.

         8.2      Definitions.  For purposes of this Article VIII, the
following terms shall have the meanings set forth below:

         (a)      "Annual Additions" means the sum of the following amounts
allocated to a Participant's Account for a Limitation Year:

         (i)      all Employer contributions (including contributions
         described in Sections 4.1, 4.3 and 4.4, and forfeitures
         treated as Matching Company Contributions);

         (ii)     all forfeitures;

                                      -42-

<PAGE>



         (iii)  all Employee contributions (including contributions
         described in Section 4.2); and

         (iv)  amounts described in Sections 415(l)(1) and 419A(d)(2)
         of the Code.

         In addition,  Annual Additions shall include Excess Elective  Deferrals
under Section 5.1 that are not  distributed to the  Participant  before April 15
following the taxable year of deferral,  Excess Contributions within the meaning
of Section 5.3 and Excess Aggregate  Contributions within the meaning of Section
6.2.

         For  purposes of this Article  VIII,  Employee  contributions  shall be
determined without regard to any (i) rollover  contributions  within the meaning
of  Section  402(a)(5),  403(a)(4)  or  408(d)(3)  of the Code [or,  on or after
January 1, 1993,  an eligible  rollover  contribution  as  described  in Section
402(c)(4)  of the Code],  (ii)  contribution  by the  Employee  to a  simplified
employee  pension,  (iii)  contribution to an individual  retirement  account or
individual  retirement annuity, (iv) repayments of loans made to the Participant
from the Plan and (v) direct  transfers  of Employee  contributions  from a plan
described in Section 401(a) of the Code to the Plan.

         (b)      "Maximum Permissible Amount" means for a Limitation Year
with respect to any Participant the lesser of:

         (i) $30,000 [or, if greater,  one-fourth  of the dollar  limitation  in
         effect  under  Section  415(b)(1)(A)  of the Code as it may be adjusted
         under  Section  415(d)(1) of the Code by the  Secretary of the Treasury
         for the Limitation Year]; or

         (ii)     25% of the Participant's Compensation for the Limitation
         Year.

         (c) "Excess Amount" means the excess of the Annual Additions  allocated
to a Participant's  Account for the Limitation Year over the Maximum Permissible
Amount, less administrative charges allocable to such excess.

         (d)  "Employer"  means for purposes of this Article VIII,  any Employer
and any  Affiliated  Company  that  adopts  this Plan;  provided,  however,  the
determination  under Sections 414(b) and (c) of the Code shall be made as if the
phrase  "more  than 50  percent"  were  substituted  for the phrase "at least 80
percent" each place it is incorporated into Sections 414(b) and (c) of the Code.

         (e)  "Related  Plan"  means any  other  defined  contribution  plan [as
defined in Section 415(k) of the Code]  maintained by any Employer as defined in
subparagraph (d) above.


                                      -43-

<PAGE>



         (f)      "Defined Contribution Plan Fraction" means for any
Limitation Year:

         (i) the sum of the Annual Additions to the Participant's  Account under
         this Plan and his accounts under any Related Plan and welfare plans [as
         described  in  Section  8.1(b)(ii)  and  (iii)]  as of the close of the
         Limitation Year, divided by:

         (ii)     the sum of the lesser of the following amounts determined
         for the Limitation Year and for each prior year of his service
         for an Employer:

         (A)      the product of 1.25,  multiplied  by the dollar  limitation in
                  effect  under  Section   415(c)(1)(A)  of  the  Code  for  the
                  Limitation   Year   [determined   without  regard  to  Section
                  415(c)(6) of the Code], or
         (B)      the product of 1.4,  multiplied  by an amount  equal to 25% of
                  the Participant's Compensation for the Limitation Year.

         If the Plan satisfied the applicable requirements of Section 415 of the
Code as in effect for all Plan Years beginning before January 1, 1987, an amount
shall be subtracted from the numerator of the Defined Contribution Plan Fraction
(not  exceeding  such  numerator)  as prescribed by the Secretary of Treasury so
that the sum of the Defined Benefit Plan Fraction and Defined  Contribution Plan
Fraction  computed  under  Section  415(e)(1)  of the Code (as  revised  by this
Article VIII) does not exceed 1.0 for such Plan Year.

         (g)      "Defined Benefit Plan Fraction" means for any Limitation
Year:

         (i)      the projected Annual Benefit of the Participant under the
         defined benefit plans maintained by an Employer determined as
         of the close of the Limitation Year,
         divided by:

         (ii)     the lesser of:

         (A)      the product of 1.25, multiplied by the dollar limitation
                  in effect under Section 415(b)(1)(A) of the Code for the
                  Limitation Year, or

         (B)      the product of 1.4,  multiplied  by 100% of the  Participant's
                  Average Compensation.

         If the  Employee  was a  Participant  as of the  first day of the first
Limitation  Year  beginning  after  December  31,  1986,  in one or more defined
benefit plans  maintained by an Employer which were in existence on May 6, 1986,
the denominator of this fraction will not

                                      -44-

<PAGE>



be less than 125% of the sum of the annual  benefits  under such plans which the
Participant  had accrued as of the close of the last  Limitation  Year beginning
before January 1, 1987,  disregarding any changes in the terms and conditions of
the plans after May 5, 1986. The preceding  sentence applies only if the defined
benefit plans  individually  and in the aggregate  satisfied the requirements of
Section 415 of the Code for all  Limitation  Years  beginning  before January 1,
1987.

         (h)  "Average  Compensation"  means the average  Compensation  during a
Participant's high three years of service, which period is the three consecutive
calendar  years (or, the actual number of  consecutive  years of employment  for
those Employees who are employed for less than three  consecutive  years with an
Employer)   during  which  the  Employee  had  the  greatest   aggregate  Annual
Compensation  from the Employer,  including any adjustments under Section 415(d)
of the Code.

         (i) "Annual  Benefit" means a benefit payable annually in the form of a
straight  life  annuity  (with  no  ancillary  benefits)  under a plan to  which
Employees do not contribute and under which no Rollover Contributions are made.

         (j)      "Compensation" means compensation as defined in Section
2.13(c).

         8.3  Excess  Annual  Additions.  In the event  that,  notwith  standing
Section  8.5(a)  hereof,  the  limitations  with  respect  to  Annual  Additions
prescribed  hereunder  are  exceeded  with  respect  to  any  Participant  for a
Limitation  Year  and  such  excess  arises  as a result  of the  allocation  of
forfeitures,  a reasonable error in estimating a Participant's  Compensation for
the Plan Year, a reasonable  error in  determining  the amount of Tax  Reduction
Contributions  that may be made by a Participant under the limits of Section 415
of the Code, or as a result of other facts and  circumstances  as established by
the Commissioner of the Internal  Revenue Service,  the Excess Amounts shall not
be deemed Annual  Additions in that  Limitation  Year, to the extent such Excess
Amounts are treated in accordance with any of the following:

         (a)   Either   Tax   Reduction   Contributions   or   Investment   Plan
Contributions,  or  both,  and  earnings  thereon  shall be  distributed  to the
Participant  to the extent  necessary  to reduce  the  Excess  Amount as soon as
practicable  after the  close of the Plan  Year.  The  amounts  distributed  are
disregarded for purposes of applying Code Section 402(g) and the tests set forth
in Sections 5.2 and 6.1.

         (b)      The Excess Amounts in the Participant's Account are
allocated and reallocated to other Participants in the Plan.
However, if the allocation or reallocation of the Excess Amounts
pursuant to the provisions of the Plan causes the limitations of

                                      -45-

<PAGE>



Section  415 to be  exceeded  with  respect  to each  Plan  Participant  for the
Limitation  Year,  then these  amounts  must be held  unallocated  in a suspense
account.  If a suspense  account is in existence at any time during a particular
Limitation  Year,  other than the  Limitation  Year  described in the  preceding
sentence,  all amounts in the suspense account must be allocated and reallocated
to Participants' Accounts (subject to the limitation of Code Section 415) before
any Employer  contributions  and Employee  contributions  that would  constitute
Annual Additions may be made to the Plan for that Limitation Year.

         (c) The Excess Amounts in the Participant's  Account are used to reduce
Employer  contributions for the next Limitation Year (and succeeding  Limitation
Years, as necessary) for that  Participant if that Participant is covered by the
Plan as of the end of the Limitation Year.  However,  if that Participant is not
covered  by the  Plan as of the end of the  Limitation  Year,  then  the  Excess
Amounts must be held  unallocated in a suspense  account for the Limitation Year
and  allocated  and  reallocated  in  the  next  Limitation  Year  to all of the
remaining  Participants  in the Plan in  accordance  with the rules set forth in
Section 8.3(b). Furthermore,  the Excess Amounts must be used to reduce Employer
contributions for the next Limitation Year (and succeeding  Limitation Years, as
necessary) for all of the remaining Participants in the Plan.

         8.4      Combined Plan Limits.

         (a) If an  Employer  maintains,  or has  ever  maintained,  one or more
defined  benefit plans  covering an Employee who is also a  Participant  in this
Plan, the sum of the Defined  Contribution Plan Fraction and the Defined Benefit
Plan Fraction,  cannot exceed 1.0 for any Limitation  Year. The Annual  Addition
for any Limitation Year beginning before January 1, 1987 shall not be recomputed
to treat all Employee contributions as an Annual Addition. If the Plan satisfied
the  applicable  requirements  of  Section  415 of the Code as in effect for all
Limitation Years beginning before January 1, 1987, an amount shall be subtracted
from the numerator of the Defined Contribution Plan Fraction (not exceeding such
numerator)  as  prescribed  by the  Secretary of Treasury so that the sum of the
Defined  Benefit  Plan  Fraction  and the  Defined  Contribution  Plan  Fraction
computed  under  Section  415(e)(1) of the Code [as revised by this Section 8.4]
does not exceed 1.0 for such Limitation Year.

         (b) For the purpose of this Section 8.4,  Employee  contri butions to a
defined  benefit plan are treated as a separate  defined  contribution  plan. In
addition,  any  contributions  paid or accrued after  December 31, 1985 that are
attributable  to medical  benefits  allocated  under a welfare  benefit fund [as
defined in Section  419(e) of the Code]  during  Limitation  Years  ending after
December 31, 1985 to a separate account established for any

                                      -46-

<PAGE>



post-retirement medical benefits provided with respect to a Participant, who, at
any time, during the Limitation Year or any preceding Limitation Year, is or was
a Key Employee,  shall be treated as Annual Additions to a defined  contribution
plan. Further,  all defined  contribution plans of an Employer are to be treated
as one defined  contribution  plan and all defined  benefit plans of an Employer
are to be treated as one defined  benefit  plan,  whether or not such plans have
been terminated.

         (c)      If the sum of the Defined Contribution Plan Fraction and
the Defined Benefit Plan Fraction exceeds 1.0, the sum of the
fractions will be reduced to 1.0 as follows:

         (i)  voluntary   nondeductible   Employee   contributions   made  by  a
         Participant  to the  defined  benefit  plan that  constitute  an Annual
         Addition  to a defined  contribution  plan,  to the  extent  they would
         reduce  the sum of the  fractions  to  1.0,  will  be  returned  to the
         Participant;

         (ii) if additional reductions are required for the sum of the fractions
         to equal 1.0,  Investment Plan  Contributions  made by a Participant to
         this Plan which  constitute  an Annual  Addition  to this Plan,  to the
         extent  they would  reduce  the sum of the  fractions  to 1.0,  will be
         returned to the Participant;

         (iii)  if  additional  reductions  are  required  for  the  sum  of the
         fractions to equal 1.0, the Annual  Benefit of a Participant  under the
         defined  benefit plan will be reduced (but not below zero and not below
         the amount of the Participant's  accrued benefit to date) to the extent
         necessary to prevent the sum of the fractions, computed as of the close
         of the Limitation Year from exceeding 1.0; and

         (iv)     if additional reductions are required for the sum of the
         fractions to equal 1.0, the reductions will then be made to
         the Annual Additions of this Plan.

         8.5      Special Rules.

         (a)  Notwithstanding  any other  provision  of this  Article  VIII,  an
Employer  shall not  contribute any amount that would cause an allocation to the
suspense account as of the date the contribution is allocated.  In the event the
making of any  Investment  Plan  Contribution,  Tax  Reduction  Contribution  or
Matching  Company  Contribution,  or  any  part  thereof,  would  result  in the
limitations set forth in this Article VIII being  exceeded,  the Committee shall
cause such  contributions  not to be made. If the  contribution is made prior to
the date as of which it is to be  allocated,  then such  contribution  shall not
exceed an amount that would cause an allocation  to the suspense  account if the
date of the  contribution  were an Allocation Date. The Committee shall maintain
records, showing the contributions to be allocated to the Account of each

                                      -47-

<PAGE>



Participant in any Limitation  Year. In the event that it is determined prior to
or within any Limitation Year that the foregoing  limitations  would be exceeded
if the full amount of contributions otherwise allocable would be allocated,  the
Annual  Additions to this Plan for the remainder of the Limitation Year shall be
adjusted by reducing (i) first,  any unmatched  Investment  Plan  Contributions,
(ii) second,  any unmatched Tax Reduction  Contributions,  (iii) third,  matched
Investment  Plan  Contributions  and a corresponding  share of Matching  Company
Contributions, and (iv) fourth, matched Tax Reduction Contributions and a corres
ponding share of Matching Company  Contributions  but, in each case, only to the
extent necessary to satisfy the limitations.

         (b) If the Annual Additions with respect to the Participant under other
Related Plans and welfare plans  described in Section  8.1(b)(ii)  and (iii) are
less than the Maximum  Permissible Amount and the Matching Company  Contribution
that otherwise  would be contributed or allocated to the  Participant's  Account
under this Plan would  cause the Annual  Additions  for the  Limitation  Year to
exceed the  limitation of Section  8.1(b),  the amount  contributed or allocated
will be  reduced  so that the  Annual  Additions  under  all such  plans for the
Limitation  Year will  equal  the  Maximum  Permissible  Amount.  If the  Annual
Additions  with respect to the  Participant  under the Related Plans and welfare
plans described in Section 8.1(b)(ii) and (iii) in the aggregate are equal to or
greater than the Maximum  Permissible  Amount,  no amount will be contributed or
allocated to the Participant's  Account under this Plan for the Limitation Year.
If a Participant's Annual Additions under this Plan and all Related Plans result
in an Excess  Amount,  such  Excess  Amount  shall be deemed to  consist  of the
amounts last allocated,  except that Annual Additions  attributable to a welfare
plan  described  in  Section  8.1(b)(ii)  or (iii)  will be  deemed to have been
allocated first regardless of the actual allocation date.

         (c) If an Excess Amount was allocated to a Participant on an allocation
date of a Related Plan,  the Excess  Amount  attributed to this Plan will be the
product of:

         (i)      the total Excess Amount allocated as of such date
         [including any amount that would have been allocated but for
         the limitations of Section 8.1(b)],
                  multiplied by:

         (ii)     the ratio of:

         (A)      the amount allocated to the Participant as of such date
                  under this Plan,


                                      -48-

<PAGE>



                  divided by:

         (B)      the total amount allocated as of such date under this Plan and
                  all  Related  Plans  [determined  without  regard  to  Section
                  8.1(b)].

         (d) Prior to the determination of the Participant's actual Compensation
for a Limitation Year, the Maximum  Permissible  Amount may be determined on the
basis of the Participant's estimated Compensation for such Limitation Year. Such
estimated  Compensation  shall be determined on a reasonable  basis and shall be
uniformly  determined  for all  Participants  similarly  situated.  Any Employer
contributions   (including   allocation  of  forfeitures)   based  on  estimated
Compensation  shall be  reduced by any Excess  Amounts  carried  over from prior
Years.
         (e) As  soon  as is  administratively  feasible  after  the  end of the
Limitation Year, the Maximum  Permissible  Amount for such Limitation Year shall
be determined on the basis of the  Participant's  actual  Compensation  for such
Limitation Year.

                                   ARTICLE IX

                             PARTICIPANT'S ACCOUNTS


         9.1  Establishment of Accounts.  The  Recordkeeper  shall establish and
maintain  a  separate  account  as a record  of each  Participant's  and  Former
Participant's interest in the Trust Fund with respect to each Account in which a
Participant or Former  Participant has an interest,  including,  as appropriate,
sub- accounts for the Participant's Tax Reduction Contributions,  his Investment
Plan  Contributions,   his  Matching  Company  Contributions  and  his  Rollover
Contributions.  Within  each  such  Account,  one or more  subaccounts  shall be
maintained  to  reflect  the  Participant's   investment   elections  among  the
Investment Funds.

         9.2      Allocation of Contributions to Participant's Accounts.
Subject to the limitations of Article VIII, contributions shall be
allocated to the Accounts of Participants as follows:

         (a)  As  of  each  Allocation   Date,  but  after  adjustment  of  each
Participant's  Accounts as  provided  in Section  9.4,  each  Participant's  Tax
Reduction  Contributions  and Investment Plan  Contributions  deposited with the
Trustee since the last Allocation Date shall be allocated, as applicable, to the
Participant's   Tax  Reduction   Contribution   Account  and   Investment   Plan
Contribution  Account in the amount by which the  Participant  has  elected,  in
accordance with Sections 4.1 and 4.2, to defer and/or to contribute a portion of
his  Compensation to the Plan during the period since the last Allocation  Date;
provided,however,  that the amount  allocated to the Tax Reduction  Contribution
Account and the Investment Plan Contribution Account of a Highly Compensated

                                      -49-

<PAGE>



Employee for a Plan Year shall be subject to the  limitations  of Sections  5.1,
5.2 and 6.1.

         (b)  As  of  each  Allocation   Date,  but  after  adjustment  of  each
Participant's  Accounts as provided in Section 9.4, each Partici pant's Rollover
Contributions deposited with the Trustee since the last Allocation Date shall be
allocated to the Participant's Rollover Account.

         (c) As of each  Allocation  Date  ending on the last day of a  calendar
quarter,  but after  adjustment  of each  Participant's  Accounts as provided in
Section 9.4, Matching Company  Contributions made on behalf of a Participant who
has authorized Tax Reduction  Contributions and/or Investment Plan Contributions
for the  period  since  the last  Allocation  Date  shall be  allocated  to such
Participant's  Matching Company  Contribution  Account in an amount equal to the
percentage of such Participant's Tax Reduction  Contributions  and/or Investment
Plan  Contributions  specified  for that Plan  Year by the  Board of  Directors;
provided,   however,   that  the  amount   allocated  to  the  Matching  Company
Contribution  Account of a Highly Compensated  Employee for a Plan Year shall be
subject to the limitations of Section 6.1 and Article VII.  Notwithstanding  the
preceding  sentence,  a  Participant  who makes an  election to receive an early
distribution  under  Section  11.3(d)  in  connection  with his  termination  of
employment  shall not receive an allocation of a Matching  Company  Contribution
for the quarterly Allocation Date following his termination of employment.

         (d) As of the last day of each  Plan  Year,  but after  adjust  ment of
Participant's Accounts as provided in Section 9.4, if an Employer made qualified
non-elective  contributions  for a Plan  Year  under  Section  4.4 on  behalf of
Participants  who are Non-Highly  Compensated  Employees in order to insure that
one of the Actual Deferral Percentage tests described in Section 5.2 are met for
such Plan Year or that one of the  Contribution  Percentage  tests  described in
Section  6.1  are  met  for  such  Plan  Year,   such   qualified   non-elective
contributions  shall be allocated to the Tax Reduction  Contribution  Account of
each   Non-Highly   Compensated   Employee   eligible  to  participate  in  such
contribution  pursuant  to  Section  4.4  in  the  ratio  that  such  Employee's
Compensation  for the Plan Year bears to the  Compensation for such Plan Year of
all Employees eligible to participate in such contribution.  Notwithstanding the
preceding  sentence,  for any Plan Year,  the Company  may  designate a specific
dollar amount to be allocated as a qualified  non-elective  contribution  to the
Tax  Reduction  Contribution  Account of each  Non-Highly  Compensated  Employee
eligible to  participate in such  contribution  pursuant to Section 4.4 for such
Plan Year.

         9.3      Trust Fund Valuation.  The value of each Investment Fund
and of the Trust Fund shall be determined by the Trustee as of the
close of business on each Valuation Date, or as soon thereafter as

                                      -50-

<PAGE>



practicable,  and  shall be the fair  market  value of all  securities  or other
property held in the  Investment  Funds,  plus cash and the fair market value of
any other assets held by the Trust Fund, with equitable  adjustments for pending
trades.

         While it is  contemplated  that the  Trust  Fund  will be valued by the
Trustee and allocations made only on the Valuation Date,  should it be necessary
to make distributions  under the provisions  hereof, and the Committee,  in good
faith  determines  that,  because  of:  (i) an  extraordinary  change in general
economic  conditions,  (ii) the occurrence of some casualty materially affecting
the  value  of the  Trust  Fund  or a  substantial  part  thereof,  or  (iii)  a
significant  fluctuation  in the value of the Trust Fund has occurred  since the
immediately   preceding   Allocation  Date,  the  Committee  may,  in  its  sole
discretion,  to prevent  the payee from  receiving  a  substantially  greater or
lesser amount than what he would be entitled to, based on current values,  cause
a re-valuation  of the Trust Fund to be made and a reallocation of the interests
therein as of the date the payee's  right of  distribution  becomes  fixed.  The
Committee's  determination  to make such special  valuation and the valuation of
the Trust Fund as determined  by the Trustee shall be conclusive  and binding on
all persons ever interested hereunder.

         If the  Committee in good faith  determines  that  certain  expenses of
administration  paid by the Trustee during the Plan Year under consideration are
not  general,  ordinary,  and usual and  should  not  equitably  be borne by all
Participants,  but should be borne only by one or more Participants, for whom or
because of whom such  specific  expenses  were  incurred,  the net  earnings and
adjustments  in value of the Accounts  shall be increased by the amounts of such
expenses,  and the  Committee  shall make suitable  adjustments  by debiting the
particular  Account  or  Accounts  of  such  one or  more  Participants,  Former
Participants, or Beneficiaries; provided, however, that any such adjustment must
be nondiscriminatory and consistent with the provisions of Section 401(a) of the
Code.

         9.4 Adjustments to Participant's  Accounts.  Each Investment Fund shall
be valued at fair market  value as of the close of  business  on each  Valuation
Date. As of such Valuation  Date, each  Participant's  interest in an Investment
Fund  shall  be  adjusted  for  the  net  earnings,  losses,   appreciation  and
depreciation in such Investment Fund since the immediately  preceding  Valuation
Date.  The  portion  of  the  total  net  earnings,   losses,   appreciation  or
depreciation of an Investment Fund allocated to a Participant's interest in such
Investment  Fund  shall be the same  ratio  that the value of the  Participant's
interest in such Investment Fund as of the immediately  preceding Valuation Date
bears to the total value of all Participants'  interests in such Investment Fund
as of the immediately preceding Valuation Date; provided, however, that for this
purpose, the value of a Participant's  interest as of the immediately  preceding
Valuation Date shall be increased by any transfers to the  Investment  Fund from
another Investment Fund

                                      -51-

<PAGE>



during the period for which the  valuation  is being made and shall be decreased
by any loans,  withdrawals or other distributions to the Participant paid to the
Participant  during the period for which the valuation is being made;  provided,
however,  that for purposes of Section 11.2,  distributions other than loans and
withdrawals  shall  not be  taken  into  account.  All  contributions  and  loan
repayments  shall be credited as of the last day of the month  during which such
contributions  and loan  repayments are made and shall not be credited until the
foregoing adjustments for earnings,  losses,  appreciation and depreciation have
been made.

         9.5      Participant-Directed Investments.

         (a) Investment  Funds.  Except as provided in Sections 9.6 and 9.7, all
contributions to the Trust that are allocated to the Tax Reduction  Contribution
Account,  Investment Plan Account,  Rollover Account and effective July 1, 1993,
Matching Company Contribution Account of each Participant, Former Participant or
Beneficiary shall be invested in one or more of the Investment Funds (other than
the Household  International,  Inc.  Common Stock Fund and any other  Investment
Fund designated by the Committee from time to time as a Fund in which additional
participation is frozen) as directed by the Participant,  Former  Participant or
Beneficiary by Notice to the Committee or to the  Recordkeeper  (in the form and
manner  prescribed  by the  Committee) in the minimum  percentages  set forth in
Section  9.5(d)  or in such  other  minimum  percentages  or  amounts  as may be
prescribed  by the  Committee  from time to time.  The  Committee may change the
Investment  Funds set forth in Section 2.25 at such time as it may  determine in
its sole and absolute discretion;  provided,  however,  that the Committee shall
maintain,  at a minimum,  and in addition to the Eljer  Industries,  Inc. Common
Stock  Fund,  at least  three  investment  funds  representing  a broad range of
investment  alternatives  which provide  Participants,  Former  Participants and
Beneficiaries  with a reasonable  opportunity to materially affect the potential
return on amounts in their Accounts.

         (b) Funding  Arrangements.  The  Committee  may use  registered  mutual
funds,  bank-maintained  collective  investment funds or similar arrangements as
funding  vehicles  for  the  Investment  Funds,  provided  that  the  underlying
investments  of  any  such   arrangement  are  consistent  with  the  investment
objectives of the particular  Investment  Fund, as established by the Committee.
The Committee,  in its sole and absolute  discretion,  may at any time establish
new Investment  Funds or discontinue  existing  Investment  Funds and may at any
time  increase or decrease  the number of  Investment  Funds that are offered to
Participants, Former Participants and Beneficiaries under the Plan.

         (c)      Loan Repayments.  A loan to a Participant pursuant to
Article XIII shall be treated as a separate investment option with
respect to such Participant; provided, however, the transfer of

                                      -52-

<PAGE>



assets from one Investment Fund to another in order to facilitate a Plan loan to
a Participant  shall not constitute an investment  election  change  pursuant to
Section  9.5(d).  A loan  subaccount  shall be established and maintained by the
Recordkeeper and the  Participant's  balance in the other Investment Funds shall
be reduced in the percentages and from such Funds  designated by the Participant
in accordance  with rules adopted by the Committee to account for the funding of
the loan or, if the Participant  fails to designate which Investment Funds shall
be used to fund his loan,  the  Participant's  balance  in the other  Investment
Funds  shall be reduced on a pro rata  basis to account  for the  funding of the
loan. The  Participant's  loan subaccount shall be credited with interest at the
loan repayment rate. As the Participant repays the loan, the balance in the loan
subaccount  shall be reduced  and the  Participant's  balance in the  Investment
Funds then  selected by the  Participant  shall be increased by  allocating  the
Participant's loan repayments to such Investment Funds. Loan repayments shall be
allocated  to  Investment  Funds in the  same  proportion  as the  Participant's
current  investment  direction  election with respect to  contributions.  If the
Participant is not making current  contributions,  then loan repayments shall be
allocated to the Investment  Funds in the same  proportion as the  Participant's
most recent investment direction election.

         (d)  Change  of  Future  Investment  Elections  and  Transfer  of  Past
Investment  Elections.  Except as provided in Sections  9.6,  9.8 and 9.10,  and
subject to any special rules  adopted by the  Committee  with respect to certain
Investment  Funds  which,  by their  nature,  require  special  treatment or are
subject to particular  restrictions,  a Participant shall be permitted to change
the  investment  of any  future  contributions  made to the  Plan on his  behalf
(including   loan   repayments   pursuant  to  Article  XIII)  and  to  transfer
contributions  to the Trust Fund previously  invested in one Investment Fund and
earnings thereon to one or more other Investment Funds (other than the Household
International, Inc. Common Stock Fund or any other Investment Fund designated by
the  Committee  from  time to time as a  frozen  Fund)  in  accordance  with the
provisions of this Section 9.5(d). A change of future investment  elections or a
transfer  of past  investment  elections  from one  Investment  Fund to  another
Investment  Fund shall be made in multiples of 25%, or  commencing  on and after
January 1, 1993,  multiples  of 10%,  or in such other  minimum  percentages  or
amounts as may be prescribed by the Committee from time to time.

         (i) Change of Future Investment  Elections.  A Participant may elect to
change his investment  elections for future payroll  periods with respect to his
Investment Plan  Contributions,  his Tax Reduction  Contributions,  his Rollover
Contributions,  his loan repayments  pursuant to Article XIII and effective July
1, 1993, his Matching Company  Contribution  Account,  effective no earlier than
the first  payroll  period  occurring  on or after the first day of the calendar
quarter commencing at least 30 days after Notice of such

                                      -53-

<PAGE>



change is received by the  Committee or the  Recordkeeper,  or commencing on and
after January 1, 1993,  effective as of the first payroll period occurring on or
after the first day of any month designated by the Participant  following Notice
to the  Committee or the  Recordkeeper  provided that such Notice is received by
the  Committee  or the  Recordkeeper  on or  before  the 25th  day of the  month
preceding  the month for which the change is to be  effective or such other date
as may be  prescribed  by the  Committee  from time to time. A  Participant  may
change his future investment elections (i) twice per Plan Year for periods prior
to April 1, 1991, (ii) four times per Plan Year for periods after March 31, 1991
and prior to  January  1, 1993 and (iii)  for  periods  commencing  on and after
January  1, 1993,  monthly,  or such  other  frequency  as may be adopted by the
Committee from time to time.

         (ii)     Transfer of Past Investment Elections.

         (A)      Contributions Other than Matching Company Contributions.
                  A Participant, or if applicable, a Former Participant,
                  Beneficiary or Alternate Payee under a Qualified Domestic
                  Relations Order, may elect to transfer amounts
                  attributable to his past investment elections with
                  respect to contributions made to the Plan on his behalf
                  (other than Matching Company Contributions), effective no
                  earlier than as soon as administratively practicable
                  after the first day of the calendar quarter commencing at
                  least 30 days after Notice of such change is received by
                  the Committee or the Recordkeeper, or commencing on and
                  after January 1, 1993, effective as soon as
                  administratively practicable after the first day of any
                  month designated by the Participant (or the Former
                  Participant or Beneficiary, if applicable) following
                  Notice to the Committee or the Recordkeeper provided that
                  such Notice is received by the Committee or the
                  Recordkeeper on or before the 25th day of the month
                  preceding the month for which the transfer is to be
                  effective or such other date as may be prescribed by the
                  Committee from time to time.  A Participant and, if
                  applicable, a Former Participant or Beneficiary may
                  transfer their past investment elections (i) twice per
                  Plan Year for periods prior to April 1, 1991, (ii) four
                  times per Plan Year for periods after March 31, 1991 and
                  prior to January 1, 1993 and (iii) for periods commencing
                  on and after January 1, 1993, monthly, or such other
                  frequency as may be adopted by the Committee from time to
                  time.

         (B)      Matching Company Contributions. Subject to the rules set forth
                  in Section  9.5(d)(ii)(A)  above as to increments,  timing and
                  frequency of investment  elections,  for periods prior to July
                  1,  1993,  a   Participant,   or  if   applicable,   a  Former
                  Participant, Beneficiary or Alternate Payee

                                      -54-

<PAGE>



                  under a  Qualified  Domestic  Relations  Order  may  elect  to
                  transfer  to the Eljer  Industries,  Inc.  Common  Stock  Fund
                  amounts invested in the Household  International,  Inc. Common
                  Stock  Fund  that  are   attributable   to  Matching   Company
                  Contributions  made to the Prior  Plan on his  behalf  and for
                  periods  commencing on and after July 1, 1993, a  Participant,
                  or if applicable,  a Former  Participant  or  Beneficiary  may
                  elect  to  transfer   among  the   Investment   Funds  amounts
                  attributable  to Matching  Company  Contributions  made to the
                  Plan  and/or the Prior Plan on his behalf;  provided,  however
                  that no such  amounts may be  transferred  into the  Household
                  Fund.

         (e) Failure to Provide  Investment  Instructions.  If a Participant  or
Former Participant fails to provide  instructions to the Committee directing the
investment  of any  contribution  to the Trust or  amount  held by the Trust for
which the  Participant or Former  Participant  may direct the  investment,  such
contribution  or  other  amount,  pending  the  Committee's  receipt  of  proper
investment  instructions  from the Participant or Former  Participant,  shall be
invested in such  Investment Fund or Funds as may be designated by the Committee
from time to time for such purpose.  If a Beneficiary of a deceased  Participant
or an  Alternate  Payee  under a  Qualified  Domestic  Relations  Order fails to
provide  instructions  to the Committee  directing the  investment of any amount
held by the Trust for which such  Beneficiary or Alternate  Payee may direct the
investment,  such amount,  pending the Committee's  receipt of proper investment
instructions  from the  Beneficiary  or Alternate  Payee,  shall  continue to be
invested in the manner last elected by the  Participant  from whose Account such
amount arose.

         (f) Participant Investment  Directions.  It is intended that the rights
given to Participants  to direct the investment of their Accounts,  as set forth
in this Section 9.5,  satisfy the  provisions of Section  404(c)(2) of ERISA and
Department   of   Labor   regulations   promulgated   thereunder.   Accordingly,
notwithstanding  any other  provisions of the Plan, in no event shall any person
who is  otherwise  a  fiduciary  under this Plan be liable  for any loss,  or by
reason of any breach under ERISA,  which results from a Participant's  direction
of the investment of his Account.

         9.6  Investment of Matching  Company  Contributions.  Except as elected
otherwise by a Participant pursuant to Section 9.7, for periods prior to July 1,
1993, Matching Company  Contributions shall be invested in the Eljer Industries,
Inc. Common Stock Fund and may be made in the form of shares of Company Stock or
cash.  Although the Trustee shall have the sole  discretion to purchase  Company
Stock at such times,  in such  amounts  and at such prices as the Trustee  deems
appropriate,  it is  the  intent  of  the  Company  that  all  Matching  Company
Contributions  made to the Plan prior to July 1, 1993 shall be  invested  in the
Eljer Industries, Inc. Common Stock Fund as soon as administratively practicable
following the date

                                      -55-

<PAGE>



such contributions are made. Effective July 1, 1993, Participants may direct the
investment  of Matching  Company  Contributions  among the  Investment  Funds in
accordance with Section 9.5.

         9.7 Age 50 Diversification Election.  Notwithstanding the provisions of
Section 9.6, effective July 1, 1992, any Participant who has attained age 50 may
elect to transfer all or a portion of his Matching Company  Contribution Account
and to change the investment of future Matching Company  Contributions  from the
Eljer  Industries,  Inc.  Common Stock Fund and, if  applicable,  the  Household
International,  Inc.  Common  Stock Fund to one or more other  Investment  Funds
(except  the  Household  International,  Inc.  Common  Stock  Fund or any  other
Investment  Fund designated by the Committee from time to time as a frozen Fund)
in accordance with the provisions of this Section 9.7.

         (a) Change of Investment of Future Matching Company  Contributions.  An
election  to change the  investment  of future  Matching  Company  Contributions
pursuant to this  Section 9.7 shall be in  multiples  of 25% of future  Matching
Company  Contributions  made  to  the  Plan  on  the  Participant's  behalf,  or
commencing  on and after  January 1, 1993,  in  multiples of 10% or 25% (or such
other minimum  percentages or amounts as may be prescribed by the Committee from
time to time) of future Matching Company  Contributions  made to the Plan on the
Participant's behalf, and may be made at the time or times authorized by Section
9.5(d)(i) with respect to a change of the Participant's  other future investment
elections.  Any change of future  investment  elections with respect to Matching
Company Contributions may be made by a Participant effective no earlier than the
first payroll period occurring on or after the first day of the calendar quarter
commencing  at least 30 days  after  Notice of such  change is  received  by the
Committee  or the  Recordkeeper,  or  commencing  on and after  January 1, 1993,
effective as of the first payroll period  occurring on or after the first day of
any month designated by the Participant following Notice to the Committee or the
Recordkeeper  provided  that such  Notice is received  by the  Committee  or the
Recordkeeper  on or  before  the 25th day of the month  preceding  the month for
which the change is to be effective or such other date as may be  prescribed  by
the Committee from time to time.

         (b) Transfer of Past  Matching  Contributions.  An election to transfer
the investment of past Matching Company  Contributions  pursuant to this Section
9.7 shall be made in multiples of 25% of the value of the Participant's Matching
Company Contribution Account invested in the Eljer Industries, Inc. Common Stock
Fund and the Household  International,  Inc. Common Stock Fund, or commencing on
and after  January 1, 1993,  in multiples  of 10% or 25% (or such other  minimum
percentages  or amounts as may be prescribed by the Committee from time to time)
of the value of the Participant's Matching Company Contribution Account invested
in such Funds, and may be made at the time or times authorized by

                                      -56-

<PAGE>



Section  9.5(d)(ii)  with  respect to a change of the  Participant's  other past
investment  elections.  A  transfer  of the  investment  of  amounts  held  in a
Participant's Matching Company Contribution Account may be made by a Participant
effective  no earlier  than as soon as  administratively  practicable  after the
first day of the calendar  quarter  commencing  at least 30 days after Notice of
such change is received by the Committee or the  Recordkeeper,  or commencing on
and after  January 1, 1993,  effective as soon as  administratively  practicable
after the first day of any month designated by the Participant  following Notice
to the  Committee or the  Recordkeeper  provided that such Notice is received by
the  Committee  or the  Recordkeeper  on or  before  the 25th  day of the  month
preceding the month for which the transfer is to be effective or such other date
as may be prescribed by the Committee from time to time.

         9.8      Special Investment Rules for 1989 Plan Year.

         (a)  Notwithstanding  any provision of the Plan,  the  Committee  shall
adopt  special  rules  with  respect  to the  investment  of  Participants'  Tax
Reduction  Contributions  and Investment Plan  Contributions  for the short Plan
Year that  commenced on April 1, 1989.  Such special  rules shall  include,  but
shall not be limited to, a rule that precludes the  investment of  Participants'
contributions  made in the  1989  short  Plan  Year  in  Company  Stock  until a
registration   statement  has  been  filed  with  the  Securities  and  Exchange
Commission and such registration  statement has become effective with respect to
the Plan.

         (b) Within such time period as the  Committee  deems  appropriate,  the
Committee  shall  direct that shares of stock in  Schwitzer,  Inc.  and Scotsman
Industries,  Inc.  received by the Plan as a consequence  of the spinoff of such
companies by Household  International,  Inc. in April, 1989 be sold or exchanged
and that  shares of  Company  Stock be  substituted  therefor.  Any such sale or
exchange may be made with the  Schwitzer Tax  Reduction  Investment  Plan or the
Scotsman Tax Reduction Investment Plan or in the open market but, in all events,
shall be made at fair market value.

         9.9 Qualified  Domestic Relations Orders. The Committee shall establish
policies and procedures for reviewing  domestic  relations  orders relating to a
Participant's  interest  in  the  Plan.  The  Committee  or its  delegate  shall
determine  whether any such  domestic  relations  order is a Qualified  Domestic
Relations   Order.   If  an  Alternate  Payee  does  not  receive  an  immediate
distribution   pursuant  to  Section  11.10,  the  Committee  shall  direct  the
Recordkeeper  to  identify  the  Alternate  Payee's  interest  in the Trust Fund
pending a distribution to Alternate Payee.

         9.10     Special Rules Relating to Transactions By Certain
Officers, Directors and Shareholders.  Notwithstanding the
foregoing provisions of this Article IX or any other provision of

                                      -57-

<PAGE>



the Plan,  the  administration  of the Plan's  provisions  regarding  investment
elections,  investment transfers,  contributions and withdrawals, are subject to
all restrictions of any applicable  securities laws,  including  restrictions on
certain  officers,  directors and  shareholders  of Affiliated  Companies  (such
individuals  hereinafter referred to as "insiders") with respect to the purchase
and sale of Company Stock or other Employer securities.  The Board of Directors,
or if permitted  pursuant to applicable  securities  laws, the Committee,  shall
adopt written  procedures which shall form a part of the Plan  establishing such
rules,  restrictions  and  limitations  on  insiders'  transactions  in Employer
securities  under  the  Plan  as may be  necessary  to  comply  with  applicable
securities laws.

                                    ARTICLE X

                               PARTICIPANT VESTING


         10.1 Vesting of  Accounts.  A  Participant  shall at all times be fully
vested  in all  amounts  credited  to his Tax  Reduction  Contribution  Account,
Investment Plan  Contribution  Account and his Rollover  Account,  including any
such  contributions  made for the Plan Year of the Participant's  termination of
employment but not yet allocated.  Amounts credited to a Participant's  Matching
Company  Contribution  Account  shall become  fully vested upon the  occurrence,
while employed by an Affiliated  Company,  of (i) a Participant's  attainment of
his  Normal  Retirement  Date,  (ii)  a  Participant's  Disability  or  (iii)  a
Participant's  death.  In addition,  the Committee may, in its sole and absolute
discretion,  fully vest the Matching Company Contribution  Accounts of similarly
situated Participants in special circumstances  including, but not limited to, a
sale of stock or assets of an Employer.

         10.2 Termination of Service Prior to Normal Retirement Date, Disability
or  Death.  If  a  Participant's  employment  terminates  prior  to  his  Normal
Retirement  Date  for any  reason  other  than  Disability,  death,  or an event
referred to in Section 10.1, the portion of such Participant's  Matching Company
Contribution Account, if any, that shall be vested shall be determined according
to the following schedule:

<TABLE>
<CAPTION>
Years of Matching                 Vested          Forfeited
Company Account                 Percentage        Percentage
------------------              ----------        ----------
<S>                             <C>               <C>
less than 1                        0%               100%
1 but less than 2                 20%                80%
2 but less than 3                 40%                60%
3 but less than 4                 60%                40%
4 or more                        100%                 0%
</TABLE>


                                      -58-

<PAGE>



For purposes of this Section 10.2,  "Years of Matching  Company Account" will be
measured in calendar  quarters  beginning with the calendar quarter with respect
to which the Participant first has Matching Company  Contributions  allocated to
his  account  (or,  if he  was  a  Participant  in  the  Prior  Plan,  had  such
contributions  allocated  to his  account in the Prior Plan) and ending with the
calendar quarter in which the Participant's employment is terminated.

         Notwithstanding the foregoing vesting schedule,  a Participant shall be
100% vested in amounts  allocated to his Matching Company  Contribution  Account
after 5 Years of Service,  determined in accordance with Article III hereof. The
value of a Participant's  vested benefit shall be determined as of the Valuation
Date immediately preceding the Participant's Annuity Starting Date. Such payment
shall be made at such times and in such manner as provided in Article XI.

         10.3  Forfeiture  of  Non-Vested  Portion of Account.  The portion of a
Participant's Account attributable to Matching Company Contributions in which he
is not vested when his employment  with the Company or an Affiliated  Company is
terminated  shall be  forfeited  upon the  earlier of (i) the date he receives a
distribution  of his entire vested  interest  (including  for this  purpose,  an
annuity contract that represents his right to such vested interest), or (ii) the
fifth anniversary of the  Participant's  severance from service date, as defined
in Section  3.6. A  Participant  who does not have any  vested  interest  in the
portion of his Account attributable to Matching Company  Contributions as of his
severance from service date shall be deemed to have received a distribution  for
purposes  of this  Section  10.3 as of his  severance  from  service  date.  The
non-vested  portion of a Participant's  Account shall be forfeited in accordance
with this Section 10.3 and Section 11.9, and the forfeitures shall be applied as
set forth in Section 11.12.

         10.4 Restoration of Non-Vested Interest.  If, following his termination
of  employment,  a Participant  received a  distribution,  or was deemed to have
received a distribution  pursuant to Section 10.3, of his entire vested interest
under the Plan and then is re-employed  and performs an Hour of Service prior to
the fifth  anniversary  of the date on which he received  (or was deemed to have
received) a distribution, the entire amount forfeited,  unadjusted for gains and
losses following the distribution, shall be restored to his Account. At any time
thereafter, the amount in which he is vested shall be determined by applying his
vested  percentage  against the sum of the distribution and the amount restored;
provided,  however,  that  the  amount  actually  distributed  to him  upon  his
subsequent  termination of employment  shall be offset by the amount  previously
distributed.  The  amount  to  be  restored  shall  be  credited  first  against
forfeitures  arising  for  the  Plan  Year,  and if  such  forfeitures  are  not
sufficient to satisfy the amount to be

                                      -59-

<PAGE>



restored in full,  such amount shall be satisfied out of Employer  contributions
for the Plan Year, which  contributions  shall be supplemented for the Plan Year
by an amount equal to such remainder. The amount restored shall not be deemed an
Annual Addition or portion thereof for any Limitation Year.

                                   ARTICLE XI

                               PAYMENT OF BENEFITS


         11.1     Withdrawals During Employment.

         (a) A Participant,  upon Notice,  may, during his employment,  elect to
withdraw  amounts  from his Account  pursuant to this Section 11.1 to the extent
vested under Article X; provided, however, that with respect to each withdrawal,
a minimum of $500 (or, if less, the balance of the  Participant's  Account) must
be  withdrawn  and a  Participant  may  receive  no more  than two  non-hardship
withdrawals  during any Plan Year.  The  provisions of Category A and Category B
below shall be  effective  January 1, 1991.  A  Participant  must  withdraw  all
amounts  eligible for  withdrawal,  if any, in each  category  below  (listed in
descending order) before amounts in the next lower category may be withdrawn:

         Category A: All of his Investment Plan Contributions made prior to 1987
under the Prior Plan excluding earnings  attributable to such  contributions.  A
Participant may withdraw  amounts from this category no more often than twice in
any Plan Year.

         Category B: All of his other Investment Plan Contributions and earnings
attributable to Investment Plan Contributions  (including earnings  attributable
to pre-1987 Investment Plan  Contributions);  provided,  however,  that the most
recent  twenty-four months of Investment Plan Contributions that were matched by
Matching   Company   Contributions   and  the  earnings   attributable  to  such
contributions  may not be withdrawn unless a Participant has participated in the
Plan (or the Plan and the Prior Plan) for at least five years. A Participant may
withdraw amounts from this category no more often than twice in any Plan Year.

         Category C: In the case of a Participant  who has been a Participant in
the Plan (including participation in the Prior Plan) for five or more years, all
or any portion of his Matching Company Contributions (plus earnings thereon) and
all or any  portion of the  earnings on his  Investment  Plan  Contributions.  A
Participant  may withdraw  amounts from this category no more often than once in
any Plan Year.

         Category  D: All or any  portion  of his  Rollover  Contribution  (plus
earnings thereon). A Participant may withdraw amounts from this category no more
often than twice in any Plan Year.

                                      -60-

<PAGE>



         Category E: All or any portion of his Tax Reduction  Contributions (but
only to the extent of the value of the Participant's Tax Reduction  Contribution
subaccount  in the Prior Plan as of December 31, 1988 plus the amount of his Tax
Reduction  Contributions  to the Prior Plan and to this Plan thereafter) that is
needed to satisfy a hardship  created by an immediate and heavy  financial need,
subject to the following rules and procedures:

         (i)      A withdrawal for hardship may be made only if the
         Participant has:

         (A)      withdrawn the maximum amount available under the
                  foregoing Categories A-D;

         (B)      withdrawn the maximum amount available to him under any
                  other qualified plan maintained by an Affiliated Company;
                  and

         (C)      taken out the maximum loan amount  pursuant to the  provisions
                  of Article XIII.

         (ii)     A withdrawal for a hardship may be made only for the
         following reasons:

         (A)      medical  expenses  described  in  Section  231(d)  of the Code
                  incurred by the Participant,  his spouse or any dependents (as
                  defined  in  Section  152 of the Code) or  necessary  for such
                  persons to obtain  medical care as described in Section 213(d)
                  of the Code;

         (B)      costs directly related to the purchase (excluding
                  mortgage payments) of a principal residence of the
                  Participant;

         (C)      payment of tuition and related  educational  fees for the next
                  12 months of  post-secondary  education for the Participant or
                  his spouse,  children or dependents (as defined in Section 152
                  of the Code); or

         (D)      payments necessary to prevent eviction of the Participant from
                  his principal  residence or foreclosure on the mortgage of the
                  Participant's principal residence.

         (iii) A withdrawal for a hardship may be made only once during any Plan
         Year and may be made only under the following terms and conditions:

         (A)      the withdrawal shall not exceed the amount of the
                  hardship;

         (B)      the Participant may not make any Tax Reduction
                  Contributions or Investment Plan Contributions under this

                                      -61-

<PAGE>



                  Plan or  before-tax  or after-tax  contributions  to any other
                  pension,  profit  sharing,   deferred  compensation  or  stock
                  purchase plan  maintained by an  Affiliated  Company  (whether
                  such plan is  qualified or  nonqualified)  but  excluding  any
                  health or welfare plan (including a cafete ria plan within the
                  meaning  of  Section  125 of the Code) for a period  beginning
                  with the payroll  period next  following  the date he receives
                  the  hardship  withdrawal  and ending with the last day of the
                  calendar  quarter  that is at least 12  months  following  the
                  receipt of the hardship withdrawal; and

         (C)      the Participant may not make Tax Reduction Contributions
                  to this Plan or before-tax contributions any other pen
                  sion or profit sharing plan maintained by an Affiliated
                  Company for the Participant's taxable year immediately
                  following the taxable year of a hardship distribution in
                  excess of the applicable limits under Section 402(g) of
                  the Code for such taxable year less the amount of such
                  Participant's Tax Reduction Contributions for the taxable
                  year of the hardship withdrawal.

         (iv)  The  determination  of  the  amount  of an  immediate  and  heavy
         financial  need  for  purposes  of  this   subsection   shall,  at  the
         Participant's  election,  include  any  amounts  necessary  to pay  any
         federal, state or local income taxes, based on applicable  supplemental
         withholding  tables, and penalties  resulting from the withdrawal for a
         hardship under this Section 11.1(a).

         (b) Any  participant  who has  attained  age 59-1/2 may elect once each
Plan Year to withdraw all or a portion of his Tax  Reduction  Contributions  and
the earnings thereon,  regardless of whether he meets the hardship  requirements
hereof,  provided he has first exhausted all amounts  eligible for withdrawal in
Categories A through D of Section  11.1(a).  All withdrawals  under this Section
11.1 shall be made as soon as  administratively  practicable after the first day
of  any  month,  as  elected  by  the   Participant,   following  the  date  the
Participant's  Notice of withdrawal is received by the Recordkeeper with respect
to  withdrawals  under  Categories  A through D of Section  11.1(a)  and Section
11.1(b) or the Committee with respect to withdrawals under Category E of Section
11.1(a) specifying the category of the withdrawal and the amount requested to be
withdrawn,  if the Recordkeeper or, if applicable,  the Committee  receives such
Notice on or before the 25th day of the preceding month; provided, however, that
hardship  withdrawals  shall  be made as  soon as  administratively  practicable
following  the date  Notice  is  received  by the  Committee  and the  Committee
approves the withdrawal.  All withdrawals under this Section 11.1 shall be based
on the value of the Participant's  Investment Plan Contribution Account, his Tax
Reduction  Contribution  Account,  his Matching Company Contribution Account and
his Rollover Account, as the case might be, as of the Valuation

                                      -62-

<PAGE>



Date  immediately   preceding  receipt  of  the  Participant's   Notice  by  the
Recordkeeper or, if applicable,  the Committee. Upon approving the amount of any
withdrawal, the Recordkeeper shall furnish the Trustee with written instructions
directing the Trustee to make a single sum payment of the withdrawal.  Except as
provided in the following sentence,  payments from the Investment Funds shall be
in cash.  Payments  from the Eljer  Industries,  Inc.  Common Stock Fund and the
Household  International,  Inc. Common Stock Fund shall be in cash or stock or a
combination of both, as elected by the Participant;  provided, however, that (i)
a hardship  withdrawal  only may be made in cash,  (ii) no  distribution of less
than twenty (20)  shares  will be made from  either the Eljer  Industries,  Inc.
Common Stock Fund or the Household  International,  Inc.  Common Stock Fund, and
(iii) partial shares of stock held in the Funds  described in (ii) above will be
paid in cash.  Withdrawals under this Section 11.1 shall, to the extent required
by the Code, be subject to the provisions of Section  11.11. A Participant  may,
subject to any restrictions and limitations  imposed on a particular  Investment
Fund,  direct  withdrawals  under this Section 11.1 which are less than the full
value of any Account  from which an amount is withdrawn to be charged to any one
or more of the  Investment  Funds  in  which  such  Account  is  invested.  Such
direction  shall be given by the  Participant  with his Notice to  withdraw  and
shall  specify the manner in which the  withdrawal  will be allocated  among the
Investment  Funds.  If a  Participant  does not  specify  the  manner in which a
withdrawal  shall be allocated  among  Investment  Funds,  the  Committee  shall
allocate the withdrawal on a pro rata basis among the  Participant's  Investment
Fund  elections,  subject to any  restrictions  or  limitations  applicable to a
particular  Investment Fund. The Committee or its delegate from time to time may
establish procedures that govern the tax treatment of withdrawals from the Plan,
which  procedures  shall not  necessarily  be consistent  with the categories of
withdrawals provided under this Article XI. Unless the Committee or its delegate
determines  otherwise,  however,  Categories A and B of Section 11.1(a) shall be
treated as a single contract for Federal income tax purposes.

         11.2  Amounts  Payable  Following   Termination  of  Service.   Upon  a
Participant's  termination of employment,  distributions  from the Plan shall be
made,  to the extent  vested under  Article X, at the time  specified in Section
11.3 (subject to the  provisions  of Section 11.6) and in the form  specified in
Section 11.4.

         11.3     Time of Payment.

         (a) Retirement.  In the event a Participant  terminates employment with
the Employer after (i) attaining his Normal  Retirement  Date or (ii) satisfying
the  requirements  for early  retirement  under any defined benefit pension plan
maintained  by the  Employer in which he  participates,  unless the  Participant
elects  to defer  payment  pursuant  to this  Section  11.3(a),  payment  of the
Participant's   entire  Account  shall  commence  as  soon  as  administratively


                                      -63-
<PAGE>
practicable after the Quarterly Valuation Date coinciding with or next following
the Participant's  severance from service date,  provided that the Committee has
received at least 30 days advance written notice of the Participant's  severance
from service date. The amount distributable shall be valued as of such Quarterly
Valuation  Date, or such later Valuation Date selected by the Participant in the
event the Participant  elects to defer payment as provided herein. A Participant
described in this Section  11.3(a) may,  regardless of the value of his Account,
elect to defer payment of his Account to any Valuation  Date after his severance
from  service date  specified by him, but no later than  December 31 of the Plan
Year immediately following the later of (i) the Plan Year in which he terminates
employment  with the  Employer or (ii) the Plan Year in which he attains age 65.
An  election of a  Participant  to defer  payment of  benefits  shall be made by
submitting  to the  Committee  a written  statement  signed by the  Participant,
describing the benefits and the Valuation Date on which the Participant requests
that the payments  commence;  provided,  however, a Participant may not elect to
defer receipt or  commencement  of receipt of benefits  beyond the date required
pursuant  to  Section  401(a)(9)  of the Code.  The  value of the  Participant's
Account shall be determined as of the Valuation Date selected by the Participant
pursuant  to his  deferral  election  and  payment  shall  commence  as  soon as
administratively practicable following such Valuation Date.

         (b) Death or  Disability.  In the case of the death or  Disability of a
Participant (whether before or after a Participant's severance from service date
with the Employer),  except in the case of a distribution deferred pursuant this
Section 11.3(b) or Section 11.3(e),  payment of the Participant's entire Account
shall  commence  as soon as  administratively  practicable  after the  Quarterly
Valuation  Date that  coincides  with or next  follows 30 days  advance  written
notice to the Committee of proof of the  Participant's  death or, if applicable,
30 days  following  the  determination  by the  Committee  of the  Participant's
Disability.  The  amount  distributable  shall be  valued  as of such  Quarterly
Valuation  Date, or such later  Valuation Date in the event the  Participant (or
Beneficiary)  elects  to  defer  payment  as  provided  herein.  Subject  to the
provisions of Section 11.6, a Beneficiary  of a Participant  who was eligible to
receive a distribution  pursuant to Section 11.3(a) as of the date of his death,
may elect to defer payment of the  Participant's  Account to any Valuation  Date
specified by the  Beneficiary,  but not later than  December 31 of the Plan Year
immediately  following the Plan Year in which the Participant  died. An election
by a  Beneficiary  to defer  payment  of  benefits  shall be made by  submitting
written  notice to the Committee in the same manner  described for a Participant
in Section 11.3(a).  The value of the Participant's  Account shall be determined
as of the Valuation  Date selected by the  Beneficiary  pursuant to his deferral
election  and payment  shall  commence as soon as  administratively  practicable
following such Valuation Date.

                                      -64-

<PAGE>



         (c) Other Severance from Service. Subject to the provisions of Sections
11.3(d) and 11.3(e),  upon a  Participant's  termination of employment  with the
Employer for any reason other than the  Participant's  attainment  of his Normal
Retirement Date, his death or his Disability,  the Participant's  vested Account
shall become distributable to him as soon as administratively  practicable after
the Quarterly  Valuation  Date next following the  Participant's  severance from
service date,  provided that the Committee has received at least 30 days advance
written notice of the Participant's  severance from service.  The amount payable
shall be  valued  as of such  Quarterly  Valuation  Date.  Pending  distribution
pursuant to this Section 11.3(c),  the  Participant's  Account shall continue to
share in the earnings and losses of the Trust until the Valuation Date for which
such deferred  distribution is made and the Participant's rights with respect to
his Account shall be subject to the provisions of Section 11.3(f).

         (d) Earlier Distribution;  Waiver of Matching Company Contributions.  A
Participant (or  Beneficiary) may elect to receive his vested Account as soon as
administratively  practicable  following  a  monthly  Valuation  Date  after his
severance from service date (or death) but earlier than the Quarterly  Valuation
Date set  forth in  Sections  11.3(a),  (b) and (c)  hereof,  provided  that the
Committee  has  received  at  least  30  days  advance  written  notice  of  the
Participant's  severance from service date (or death). The amount  distributable
shall be valued as of such earlier monthly Valuation Date.  Notwithstanding  any
other  provision  of the  Plan,  a  Participant  (or  Beneficiary)  who makes an
election  under this  Section  11.3(d)  shall not be  entitled  to any  Matching
Company  Contributions  with  respect  to the  calendar  quarter  in  which  the
Valuation Date described hereunder occurs.

         (e)  Limitation  on  Involuntary  Payment  of  Benefits  and  Lump  Sum
Cashouts.  Notwithstanding  any  provision of this  Article XI to the  contrary,
subject  to  the  provisions  of  Section  11.3(d),  if  upon  termination  of a
Participant's  employment with an Employer the value of the Participant's vested
Account  does not exceed  $3,500,  the  Committee  shall  direct the  Trustee to
distribute the value of the Participant's vested Account to the Participant (or,
in the event of the Participant's death, to the Participant's Beneficiary) or to
an  eligible  retirement  plan as defined in  Section  402(c)(8)(B)  of the Code
pursuant to the Participant's (or, if applicable,  the Participant's spouse's or
former  spouse's)  direct  rollover  election  described in Section 11.11,  in a
single  lump sum as soon as  administratively  practicable  after the  Quarterly
Valuation Date next following the Participant's  severance from service date. If
upon  termination of a Participant's  employment with an Employer for any reason
other than  death the then value of the  Participant's  vested  Account  exceeds
$3,500, no distribution of the  Participant's  vested Account to the Participant
may  occur  prior  to  the  Participant's  Normal  Retirement  Date  unless  the
Participant files with the Committee a written request for the payment of his

                                      -65-

<PAGE>



vested  Account,  such  request  expressly  to  consent to the  payment.  If the
Participant files such a request,  the Committee shall direct the Trustee to pay
such amount to the Participant as soon as administratively practicable after the
later of (i) the Quarterly Valuation Date following the Participant's separation
from  service date or (ii) the  Valuation  Date next  following  receipt of said
request.  If such a Participant does not consent to a distribution,  the Trustee
shall  continue  to hold the  Participant's  vested  Account  in trust and shall
distribute the Participant's vested Account in a single lump sum payment as soon
as administratively  practicable following the Valuation Date coinciding with or
next following the date the Participant  attains his Normal  Retirement Date. In
accordance  with rules  prescribed by the Committee,  a Participant who does not
consent  may elect to defer his  distribution  until a date  which is as soon as
administratively  practicable  following any Valuation Date thereafter,  but not
later  than  the  Valuation   Date   coinciding   with  or  next  following  the
Participant's  Normal  Retirement Date,  valued as of such later Valuation Date.
Except as provided otherwise herein, no consent to a distribution shall be valid
unless the Participant has received a notice  describing the material  features,
and an explanation  of the relative  values,  of the forms of benefit  available
under the Plan with  respect to the  distribution  and a notice  describing  the
Participant's  direct rollover rights described in Section 11.11 hereof, no less
than 30 days and no more than 90 days before the Annuity  Starting  Date. If the
distribution  is one to  which  sections  401(a)(11)  and 417 of the 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 (i) the  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 (ii) the  Participant,
after receiving the notice, affirmatively elects a distribution.

         (f)  Treatment of Accounts in the Case of Deferred  Distribution.  If a
Participant or Beneficiary  elects to defer  distribution  of the  Participant's
vested  interest  pursuant  to Sections  11.3(a),  (b),  (c) or (e) hereof,  the
Participant's  Account shall continue to share in the earnings and losses of the
Trust until the applicable  Valuation Date under Sections  11.3(a),  (b), (c) or
(e).  Transfers among  Investment  Funds shall be permitted until the applicable
Valuation Date. However, except as provided in Section 13.7, loans granted under
Article  XIII  shall be  immediately  due and  payable  upon  the  Participant's
severance from service date.

         (g)      Forfeiture of Non-Vested Account Upon Distribution.  As
of the date of the distribution of a Participant's vested Account
pursuant to this Section 11.3, the non-vested portion of the

                                      -66-

<PAGE>



Participant's Account shall be forfeited,  subject to restoration as provided in
Section 10.4.

         11.4     Method of Payments.

         (a) Except as provided in Section  11.4(b),  payments to a Participant,
Former Participant or Beneficiary shall be made in the form of a single lump sum
payment in cash of the total amount due; provided,  however,  that a Participant
or Former  Participant  may elect to receive a portion  of his lump sum  payment
attributable  to (i) his  interest in the Eljer  Industries,  Inc.  Common Stock
Fund, in the form of shares of Company Stock, (ii) his interest,  if any, in the
Household  International,  Inc.  Common Stock Fund, in shares of common stock of
Household International, Inc. and (iii) for a Participant, Former Participant or
Beneficiary  who  receives  a  distribution  on or  before  June 30,  1993,  his
interest,  if any,  in the Equity  Securities  Fund,  in shares of the  Fidelity
Equity-Income Fund.  Notwithstanding the preceding sentence,  no distribution of
less than  twenty (20)  shares  shall be made from either the Eljer  Industries,
Inc.  Common Stock Fund or the Household  International,  Inc. Common Stock Fund
and partial shares in each such fund will be paid in cash.

         (b)  Notwithstanding  the  provisions  of Section  11.4(a),  subject to
Section 11.6, a Participant, Former Participant or Beneficiary may elect to have
the value of his Accounts paid in one or more of the following manners:

         (i) A Participant or Former  Participant who became a Participant prior
         to July 1, 1989 and who does not have a loan  outstanding  may elect to
         receive  his  distribution  in a single sum,  as an  immediate  annuity
         purchased  under the  group  annuity  contract  or  contracts,  or as a
         combination  of both,  or in any other form  available  through a group
         annuity  contract  issued to the Plan by a legal reserve life insurance
         company  authorized  to do  business  in the State of Texas;  provided,
         however,  that if an annuity  form of payment  is chosen,  then  unless
         otherwise elected pursuant to Section 11.4(c), a married  Participant's
         vested  Account  shall be paid in the  form of a  Qualified  Joint  and
         Survivor  Annuity (as long as the  Participant  does not die before his
         annuity starting date, in which case the  Participant's  vested Account
         shall be paid in the form of a Qualified Preretirement Survivor Annuity
         to his surviving spouse. The forms of immediate annuity available under
         the group annuity contract or contracts shall include the following:

         (A)      Qualified Joint and Survivor Annuity.  An annuity for the
                  life of the Participant or Former Participant with a
                  survivor annuity for the life of such Participant's
                  spouse which is not less than one-half, or greater than,

                                      -67-

<PAGE>



                  the amount of the annuity payable during the joint lives
                  of the Participant and such Participant's spouse; and

         (B)      Annuity  Certain  and  Life.  An  annuity  for the life of the
                  Participant or Former  Participant  with a guaranteed  minimum
                  number of monthly  payments as specified by the Participant or
                  Former Participant.

         (ii) A  Participant,  Former  Participant or eligible  Beneficiary  may
         elect a direct rollover to an eligible  retirement plan as described in
         Section  402(c)(8)(B) of the Code pursuant to the provisions of Section
         11.11.

Notwithstanding the foregoing  provisions,  no Participant or Former Participant
may elect to distribution in the form of an annuity unless the annuity  payments
will equal or exceed $30 per month.

         (c) A Qualified  Joint and  Survivor  Annuity  (herein so called) is an
annuity for the life of the Participant  with a survivor annuity for the life of
the spouse equal to not less than 50 percent of the amount of the annuity  which
is payable during the joint lives of the Participant  and his spouse,  and which
is the  actuarial  equivalent  of a  single  life  annuity  for the  life of the
Participant. A Qualified Preretirement Survivor Annuity (herein so called) is an
annuity for the life of the surviving  spouse that is actuarially  equivalent to
100 percent of the vested Account of the Participant (as of his date of death).

         A  Participant  may elect at any time  during the  applicable  election
period to waive the  Qualified  Joint and Survivor  Annuity in favor of a single
life annuity or another form of  distribution  available under the Plan, and may
revoke such election at any time during the applicable election period, provided
that,  for the  election  to be  effective,  (i) the  Participant's  spouse must
consent in writing to such election,  such spouse's consent must acknowledge the
effect  of  such  election,  and  her  signature  must  be  witnessed  by a Plan
representative  or notary public (or it must be established to the  satisfaction
of a Plan  representative  that the consent may not be obtained because there is
no  spouse,  because  the  spouse  cannot be  located,  or because of such other
circumstances  as the Secretary of the Treasury may by  regulations  prescribe);
and (ii) the Plan must provide to each  Participant,  within a reasonable period
of time before the Annuity  Starting Date (and consistent with such  regulations
as the Secretary of Treasury may prescribe),  a written explanation of the terms
and conditions of the Qualified Joint and Survivor  Annuity,  the  Participant's
right to make,  and the effect of, an election to waive the same,  the rights of
the Participant's spouse, and the right to make, and the effect of, a revocation
of such  election.  For  purposes  of this  Section  11.4(c),  the  "application
election period" is the 90 day period ending on the Annuity Starting Date.


                                      -68-

<PAGE>



         In the case of a married  Participant who elects a life annuity form of
benefit and dies prior to his Annuity Starting Date, such that the Participant's
surviving  spouse  shall  receive a  Qualified  Preretirement  Survivor  Annuity
pursuant  to  Section  11.4(b),  the  spouse  may elect in writing to waive such
survivor   annuity  in  favor  of  a  single  lump  sum  payment  equal  to  the
Participant's vested Account as of his date of death.

         (d) Notwithstanding the foregoing  provisions of this Section 11.4, the
phrase  "single  lump  sum  payment"  as  used  herein  shall  not  include  the
distribution  of an  insurance  contract  providing  for (i) a life annuity to a
Participant,  (ii) a  joint  and  survivor  annuity  to a  Participant  and  his
Beneficiary, or (iii) any other form of payment having the effect of (i) or (ii)
above.

         11.5 Minority or Legal  Disability of Distributee.  During the minority
or legal  disability of a person  entitled to receive  benefits  hereunder,  the
Committee may, in its sole  discretion,  direct payment of all or any portion of
such benefits due such person  directly to him or to his spouse or a relative or
to any  individual  or  institution  having  custody of such person.  Neither an
Employer,  the  Committee  nor  the  Trustee  shall  be  required  to see to the
application of any payments so made and the receipt of the payee  (including the
endorsement  of a check or checks) shall be final,  binding and conclusive as to
all interested parties.  Any payment made pursuant to the power herein conferred
upon the Committee  shall operate as a complete  discharge of all obligations of
the Trustee and the Committee, to the extent of the distributions so made.

         11.6     Additional Requirements Relating to Benefit Payments.
         Unless a Participant otherwise elects, payment of benefits
under the Plan to the  Participant  will begin not later than the 60th day after
the end of the Plan Year in which the latest of the following events occur:

         (a)      the date on which the Participant attains his Normal
Retirement Age;

         (b)      the tenth anniversary of the year in which the
Participant commenced participation in the Plan; or

         (c)  the   Participant   terminates   employment   with  the  Employer.
Notwithstanding  any other  provisions of the Plan, all  distributions  required
under this Article XI shall be determined  and made in  accordance  with Section
401(a)(9) of the Code and the Treasury  Regulations  thereunder,  including  the
minimum  distribution  incidental  benefit  requirements of Treasury  Regulation
Section 1.401(a)(9)-2.

         11.7     Claims Procedure.  The Committee shall make all
determinations as to the right of any person to receive a benefit

                                      -69-

<PAGE>



from the Plan.  The denial by the  Committee of a claim for  benefits  under the
Plan,  including  but  not  limited  to,  a  claim  for  distribution,  loan  or
withdrawal,  shall be stated in a written instrument signed by the Committee and
delivered to or mailed to the claimant within 60 days after receipt of the claim
by the Committee,  unless special circumstances require an extension of time for
processing  the claim,  in which case a  determination  shall be made as soon as
possible,  but in no event  later  than 120 days  after  receipt  of the  claim.
Written notice of the extension  shall be furnished to the claimant prior to the
termination of the initial  60-day period and shall  indicate the  circumstances
requiring the  extension  and the date by which the Committee  expects to render
its decision. The written decision shall set forth:

         (a)      the specific reason or reasons for the denial;

         (b)      a specific reference to the pertinent provisions of the
Plan on which the denial is based;

         (c)      a description of any additional material or information
necessary for the claimant to perfect a claim and an explanation of
why such material or information is necessary; and

         (d)      a statement that the claimant may:

         (i)      request a review upon written application to the
         Committee;

         (ii)     review pertinent plan documents; and

         (iii) submit issues and comments in writing.

If notice of the denial is not furnished in accordance with the above procedure,
the claim shall be deemed denied and the claimant  shall be permitted to proceed
with the review procedure.  A request by the claimant for a review of the denied
claim must be delivered to the  Committee  within 60 days after  receipt by such
claimant  of written  notification  of the denial of such claim.  The  Committee
shall,  not later than 60 days after  receipt of a request for a review,  make a
determination  concerning  the claim.  If  special  circumstances  require,  the
Committee  shall notify the claimant  that an extension of time for  processing,
not in excess of 120 days after receipt of the request for review, is necessary.
A written statement stating the decision on review, the specific reasons for the
decision, and the specific provisions of the Plan on which the decision is based
shall be mailed or delivered to the claimant within such 60 (or 120) day period.
If the decision on review is not  furnished  within the  appropriate  time,  the
claim shall be deemed denied on review. All communications from the Committee to
the claimant  shall be written in a manner  calculated  to be  understood by the
claimant. All interpretations,  determinations and decisions by the Committee in
respect of any matter hereunder

                                      -70-

<PAGE>



will be final, conclusive, and binding upon the Employer,
Participants, Former Participants, Beneficiaries, and all other
persons claiming an interest in the Plan.

         11.8 Committee's Duty to Trustee. The Committee will notify the Trustee
at the  appropriate  time of all facts which may be necessary  hereunder for the
proper  allocation of increases,  decreases,  expenses,  and  contributions  for
Participants,  the proper  payment or  distribution  of benefits,  or the proper
performance  of any other act required of the Trustee  hereunder.  The Committee
will  notify the  Trustee of such facts as are needed by the  Trustee to perform
its functions under the Plan. The Committee will secure  appropriate  elections,
directions,  and  designations  for  Participants,   Former  Participants,   and
Beneficiaries provided for in the Plan.

         11.9 Duty to Keep Committee Informed of Distributee's  Current Address.
Each  Participant,  Former  Participant  and  Beneficiary  must  file  with  the
Committee  from time to time in writing his  mailing  address and each change of
mailing  address.  Any  communication,   statement  or  Notice  addressed  to  a
Participant, Former Participant or Beneficiary at his last mailing address filed
with the Committee or if no address is filed with the Committee then at the last
mailing  address  as shown on an  Employer's  records,  will be  binding  on the
Participant,  Former Participant and their Beneficiaries for all purposes of the
Plan.  Neither the  Committee nor the Trustee shall be required to search for or
locate a Participant,  Former Participant or Beneficiary. In connection with the
payment of any  benefits,  the  Committee  shall mail by registered or certified
mail to the  Participant,  Former  Participant  or Beneficiary at his last known
address his distribution  under the Plan. If the distribution is returned to the
Committee,  the unpaid amounts will be invested in an Investment Fund consisting
primarily of fixed income investments. If the Participant, Former Participant or
Beneficiary  fails to claim his benefits under the Plan within three years after
the date of the distribution,  the Committee will direct that all unpaid amounts
which  would  have been  payable  to such  Participant,  Former  Participant  or
Beneficiary  will be  forfeited  as of the next  Valuation  Date and  applied to
reduce Matching  Company  Contributions as provided in Section 4.8. In the event
that the Participant, Former Participant or Beneficiary is subsequently located,
the  unpaid  amounts  as of the  date  of the  forfeiture  will  be paid to such
Participant,  Former  Participant  or  Beneficiary.  The funds used to make such
distribution will be paid from forfeitures. In the event the forfeitures are not
adequate to effect the  distribution,  the Employer  shall make such  additional
contribution to the Plan as is necessary to make such distribution.

         11.10    Distribution Pursuant to Qualified Domestic Rela-
tions Orders.  Notwithstanding any other provision of the Plan to
the contrary, if the provisions of a Qualified Domestic Relations
Order provide that distributions shall be made to an Alternate

                                      -71-

<PAGE>



Payee prior to the time that the Participant  with respect to whom the Alternate
Payee's  benefits  are  derived  attains  age  50  or  would  be  entitled  to a
distribution of assets from the Plan, the Trustee shall commence payments to the
Alternate Payee as soon as administratively  practicable  following the later of
(i) the receipt of such Qualified  Domestic  Relations Order by the Committee or
(ii) the date the Committee  receives the Alternate  Payee's  written consent to
such distribution.  Unless specified otherwise in a Qualified Domestic Relations
Order,  a  distribution  to an Alternate  Payee who is the former  spouse of the
Participant  shall  be  based  on a pro  rata  allocation  of the  Participant's
Investment Plan  Contributions as provided in Section  72(m)(10) of the Code and
amounts  awarded to the  Alternate  Payee shall be paid on a pro rata basis from
the  Investment  Funds in which the  Participant  is invested at the time of the
distribution  to the Alternate  Payee.  Until such time as payment is made to an
Alternate  Payee pursuant to this Section 11.10,  the Alternate Payee shall have
no rights under the Plan other than the rights of a Beneficiary and the right to
direct the  investment  of amounts  awarded to Alternate  Payee  pursuant to the
provisions of Article IX.

         11.11 Tax  Withholding  and  Participant's  Direct  Rollover  Election.
Unless  provided  otherwise in  regulations  promulgated by the Secretary of the
Treasury,  to the extent  required  under Section 3405 of the Code,  the Trustee
shall withhold 20% of the taxable portion of the Plan distribution or withdrawal
made to a Partici pant,  Former  Participant or  Beneficiary  after December 31,
1992 which constitutes an eligible rollover  distribution  within the meaning of
Section  402(c)(4) of the Code.  Any amount  withheld  shall be deposited by the
Trustee  with the  Internal  Revenue  Service  for the  purpose  of  paying  the
distributee's  federal income tax liability  associated with the distribution or
withdrawal.  Notwith standing the foregoing provisions,  commencing on and after
January 1, 1993, each Participant,  each Former  Participant and each spouse (or
former spouse under a Qualified  Domestic  Relations  Order) of a Participant or
Former  Participant shall be provided with a notice described in Section 11.3(e)
hereof and given the right to elect [pursuant to Section  401(a)(31) of the Code
and applicable Treasury  regulations  promulgated  thereunder] during the period
described  in  Section  11.3(e)  hereof to  rollover  all or any  portion of the
taxable  amount  of  such  person's   distribution  or  withdrawal  (subject  to
limitations  and  restrictions,  if any,  adopted by the Committee in accordance
with applicable Treasury regulations) directly to an eligible retirement plan as
defined in Section  402(c)(8)(B) of the Code as limited by Section  402(c)(9) of
the Code and, to the extent a direct rollover is elected by any such person, the
tax withholding  requirements of this Section 11.11 will not apply. If permitted
by the Code or applicable Treasury  regulations,  a direct rollover as described
in the  preceding  sentence may be  accomplished  by delivering a check from the
Plan to the  distributee  payable to the trustee or  custodian  of the  eligible
retirement plan. Each direct rollover election shall be in writing

                                      -72-

<PAGE>



on a form  prescribed  by the  Committee  for  such  purpose  and  given  to the
Participant,  Former  Participant  or spouse within a reasonable  period of time
prior to the distribution or withdrawal.

         11.12 Application of Forfeitures. As of each Valuation Date forfeitures
under Sections 5.1, 5.3, 6.2, 8.3, 10.3 and 11.9,  less any  restorations  under
Sections 10.4 and 11.9, shall be placed in a Plan forfeiture account and applied
as provided in Section 4.8.

         11.13  Restrictions on Distributions.  Notwithstanding  anything to the
contrary  contained  in the Plan, a  Participant's  Tax  Reduction  Contribution
Account and any earnings thereon,  shall not be distributed  before the first to
occur of the following events:

         (a)      the Participant's retirement;

         (b)      his death;

         (c)      his permanent disability;

         (d)      his termination of employment;

         (e)      his attainment of age 59-1/2;

         (f)      the termination of the Plan, provided that neither the
Employer nor an Affiliated Company maintains a successor plan;

         (g) the disposition, to a corporation that is not an Affiliated Company
of  substantially  all of  the  assets  [within  the  meaning  of  Code  section
409(d)(2)]  used  by  the  Employer  in the  trade  or  business  in  which  the
Participant is employed, provided that the Participant continues employment with
the transferee corporation and the Employer continues to maintain the Plan; or

         (h) the disposition, to a corporation that is not an Affiliated Company
of the Employer's interest in a subsidiary in which the Participant is employed,
provided that the Participant  continues  employment with the subsidiary and the
Employer  continues to maintain the Plan. A distribution  may be made under (f),
(g)  or  (h)  above  only  if  it  constitutes  a  total   distribution  of  the
Participant's  entire balance in all Accounts and the account balances under any
other profit-sharing plans of the Employer or an Affiliated Company.

                                   ARTICLE XII

                                     NOTICES


         12.1     Notice.  As soon as practicable after a Participant or
Former Participant makes a request for payment or a benefit becomes

                                      -73-

<PAGE>



payable  to a  Beneficiary,  the  Committee  shall  notify  the  Trustee  of the
following  information  and give such  directions  as are necessary or advisable
under the circumstances:

         (a)      name and address of the Participant, Former Participant
or Beneficiary, and

         (b)      amount to be distributed.
         In addition to the information  described above, for distribu tions and
withdrawals  occurring  after December 31, 1992, the Committee  shall notify the
Trustee,  if  applicable,  as to  the  identity,  address  and  other  pertinent
information of eligible retirement plans as described in Section 402(c)(8)(B) of
the Code to which the payee has elected to rollover  directly such  distribution
or withdrawal pursuant to Section 11.11 of the Plan.

         12.2  Modification  of Notice.  At any time and from time to time after
giving the notice as provided for in Section 12.1, the Committee may modify such
original notice or any subsequent notice by means of a further notice or notices
to the Trustee but any action taken or payments made by the Trustee  pursuant to
a prior notice shall not be affected by a subsequent notice.

         12.3 Reliance on Notice. Upon receipt of any notice as provided in this
Article XII, the Trustee shall  promptly take whatever  action and make whatever
payments are called for  therein,  it being  intended  that the Trustee may rely
upon the  information  and  directions  in such  notice  absolutely  and without
question.

                                  ARTICLE XIII

                                      LOANS


         13.1 General Provisions  Regarding Loans. At any time prior to the date
a Participant's benefits are paid, the Committee,  in its sole discretion and in
accordance  with the policies and procedures set forth in this Article XIII, may
direct the Trustee to make a loan to a  Participant  (as defined  below) if such
loans (a) are made on a reasonably  equivalent basis, (b) are not made available
to Highly  Compensated  Employees,  in an amount  greater  than the amount  made
available  to  other  Employees,  (c) are  adequately  secured  and  (d)  bear a
reasonable  interest  rate.  Solely for purposes of this Article XIII,  the term
"Participant"  shall  mean an  active  Participant,  a Former  Participant  or a
Beneficiary who is a "party in interest" [within the meaning of Section 3(14) of
ERISA].

         13.2 Amount and  Limitations  Applicable  to Loans.  A Partici pant may
request a loan in an amount  which does not exceed (i) 50% of the present  value
of the  Participant's  vested interest in the Plan determined in accordance with
Section 13.8 hereof or, if less, (ii) $50,000 reduced by the highest outstanding
loan balance

                                      -74-

<PAGE>



applicable to the Participant from this Plan and any other qualified plan of the
Company or an  Affiliated  Company  during the one year period ending on the day
before the loan date.  The minimum  amount that may be borrowed from the Plan is
$1,000 and only two loans may be outstanding  under the Plan at any one time. It
is intended that loans granted to a Participant under this Article XIII will not
place other Participants at risk with respect to their Accounts. Therefore, each
loan shall be made from the borrower's Account and the income or loss associated
with the loan shall be allocated to the borrower's Account.

         A loan to a Participant  (and interest  thereon)  shall be considered a
Plan investment, and repayments shall be credited to an Investment Fund or Funds
in accordance  with Article IX as if such  repayments  were future Tax Reduction
Contributions,  Investment Plan  Contributions,  Matching Company  Contributions
and/or Rollover Contributions,  as the case might be, made to the Plan on behalf
of the Participant.

         13.3 Security for Loans.  Any loan to a Participant  under this Article
XIII shall be secured by the  irrevocable  pledge and assign  ment of 50% of the
present  value,  determined  at the time the loan is  granted  based on the most
recently  completed  Valuation  Date, of  Participant's  vested  interest in the
Trust,  supported by the  execution  of a promissory  note for the amount of the
loan, including interest,  payable to the order of the Trustee. If the loan will
be used to acquire or  construct  a dwelling  unit which is within a  reasonable
period of time to be used as the  principal  residence  of the  Participant  the
Committee may permit or require the  Participant to secure such loan with assets
in addition to 50% of the Participant's interest in the Trust.

         13.4 Interest  Rate for Loans.  Each loan shall bear interest at a rate
fixed by the Committee  based on rates charged by the financial  institutions in
the same geographic  location for similar secured  personal loans. The loan rate
shall  remain  fixed  for the  term of the  loan  (or  the  remaining  term of a
renegotiated  loan). The Committee shall not discriminate  among Participants in
the manner of interest  rates;  but loans  granted at  different  times may bear
different interest rates if, in the opinion of the Committee,  the difference in
rates is justified by a change in general economic conditions.

         13.5     Repayment of Loans.  (a) Any loan to a Participant under
this Article XIII shall be repaid within five years of the date on
which the loan is made, except that loans used to acquire or
construct any dwelling unit which is within a reasonable time to be
used as a principal residence of the Participant may be repaid over
a longer period of time (not to exceed 25 years) as determined by
the Committee; provided, however, that any loan shall be repaid (or
offset against the Participant's Account) on or before the date the
Participant receives his final distribution from the Plan.  Loans

                                      -75-

<PAGE>



shall be amortized on a level basis and repaid in regular,  substantially  equal
installments  by payroll  deduction (or, if the Participant is not receiving pay
from the  Employer at any time while a loan is  outstanding,  by direct  payment
from the  Participant  to the  Employer  for  deposit  in the  Trust  Fund) on a
schedule  prescribed by the Committee  (with  payments made at least as often as
quarterly),  which installments shall be applied to reduce the principal as well
as the accrued interest of the loan. Notwithstanding the preceding provisions of
this Section  13.5(a),  for periods  commencing  on and after the date this Plan
document is executed,  a Participant shall not be required to make payments on a
level  amortization  basis  during  any period  the  Participant  is on leave of
absence from the Employer without pay for up to one year.

         (b) Each loan repayment shall be paid to the Trustee, and the Committee
shall provide written instructions to the Recordkeeper  regarding such repayment
that:

         (i)      identify the Participant on whose behalf the repayment is
         being made; and

         (ii) direct the investment of the loan repayment to the Investment Fund
         account in the same proportion as elected by the Participant in Section
         9.5 as if the repayment were future contributions.

         13.6 Default on Loans.  In the event of a default by a Participant on a
loan  repayment,  all remaining  repayments on the loan shall be immediately due
and  payable,  and the  entire  amount of the  unpaid  balance  of such loan and
accrued  interest  thereon  shall be  considered  and  treated  as  having  been
distributed  in  cash  under  Article  XI as of  the  date  of  default,  and an
appropriate  adjustment of his Account shall be made  therefor.  Notwithstanding
the foregoing,  the Committee may use  alternative  means to pursue payment of a
loan in default if such  alternative  means are  necessary  to prevent an actual
distribution from the portion of the Participant's  Account that is attributable
to Tax Reduction  Contributions and that would contravene  Section 401(k) of the
Code;  provided,  however,  that a taxable  distribution for purposes of Section
72(p) of the Code shall occur in the event of any default by a Participant  on a
loan made under this Article XIII.

         13.7  Acceleration of Loans Upon  Termination of Employment.  All loans
shall be  accelerated  and  immediately  due and  payable  upon a  Participant's
termination of employment with the Employer [unless such Participant is a "party
in  interest" as defined in Section  3(14) of ERISA or is otherwise  mandatorily
eligible  for Plan  loans  under  ERISA,  the Code or  regulations  and  rulings
promulgated thereunder]. If a Participant does not repay the loan at the time of
acceleration,  the  Committee  shall  direct  the  Recordkeeper  to  offset  the
nonforfeitable portion of the Participant's Accounts by

                                      -76-

<PAGE>



the  outstanding  amount of the loan and such  offset  shall  reduce  the amount
payable to the Participant from the Trust Fund.

         13.8 Manner of Making Loans.  All requests by a  Participant  for loans
from the Trust shall be made in writing to the  Committee  and if the request is
received on or before the 25th day of a month,  the loan amount shall be paid to
the Participant as soon as  administratively  practicable after the first day of
the next  month,  based  on the  value of the  Participant's  Account  as of the
preceding  Valuation  Date,  adjusted to reflect the value of the  Participant's
interest,  if any,  in the Eljer  Industries,  Inc.  Common  Stock  Fund and the
Household International,  Inc. Common Stock Fund as of the 25th day of the month
immediately  following  such  Valuation  Date.   Notwithstanding  the  foregoing
provisions  of this Section  13.8,  if a  Participant  repays a loan made to him
pursuant to this Article  XIII, he may not apply for another loan from the Trust
prior to the  expiration  of two  months  from the date of such  repayment.  The
Committee  shall apply its  standards for the approval of loans in a uniform and
consistent  manner with respect to all  participants and shall approve a loan if
the requirements of this Article XIII are satisfied.  If a Participant's request
for a loan is approved by the Committee, the Committee shall furnish the Trustee
with written instructions directing the Trustee to make the loan in a single sum
payment in cash to the Participant. Such payment shall be made by withdrawing as
of the  Valuation  Date for which the loan is made amounts  from the  Investment
Funds as designated by the Participant in accordance  with rules  established by
the  Committee  from  time to  time or if the  Participant  fails  to  designate
Investment Funds to be used to fund the loan, by withdrawing as of the Valuation
Date  for  which  the loan is made a  proportionate  amount  from  the  separate
Investment  Funds of the  Participant  under the Plan.  No loan shall be granted
hereunder  if at the time the loan is to be  granted  it would be  treated  as a
distribution under Section 72(p) of the Code.

         13.9  Additional  Loan  Procedures.  For  purposes  of  satisfying  the
requirements of Section  2550.408b-1(d) of the Labor Regulations,  the Committee
may adopt written loan policies and procedures to supplement or, if appropriate,
modify the provisions of this Article XIII. Such policies and  procedures,  upon
adoption by the Committee,  shall be  incorporated in the Plan by this reference
as if fully set forth herein.  The  Committee  shall have the power to amend and
modify  such  policies  and  procedures  at any  time  in the  Committee's  sole
discretion.

                                   ARTICLE XIV

                           ADMINISTRATION OF THE PLAN


         14.1     Allocation of Responsibilities Among Fiduciaries.  A
fiduciary with respect to the Plan, as described in Section 3(21)
of ERISA,  shall have only those specific powers, duties, responsibilities


                                     -77-
<PAGE>
and obligations as are explicitly given such fiduciary
under the terms of the Plan and the Trust Agreement or allocated to
such fiduciary pursuant to the procedures set forth herein.  In
general, Eljer Manufacturing, Inc., shall have the sole authority
to establish the Plan and Trust and to amend or terminate, in whole
or in part the Plan or the Trust Agreement, subject to the
provisions of Article XVI.  The Chief Executive Officer of Eljer
Manufacturing, Inc. shall have the sole authority to appoint and
remove the members of the Committee.  The Employer shall have the
sole responsibility for making contributions to the Plan.  The
Company shall be the administrator of the Plan as described in
Section 3(16)(A) of ERISA and, except as otherwise provided herein,
the Company shall have all the duties and responsibilities of an
administrator for purposes of ERISA.  Except as otherwise provided
herein or subsequently delegated to other persons pursuant to the
provisions hereof, the Committee shall possess general authority to
manage the operation and administration of the Plan.  The Committee
may designate one or more individuals or committees of individuals
to carry out any of its fiduciary responsibilities  in connection
with the Plan.  Any such designation may be made by action of the
Committee or by a member or members duly authorized by the
Committee to make such designation on behalf of the Committee. Any
designation, or revocation thereof, made by the Committee or by
such authorized Committee member shall be made in writing, shall
specify the responsibilities which the designee is to carry out and
shall be filed with the Secretary of the Committee, from whom the
names and Committee assignments, if any, of all individuals so
designated and of any Committee member authorized to make such
designations shall be available.  Subject to Participants'
investment directions under Section 9.5, and subject to Committee
directions under Section 14.3, the Trustee shall have the sole
responsibility for the administration of the Trust and the
management of the assets held thereunder, as provided in the Trust
Agreement.  It is intended that each fiduciary shall be responsible
only for the proper exercise of his own powers, duties, responsi
bilities and obligations under the Plan and shall not be responsi
ble for any act or failure to act of another fiduciary.  A
fiduciary may serve in more than one fiduciary capacity with
respect to the Plan and any fiduciary to the Plan may also be an
Employee.  The Committee may employ one or more persons to render
advice to any director, officer or Employee with respect to such
individual's responsibilities under the Plan.  No fiduciary of the
Plan guarantees the Trust Fund in any manner against investment
loss or depreciation in asset value.

         14.2 Management of Plan Assets.  The amounts  allocated under this Plan
shall be held in trust pursuant to the terms of the Trust Agreement by a Trustee
or Trustees appointed by the Committee,  provided that a portion of such amounts
may be  held  directly  by one or  more  insurance  companies  appointed  by the
Committee  under  one or more  individual  or  group  insurance  contracts.  The
aggregate of the amounts so  contributed to the Plan and held by the Trustee and
such

                                      -78-

<PAGE>



insurance  companies  as may be acting at any time,  together  with any  income,
gains and profits  thereon,  less losses,  distributions  and other  permissible
payments  therefrom,  shall  constitute a Trust Fund for the payment of benefits
under the Plan. The Committee  shall review the  performance of the Trustee from
time to time  and the  Committee  shall  determine  the  form  and  terms of any
insurance company contract to accomplish the purposes of the Plan. The Committee
may remove any Trustee and may terminate any insurance  contract,  to the extent
permitted by the terms hereof, the terms of the Trust Agreement and the terms of
the insurance contract.

         The Trustee shall have exclusive  responsibility for the management and
control of the portion of the Trust Fund held in trust by it, except as provided
in Section  14.3 and  except to the extent  that the  Committee  delegates  such
responsibility to one or more persons who are "investment  managers"[within  the
meaning of Section 3(38) of ERISA], each of whom shall be either:

         (a)      registered as an investment adviser under the Investment
Advisers Act of 1940 (the "Act");

         (b)      a bank, as defined in the Act; or

         (c) an insurance  company  qualified to perform  investment  management
services  under the laws of more than one state.  Any  insurance  company  which
holds a portion of the Trust Fund directly shall have  exclusive  responsibility
for the  management  and control of such portion of the Trust Fund. The names of
each  Trustee,  insurance  company  and  investment  manager  acting at any time
hereunder shall be available from the Committee.

         14.3 Powers and  Responsibilities of the Committee.  In addition to any
other powers and  responsibilities  allocated to the  Committee  pursuant to the
terms of this Plan, the following powers and responsibilities shall be exercised
by the  Committee,  the members of which shall be appointed by, and serve at the
pleasure of, the Chief Executive Officer of the Company:

         (a) To administer the Plan,  including but not limited to, the power to
resolve any and all  disputes  which may arise  involving  Participants,  Former
Participants,  Beneficiaries  and/or the Trustee.  The Committee  shall have the
exclusive  discretionary  authority to  interpret  and construe the terms of the
Plan and the  Trust  Agreement  and the  exclusive  discretionary  authority  to
determine  eligibility for all benefits  hereunder.  Any such  determinations or
interpretations  of the  Plan  adopted  by the  Committee  shall  be  final  and
conclusive and shall bind all parties. The Trustee may rely upon the decision of
the   Committee   with   respect  to  any  question   concerning   the  meaning,
interpretation,  or  application  of any  provision  of the Plan  and the  Trust
Agreement.  The Committee's  interpretations  and determinations with respect to
the Plan and the Trust Agreement shall be based on such information

                                      -79-

<PAGE>



as is  reasonably  available to the Committee at the time a decision is made. In
addition, in administering the Plan, the Committee may rely conclusively upon an
Affiliated  Company's payroll and personnel  records  maintained in the ordinary
course of business.

         (b)      To administer the Plan's claims procedure pursuant to
Section 11.7 in a uniform and nondiscriminatory manner.

         (c) To  adopt  such  rules,  forms  and  procedures  as it  shall  deem
necessary for the efficient  administration  of the Plan in accordance  with its
terms and the terms of any applicable law.

         (d) To  prepare  and  submit to  governmental  agencies,  Participants,
Former Participants and Beneficiaries such Plan descriptions,  reports and other
documents,  or  summaries  thereof,  as may be  required  by  applicable  law or
necessary in the
administration of the Plan.
         (e) To remedy  possible  ambiguities,  inconsistencies  or omissions in
connection  with its power to interpret the Plan;  provided,  however,  that all
such actions and decisions shall be applied in a uniform manner to all Employees
similarly situated.

         (f) To authorize  disbursements  from the Trust,  including  refunds of
contributions  permitted by the Plan (any  instructions  of the Committee to the
Trustee  shall be evidenced  in writing and signed by a member of the  Committee
delegated with such authority by a majority of the Committee).

         (g) To employ such  advisors  (including  but not limited to attorneys,
independent public accountants and investment advisors) and such other technical
and clerical personnel as may be required in the Committee's  discretion for the
proper  administration  of the Plan, and to pay the reasonable  expenses of such
persons from the Trust Fund.

         (h) To establish and to instruct the Trustee and any investment manager
with respect to asset  administration  objectives and policies  consistent  with
Plan  requirements  and  establish  Investment  Funds in  accordance  with  such
objectives and policies.

         (i) To review from time to time, but at least as often as annually, the
investment  performance  of the Trustee and any insurance  company or investment
manager  acting with respect to any portion of the Trust Fund. The Committee may
engage the services of such persons it deems appropriate  including,  investment
managers,  to review investments held by the Plan and the financial condition of
insurance companies issuing insurance contracts to the Plan.

         (j) To supervise at least one audit of the Plan's  assets for each Plan
Year and review the Trustee's annual accounting.


                                      -80-

<PAGE>



         (k)      To exclude Affiliated Companies from participation in the
Plan.

         Each of the  members  of the  Committee  is hereby  authorized  to sign
documents  relating to the Plan required by the  Department  of Labor,  Internal
Revenue  Service  or other  governmental  agencies  on  behalf  of the  Company;
provided,  however,  that the Company shall have the  responsibility and duty to
file reports required by any governmental agency with respect to the Plan and to
comply with all other filing and  disclosure  requirements  required by ERISA in
connection  with the  administration  of the  Plan.  Notwithstanding  any  other
provisions of this Section  14.3,  no member of the Committee  shall vote or act
upon any matter  involving his own rights,  benefits,  or  participation  in the
Plan.

         14.4 Operation of Committee. The Committee may act by a majority of its
members  present at a meeting at which at least half the  members are present or
by a unanimous  written  decision taken without a meeting.  The Chief  Executive
Officer of the Company may remove any member of the  Committee at any time and a
member  may  resign by  written  notice to the Chief  Executive  Officer  of the
Company.  If at any time the minimum  number of  Committee  members has not been
designated  by the Chief  Executive  Officer of the Company,  then the Committee
member  or  members  designated  and  acting  at such  time  shall be  deemed to
constitute  the full  membership of the  Committee.  The Committee may appoint a
chairman,  a secretary and such other agents and  representatives  (who may, but
need not, be members  thereof) as it may deem  advisable  to keep its records or
otherwise to assist it in the performance of its responsibilities. The Committee
may engage  agents to assist it and may engage  legal  counsel  who may be legal
counsel for the Company.  All reasonable  expenses incurred by the Committee may
be paid from the Trust Fund to the extent not paid by the Employer.

         14.5  Compensation  and Expenses of Employees and Directors  Serving as
Fiduciaries. The members of the Committee and employees,  officers and directors
of Affiliated  Companies who are designated as  fiduciaries  with respect to the
Plan shall serve without  compensation  for their  services,  but all reasonable
expenses  of the  Committee,  the  members  thereof  and such other  individuals
incurred in the performance of their duties and responsibilities  under the Plan
shall be paid out of the Trust Fund unless paid by the Employer.

         14.6  Indemnification  of Employees and  Directors.  The Company hereby
indemnifies each member of the Committee and each employee, officer and director
of an Affiliated Company who are delegated responsibilities under or pursuant to
the Plan against any and all  liabilities  and  expenses,  including  attorney's
fees,   actually  and  reasonably  incurred  by  them  in  connection  with  any
threatened,  pending or  completed  legal  action or judicial or  administrative
proceeding to which they may be a party, or may be threatened to be

                                      -81-

<PAGE>



made a party,  by reason of membership  on the Committee or other  delegation of
responsibilities,  except  with  regard to any matters as to which they shall be
adjudged  in such  action or  proceeding  to be liable for gross  negligence  or
willful misconduct in connection therewith. In addition, the Company may provide
appropriate  insurance  coverage  for the members of the  Committee or each such
other individual  indemnified pursuant to this Section 14.6 who is not otherwise
appropriately insured.

         14.7 Action Taken in Good Faith. To the extent  permitted by ERISA, the
members  of  the  Committee  and  each  employee,  officer  and  director  of an
Affiliated  Company  who are  fiduciaries  with  respect  to the  Plan  shall be
entitled to rely upon,  and be fully  protected with respect to any action taken
or  suffered  by them in good faith in reliance  upon,  all tables,  valuations,
certificates,  reports and opinions furnished by the Recordkeeper,  the Trustee,
or any accountant,  attorney,  insurance company or investment manager acting at
any time hereunder.

         14.8  Expenses of the Plan.  The  expenses of  administering  the Plan,
other than the compensation of persons on the payroll of an Affiliated  Company,
but  including  fees of the  Trustee,  counsel,  accountants  or  other  experts
appointed under the Plan, at the direction of the Committee may be paid from any
forfeitures  which arise under the Plan, and to the extent expenses are not paid
from  forfeitures,  they  shall be paid out of the Trust  Fund to the extent not
paid by the Employer.

                                   ARTICLE XV

                                   TRUST FUND


         15.1  Establishment of Trust Fund. The Trustee appointed by the Company
shall accept and receipt for all assets transferred to it as Trustee. All assets
so received, together with the income therefrom and any other increment thereon,
as well as assets held in the Trust as of the Effective Date,  shall  constitute
the Trust  Fund and shall be held,  managed  and  administered  by the  Trustee,
pursuant  to  the  terms  of the  Trust  Agreement.  The  Trustee  shall  not be
responsible for the collection of any contributions pursuant to the terms of the
Plan but shall be accountable only for cash or other property  actually received
by the Trustee and for the  administration  thereof in accordance with the terms
of the Trust Agreement.

         15.2  Investments in Company Stock.  All  investments by the Trustee in
shares  of  Company  Stock  shall be made in such a manner  to  comply  with all
applicable federal and state securities laws and the provisions of ERISA and the
Code.  Up to 100% of the assets of the Trust Fund may be  invested  in shares of
Company Stock.


                                      -82-

<PAGE>



         15.3 Title of Trust Assets. The legal and equitable title and ownership
of all  assets at any time  constituting  a part of the Trust  Fund shall be and
remain with the  Trustee,  and  neither the  Company,  or any  Employer  nor any
Participant,  Former  Participant  or  Beneficiary  shall ever have any legal or
equitable  estate  therein,  save  and  except  that  each  Participant,  Former
Participant and Beneficiary  shall be entitled to receive  distributions  as and
when lawfully made under the terms of the Plan.

                                   ARTICLE XVI

                            AMENDMENT AND TERMINATION


         16.1 Amendment. The Company, acting through its Board of Directors, may
at any  time,  and from time to time,  modify or amend  this Plan in whole or in
part, or discontinue or modify  Employer  contributions  to the Plan;  provided,
however,  that except to the extent  required or  permitted by the Code or other
applicable law, the accrued benefit of any  Participant,  Former  Participant or
Beneficiary shall not be affected retroactively by any such action. No amendment
of the Plan shall  authorize or permit any part of the Trust Fund to be used for
or diverted to purposes other than for the exclusive benefit of the Participants
or their  Beneficiaries,  and no amendment shall be made or shall be valid if it
would result in the Plan's  disqualification  under the applicable provisions of
the Code.

         16.2  Termination  or  Discontinuance  of  Contributions.  The Board of
Directors  may at any  time  terminate  or  partially  terminate  this  Plan  or
permanently  discontinue  contributions  hereunder.  Upon termination or partial
termination  of the Plan with  respect to a group of  Participants  or  complete
discontinuance  of  contributions  to the Plan,  any  amount  of the Trust  Fund
previously unallocated,  including any amounts in a suspense account established
under  Section 8.3,  shall be allocated  (unless such  allocation  would violate
Section 8.1), and the Accounts of all affected  Participants  shall thereupon be
and become  fully  vested and  nonforfeitable  to the extent  then  funded.  The
Trustee  shall  deduct  from the Trust  Fund all  unpaid  charges  and  expenses
including those relating to said termination,  except as the same may be paid by
an  Employer.  The Trustee  shall then adjust the balance of all Accounts on the
basis of the net value of the Trust  Fund.  The  Trustee  shall  distribute  the
amount to the credit of each Participant,  Former  Participant,  and Beneficiary
when all  appropriate  administrative  procedures  have been  completed.  If any
amount in a suspense account shall not be allocable because of the provisions of
Section 8.1,  such amount shall be returned to the  Employer.  Upon any complete
discontinuance  of  contributions  by an Employer,  the assets of the Trust Fund
shall  be  held  and  administered  by  the  Trustee  for  the  benefit  of  the
Participants employed by such Employer  discontinuing  contributions in the same
manner and with

                                      -83-

<PAGE>



the same powers,  rights, duties and privileges herein described until the Trust
Fund with respect to such Employer has been fully distributed.

         16.3 Distribution on Plan  Termination.  Except as provided in the next
sentence,  if no other defined  contribution  plan [other than an employee stock
ownership  plan as  defined in Section  4975(e)(7)  of the Code or a  simplified
employee pension plan as defined in Section 408(k) of the Code] is maintained by
the Company or any other Affiliated Company as of the Plan termination date, the
Trustee shall distribute each Participant's  entire Account in a single lump sum
distribution  to him,  or to an eligible  retirement  plan as defined in Section
402(c)(8)(B) of the Code pursuant to the Participant's  direct rollover election
described in Section 11.11, as soon as  administratively  practicable  after the
later of (i) the  termination  date of the Plan or (ii)  the  receipt  following
application  of a  favorable  determination  letter  from the  Internal  Revenue
Service with respect to the termination of the Plan. If the  Participant  either
fails or refuses to consent in writing to the  distribution  upon termination of
the Plan,  the  Trustee  shall use the balance of the  Participant's  Account to
purchase  a  deferred  annuity  satisfying  the  requirements  of Article XI and
providing  for  commencement  of  the  Participant's  benefits  at  age  65  and
distribute such annuity contract to the Participant. If, however, the Company or
any Affiliated  Company maintains another defined  contribution plan [other than
an employee stock ownership plan as defined in Section 4975(e)(7) of the Code or
a simplified  employee pension plan as defined in Section 408(k) of the Code] as
of the Plan termination date, then except as provided in the next sentence, each
Participant's  entire  Account shall either (i) be  transferred  by the Trustee,
without the  Participant's  consent,  to such other defined  contribution  plan;
provided,  however,  that no such  transfer  may  result in the  elimination  or
reduction of a Plan benefit of the Participant protected under Section 411(d)(6)
of the Code,  unless the transfer  satisfies the requirements of Q&A-3(b) of the
Treasury Regulations,  or (ii) be used to purchase a deferred annuity satisfying
the requirements of Article XI and providing for commencement of benefits at age
65 and  such  annuity  contract  shall  be  distributed  to the  Participant.  A
Participant  may request in writing  that the Trustee  distribute  his  Account,
excluding the balance  attributable to his Tax Reduction  Contribution  Account,
unless   distribution   of  such  account  would  be  permitted   under  Section
401(k)(2)(B) of the Code and the applicable Treasury regulations thereunder,  in
a single lump sum  distribution  to him, or to an  eligible  retirement  plan as
defined in Section 402(c)(8)(B) of the Code pursuant to the Participant's direct
rollover  election  described  in  Section  11.11,  as soon as  administratively
practicable  after the later of (i) the termination date of the Plan or (ii) the
receipt  following  application  of a  favorable  determination  letter from the
Internal Revenue Service with respect to the termination of the Plan.


                                      -84-

<PAGE>



         16.4  Distributions  upon Certain Sales. A single sum distribu tion may
be made from the Plan to any Participant,  or to an eligible  retirement plan as
defined in Section 402(c)(8)(B) of the Code pursuant to the Participant's direct
rollover election  described in Section 11.11,  affected by (i) a disposition by
an Employer of  substantially  all of the assets used by the Employer in a trade
or  business,  but  only  if  the  Participant  continues  employment  with  the
corporation  acquiring  such assets or (ii) a disposition  by an Employer of its
interest in a subsidiary,  but only if the Participant continues employment with
such subsidiary.

         16.5  Merger or  Consolidation  of Plan.  In the event of any merger or
consolidation  of the Plan with,  or  transfer in whole or in part of the assets
and  liabilities  of the Trust Fund to,  another trust fund held under any other
plan of deferred compensation maintained or to be established for the benefit of
all or some of the  Participants  in this  Plan,  the  assets of the Trust  Fund
applicable to such  Participants  shall be  transferred  to the other trust fund
only if:

         (a) each  Participant  would (if either this Plan or the other plan had
then terminated) receive a benefit immediately after the merger,  consolidation,
or  transfer  which is equal to or greater  than the  benefit he would have been
entitled to receive  immediately before the merger,  consolidation,  or transfer
(if this Plan had then terminated); and

         (b) such other plan and trust fund are qualified  under Section  401(a)
of the Code and exempt from tax under Section 501(a) of the Code.

         16.6  Merger  and  Other   Reorganization   of   Employer.   A  merger,
consolidation, similar corporation change, or sale which results in the transfer
of substantially all the assets and Employees of the Company or an Employer to a
successor  corporation  shall  constitute a total or partial  termination of the
Plan unless,  and except to the extent that the Board of Directors shall adopt a
resolution consenting to the continuance of the Plan and specifying  appropriate
amendments and conditions applicable to such continuance.

                                  ARTICLE XVII

                                  MISCELLANEOUS


         17.1 No Employment or Compensation Agreement.  Nothing contained in the
Plan shall be  construed  as giving any person or entity any legal or  equitable
right  against  the  Company,  any  Employer,   any  Affiliated  Company,  their
stockholders or partners,  officers or directors,  the Named  Fiduciary,  or the
Trustee,  except as the same shall be  specifically  provided  in the Plan.  Nor
shall anything in

                                      -85-

<PAGE>



the Plan give any  Participant or other Employee the right to be retained in the
service of an  Employer.  The  employment  of all persons by an  Employer  shall
remain subject to termination by such Employer to the same extent as if the Plan
had never been executed.

         17.2 Spendthrift Provision.  Except as provided under Article XIII with
respect to participant  loans,  by the terms of a Qualified  Domestic  Relations
Order,  or  as  permitted  pursuant  to  Section  401(a)(13)  of  the  Code,  no
Participant,  Former Participant, or Beneficiary shall have the right to assign,
alienate or transfer his interest  hereunder,  nor shall his interest be subject
to claims of his creditors or others, it being understood that all provisions of
the Plan shall be for the exclusive benefit of those designated herein.

         17.3  Construction.  It is the intention of each Employer that the Plan
be  qualified  under  Section  401 of the Code and  comply  with the  applicable
provisions  of ERISA,  and all  provisions  hereof  shall be  construed  to that
result.

         17.4     Titles.  Titles of Articles and Sections hereof are for
convenience only and shall not be considered in construing the
Plan.

         17.5     Texas Law Applicable.  The Plan and each of its provi
sions shall be construed and their validity determined by the laws
of the State of Texas to the extend not preempted by ERISA or other
applicable federal law.

         17.6  Successors  and  Assigns.  The  Plan  shall be  binding  upon the
successors and assigns of the Company and each Employer and the Trustee and upon
the  heirs  and  personal   representatives  of  those  individuals  who  become
Participants hereunder.

         17.7 Payments  Only from Trust Fund.  All benefits of the Plan shall be
payable solely from the Trust Fund and neither the Employer, the Committee,  nor
the  Trustee  shall have any  liability  or  responsibility  therefor  except as
expressly provided herein.

         17.8 Plan Controls.  The Trust Agreement is a part of the Plan. In case
of any inconsistency between the terms of the Plan and the Trust Agreement,  the
provisions of the Plan shall control.  In the event of any conflict  between the
terms of the Plan and any summary  thereof or other document  relating  thereto,
from whatever source, the terms of the Plan shall govern.

         17.9 Effect of Mistakes.  In the event of a mistake or  misstatement as
to  the  age or  eligibility  of  any  person,  or the  amount  of any  kind  of
contributions, withdrawals or distributions made or to be made to a Participant,
or other person, the Committee shall, to the extent it deems possible, make such
adjustment as will in its judgment afford to such person the credits,

                                      -86-

<PAGE>



distributions or other rights to which he is properly entitled
under the Plan.

                                  ARTICLE XVIII

                              TOP HEAVY PROVISIONS


         18.1 Application and Purpose.  The following  special  provisions shall
apply to  determine if the Plan is a Top Heavy Plan in  accordance  with Section
416 of the Code and special  rules that will apply based on the Plan's status as
a Top Heavy Plan. In the event that the provisions contained in this Article are
inconsis  tent with the  terms  contained  in the  remainder  of the  Plan,  the
provisions  of this Article shall take  precedence  over such other terms of the
Plan.

         18.2 Minimum  Allocation  Requirements.  For any Plan Year in which the
Plan is a Top Heavy Plan,  each  Employee  who on the last day of such Plan Year
(i) is a Non-Key  Employee who has satisfied  the  eligibility  requirements  of
Section 3.1 (regardless of whether he will have Tax Reduction  Contributions  or
Investment Plan  Contributions made on his behalf to the Plan for the Plan Year)
and (ii)  does not  participate  in a  defined  benefit  plan  maintained  by an
Employer  or an  Affiliated  Company  that  provides  that the  minimum  benefit
applicable  to top heavy  plans  will be  satisfied  in such other  plan,  shall
receive a minimum  allocation  of Employer  contributions  (excluding,  for Plan
Years  beginning  after  December  31, 1988,  Tax  Reduction  Contributions  and
Matching  Company  Contributions  that  are  used to  satisfy  the  Contribution
Percentage  tests of Section  6.1)  equal to the lesser of (x) three  percent of
such  Participant's  Compensation  or (y) the  largest  percentage  of  Employer
contributions (including,  for Plan Years beginning after December 31, 1988, Tax
Reduction Contributions and Matching Company Contributions) made to the Plan for
the Plan Year, as a percentage of the first $200,000 (or such other amount equal
to the  Compensation  Limitation as defined in Section 2.13) of the Compensation
of Participants who are Key Employees allocated to any such Participant who is a
Key Employee for that Plan Year; provided, however that if the Plan is part of a
Required  Aggregation  Group and the Plan enables a defined benefit plan that is
included in the same  Required  Aggregation  Group to meet the  requirements  of
Sections 401(a)(4) or 410 of the Code, clause (y) above shall not apply.

         18.3  Adjustment  to Limitation  on  Allocations.  For any Plan Year in
which the Plan is a Top Heavy Plan,  the provisions of Article VIII hereof shall
be adjusted in  accordance  with the  provisions  of Section  416(h) of the Code
which are by this reference incorporated herein.


                                      -87-

<PAGE>



         18.4     Vesting Schedule.  For any Plan Year in which the Plan is
a Top Heavy Plan, the following provisions shall be applicable to
the Plan:

         (a) Except as provided in Section 18.4(b) below, each Participant shall
be entitled (as a vested interest) to receive the greater of the vested interest
calculated  pursuant to any other  provision of the Plan or a percentage  of the
then combined balance to his credit in his Accounts and determined in accordance
with the following schedule:

<TABLE>
<CAPTION>
                  Years of Service                            Vested Interest
                  ----------------                            ---------------
                  <S>                                         <C>
                    Less than 3                                      0%
                    3 or more                                      100%
</TABLE>

         (b) The  schedule  in  Section  18.4(a)  above  shall  not apply to the
Account of any  Participant  who does not  perform an Hour of Service  after the
Determination Date on which the Plan first becomes a Top Heavy Plan.

         18.5     Definitions.

         (a) "Top Heavy  Plan" means the Plan for a Plan Year if the Plan is the
only  plan  maintained  by an  Employer  and  the  top  heavy  ratio  as of  the
Determination Date exceeds 60%. The top heavy ratio is a fraction, the numerator
of which is the sum of the present value of the Accounts of all Key Employees as
of the Determination  Date, the contributions due as of the Determination  Date,
and  distributions  made within the five-year period  immediately  preceding the
Determination Date (including  distributions under a terminated plan which if it
had not been  terminated  would have been  required to be included in an aggrega
tion group),  and the  denominator  of which is a similar sum determined for all
Employees.  The top heavy ratio shall be  calculated  without  regard to (i) the
Account of a Participant who is not a Key Employee but who was a Key Employee in
a prior Plan Year,  (ii) the Account of any individual who has not performed any
services for an Employer at any time during the  five-year  period ending on the
Determination Date, and (iii) voluntary  deductible Employee  contributions,  if
any. The top heavy ratio, including  distributions,  rollovers and transfers, to
the  extent  such  items  must be taken into  account,  shall be  calculated  in
accordance  with Section 416 of the Code and the regulations  thereunder.  If an
Employer  maintains  other  qualified  plans  (including a  simplified  employee
pension  plan) or has ever  maintained  one or more defined  benefit plans which
have covered or could cover a Participant  in this Plan,  this Plan is top heavy
for a Plan Year only if it is part of the Required  Aggregation  Group,  and the
top  heavy  ratio for both the  Required  Aggregation  Group and the  Permissive
Aggregation  Group  exceeds  60%.  The top heavy  ratio shall be  calculated  as
described above, taking into account all plans within the

                                      -88-

<PAGE>



aggregation group and with reference to Determination Dates that fall within the
same calendar year;  provided that if a defined  benefit plan is included in the
aggregation  group,  the present value of accrued  benefits  (instead of account
balances)  of  participants  in that plan  shall be  computed  for  purposes  of
calculating  the top heavy ratio.  The accrued  benefit under a defined  benefit
plan in both the  numerator  and the  denominator  of the top  heavy  ratio  are
increased  for any  distribution  of an accrued  benefit  made in the  five-year
period ending on the  Determination  Date. The accrued  benefit of a Participant
other than a Key Employee shall be determined under (i) the method, if any, that
uniformly   applies  for  accrual  purposes  under  all  defined  benefit  plans
maintained  by the  Employer,  or (ii) if  there is no such  method,  as if such
benefit  accrued not more rapidly than the slowest  accrual rate permitted under
the fractional  rule of Section  411(b)(1)(C)  of the Code. The value of account
balances and the present value of accrued  benefits will be determined as of the
most recent  Allocation  Date that falls within or ends with the 12-month period
ending on the Determination  Date, except as provided in Section 416 of the Code
and the Treasury Regulations thereunder for the first and second plan years of a
defined  benefit plan.  The actuarial  assumptions  (interest rate and mortality
only)  used by the  actuary  under the  defined  benefit  plan  shall be used to
calculate the present value of accrued benefits from the defined benefit plan.

         (b)  "Determination  Date"  means for any Plan Year the last day of the
preceding Plan Year, or in the case of the first Plan Year of the Plan, the last
day of that Plan Year.

         (c) "Required  Aggregation  Group" means (i) each  qualified plan of an
Employer in which at least one Key Employee  partici  pates,  and (ii) any other
qualified  plan of an Employer which enables a plan described in (i) to meet the
requirements of Sections 401(a)(4) and 410 of the Code.

         (d) "Permissive Aggregation Group" means the Required Aggregation Group
plus any other qualified plans maintained by an Employer which,  when considered
as a group with the Required  Aggregation  Group,  would continue to satisfy the
requirements of Sections 401(a)(4) and 410 of the Code.


                                      -89-

<PAGE>


         IN WITNESS WHEREOF, Eljer Manufacturing, Inc. has caused this Agreement
to be executed this 9th day of September, 1994, effective as set forth herein.

                               ELJER MANUFACTURING, INC.




                          By: /s/Charles R. Wackenhuth
                             --------------------------
                          Title: Vice President-Human Resources





97525.12;64349/3; 8/94


                                      -90-