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                                                                    EXHIBIT 4.14


                              MINNEGASCO DIVISION

                       EMPLOYEES' RETIREMENT SAVINGS PLAN
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                               MINNEGASCO DIVISION

                       EMPLOYEES' RETIREMENT SAVINGS PLAN

                               TABLE OF CONTENTS
 
                                                                     Page
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ARTICLE 1.  APPLICATION, PURPOSES AND USE OF THE PLAN................  1
     Section 1.1   Application of the Plan...........................  1
     Section 1.2   Purposes of the Plan..............................  2

ARTICLE 2.  DEFINITIONS AND GENDER...................................  2
     Section 2.1     Definitions.....................................  2
             2.1.1   Account.........................................  2
             2.1.2   Accounting Date.................................  4
             2.1.3   Administrative Delegate.........................  4
             2.1.4   Administrator...................................  4
             2.1.5   Affiliate.......................................  4
             2.1.6   Alternate Payee.................................  4
             2.1.7   Annual Addition.................................  4
             2.1.8   Basic Earnings..................................  5
             2.1.9   Beneficiary.....................................  6
             2.1.10  Code............................................  6
             2.1.11  Committee.......................................  7
             2.1.12  Computation Year................................  7
             2.1.13  Deferred Compensation...........................  7
             2.1.14  DEI.............................................  7
             2.1.15  Designated Beneficiary..........................  7
             2.1.16  Disability......................................  7
             2.1.17  Elective Contribution...........................  7
             2.1.18  Elective Deferrals..............................  7
             2.1.19  Employee........................................  8
             2.1.20  Employer........................................  8
             2.1.21  Employment Commencement Date....................  8
             2.1.22  Entry Date......................................  8
             2.1.23  Excess Aggregate Contributions..................  8
             2.1.24  Excess Contributions............................  8
             2.1.25  Excess Deferral Amount..........................  9
             2.1.26  Family Member...................................  9
             2.1.27  415 Compensation................................  9
             2.1.28  414(s) Compensation............................. 10
             2.1.29  Full Time Employee.............................. 10


                                       i
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                                                                     Page
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             2.1.30  Highly Compensated Employee..................... 10
             2.1.31  Hour of Service................................. 12
             2.1.32  Leave of Absence................................ 16
             2.1.33  Limitation Year................................. 16
             2.1.34  Matching Contribution........................... 16
             2.1.35  Maximum Permissible Amount...................... 16
             2.1.36  Non highly Compensated Employee................. 16
             2.1.37  Normal Retirement Date.......................... 16
             2.1.38  One Year Break in Service....................... 16
             2.1.39  One Year Period of Severance.................... 16
             2.1.40  Part Time Employee.............................. 17
             2.1.41  Participant..................................... 17
             2.1.42  Participating Affiliate......................... 17
             2.1.43  Period of Service............................... 17
             2.1.44  Period of Severance............................. 20
             2.1.45  Plan............................................ 20
             2.1.46  Plan Year....................................... 20
             2.1.47  Qualified Domestic Relations Order.............. 20
             2.1.48  Qualified Joint and Survivor Annuity............ 23
             2.1.49  Qualified Matching Contribution................. 23
             2.1.50  Qualified Non-elective Contribution............. 23
             2.1.51  Qualified Survivor Annuity...................... 23
             2.1.52  Reemployment Commencement Date.................. 24
             2.1.53  Relief Employee................................. 24
             2.1.54  Severance from Service Date..................... 24
             2.1.55  Stock........................................... 25
             2.1.56  Temporary Employee.............................. 25
             2.1.57  Trust or Trust Agreement........................ 25
             2.1.58  Trustee......................................... 25
             2.1.59  Trusteed Stock Plan............................. 26
             2.1.60  Vesting Period of Service....................... 26
             2.1.61  Year of Service................................. 26
     Section 2.2     Gender and Number............................... 26

ARTICLE 3.   ELIGIBILITY TO BE A PARTICIPANT......................... 26
     Section 3.1     Initial Eligibility............................. 26
     Section 3.2     Subsequent Eligibility.......................... 27

ARTICLE 4.   CONTRIBUTIONS TO THE TRUST.............................. 28
     Section 4.1     Pay Reduction Contributions..................... 28
             4.1.1   Pay Reduction Contributions..................... 28

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             4.1.2   Pay Reduction Election.......................... 28
             4.1.3   Payment......................................... 33
             4.1.4   Allocation to Account........................... 33
     Section 4.2     Employer's Matching Contributions............... 33
             4.2.1   Amount.......................................... 33
             4.2.2   Payment......................................... 34
             4.2.3   Allocation...................................... 34
     Section 4.3     Fail Safe Contributions......................... 34
             4.3.1   Method of Determining Fail Safe Contributions... 34
             4.3.2   Time of Making Fail Safe Contributions.......... 34
             4.3.3   Allocation and Accrual Rules.................... 35
     Section 4.4     Employer Directed Reduction of Contributions.... 35
             4.4.1   General......................................... 35
             4.4.2   Actual Deferral Percentage Test................. 37
             4.4.3   Actual Contribution Percentage Test............. 38
             4.4.4   Aggregation of Plans............................ 40
             4.4.5   Additional Limitation........................... 40
     Section 4.5     Rollover Contributions and Transfers from
                     Qualified Plans................................. 42
             4.5.1   Trustee Authorized to Accept Rollover
                     Contributions (Pre 1993)........................ 42
             4.5.2   Transfers from Trusteed Stock Plan.............. 43
             4.5.3   Transfers from Cengas Plan...................... 44
             4.5.4   Transfers from EnScan Plan...................... 44
             4.5.5   Transfers from Midwest Gas Plans................ 44
             4.5.6   Other Transfers................................. 45
             4.5.7   Effect on Participation in Plan................. 46
             4.5.8   Acceptance of Direct Rollovers and Rollovers
                     (Post 1992)..................................... 46
     Section 4.6     Make up Contributions for Omitted Participants.. 47
     Section 4.7     Voluntary After Tax Contributions............... 47
             4.7.1   Amount.......................................... 47
             4.7.2   Payment......................................... 48
             4.7.3   Allocation to Account........................... 48
             4.7.4   Termination of Contributions.................... 48

ARTICLE 5.   RESTRICTIONS ON ANNUAL ADDITIONS........................ 49
     Section 5.1     General Restrictions............................ 49
     Section 5.2     Maximum Permissible Amount...................... 49
     Section 5.3     Differing Accounting Dates...................... 49
     Section 5.4     Coincidental Accounting Dates................... 50
     Section 5.5     Effect of Reduction............................. 50
     Section 5.6     Limiting Contributions to Suspense Account...... 51

                                      iii
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ARTICLE 6.   PERIODIC ADJUSTMENT OF ACCOUNTS AND FORFEITURES......... 51
     Section 6.1     Adjustments..................................... 51
             6.1.1   Periodic Processing Prior to May 1, 1994........ 51
             6.1.2   Daily Processing After April 30, 1994........... 53
     Section 6.2     Adjustment on Termination....................... 54
     Section 6.3     Adjustment on Direction......................... 54
     Section 6.4     Forfeitures..................................... 54

ARTICLE 7.   FUNDING AND INVESTMENT OPTIONS.......................... 54
     Section 7.1     Establishment of Funding Policy................. 54
             7.1.1   Employer Contribution and Voluntary
                     Contribution Accounts........................... 54
             7.1.2   Other Accounts.................................. 56
     Section 7.2     Separate Funds.................................. 56
             7.2.1   In General...................................... 56
             7.2.2   Establishment of Separate Funds................. 57
             7.2.3   Valuation of Separate Funds and Accounts........ 57
             7.2.4   Consolidation of Funds.......................... 57
     Section 7.3     Acquisition of Stock for Stock Accounts......... 58
     Section 7.4     Voting and Sale of Stock........................ 58
             7.4.1   Voting.......................................... 58
             7.4.2   Sale of Stock................................... 59

ARTICLE 8.   VESTING AND DISTRIBUTION OF BENEFITS.................... 59
     Section 8.1.    Retirement...................................... 59
     Section 8.2     Death........................................... 59
             8.2.1   Distributee..................................... 59
             8.2.2   Spousal Consent to Designation of Non-Spouse
                     Beneficiary..................................... 61
             8.2.3   Death After Commencement of Benefits............ 61
             8.2.4   Death Prior to Commencement of Benefits......... 61
     Section 8.3     Disability...................................... 62
     Section 8.4     Resignation or Discharge........................ 62
             8.4.1   Determination of Vesting Period of Service...... 65
             8.4.2   Forfeiture of Nonvested Portion of Account...... 65
     Section 8.5     Termination of Plan............................. 66
     Section 8.6     Distribution by Trustee......................... 67
     Section 8.7     Manner of Paying Benefits....................... 67
             8.7.1   General Forms of Distribution................... 67
             8.7.2   In Kind Distributions........................... 68
             8.7.3   Additional Rules Governing Distributions........ 68
             8.7.4   Joint and Survivor Annuity Requirements......... 69
             8.7.5   Deferred Annuity Contracts...................... 69
     Section 8.8     Commencement of Distribution.................... 70

                                       iv
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                                                                     Page
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             8.8.1   General......................................... 70
             8.8.2   Required Beginning Date......................... 70
             8.8.3   $3,500 Rule..................................... 71
             8.8.4   Deceased Participants........................... 71
             8.8.5   TEFRA Elections................................. 71
             8.8.6   Transfers....................................... 71
             8.8.7   Limitations on Distributions.................... 72
             8.8.8   Transfers to Successor Employer Plans........... 72
     Section 8.9     Withdrawals..................................... 73
             8.9.1   Withdrawals from Voluntary Contribution, Cengas
                     Transfer, EnScanTransfer, Midwest Employer ESOP
                     and Rollover Accounts........................... 74
             8.9.2   Withdrawals from Employer Contribution and
                     Midwest Employer Matching Accounts.............. 74
             8.9.3   Withdrawals from Pay Conversion Accounts........ 76
             8.9.4   Procedures and Penalties........................ 79
     Section 8.10    Claims Procedure................................ 80
     Section 8. 11   Incompetents.................................... 81
     Section 8.12    Missing Persons................................. 81
     Section 8.13    No Duplicate Benefits........................... 81
     Section 8.14    Direct Rollovers................................ 81
             8.14.1  General Rule.................................... 81
             8.14.2  Definitions..................................... 82

ARTICLE 9.   ADMINISTRATION.......................................... 82
     Section 9.1     Administrator................................... 83
     Section 9.2     Delegation...................................... 83
     Section 9.3     Committee....................................... 83
     Section 9.4     Reports and Records............................. 84
     Section 9.5     Establishment of Funding Policy and Investment   
                     Management...................................... 85
     Section 9.6     Payment of Expenses............................. 85
     Section 9.7     Indemnification................................. 85

ARTICLE 10.  AMENDMENT TO AND TERMINATION OF PLAN.................... 85
     Section 10.1    Amendments...................................... 85
     Section 10.2    Termination of Plan............................. 86
     Section 10.3    Time of Termination............................. 86
     Section 10.4.   Distributions................................... 87
     Section 10.5    Partial Termination............................. 87

ARTICLE 11.  MISCELLANEOUS........................................... 87
     Section 11.1    No Guaranty of Employment....................... 87

                                       v
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                                                                     Page
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     Section 11.2    Construction of Agreement....................... 87
     Section 11.3    Spendthrift Provision........................... 87
     Section 11.4    Headings........................................ 88
     Section 11.5    Limitation on Participating Affiliates' and
                     Trustee's Liability............................. 88
     Section 11.6    Merger.......................................... 88
     Section 11.7    Counterparts.................................... 88
     Section 11.8    Exclusive Benefit............................... 88

ARTICLE 12.  TOP HEAVY PLAN PROVISIONS............................... 89
     Section 12.1    Special Definitions............................. 89
             12.1.1  Determination Date.............................. 89
             12.1.2  Key Employee.................................... 89
             12.1.3  Permissive Aggregation Group.................... 90
             12.1.4  Required Aggregation Group...................... 90
             12.1.5  Super Top Heavy Plan............................ 91
             12.1.6  Top Heavy Compensation.......................... 91
             12.1.7  Top Heavy Plan.................................. 91
             12.1.8  Top Heavy Ratio................................. 91
             12.1.9  Valuation Date.................................. 92
     Section 12.2    Minimum Allocation.............................. 92
     Section 12.3    Vested Account Balance.......................... 94
     Section 12.4    Limitation on Benefits.......................... 95

ARTICLE 13.  PARTICIPATION BY AFFILIATES............................. 95
     Section 13.1    In General...................................... 95
     Section 13.2    Adoption........................................ 95
     Section 13.3    Administration.................................. 95
     Section 13.4    Amendment....................................... 96
     Section 13.5    Termination or Withdrawal....................... 96
     Section 13.6    Application of Terms of the Plan................ 96
             13.6.1  Eligibility..................................... 96
             13.6.2  Determination of Contributions.................. 97
             13.6.3  Allocation of Contributions..................... 97
             13.6.4  Distributions................................... 98
     Section 13.7    Interpretation.................................. 98

                                       vi
<PAGE>
 
                              MINNEGASCO DIVISION

                       EMPLOYEES' RETIREMENT SAVINGS PLAN

     In order to comply with the Tax Reform Act of 1986, the Omnibus Budget
Reconciliation Act of 1986, the Omnibus Budget Reconciliation Act of 1987, the
Technical and Miscellaneous Revenue Act of 1988, the Omnibus Budget
Reconciliation Act of 1989, the Unemployment Compensation Amendments of 1992,
the Omnibus Budget Reconciliation Act of 1993, and other applicable laws, the
successor sponsor of the Diversified Energies, Inc.  Employees Retirement
Savings Plan and the Diversified Energies, Inc.  Employees' Trusteed Stock
Purchase Plan adopts this plan document as a complete restatement of the Plan
effective January 1, 1987, or as of such other dates explicitly stated in the
plan document.  Effective November 29, 1990, the Plan was renamed the Minnegasco
Division Employees' Retirement Savings Plan.

     Prior to May 1, 1994, the Plan was administered using periodic Accounting
Dates.  Effective May 1, 1994, the Plan is administered with daily valuations of
investment funds and, ultimately, with daily processing of transactions.  Due to
the conversion from one recordkeeping system to another and the transfer of
accounts to newly selected investment funds, the processing of distribution
requests, changes in contribution levels and changes in participant investment
elections which are otherwise permitted by the Plan shall be suspended for a
period of approximately two months. References in the Plan to "July 1, 1994" are
intended to be references to the date on which the conversion to daily
processing is completed.  The references to "July 1, 1994" shall be interpreted
to mean July 1, 1994 or such other date on which the conversion is completed.

 ARTICLE 1.    APPLICATION, PURPOSES AND USE OF THE PLAN

      SECTION 1.1 -  APPLICATION OF THE PLAN.  The provisions of the Plan, as
set forth herein, shall apply only to individuals who are employed by a
Participating Affiliate on or after January 1, 1987, and to their Beneficiaries.

     From July 1, 1983, until the adoption of this restatement, the provisions
of the Plan have been contained in two separate documents, each one describing
the provisions applicable to different groups of employees.  With this
restatement the document entitled "Diversified Energies, Inc. Employees Savings
Plan" and the document entitled "Diversified Energies, Inc. Employees' Trusteed
Stock Purchase Plan" are combined as a single plan document.

     The Plan and the Trust shall constitute a qualified profit sharing
retirement plan (within the meaning of Code Section 401(a)), with savings
features pursuant to Code Section 401(k).  The Plan shall also constitute an
eligible individual account plan as defined in ERISA (S) 407(d)(3) which is
authorized to acquire and hold qualifying employer securities (as defined in
ERISA (S) 407(d)(5)) with a value in excess of ten percent of the fair market
value of the assets of the Plan.
<PAGE>
 
     The Plan is intended to constitute a plan described in Section 404(c) of
ERISA and Labor Regulations (S) 2550.404c-1. The Plan's fiduciaries shall be
relieved of liability for any losses which are the direct and necessary result
of investment instructions given by a Participant or Beneficiary, to the extent
permitted under Section 404(c) of ERISA.

     SECTION 1.2 - PURPOSES OF THE PLAN.  The principal purposes of the Plan are
(a) to aid eligible Employees in the acquisition of financial security for
themselves and their Beneficiaries, (b) to promote in Employees a strong
interest in the successful operation of the Employer, loyalty to the Employer
and increased efficiency in their work, and (c) to encourage and provide the
opportunity for eligible Employees to make regular and systematic retirement
savings from current income by pre-income-tax payroll deductions.

 ARTICLE 2.    DEFINITIONS AND GENDER

     SECTION 2.1 - DEFINITIONS.  Whenever used in the Plan, the following terms
shall have the respective meanings set forth below, unless the context clearly
requires otherwise, and when the defined meaning is intended, the term is
capitalized:

             2.1.1 - "ACCOUNT" means the record of the assets credited to an
     individual under the Plan and may refer to any or all of the following: Pay
     Conversion Account, Employer Contribution Account, Voluntary Contribution
     Account, Cengas Transfer Account, EnScan Transfer Account, Midwest Employer
     Matching Account, Midwest Employer ESOP Account, Rollover Account, and Loan
     Account.

            "Pay Conversion Account" means the record of amounts attributable to
            Employer contributions made at the election of a Participant in lieu
            of cash compensation pursuant to a pay reduction agreement.

            "Employer Contribution Account" means the record of Matching
            Contributions to the Plan (other than Elective Deferrals) pursuant
            to Sections 4.2, 4.3 or 4.6.

            "Employer Contribution Account" also includes amounts and shares of
            Stock attributable to Participating Affiliate contributions
            allocated to a Participant under the Trusteed Stock Plan.

            "Voluntary Contribution Account" means the record of amounts
            attributable to Participant after-tax non-matching contributions
            made pursuant to Section 4.7 and amounts and shares of Stock
            attributable to Participant contributions made under the Trusteed
            Stock Plan which are to be held, administered and distributed
            pursuant to the terms of this Plan .

                                      -2-
<PAGE>
 
             For periods prior to May 1, 1994, Voluntary Contribution Accounts
             and Employer Contribution Accounts may have subaccounts which
             separately hold amounts invested in Stock and amounts otherwise
             invested ("Stock Accounts" and "Cash Accounts").  The subaccounts
             in the Voluntary Contribution Account may be further divided into
             subaccounts holding amounts accumulated as of December 31, 1986,
             and contributions and earnings allocated subsequent to December 31,
             1986.  Effective May 1, 1994, the Stock Accounts and Cash Accounts
             shall be merged, but amounts accumulated as of December 31, 1986 in
             Voluntary Contribution Accounts shall continue to be recorded
             separately from contributions and earnings allocated thereafter.

             "Cengas Transfer Account" means the record of amounts attributable
             to assets transferred to the Plan on behalf of a Participant from
             the Minnegasco, Inc. Retirement Plan for Employees of the former
             Cengas Division.  See Subsection 4.5.3.

             "EnScan Transfer Account" means the record of amounts attributable
             to assets transferred to the Plan on behalf of a Participant from
             the EnScan, Inc.  Profit Sharing Plan.  See Subsection 4.5.4.

             "Midwest Employer Matching Account" and "Midwest Employer ESOP
             Account" mean the record of amounts attributable to assets
             transferred to the Plan on behalf of a Participant from a Matching
             Account or ESOP Fund under the Iowa Public Service Savings
             Investment Plan For Salaried Employees or the Iowa Public Service
             Savings Investment Plan For Bargaining Unit Employees.  See
             Subsection 4.5.5.

             "Rollover Account" means the record of an Employee's rollover
             contributions from other qualified plans and direct transfers on
             behalf of an Employee by trustees of other qualified retirement
             plans.

             "Loan Account" means the record of unpaid principal and accrued
             interest on a loan to a Participant or Beneficiary under a loan
             program adopted by the Administrator.

     The Administrator, in its discretion, may establish additional subaccounts
     within the various Accounts or combine similar Accounts or subaccounts.
     The Administrator may also determine that certain benefits transferred from
     other qualified plans shall be credited to existing Accounts which have
     similar tax or distribution characteristics as the transferred benefits,

                                      -3-
<PAGE>
 
             2.1.2 - "ACCOUNTING DATE" means (i) prior to May 1, 1994, the last
     day of each Plan Year, and such other dates as may be specified by the
     Administrator and (ii) on or after May 1, 1994, each day the New York Stock
     Exchange is open for business, except for bank holidays.

             2.1.3 - "ADMINISTRATIVE DELEGATE" means one or more persons or
     institutions to whom the Administrator or Committee has delegated certain
     administrative functions pursuant to written agreement.

             2.1.4 - "ADMINISTRATOR" for purposes of Section 3(16)(A) of the
     Employee Retirement Income Security Act of 1974 shall mean Minnegasco, a
     division of NorAm Energy Corp. (formerly known as Arkla, Inc.), for periods
     on or after November 29, 1990. Prior to November 29, 1990, DEI was the
     Administrator of the Diversified Energies, Inc. Employees Retirement
     Savings Plan. In the event a Committee is appointed, the term Administrator
     shall be deemed to refer to the Committee to the extent the duties and
     obligations of the Administrator are delegated to such Committee.

             2.1.5 - "AFFILIATE" means, for periods prior to November 29, 1990,
     a group of entities and each such entity, including DEI, which constitutes
     a controlled group of corporations (as defined in Code Section 414(b)), a
     group of trades or businesses (whether or not incorporated) under common
     control (as defined in Code Section 414(c)), or an affiliated service group
     (within the meaning of Code Section 414(m)), and any other entity required
     to be aggregated with the Employer pursuant to regulations under Code
     Section 414(o).  For periods after November 28, 1990, "Affiliate" means a
     similarly described group consisting of NorAm Energy Corp. (formerly known
     as Arkla, Inc.) and its related entities.  For purposes of Article 5 of the
     Plan, the necessary level of ownership or control for determining
     affiliation shall be reduced from 80% to 50% pursuant to Code Section
     415(h).

             2.1.6 - "ALTERNATE PAYEE" means any spouse, former spouse, child or
     other dependent of a Participant who is recognized by a domestic relations
     order as having a right to receive all, or a portion, of the benefits
     payable under the Plan with respect to such Participant.

             2.1.7 - "ANNUAL ADDITION" means, with respect to each Participant,
     the sum for the Limitation Year of all Affiliate contributions, employee
     after-tax contributions and forfeitures allocated to his accounts in all
     qualified retirement plans.  Annual Additions for a Limitation Year also
     include amounts allocated to a suspense account in a prior year pursuant to
     Section 5.5 and allocated to the Participant's Account for such Limitation
     Year.  However, for Limitation Years commencing prior to January 1, 1987,
     employee after-tax contributions included in Annual Additions shall be
     limited to such contributions equal to the lesser of one-half 

                                      -4-
<PAGE>
 
     of the Participant's after-tax contributions, or the excess of said
     contributions over 6% of said Participant's 415 Compensation for the
     Limitation Year.

            Amounts allocated to an individual medical benefit account, as
     defined in Code Section 415(1)(2), which is part of a qualified pension or
     annuity plan maintained by an Affiliate, are treated as Annual Additions to
     a defined contribution plan.  In addition, amounts derived from
     contributions that are attributable to post-retirement medical benefits
     allocated to the separate account of a Key Employee, as defined in Code
     Section 419A(d)(3), under a welfare benefit fund, as defined in Code
     Section 419(e), maintained by an Affiliate, are treated as Annual Additions
     to a defined contribution plan.

             2.1.8 - "BASIC EARNINGS" of a Participant for each Participating
     Affiliate shall be the individual's regular salary or regular basic
     earnings based on the individual's straight time hourly wage which is paid
     during the Plan Year, in each case adjusted by the following:

                    (a) If an Employee is compensated in whole or in part on the
             basis of a commission, a sales bonus, or both, where the commission
             or sales bonus is an integral part of the Employee's customary
             compensation, that commission or sales bonus paid by the
             Participating Affiliate shall be included in the definition of
             Basic Earnings.  For example, Basic Earnings shall not include
             incentive bonuses paid by DEI, Minnegasco, Inc. and Minneapolis
             Energy Center, Inc., but shall include commissions, sales bonuses
             (including spot bonuses for sales performance), sales support pool
             bonuses and employment bonuses paid by EnScan, Inc.

                    (b) If an Employee is a participant in a plan maintained by
             an Affiliate which is described in Code Section 401(k), including
             this Plan, Basic Earnings shall include any amount which would be
             included in Basic Earnings but for the Employee's election to
             reduce his or her compensation and have the amount of the reduction
             contributed to the 401(k) plan on the Employee's behalf

                    (c) If an Employee is a participant in a plan maintained by
             an Affiliate which is described in Code Section 125, Basic Earnings
             shall include any amounts which would be included in Basic Earnings
             but for the Employee's election to reduce his or her salary and
             apply the same toward a benefit or benefits under the plan, but
             expressly excluding any 

                                      -5-
<PAGE>
 
             funds or credits made available by an Affiliate other than through
             salary reduction, regardless of whether the Employee elects or
             could elect to receive the same in cash.

                    (d) Basic Earnings shall not include pay for overtime, non-
             sales bonuses or commissions, any bonuses or commissions which are
             not an integral part of an Employee's customary compensation,
             reimbursed expenses, moving allowances, and any amounts paid or
             credited under this Plan or, except as otherwise provided in this
             Section, any other plan of deferred compensation.

                    (e) Basic Earnings shall not include any compensation
             payable in a form other than cash or not included in an Employee's
             gross income for federal income tax purposes.

                    (f) Shift differentials shall be included in Basic Earnings.

                    (g) Basic Earnings shall include amounts paid to an
             individual by the Participating Affiliate for performance of union
             functions for which the Participating Affiliate is reimbursed by
             the union.

                    (h) Basic Earnings of a Key Employee for a Plan Year the
             Plan is a Top Heavy Plan, and of any Employee for Plan Years
             beginning after December 31, 1988, and before January 1, 1994,
             shall not exceed $200,000 (as adjusted to take into account any
             adjustments made by the Secretary of the Treasury pursuant to Code
             Sections 40l(a)(17) or 4l5(d)(2)).  For Plan Years beginning after
             December 31, 1993, Basic Earnings shall not exceed $150,000 (as
             adjusted by the Secretary of the Treasury for cost-of-living
             increases).

             2.1.9 - "BENEFICIARY" means such person or persons who at any
     particular time shall be entitled to receive a distribution from the Trust
     in the event of the death of a Participant.

             2.1.10 - "CODE" means the Internal Revenue Code of 1986, as amended
     from time to time, or any successor tax code.  References to a Code section
     shall be deemed to be to that section or to any successor to that section.

                                      -6-
<PAGE>
 
             2.1.11 - "COMMITTEE", as used in the Plan, means the administrative
     committee which the Administrator may establish under the provisions of
     Section 9.3 of the Plan.  In this context, the Committee is distinct from
     the Employee Benefits Administrative Committee of NorAm Energy Corp. As
     used in the Trust, however, Committee means the Employee Benefits
     Administrative Committee of NorAm Energy Corp.

             2.1.12 - "COMPUTATION YEAR" means a consecutive 12-month period
     used for determining Years of Service for eligibility for the Plan and
     vesting.  For purposes of eligibility for the Plan, the Computation Year
     means a consecutive 12-month period measured from the date an Employee
     first completes an Hour of Service for an Affiliate; provided, however, if
     the Employee fails to complete 1,000 Hours of Service during that initial
     12-month period, the Computation Year shall be the Plan Year.  For
     computing Years of Service for vesting, the Computation Year shall be the
     Plan Year.

             2.1.13 - "DEFERRED COMPENSATION" means any Employer contribution to
     this or any other plan to the extent not includible in gross income for the
     Participant's taxable year under Code Sections 402(e)(3), 402(h)(1)(B), or
     403(b) (if contributed under a salary reduction agreement), including
     deferrals under Section 4.1 of this Plan.

             2.1.14 - "DEI" means Diversified Energies, Inc., a Minnesota
     corporation which was merged into Arkla, Inc. effective November 29, 1990.

             2.1.15 - "DESIGNATED BENEFICIARY" means any individual other than
     the Participant's spouse, designated by a Participant, or if the
     Participant is deceased, by the surviving spouse of the Participant, as a
     Beneficiary.

             2.1.16 - "DISABILITY" means a total and permanent physical or
     mental impairment of a Participant resulting from bodily injury, disease or
     mental disorder which renders him incapable of continuing his usual and
     customary employment with the Employer.  The determination of disability
     shall be made by the Administrator based upon the certificate of a
     physician approved by the Employer.  Disability shall not include a
     physical or mental condition resulting from a self-inflicted injury or the
     person's own criminal action.

             2.1.17 - "ELECTIVE CONTRIBUTION" means any contribution made to a
     qualified plan at the election of an employee in lieu of cash compensation.

             2.1.18 - "ELECTIVE DEFERRALS" means contributions made to the Plan
     during the Plan Year by the Employer at the election of the Participant in
     lieu of cash
                                      -7-
<PAGE>
 
     compensation, and shall include contributions made pursuant to a pay
     reduction election.

             2.1.19 - "EMPLOYEE" means any person, including an officer, who is
     employed as a common-law employee by a Participating Affiliate.

             Also, an individual shall be considered to be an Employee if such
     individual is a leased employee within the meaning of Code Section
     414(n)(2), but only if (a) leased employees constitute more than twenty
     percent (20%) of Non-highly Compensated Employees or (b) the individual is
     not covered by a qualified money purchase pension plan maintained by the
     leasing organization providing a nonintegrated employer contribution rate
     of at least ten percent (10%) and providing for immediate participation and
     full and immediate vesting.

             2.1.20 - "EMPLOYER" means, with respect to an Employee at a given
     time, the Participating Affiliate by which the Employee is then employed.
     For purposes of determining a Participant's entitlement to receive a
     distribution, the Participant shall not be treated as having terminated
     employment with the Employer until he has terminated employment with all
     Affiliates.

             2.1.21 - "EMPLOYMENT COMMENCEMENT DATE" of an Employee means the
     first day the Employee performs duties for an Affiliate for which the
     Employee is paid or is entitled to be paid, provided, that if such date is
     not the first day of the calendar month, but is the first regular business
     day of the calendar month for the Affiliate, the Employment Commencement
     Date shall be the first day of the calendar month.

             2.1.22 - "ENTRY DATE" means, for periods after October 31, 1989,
     the first day of each month.  Prior to November 1, 1989, "Entry Date" means
     each January 1 and July 1.

             2.1.23 - "EXCESS AGGREGATE CONTRIBUTIONS" means, with respect to
     any Plan Year, the excess of (a) the aggregate amount of Matching
     Contributions and Participant after-tax contributions (and any Elective
     Deferrals taken into account in computing the actual contribution
     percentage pursuant to Subsection 4.4.3) actually made on behalf of Highly
     Compensated Employees for such Plan Year, over (b) the maximum amount of
     such contributions permitted under the limitations of Code Section
     401(m)(2)(a).

             2.1.24 - "EXCESS CONTRIBUTIONS" means, with respect to any Plan
     Year, the excess of (a) the aggregate amount of Elective Deferrals
     (including any Qualified Matching Contributions and Qualified Non-elective
     Contributions taken into account in computing the actual deferral
     percentage pursuant to Subsection 4.4.2 actually 

                                      -8-
<PAGE>
 
     made on behalf of Highly Compensated Employees for such Plan Year, over (b)
     the maximum amount of such contributions permitted under the limitations of
     Code Section 401(k)(3)(A)(ii).

            2.1.25 - "EXCESS DEFERRAL AMOUNT" means the amount of Elective
     Deferrals for a calendar year that a Participant contributes to this Plan
     pursuant to Section 4.1 of the Plan which, when added to amounts deferred
     under this Plan and other plans or arrangements described in Code Sections
     401(k), 408(k) or 403(b), exceeds the limit imposed on the Participant by
     Code Section 402(g) for the calendar year in which the deferral occurred.

            2.1.26 - "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.

            2.1.27 - "415 COMPENSATION" of an Employee for any Limitation Year
     means a Participant's earned income, wages, salaries, and fees for
     professional services and other amounts paid for personal services actually
     rendered in the course of employment with any Participating Affiliate
     during such year (including, but not limited to, commissions paid to
     salesmen, compensation for services on the basis of a percentage of
     profits, commissions on insurance premiums, tips and bonuses, and other
     amounts as referred to in Treasury Regulation Section 1.415-2(d)), and
     excluding the following:

                    (a) Employer contributions to a plan of deferred
             compensation which are not includable in the Employees gross income
             for the taxable year in which contributed, or Employer
             contributions under a simplified employee pension plan to the
             extent such contributions are deductible by the Employee, or any
             distributions from a plan of deferred compensation;

                    (b) Amounts realized from the exercise of a nonqualified
             stock option, or when restricted stock (or property) held by the
             Employee either becomes freely transferable or is no longer subject
             to a substantial risk of forfeiture;

                    (c) Amounts realized from the sale, exchange or other
             disposition of stock acquired under a qualified stock option; and

                                      -9-
<PAGE>
 
                    (d) Other amounts which receive special tax benefits, such
             as benefits under cafeteria plans and premiums for group term life
             insurance (to the extent they are not includable in the Employee's
             gross income), or contributions made by the Employer (whether or
             not under a salary reduction agreement) towards the purchase of an
             annuity described in Code Section 403(b) (whether or not the
             amounts are actually excludable from the gross income of the
             Employee).

             2.1.28 - "414(S) COMPENSATION" of an Employee for any Plan Year
     means, unless otherwise elected by the Administrator in a manner consistent
     with Code Section 414(s) and regulations thereunder, such Employee's 415
     Compensation increased by any amount contributed by the Employer for such
     Employee pursuant to a salary reduction or other agreement and which is not
     includable in the gross income of such Employee under Code Sections 125,
     402(e)(3), 402(h) or 403(b). The Director of Compensation and Benefits has
     authority to determine whether Elective Contributions will be included in
     414(s) Compensation or to elect an alternative definition as provided in
     regulations issued by the Secretary of the Treasury.

            "414(s) Compensation" shall be limited to $200,000 (as adjusted in
     the same manner as permitted under Code Section 415(d)) for Plan Years
     beginning before January 1, 1994, and to $150,000 (as adjusted) for Plan
     Years beginning after December 31, 1993.  Provided, that if there is a
     partial Plan Year due to a change in Plan Year, the annual compensation
     limit shall be multiplied by the number of months in such year and divided
     by 12.

             2.1.29 - "FULL TIME EMPLOYEE" means an Employee who has a regularly
     scheduled work week of 40 hours or more.  Any reduction of hours worked or
     scheduled for an Employee who is on a reduced work schedule that was
     offered to the Employee pursuant to the Special Personal Leave and Reduced
     Work Week Program shall be disregarded in determining whether an individual
     is a Full Time Employee.

             2.1.30 - "HIGHLY COMPENSATED EMPLOYEE" includes highly compensated
     active employees and highly compensated former employees.

            A highly compensated active employee includes any Employee who
     performs service for an Affiliate during the determination year and who,
     during the look-back year: (i) received compensation from all Affiliates in
     excess of $75,000 (as adjusted pursuant to Code (S) 415(d)); (ii) received
     compensation from all Affiliates in excess of $50,000 (as adjusted pursuant
     to Code (S) 415(d)) and was a 

                                      -10-
<PAGE>
 
     member of the top-paid group for such year; or (iii) was an officer of an
     Affiliate and received compensation during such year that is greater than
     50% of the dollar limitation in effect under Code (S) 415(b)(i)(A). The
     term Highly Compensated Employee also includes: (i) Employees who are both
     described in the preceding sentence if the term "determination year" is
     substituted for the term "look-back year" and the Employee is one of the
     100 employees who received the most compensation from all Affiliates during
     the determination year; and (ii) Employees who are five-percent owners at
     any time during the look-back year or determination year.

            The top-paid group consists of the top 20% of Employees ranked on
     the basis of compensation received during the Plan Year.  For purposes of
     determining the number of employees in the top-paid group, Employees
     described in Code Section 414(q)(8) and Q & A 9(b) of Treasury Regulation
     (S) 1.414(q)-IT are excluded.  The number of officers is limited to 50 or,
     if lesser, the greater of 3 Employees or 10% of all Employees.  Further,
     all Affiliates are treated as one employer when applying these rules to
     determine the Highly Compensated Employees.

            If no officer has satisfied the compensation requirement of (iii)
     above during either a determination year or look-back year, the highest
     paid officer for such year shall be treated as a Highly Compensated
     Employee.

            For this purpose, the determination year shall be the Plan Year.
     The look-back year shall be the 12-month period immediately preceding the
     determination year.

            A highly compensated former employee includes any Employee who
     separated from service (or was deemed to have separated) prior to the
     determination year, performs no service for an Affiliate during the
     determination year, and was a highly compensated active employee for either
     the separation year or any determination year ending on or after the
     employee's 55th birthday.  With respect to an Employee who separated from
     service before January 1, 1987, such an Employee will be included as a
     Highly Compensated Employee only if the Employee was a 5% owner or received
     compensation in excess of $50,000 during (1) the Employee's separation year
     (or the year preceding such separation year) or (2)  any year ending on or
     after such individual's 55th birthday (or the last year ending before such
     Employees 55th birthday).

            If an Employee is, during a determination year or a look-back year,
     a Family Member of either a five-percent owner who is an active or former
     employee or a Highly Compensated Employee who is one of the ten most highly
     compensated employees ranked on the basis of compensation paid by the
     employer during such year, then the Family Member and the five-percent
     owner or top-ten highly compensated employee shall be aggregated.  In such
     case, the Family Member and five-percent owner or top-ten highly

                                      -11-
<PAGE>
 
     compensated employee shall be treated as a single Employee receiving
     compensation and plan contributions or benefits equal to the sum of such
     compensation and contributions or benefits of the Family Member and five-
     percent owner or top-ten highly compensated employee.

            The determination of who is a Highly Compensated Employee, including
     the determinations of the number and identity of Employees in the top-paid
     group, the top 100 Employees, the number of Employees treated as officers
     and the compensation that is considered, will be made in accordance with
     Code Section 414(q) and the regulations thereunder.  For purposes of this
     definition, "compensation" for a determination year or look-back year shall
     mean the Employee's 415 Compensation for such period (i) without regard to
     Code Section 125, and (ii) plus any Deferred Compensation for such period.

             2.1.31 - "HOUR OF SERVICE" by an Employee means each hour:

                  (a) He is paid or entitled to payment by an Affiliate for the
        performance of duties for an Affiliate;

                  (b) He is paid or entitled to payment by an Affiliate for
        reasons such as vacation, holiday, illness, incapacity (including
        Disability), lay-off, jury duty, military duty or Leave of Absence for a
        period of time during which no duties are performed (irrespective of
        whether the employment relationship has terminated); and

                  (c) For which back pay (irrespective of mitigation of damages)
        has either been awarded to the Employee or agreed to by an Affiliate and
        is not otherwise credited herein.

                  (d) Hours of Service shall be credited during a period of a
        Leave of Absence, whether paid or unpaid.  If it is a paid Leave of
        Absence, the Employee shall receive credit under either this paragraph
        or paragraph (b), whichever produces the greater number of Hours of
        Service.  Hours credited during the Leave of Absence shall be computed
        on the basis of an assumed 8 hour work day and a 40 hour work week;
        provided, however, in the case of a Part Time Employee or a Relief
        Employee, Hours of Service shall be credited based on a daily average of
        the Employee's Hours of Service determined under paragraphs (a), (b) and
        (c) for the preceding 12 months, or during the Employees entire
        employment with an Affiliate if employed by an Affiliate for less than
        12 months.

                                      -12-
<PAGE>
 
                  (e) For purposes of paragraphs (b) and (c), in the case of an
        Employee without a regular work schedule, Hours of Service shall be
        credited based on a daily average of the Employee's Hours of Service
        otherwise determined under paragraphs (a), (b) and (c) for the 12 months
        immediately preceding the date of determination, or during the
        Employee's entire employment with an Affiliate ending immediately prior
        to the date of determination if employed by an Affiliate for less than
        12 months.

                  (f) In the _____________ Employee who is absent from
        employment with an account of disability and is receiving disability
        payments under a long-term disability plan maintained by an Affiliate or
        is receiving disability payments under applicable workers' compensation
        laws, Hours of Service shall be credited to that Employee for so long as
        those payments continue (but not beyond the Employee's Normal Retirement
        Age) (i) on the basis of an assumed 8 hour work day and a 40 hour work
        week or (ii) in the case of a Part Time Employee or Relief Employee, on
        the basis of the daily average of the Employee's Hours of Service
        determined under paragraphs (a), (b) and (c) for the 12 months preceding
        the date the Employee first became disabled, or during the Employee's
        entire employment with an Affiliate if employed by an Affiliate for less
        than 12 months.

            The fact that an individual receiving long term disability benefits
     may be granted credit for service under this definition does not give the
     individual the status of an employee for purposes apart from this Plan.

            For purposes of crediting Hours of Service under paragraph (b) and
     paragraph (c) (to the extent that the award for back pay relates to periods
     of time during which no duties are performed), the following limitations
     shall apply:

                    (i) No more than 501 Hours of Service shall be credited for
             any single continuous period during which the Employee performs no
             duties (whether or not such period occurs in a single computation
             period);

                    (ii) No credit shall be given on account of payments made or
             due under a plan maintained solely for the purpose of complying
             with applicable workers compensation, unemployment compensation or
             disability instant laws; and

                                      -13-
<PAGE>
 
                    (iii)  No credit shall be given for payments which solely
             reimburse an Employee for medical or medically related expenses
             incurred by the Employee.

            For purposes of paragraphs (a), (b) and (c), a payment shall be
     deemed to be made by or due from an Affiliate regardless of whether such
     payment is made by or due from an Affiliate directly or indirectly through,
     among others, a trust fund or insurer to which an Affiliate contributes or
     pays premiums, regardless of whether contributions made or due to the trust
     fund, insurer or other entity are for the benefit of particular Employees
     or are on behalf of a group of Employees in the aggregate.

            If an Employee is not otherwise credited with 1,000 or more Hours of
     Service in a Plan Year which falls within (partially or entirely) the
     period described in the following sentence, the Employee shall be credited
     with such number of additional Hours of Service so that the number of Hours
     of Service in such Plan Year shall be equal to 1,000 provided he is
     reemployed by an Affiliate at the end of such period.  The period referred
     to in the preceding sentence is the period of service with the armed forces
     of the United States which the Employee entered from employment with an
     Affiliate on account of induction or enlistment, up to and including the
     earlier of his return to work with an Affiliate or the last day of the
     period prescribed by law within which said Employee can exercise a
     statutory right to reinstatement (or in the absence of any applicable law,
     90 days from his discharge from military service), provided that he does in
     fact return to work with an Affiliate within said period.

            If an Employee's absence from work begins by reason of a maternity
     or paternity absence described below, the Employee shall be deemed credited
     with the following Hours of Service only for purposes of determining
     whether the Employee has incurred a One-Year Break in Service.  The hours
     deemed to be Hours of Service are those which otherwise would normally have
     been credited to such Employee under this Section, or if those hours may
     not be determined, eight Hours of Service per each normal work day absent.
     However, no more than 501 Hours of Service shall be credited for any single
     continuous period during the Employee's maternity or paternity absence.
     The hours shall be deemed to be Hours of Service in the year in which
     absence form work begins if an Employee Would be prevented from incurring a
     One-Year Break in Service in such year solely because the period of absence
     is treated as Hours of Service, or in the immediately following year, if
     the Employee would not incur a One-Year Break in Service in the year in
     which the absence begins. For purposes of this paragraph, a maternity or
     paternity absence means an absence:

          (1) by reason of the pregnancy of the Employee;

          (2) by reason of the birth of a child of the Employee;

                                      -14-
<PAGE>
 
          (3)    by reason of the placement of a child with the Employee in
                 connection with the adoption of such child by such Employee; or

          (4)    for purposes of caring for such child for a period beginning
                 immediately following such birth or placement.

     The Employer may require the Employee to furnish such timely information as
     the Employer may reasonably require to establish that the absence from work
     is for the maternity or paternity reasons described above and the number of
     days for which there was such an absence.

            Credit for Hours of Service shall be given to the extent and for the
     purposes provided by the Family and Medical Leave Act.

            For computing Hours of Service, credit shall not be given for
     service with all predecessor entities of an Affiliate or with respect to
     periods Affiliates were not considered as Affiliates except: (1) credit
     shall be given to the extent required by the provisions of any agreement
     executed by an Affiliate relating to any acquisition or merger, or in
     accordance with uniform rules adopted by the Employer, and (2) credit for
     purposes of eligibility and vesting shall be given for service (prior to
     employment with the Employer) with Midwest Power Systems, Inc. or one of
     its affiliates, and with any employer that was not an Affiliate at the time
     of the service but had become an Affiliate prior to January 1, 1987.  Also,
     credit for Hours of Service shall be given with respect to service with all
     entities which are members of a controlled or commonly controlled group of
     corporations, trades or businesses, or affiliated service groups (as those
     terms are referred to Code Sections 414(b), 414(c) and 414(m)) in periods
     during which Affiliate is a member of such group.

            In computing Hours of Service to the extent not otherwise provided
     in the Plan, the rules contained in paragraph (b) and (c) of Regulation (S)
     2530.200b-2 issued by the Department of Labor shall be applied, and such
     rules are incorporated herein by reference.

            Hours of Service shall be determined by Employer from records
     determined by it to accurately reflect this information.  Personnel who are
     considered to be in a maritime industry for purposes of Code Sections
     410(a)(3)(D) and 411 (a)(5)(D) shall be credited with eight Hours of
     Service for each day for which the Employee would be required to be
     credited with at least one Hour of Service pursuant to the foregoing
     provisions.  If during any computation period, an Employee is neither paid
     on an hourly basis nor in a maritime industry job classification or in a
     job classification requiring that he receive pay for overtime, if any,
     under the Federal Fair Labor Standards Acts, such Employee shall, for that
     computation period, 

                                      -15-
<PAGE>
 
     be credited with 190 Hours of Service for each calendar month for which the
     Employee would be required to be credited with at least one Hour of Service
     pursuant to the foregoing provisions.

             2.1.32 - "LEAVE OF ABSENCE" means a leave from active employment
     approved by a Participating Affiliate on a uniform and nondiscriminatory
     basis in accordance with its standard personnel policy.

             2.1.33 - "LIMITATION YEAR" means the 12-month period commencing
     January 1 and ending December 31.

             2.1.34 - "MATCHING CONTRIBUTION" means any Employer contribution
     for a Plan Year allocated to a Participant's Employer Contribution Account
     pursuant to Sections 4.2, 4.3 or 4.6.

             2.1.35 - "MAXIMUM PERMISSIBLE AMOUNT" means, for a Limitation Year,
     with respect to any Participant, the lesser of (1) $30,000 (or, if greater,
     one-fourth of the dollar limitation for defined benefit plans under Code
     Section 415(b)(1)(A) as in effect for the Limitation Year) or (2) twenty-
     five percent (25%) of his 415 Compensation for the Limitation Year.  The
     latter limitation of this subsection shall not apply to any contribution
     for medical benefits (within the meaning of Code Section 419A(f)(2)) after
     separation from service which is otherwise treated as an Annual Addition,
     or any amount otherwise treated as an Annual Addition under Code Section
     415(1)(1).

             2.1.36 - "NON-HIGHLY COMPENSATED EMPLOYEE" means an Employee who is
     neither a Highly Compensated Employee nor a Family Member of a Highly
     Compensated Employee who is either a 5-percent owner (as defined in Code
     Section 414(q)) or in the group consisting of the ten Highly Compensated
     Employees paid the greatest 415 Compensation for the Plan Year.

             2.1.37 - "NORMAL RETIREMENT DATE" means the date on which a
     Participant attains age 65.

             2.1.38 - "ONE-YEAR BREAK IN SERVICE" means a Plan Year during which
     a Relief Employee (or a Part Time, Employee who is not scheduled to work
     more than 1,000 hours in a 12-month period) has not completed more than 500
     Hours of Service.

             2.1.39 - "ONE-YEAR PERIOD OF SEVERANCE" for a Full Time Employee
     (or a Part Time Employee scheduled to work more than 1,000 hours in a 12-
     month period) means a 12-consecutive-month period beginning on the
     Participant's Severance from Service Date and ending on the first
     anniversary of that date, 

                                      -16-
<PAGE>
 
     provided that the Participant does not perform any duties for an Affiliate
     during that period for which the Participant is paid or entitled to
     payment.

             2.1.40 - "PART TIME EMPLOYEE" means an Employee who has a regularly
     scheduled work week of less than 40 hours.  Any reduction of hours worked
     or scheduled for an Employee who is on a reduced work schedule that was
     offered to the Employee pursuant to the Special Personal Leave and Reduced
     Work Week Program shall be disregarded in determining whether an individual
     is a Part Time Employee.

            2.1.41 - "PARTICIPANT" means an Employee who enters the Plan as
     provided herein.  An Employee who becomes a Participant shall be considered
     to be a Participant until the earlier of his death, payment of all benefits
     from the Plan to him, or forfeiture of all of his benefits under the Plan.

             2.1.42 - "PARTICIPATING AFFILIATE" means an Affiliate which has
     adopted the Plan and which has not terminated participation or withdrawn
     pursuant to Article 13.  Prior to November 29, 1990, the Participating
     Affiliates were DEI, Minnegasco, Inc., Minneapolis Energy Center, Inc., and
     EnScan, Inc.  After November 28, 1990, the Participating Affiliates became
     Minnegasco (a division of Arkla, Inc.), DEI (a division of Arkla, Inc.),
     Minneapolis Energy Center, Inc., EnScan, Inc. and E.F. Johnson Company.
     EnScan, Inc. ceased being a Participating Affiliate on February 28, 1992,
     E.F. Johnson Company ceased being a Participating Affiliate on July 31,
     1992, and Minneapolis Energy Center, Inc, ceased being a Participating
     Affiliate on August 19, 1993.

             2.1.43 - "PERIOD OF SERVICE" means the aggregate of each segment of
     time, stated as full months, which begins on an Employee's Employment
     Commencement Date or Reemployment Commencement Date, whichever is
     applicable, and ends on the next following Severance from Service Date.
     The term shall be applicable only to Full Time Employees and to Part Time
     Employees who are scheduled to work more than 1000 hours in a 12-
     consecutive-month period.  In computing Periods of Service, 30 days shall
     be deemed to be a full month when aggregating fractional months.  "Period
     of Service" shall also include the following:

                    (a) Any period of service with the armed forces of the
             United States which the Employee entered from employment with an
             Affiliate on account of induction or enlistment under federal law,
             provided the Employee returns to employment with an Affiliate
             within the period prescribed by federal law during which the
             Employee's reemployment rights are protected or, in the absence of
             such law, within 90 

                                      -17-
<PAGE>
 
             days from the date the Employees release or discharge from military
             service is available.

                    (b) In the event an Employee has a Severance from Service by
             reason of a quit, discharge or retirement and the Employee
             subsequently performs an Hour of Service for which the Employee is
             paid or entitled to payment, and that Hour of Service is performed
             within 12 months of the Severance from Service Date, "Period of
             Service" shall include the Period of Severance.

                    (c) In the event an Employee has a Severance from Service by
             reason of a quit, discharge or retirement during an absence from
             service from an Affiliate of 12 months or less (which absence from
             service was not the result of a quit, discharge or retirement) and
             subsequently performs an Hour of Service for which the Employee is
             paid or entitled to payment, and that Hour of Service is performed
             within 12 months of the date the Employee was first absent from
             service from an Affiliate, then despite the provisions of
             Subsection (b) above, "Period of Service" shall include the period
             from the date of the quit, discharge or retirement and the first
             anniversary of the date on which the Employee was first absent from
             service for a reason other than a quit, discharge or retirement.

                    (d) Any period during which the Employee is on a Leave of
             Absence, except that credit shall not be given under this
             subsection if it would otherwise be given under any other provision
             of this Section.

                    (e) Any period for which an Employee is disabled and
             receiving disability payments under a long term disability plan
             maintained by an Affiliate or disability payments under applicable
             workers' compensation laws.  The fact that an individual receiving
             long term disability benefits may be granted credit for service
             under this definition does not give the individual the status of an
             employee for purposes apart from this Plan.

                    (f) Any period of service with Midwest Power Systems, Inc.
             or one of its affiliates, and with any employer that was not an
             Affiliate at the time of the service but had 

                                      -18-
<PAGE>
 
             become an Affiliate prior to January 1, 1997, if such service was
             followed by employment with an Affiliate. This service shall be
             credited only for purposes of eligibility and vesting.

                    (g) Any period for which credit is required under the Family
             and Medical Leave Act, for such purposes described in the Act,
             except that credit shall not be given under this paragraph if it
             would otherwise by given under any other provision of the
             Subsection.

            In the case of an Employee who transfers from a class of employees
     whose service is determined by counting Years of Service to a class of
     employees whose service is determined on the basis of Periods of Service;
     the Employee shall receive credit, as of the date of the transfer, for
     service consisting of--

                    (A) A number of years equal to the number of Years of
             Service credited to the Employee before the Computation Year during
             which the transfer occurs; and

                    (B) The greater of (1) the period of time beginning on the
             first day of the Computation Year during which the transfer occurs
             and ending on the date of such transfer or (2) the service taken
             into account under the Years of Service rule as of the date of the
             transfer.

     If the service for which an Employee receives credit under this paragraph
     consists of the total of the service determined under (A) and (B)(1) above,
     the Employee shall receive credit for service subsequent to the transfer
     commencing on the date the transfer occurs.  If such service consists of
     the total of the amounts of service determined under (A) plus (B)(2) above,
     the Employee shall receive credit for service subsequent to the transfer
     commencing on the day after the last day of the Computation Year during
     which the transfer occurred.

            In the case of an Employee who transfers from a class of employees
     whose service is determined on the basis of Periods of Service to a class
     of employees whose service is determined by counting Years of Service--

                    (A) The Employee shall receive credit, as of the date of the
             transfer, for a number of years equal to the number of one-year
             Periods of Service credited to the Employee as of the date of the
             transfer; and

                                      -19-
<PAGE>
 
                    (B) The Employee shall receive credit in the Computation
             Year which includes the date of the transfer, for a number of Hours
             of Service determined by crediting 190 Hours of Service for each
             calendar month for which the Employee would be required to be
             credited with at least one Hour of Service pursuant to the Plan.

             2.1.44 - "PERIOD OF SEVERANCE" of an Employee means the period of
     time commencing on the Employee's Severance from Service Date and ending on
     the Employee's Reemployment Commencement Date.

             2.1.45 - "PLAN" means the Minnegasco Division Employees'
     Retirement Savings Plan, the terms and provisions of which are set forth
     herein, as the same may be amended or restated from time to time.

             2.1.46 - "PLAN YEAR" means for periods prior to January 1, 1989,
     the 12-month period commencing January 1 and ending December 31.  The
     period from January 1, 1989 to December 30, 1989 is a short Plan Year.  The
     12-month period from December 31, 1989 to December 30, 1990 is a Plan Year.
     December 31, 1990 is a short Plan Year and, for periods after December 31,
     1990, the Plan Year is the 12-month period from January 1 to December 31.

             2.1.47 - "QUALIFIED DOMESTIC RELATIONS ORDER" means a domestic
     relations order entered on or after January 1, 1985, which creates or
     recognizes the existence of an Alternate Payee's right, or assigns to an
     Alternate Payee the right, to receive all or a portion of the benefits
     payable with respect to the Participant under the Plan, provided the order
     clearly specifies certain facts and does not alter the amount or form of
     benefits.  To the extent permitted in a Qualified Domestic Relations Order,
     an Alternate Payee may elect any of the optional forms of benefit that
     would be available under Sections 8.7 and 8.9 to a terminated Participant.

            A domestic relations order means any judgment, decree, or order,
     including approval of a property settlement agreement, which relates to the
     provision of child support, alimony payments, or marital property rights to
     a spouse, former spouse, child, or other dependent of the Participant.  The
     order must be made pursuant to a State domestic relations law.

            The order is deemed to clearly specify certain facts only if it
specifies:

                    (a) the name and last known mailing address, if any, of the
             Participant and the name and mailing address, if any, of each
             alternate Payee covered by the Order;

                                      -20-
<PAGE>
 
                    (b) the amount or percentage of the Participant's benefits
             to be paid by the Plan to each such Alternate Payee, or the manner
             in which such amount or percentage is to be determined;

                    (c) the number of payments or period to which such order
             applies; and

                    (d) each plan to which such order applies.

     if the Administrator has reason to know of the Participant's or Alternate
     Payee's current mailing address independently an order shall not fail to
     clearly specify certain facts merely because it does not specify such
     address.

             An order is deemed not to alter the amount or form of benefits only
             if it:

                    (i) does not require the Plan to provide any type or form of
             benefit or any option, not otherwise provided under the Plan when
             the order was issued;

                    (ii) does not require the Plan to provide increased
             benefits, determined on the basis of actuarial value; and

                    (iii)  does not require the payment of benefits to an
             Alternate Payee which have been required to be paid to another
             Alternate Payee under another order previously determined to be a
             Qualified Domestic Relations Order.

            In the case of any payment before a Participant has separated from
     service, a domestic relations order shall not be treated as failing to meet
     the requirements of not altering the amount or form of benefits solely
     because such order requires that payment of benefits be made to an
     Alternate Payee:

                    (a) on or after the date on which the Participant reaches
             the "earliest retirement age";

                    (b) as if the Participant had retired on the date on which
             such payment is to begin under such order (but taking into account
             only the present value of the benefits actually accrued); and

                                      -21-
<PAGE>
 
                    (c) _______ any form in which such Benefits may be paid
             under the Plan to the Participant (other than in the form of a
             joint and survivor annuity for the Alternate Payee and his or her
             subsequent spouse).

     The "earliest retirement age" is the earlier of two dates: (1) the date the
     Participant may receive a distribution under the plan, or (2) the date the
     Participant reaches age 50.  Notwithstanding any provision of the Plan to
     the contrary, payment to an Alternate Payee pursuant to an order that has
     been determined to be a Qualified Domestic Relations Order (without regard
     to the benefit commencement date) on or after May 1, 1994, will be made in
     an immediate lump sum payment, if the order so provides.

            To the extent provided in any Qualified Domestic Relations Order,
     the former spouse of a Participant shall be treated as a surviving spouse
     of such Participant for purposes of Section 8.2.

            The Administrator shall establish in its discretion reasonable
     procedures to determine the qualified status of domestic relations orders
     and to administer distributions under such orders.  When an Administrator
     receives a domestic relations order, he shall promptly notify the
     Participant, and any other Alternate Payee of the receipt of such order and
     the Plan's procedures for determining the qualified status of such orders.
     Within a reasonable period after receipt of such order, the Administrator
     shall determine whether such order is a Qualified Domestic Relations Order
     and notify the Participant and each Alternate Payee of its determination.

            During any period in which the issue of whether a domestic relations
     order is a Qualified Domestic Relations Order is being determined by the
     Administrator, a court of competent jurisdiction, or otherwise, the
     Administrator shall separately account for the amounts (the "segregated
     amounts") which would have been payable to the Alternate Payee during such
     period if the order had been determined to be a Qualified Domestic
     Relations Order.  Prior to receiving a domestic relations order, the
     Administrator may suspend a Participant's right to borrow or withdraw from
     his or her Account if the Administrator has reason to believe that a
     domestic relations order is forthcoming with respect to such Participant's
     Account.  The suspension shall be lifted only upon receipt of evidence that
     the Participant's spouse or former spouse consents or has declined to claim
     an interest in the Account.

            If, within 18 months after the date payments are due to commence
     under the order, the order, or modifications thereof, is determined to be a
     Qualified Domestic Relations Order, the Administrator shall pay the
     segregated amounts, including any interest thereon, to the person or
     persons entitled to them.  If, within 

                                      -22-
<PAGE>
 
     the same 18-month period, it is determined that the order is not a
     Qualified Domestic Relations Order, or the issue as to whether such order
     is a Qualified Domestic Relations Order is not resolved, the Administrator
     shall then pay the segregated amounts, including any interest thereon, to
     the person or persons who would have been entitled to such amounts if there
     had been no order. However, if the Administrator is notified that the
     parties are attempting to cure the defects in the order, the Administrator
     shall continue to defer payments and maintain a separate account for the
     amounts until the end of the 18-month period. Any determination that an
     order is a Qualified Domestic Relations Order which is made after the close
     of the 18-month period shall be applied prospectively only. The
     Administrator may treat a domestic relations order entered before January
     1, 1985, as a Qualified Domestic Relations Order, pursuant to any uniform
     and nondiscriminatory rules it may establish, even if the domestic
     relations order does not satisfy the requirements of this Section.

             2.1.48 - "QUALIFIED JOINT AND SURVIVOR ANNUITY" means, with respect
     to Participants with Cengas Transfer Accounts, a monthly annuity for the
     life of the Participant beginning on the date any distribution is to be
     made with a survivor annuity equal to 50% of the amount of the annuity
     which is payable during the joint lives of the Participant and the person
     who is the spouse of the Participant on the earlier of the date benefits
     commence or the date the annuity is distributed, and which is purchased
     from an insurance company with the vested portion of the Participant's
     Cengas Transfer Account as of the most recent Accounting Date.  The
     Administrator shall have the discretion to determine the insurance company
     from which the annuity shall be purchased.  If a Participant is not married
     this term shall mean an immediate annuity for the fife of the Participant
     purchased in the same manner as provided above.

             2.1.49 - "QUALIFIED MATCHING CONTRIBUTION" means any Matching
     Contribution allocated to Participants' Accounts for the Plan Year which,
     at the time of the contribution, satisfies the distribution and
     nonforfeitability requirements of Code (S)(S) 401(k)(2)(B) and (C).

             2.1.50 - "QUALIFIED NON-ELECTIVE CONTRIBUTION" means any Employer
     contribution (other than a Matching Contribution) allocated to
     Participants' Accounts for the Plan Year, which the Participant may not
     elect to receive in cash until distributed from the Plan and which, at the
     time of the contribution, satisfies the distribution and nonforfeitability
     requirements of Code (S)(S) 401(k)(2)(B) and (C).

             2.1.51 - "QUALIFIED SURVIVOR ANNUITY" means, with respect to
     Participants with Cengas Transfer Accounts, an annuity payable for the life
     of the surviving spouse commencing on the date any distribution is to be
     made which is purchased from an insurance company with the vested Cengas
     Transfer Account 

                                      -23-
<PAGE>
 
     balance of the Participant determined as of the most recent Accounting
     Date. The Administrator shall have the discretion to determine the
     insurance company from which the annuity will be purchased.

             2.1.52 - "REEMPLOYMENT COMMENCEMENT DATE" of an Employee means the
     first date following the Employee's Period of Severance from Service (which
     period is not included as a Period of Service) on which the Employee
     performs duties for an Affiliate for which the Employee is paid or is
     entitled to payment.

             2.1.53 - "RELIEF EMPLOYEE" means an Employee employed by an
     Affiliate for the purpose of replacing, on a temporary basis, another
     Employee of an Affiliate.  Employees who are considered part of an employee
     pool and who may be called in to replace other Employees on a recurring
     basis shall be considered Temporary Employees and not Relief Employees.

             2.1.54 - "SEVERANCE FROM SERVICE DATE" means the earlier of

                    (a) The date an Employee terminates employment with all
             Affiliates by reason of voluntary termination, discharge, death or
             retirement;

                    (b) The first anniversary of the beginning of a period
             during which an Employee remains absent from service with all
             Affiliates for any reason other than voluntary termination,
             discharge, death or retirement, such as vacation, holiday,
             sickness, disability, Leave of Absence or layoff, provided,
             however, that in the event an Employee is on a Leave of Absence and
             the Leave of Absence terminates after that first anniversary, the
             applicable date shall be the date the Leave of Absence terminates;
             or

                    (c) Solely for purposes of determining whether a One Year
             Period of Severance has occurred for the Plan Years commencing
             after December 31, 1984, the second anniversary of the beginning of
             a period during which an Employee remains absent from service with
             all Affiliates for maternity or paternity reasons.  Under this
             subsection, "maternity or paternity reasons" means the same as
             under the definition of an Hour of Service.  The application of the
             rules provided in this Paragraph relating to absences for maternity
             and paternity reasons shall be limited as follows: (i) the rules
             shall apply only for purposes of determining whether an Employee
             has a One-Year Period of Severance for eligibility 

                                      -24-
<PAGE>
 
             to participate and calculating the Employee's vested interest and
             it shall not affect the determination as to whether the Employee
             has a One-Year Period of Severance for purposes of the Employee's
             Account being credited with contributions; and (ii) if an Employee
             has a Leave of Absence which terminates after the second
             anniversary described in this Paragraph, the Employee's Severance
             from Service Date shall be the date the Leave of Absence terminates
             instead of the second anniversary date.

            In the case of a Part Time Employee or Relief Employee, "Severance
     from Service Date" means the date an Employee terminates employment with
     all Affiliates.

             2.1.55 - "STOCK" means the common stock of DEI for periods prior to
     November 29, 1990.  After November 28, 1990, Stock means the common stock
     of Arkla, Inc. (later NorAm Energy Corp.).

             2.1.56 - "TEMPORARY EMPLOYEE" means (a) an Employee employed by an
     Affiliate on a basis where one of the conditions of employment is that the
     duration of employment will not exceed 6 months, or (b) an Employee who is
     considered part of a temporary employee "pool" and who may be called in to
     replace other on a recurring basis.  If a Temporary Employee is retained as
     a Full Time Employee, the individual's vesting and eligibility service will
     be determined under the rules applicable to Full Time Employees from the
     individual's Employment Commencement Date, as if the individual had always
     been a Full Time Employee. If a Temporary Employee is retained as a Part
     Time Employee or Relief Employee, the individual's vesting and eligibility
     service will be determined under the rules applicable to Part Time
     Employees or Relief Employees from the individual's Employment Commencement
     Date, as if the individual had always been a Part Time Employee or Relief
     Employee.  Participation by a former Temporary Employee under the foregoing
     provisions shall be prospective only.  Nothing in this paragraph shall be
     interpreted to entitle an Employee to contributions or any other benefits
     under the Plan for periods when the Employee is a Temporary Employee.

             2.1.57 - "TRUST" OR "TRUST AGREEMENT" means the trust agreement or
     trust agreements with the Trustee which the Employer establishes in
     connection with the Plan, including any group trust or pooled investment
     trust to the extent the assets of the group or pooled investment trust are
     attributable to the Plan.

             2.1.58 - "TRUSTEE" means the individuals or the institution having
     trust powers which shall accept the appointment to execute the duties of
     the Trustee as set forth in the Plan and the Trust Agreement.

                                      -25-
<PAGE>
 
            2.1.59 - "TRUSTEED STOCK PLAN" means the document entitled
     "Diversified Energies, Inc.  Employees' Trusteed Stock Purchase Plan" as
     approved by the Board of Directors of DEI on May 10, 1983, and as amended
     from time to time.  Effective as of January 1, 1987, the Trusteed Stock
     Plan--which has been part of a single plan with this 401(k) plan since its
     inception--shall exist and be governed pursuant only to this document.

             2.1.60 - "VESTING PERIOD OF SERVICE" means that period of time
     determined under Subsection 8.4. 1.

            2.1.61 - "YEAR OF SERVICE" means an applicable Computation Year
     during which an Employee completes at least 1,000 Hours of Service.  The
     term shall apply to Part Time and Relief Employees only.  Credit shall be
     given for purposes of eligibility and vesting for service with an
     Affiliate.  Credit shall also be given for service with Midwest Power
     Systems Inc. or one of its affiliates, and with any employer that was not
     an Affiliate at the time of the service but had become an Affiliate prior
     to January 1, 1987, if such service was followed by employment with an
     Affiliate.  In the case of an Employee who transfers between classes of
     employees whose service is determined by counting Years of Service, on the
     one hand, and Periods of Service, on the other hand, the rules for counting
     service in the year of the transfer are set forth in Subsection 2.1.43.

      SECTION 2.2 - GENDER AND NUMBER. Pronoun references herein shall be deemed
to be of any gender relevant to the context, and words used in the singular
shall include the plural.

 ARTICLE 3. ELIGIBILITY TO BE A PARTICIPANT

      SECTION 3.1 - INITIAL ELIGIBILITY.  Each Employee of a Participating
Affiliate who has not previously been a Participant in the Plan shall become a
Participant of this Plan as of the Entry Date for a Plan Year the Employee first
satisfies all of the following criteria:

            (a) The Employee either (i) is a Full Time Employee and has a Period
     of Service of not less than 30 days, (ii) is a Part Time Employee (other
     than a Relief or Temporary Employee) who is scheduled to work more than
     1,000 hours in a 12 consecutive month period and has a Period of Service of
     not less than 30 days, or (iii) is a Part Time or a Relief Employee (who is
     not a Temporary Employee) and is credited with at least one Year of Service
     during a Computation Year which ends prior to the applicable Entry Date.
     Prior to November 1, 1989, the 30-day service requirement in (i) and (ii)
     above is a four-month service requirement;

            (b) The Employee is not covered by a collective bargaining agreement
     to which a Participating Affiliate is a party, unless the collective
     

                                      -26-
<PAGE>
 
     bargaining agreement is entered into on or after July 1, 1983, and
     expressly provides for the application of the provisions of the Plan to the
     Employee;

            (c) The Employee has entered into a pay reduction agreement pursuant
     to Section 4.1 which shall be effective with the first practicable payroll
     date after the applicable Entry Date (or such other enrollment date as the
     Administrator shall establish in its discretion).  For periods prior to
     January 1, 1994, a Participant who does not enter into a pay reduction
     agreement for the applicable first Entry Date may commence participation
     only on a subsequent January 1.  After January 1, 1994, noncontributing
     Employees who do not participate on their earliest possible payroll date
     may commence participation on the first payroll date after May 1, 1994, or
     any payroll date after July 1, 1994;

          (d) The Employee is not a non-resident alien;

          (e) The Employee is not an intern or a Temporary Employee;

          (f) The Employee is not a seasonal employee;

          (g) The Employee is not a leased employee as defined in Code Section
     414(n)(2); and

          (h) If the Employee is employed by E.F. Johnson Company prior to
     July 31, 1992, the Employee is a transitional employee who was employed by
     DEI and participating in the Plan immediately prior to employment with E.F.
     Johnson Company.

     Under the Plan, individuals will be deemed to be covered under a collective
bargaining agreement if they are in an employee classification which is subject
to the terms of that agreement. Individuals will be deemed to be so covered
during the period following the date of actual cessation of their coverage and
prior to the date which is the first day of a calendar month not less than 30
days following that termination, unless expressly provided to the contrary in
the collective bargaining agreement.

     Any reduction of hours worked or scheduled for an Employee who is on a
reduced work schedule that was offered to the Employee pursuant to the Special
Personal Leave and Reduced Work Week Program shall be disregarded for purposes
of eligibility and for purposes of determining whether an Employee is a Part
Time or Full Time Employee.

     SECTION 3.2 - SUBSEQUENT ELIGIBILITY.  Employees who have commenced
participation in the Plan pursuant to Section 3.1 shall continue to be eligible
to participate in contributions to this Plan until the earlier of their death,
retirement or termination of employment with all Participating Affiliates, or
the date they become covered by a collective bargaining agreement to which a

                                      -27-
<PAGE>
 
Participating Affiliate is a party (unless the collective bargaining agreement
expressly provides for the application of the provisions of this Plan to them),
the date they become non-resident aliens, Temporary Employees, or seasonal
employees, or the effective date of the termination of their pay reduction
agreements as provided in Subsection 4.1.2.

     Participants who have terminated their eligibility pursuant to the
preceding sentence and who are employed by a Participating Affiliate shall be
entitled to make an application to resume participating, such participation to
commence as of the later of (a) their Reemployment Commencement Date (if their
employment has terminated), (b) if they are (or were) covered by a collective
bargaining agreement to which a Participating Affiliate is (or was) a party
(which did not provide for the application of the provisions of this Plan to
them), the earlier of the date they cease to be so covered, or the date the
collective bargaining agreement expressly provides for the application of the
provisions of this Plan to them, (c) the date they are neither non-resident
aliens, Temporary Employees nor seasonal employees and (d) the payroll date
specified in their subsequent pay reduction agreements.

     Participants who terminate their pay reduction agreements solely for the
reason of a voluntary termination of contributions, as provided in Subsection
4.1.2, shall be entitled to enter into subsequent pay reduction agreements prior
to May 1, 1994, as of any Entry Date following at least 6 months after the
effective date of the voluntary termination.  The six-month suspension period in
effect prior to May 1, 1994, may be reduced at the option of the Administrator
with respect to specified Entry Dates, in accordance with uniform rules.
Effective May 1, 1994, any ongoing suspension periods shall be lifted.
Beginning July 1, 1994, Participants may recommence pay reduction contributions
with the first practicable payroll date after they give instructions to the
Administrative Delegate, provided that the request to recommence contributions
is not made in the same month as the request to terminate contributions.

 ARTICLE 4. CONTRIBUTIONS TO THE TRUST

      SECTION 4.1 - PAY REDUCTION CONTRIBUTIONS.

             4.1.1 - PAY REDUCTION CONTRIBUTIONS.  Subject to the limitations of
     Sections 4.1.2, 4.4 and 5.1 hereof the Employer shall contribute to the
     Trust for each Plan Year an amount equal to the amount deducted and
     withheld from each Participant's Basic Earnings during such Plan Year as a
     pre-tax pay reduction contribution pursuant to the Participant's election.

             4.1.2 - PAY REDUCTION ELECTION.  Each Employee who has satisfied
     all eligibility requirements set forth in Section 3.1 or Section 3.2 (or is
     reasonably expected to and does satisfy the requirements on or prior to the
     next payroll date) may elect to reduce his Basic Earnings for the Plan Year
     paid on or after the effective date of the election and have the reduction
     contributed by the Employer to the Participant's Pay Conversion Account.
     Elections shall be made at least 10 days 

                                      -28-
<PAGE>
 
     before the payroll date the Participant first chooses to participate in
     contributions pursuant to this Section, or as of such other dates as the
     Employer may permit in accordance with uniform, nondiscriminatory rules,
     and shall become effective with the first practicable payroll date on or
     after such date. Prior to May 1, 1994, pay reduction contributions can be
     initiated only on the first payroll date of each month.

     Pay reduction elections shall be further subject to the following rules and
     limitations:

             (1)  Amounts - All amounts are to be expressed as whole percentages
                  of Basic Earnings, or in such other manner of uniform
                  application specified by the Employer, but in no event may
                  such amount exceed twelve percent (12%) of Basic Earnings (ten
                  percent (10%) for elections in effect prior to May 1, 1994).
                  Contributions to a cafeteria plan, which are permitted by the
                  terms of that plan to be used as contributions to this Plan
                  may be considered as contributions made under this Section 4.1
                  and shall increase the maximum contributions otherwise
                  permitted to be made pursuant to Section 4.

             (2)  Changes - After his initial entry into the Plan, a Participant
                  may change the amount to be contributed to his Pay Conversion
                  Account as of any January 1 prior to May 1, 1994, or as of May
                  1, 1994.  As of the first day of any month on or before May 1,
                  1994, a Participant making contributions in excess of 6% of
                  Basic Earnings may reduce the contributions to 6%.  Effective
                  July 1, 1994, a Participant may elect on any Accounting Date
                  to change the amount to be contributed to his Pay Conversion
                  Account, and such change may be to any contribution level
                  permitted under the Plan, stated as a multiple of 1%.  Changes
                  made after June 30, 1994, are limited to one change per month
                  and will become effective with the first practicable payroll
                  date after such election is made.  A Participant shall
                  initiate a change in contributions prior to July 1, 1994, by
                  giving the Employer written notice at least ten days before
                  the effective date of the change, or such shorter or longer
                  period as the 

                                      -29-
<PAGE>
 
                  Employer may select. Such notice shall be on a form provided
                  by the Employer and signed by the Participant specifying the
                  amount to be contributed to his Pay Conversion Account.
                  Effective July 1, 1994, a Participant shall initiate a change
                  by giving the Administrative Delegate telephonic notice
                  according to rules and procedures agreed to by the Employer
                  and the Administrative Delegate.

              (3) Termination of Pay Reduction Elections - A Participant may
                  terminate (or suspend) his pay reduction election prior to May
                  1, 1994, as of the last day of any calendar month, by giving
                  the Employer written notice on a form provided by the
                  Employer, at least ten days before the effective date of the
                  termination, or such shorter or longer period as the Employer
                  may elect.  Effective July 1, 1994, a termination or
                  suspension of pay reduction contributions may occur at any
                  time effective with the next practicable payroll date after
                  such election is made.  A Participant shall initiate an
                  election to terminate (or suspend) his pay reduction election
                  on or after July 1, 1994, by giving the Administrative
                  Delegate telephonic notice according to rules and procedures
                  agreed to by the Employer and the Administrative Delegate. As
                  of the effective date of the termination of his pay reduction
                  election, no further pay reduction contributions will be made
                  to the Participant's Pay Conversion Account until the
                  Participant makes a new pay reduction election, but such
                  termination shall not affect any amounts which have already
                  been allocated to the Participant's Pay Conversion Account
                  pursuant to Subsection 4.1.4. Any Participant who has so
                  terminated his pay reduction election may enter into a new
                  election as provided in Section 3.2. A termination of
                  contributions that results from a personal leave pursuant to
                  the Special Personal Leave and Reduced Work Week Program shall
                  not be treated as a termination of a pay reduction agreement
                  under this Subsection.  A Participant may 

                                      -30-
<PAGE>
 
                  recommence pay reduction contributions as of the first
                  administratively possible payroll date on or immediately
                  following the date the Participant returns to active
                  employment from the personal leave.

             (4)  Limitation on Amounts of Reduction - Any pay reduction
                  election shall at all times be subject to the limitations set
                  forth in Sections 4.1.2, 4.4 and Article 5 hereof.  No
                  Participant may elect to defer an amount under this Section
                  that was otherwise payable in cash during the Participant's
                  taxable year which, when combined with all other Deferred
                  Compensation provided by the Employer for the taxable year,
                  would exceed $7,000 (or such larger amount (a) prescribed by
                  the Secretary of the Treasury or his delegate due to cost-of-
                  living adjustments after 1987, (b) permitted pursuant to Code
                  Section 402(g)(4), or (c) permitted pursuant to Code Section
                  402(g)(8)).  The Employer may disregard any election to make
                  Elective Deferrals to the extent it would result in the
                  contribution of an Excess Deferral Amount.  If an Excess
                  Deferral Amount is contributed to the Plan on behalf of any
                  Participant during a calendar year, the Excess Deferral Amount
                  (plus any income and minus any loss allocable thereto) may be
                  distributed to the Participant prior to the first April 15
                  following such calendar year.  Any such distribution shall be
                  designated as an Excess Deferral by the Employer or the
                  Trustee, as the case may be, and shall be reduced by the
                  amount of any Excess Contributions previously distributed to
                  the Participant from the Plan for the Plan Year beginning with
                  or within such calendar year.

                  Income or loss for the taxable year of the individual shall be
                  determined by multiplying the income or loss for the taxable
                  year allocable to the Participant's Elective Deferral Account
                  by a fraction, where the numerator is the Excess Deferral
                  Amount for the taxable year, and the

                                      -31-
<PAGE>
 
               denominator is the account balance attributable to the
               Participant's Elective Deferrals as of the end of the taxable
               year minus the income or plus the loss allocable to such account
               balance for the year. For Plan Years after 1987 and prior to
               1992, the allocable income or loss for the period from the end of
               the taxable year to the date of distribution shall be determined
               in a similar manner; or, at the option of the Employer, such
               amount shall be ten percent of the amount determined as allocable
               income or loss for the taxable year multiplied by the number of
               whole calendar months between the end of the taxable year and the
               date of distribution, counting the month of distribution if
               distribution occurs after the 15th of the month. For the taxable
               year beginning in 1987, any reasonable method may be used
               provided it is consistently applied. For Plan Years after 1991,
               no income or loss shall be allocated for the period after the end
               of the taxable year.

            In the event that a Participant is also a participant in another
     plan or arrangement (of the Employer or another plan sponsor) such that the
     combined Deferred Compensation under this Plan and such other plans or
     arrangements results in an Excess Deferral Amount for a taxable year of the
     Participant, the Participant may, not later than March 1 following the
     close of his taxable year, notify the Administrator in writing of the
     portion of the Excess Deferral Amount that is to be allocated to this Plan
     for the preceding calendar year.  The Participant's Elective Deferrals
     under this Plan shall be reduced by the amount of the excess allocated to
     this Plan (plus any income and minus any loss allocable thereto) and the
     amount shall be distributed in the same manner as provided in the preceding
     paragraph.

            For purposes of this Article 4, if two or more plans which include
     arrangements under Code Section 401(k) are considered one plan for purposes
     of Code Sections 401(a)(4) or 410(b) (other than 410(b)(2)(A)(ii) as in
     effect for Plan Years beginning after December 31, 1988), the Code Section
     401(k) arrangements included in such plans shall be treated as one
     arrangement; provided, however, that for Plan Years beginning after
     December 31, 1988, contributions and allocations under an Employee Stock
     Ownership Plan, as described in Code Section 4975(e)(7), shall not be
     combined with the Plan.

            All Elective Deferrals shall be deemed to be Employer and not
     Employee contributions.

                                      -32-
<PAGE>
 
             4.1.3 - PAYMENT.  The amount designated by the Participant for
     contribution to his Pay Conversion Account shall be reflected in one or
     more payroll deductions during the Plan Year or such other means as the
     Employer shall prescribe under rules of uniform application.  The
     Participant's contributions so collected generally shall be remitted to the
     Trustee as soon as reasonably practical, but in no event later than 90 days
     after the date of collection.

             4.1.4 - ALLOCATION TO ACCOUNT.  The amount contributed for a
     Participant shall be allocated to the Participant's Pay Conversion Account
     maintained under this Plan on such date as the Trustee receives the
     contributed amount from the Employer with the Trustee's prior knowledge and
     expectation of receipt on that date.

     SECTION 4.2 - EMPLOYER'S MATCHING CONTRIBUTIONS.

             4.2.1 - AMOUNT.  The Employer may contribute a matching amount to
     the Trustee for each Participant making pay reduction contributions
     pursuant to Section 4.1.  Each Plan Year the Employer may determine a
     percentage (which may be limited by reference to a maximum dollar amount or
     a percentage of a Participant's Basic Earnings) which is to be multiplied
     by the amount contributed to a Participant's Pay Conversion Account
     pursuant to his election under Section 4.1 for said period.  The product is
     the Employer's Matching Contribution for such Participant for that Plan
     Year.

            The Employer shall have discretion to determine the matching
     percentage from year to year, which may be based on a formula or formulas
     which rely upon profit or performance levels, and may specify a zero
     percentage.  The Employer's Board of Directors may also determine
     classifications of eligible Employees on a uniform, nondiscriminatory basis
     and establish a matching percentage for each classification.  Unless
     changed by a resolution of the Board of Directors of the Employer, the
     Employer contribution percentage shall be fifty percent (50%) of  the
     portion of the Elective Deferrals that does not exceed six percent (6%) of
     Basic Earnings for all Participants eligible to receive a contribution
     under this Section.  For purposes of contributions under this Section,
     Participant contributions made pursuant to Section 4.1 of an amount greater
     than six percent of Basic Earnings for the portion of the Plan Year during
     which the Participant was eligible to participate in the Plan shall not be
     taken into account.

            Reductions of Accounts pursuant to Sections 4.1.2(4) or 4.4 and
     additions to Accounts pursuant to 4.6 shall not be eligible for Matching
     Contributions under this Section.  Withdrawals pursuant to Section 8.9
     shall not affect the amount of contributions under this Section.  The
     Employer shall not contribute an amount in excess of the maximum
     contribution permitted under Article 5.

                                      -33-
<PAGE>
 
            4.2.2 - PAYMENT.  The Employer generally may contribute matching
     amounts at any time during the Plan Year or within the time following the
     close of the Plan Year which is prescribed by law for the filing of the
     Employer's Federal income tax return for such Plan Year (including
     extensions thereof), but in no event later than twelve months after the
     close of the Plan Year.  The contributions may be made in the form of money
     or other property acceptable to the Trustee.  Forfeitures of amounts
     allocated to Employer Contribution Accounts or Midwest Employer Matching
     Accounts shall be used in the following order until all forfeitures have
     been used: (i) to pay plan expenses at the close of each calendar quarter;
     (ii) to restore forfeited amounts to rehired Employees pursuant to
     Subsection 8.4.2; (iii) to reduce the Employer's contributions under this
     Section 4.2; and (iv) if any forfeitures remain, they shall be allocated as
     additional Matching Contributions.

             4.2.3 - ALLOCATION.  Matching Contributions made on behalf of each
     Participant pursuant to this Section shall be allocated to the
     Participant's Employer Contribution Account.  In general, Matching
     Contributions to a Participant's Account for a Plan Year under this Section
     shall be calculated as of each payroll date with respect to Elective
     Deferrals credited as of that date.  For Plan Years prior to January 1,
     1994, an additional Matching Contribution amount shall be determined on
     behalf of a Participant with respect to Elective Deferrals that are
     eligible for Matching Contributions that were not previously contributed
     (i.e., when the matching formula is applied to deferrals for the entire
     Plan Year as opposed to a single pay period), provided that the Participant
     is employed by any Affiliate on the last business day of the Plan Year.
     Matching Contributions shall be allocated on such date as the Trustee
     receives the contributed amount from the Employer with the Trustee's prior
     knowledge and expectation of receipt on such date.

      SECTION 4.3 - FAIL-SAFE CONTRIBUTIONS.

             4.3.1 - METHOD OF DETERMINING FAIL-SAFE CONTRIBUTIONS.  If the
     Employer determines that contributions under other portions of the Plan
     would cause a failure to comply with the actual deferral percentage test or
     the actual contribution percentage test, and such failure is not corrected
     by reducing the contributions of or for Highly Compensated Employees under
     Section 4.4, the Employer shall make contributions pursuant to this Section
     to the Trustee for a Plan Year.  Within 60 days after the end of the Plan
     Year, the Employer's Board of Directors shall authorize a contribution in
     the dollar amount necessary to satisfy the applicable test; provided,
     however, that the Employer shall not contribute an amount in excess of the
     maximum contribution permitted under Article 5.

             4.3.2 - TIME OF MAKING FAIL-SAFE CONTRIBUTIONS.  Employer
     contributions made pursuant to this Section may be made at any time within
     the period for making Employer contributions specified in Subsection 4.2.2
     for such Plan 

                                      -34-
<PAGE>
 
     Year. This contribution may be made in money or in property acceptable to
     the Trustee.

             4.3.3 - ALLOCATION AND ACCRUAL RULES.  Any contribution to be made
     by the Employer to the Trustee pursuant to this Section for a Plan Year for
     purposes of enabling the Plan to meet the actual deferral percentage test
     or the actual contribution test shall be allocated among the Employer
     Contribution Accounts of Non-highly Compensated Employees who have
     completed 1,000 Hours of Service during the Plan Year and are employed on
     the last day of the Plan Year, in the proportion that the Basic Earnings
     paid by the Employer for such Plan Year for each such employee bears to the
     Basic Earnings paid by the Employer for such Plan Year for all such
     individuals.  Contributions made pursuant to this Section are not eligible
     for Matching Contributions made pursuant to Section 4.2.

      SECTION 4.4 - EMPLOYER-DIRECTED REDUCTION OF CONTRIBUTIONS.

             4.4.1 - GENERAL.  The Plan must meet the nondiscrimination tests
     set forth in Code Sections 401(k)(3) and 401(m)(2).  In the event the
     Administrator determines there is a reasonable probability that either of
     these nondiscrimination tests will not be satisfied for a Plan Year, the
     Administrator shall have the right to disallow or reduce (to zero if
     necessary) contributions on behalf of persons who are Highly Compensated
     Employees at the date the Plan is tested for discrimination. Any such
     reduction shall be achieved by distributing Excess Contributions or Excess
     Aggregate Contributions to Highly Compensated Employees on the basis of the
     respective portions of the excess amounts attributable to each Highly
     Compensated Employee.  Determination of the amount of Excess Aggregate
     Contributions shall be made after first determining the amount of Excess
     Contributions.

            Contributions will be reduced only to the extent necessary, in the
     judgment of the Administrator, to comply with the nondiscrimination tests.
     In accordance with the method described above, the Administrator shall
     first disallow future contributions on behalf of a Participant, and then
     reduce Excess Contributions or Excess Aggregate Contributions, as the case
     may be, which have been paid to the Participant's Account.  A distribution
     of Excess Contributions or Excess Aggregate Contributions must be made
     after the Plan Year in which the excess amounts were contributed.

            The amount designated by a Highly Compensated Employee to be paid to
     his Pay Conversion Account (and any other amount treated as an Elective
     Deferral pursuant to Subsection 4.4.2) but which is subject to the
     reduction referred to in the preceding sentences (plus any income and minus
     any loss allocable thereto) shall be designated as an Excess Contribution
     and paid by the Trustee or the Employer, as the case may be, to the
     Employee as soon as practicable.  Any such distribution shall be 

                                      -35-
<PAGE>
 
     reduced by the amount of any Excess Deferrals previously distributed from
     the Plan to the Participant for the Participant's taxable year ending with
     or within the Plan Year in which the Excess Contribution arose.

            The amount of any Matching Contribution (and any amount treated as a
     Matching Contribution pursuant to Subsection 4.4.3) on behalf of a Highly
     Compensated Employee but which is subject to the reduction referred to in
     the preceding sentences (plus any income and minus any loss allocable
     thereto) shall be designated as an Excess Aggregate Contribution and either
     paid by the Trustee or the Employer, as the case may be, to the Employee as
     soon as practicable, if the amount is vested, or the amount shall be
     forfeited and used to offset contributions as described in Subsection
     4.2.2.

            Contributions shall be reduced first for Highly Compensated
     Employees with the highest ratio until the maximum allowed percentage is
     reached, or until the next highest ratio of a Highly Compensated Employee
     is reached, whichever is sooner.  This leveling process shall be repeated
     until the maximum allowed percentage is reached.

            Income or loss allocable to an Excess Contribution for the Plan Year
     shall be determined by multiplying the income or loss for the Plan Year
     allocable to the Participant's Pay Conversion Account by a fraction, where
     the numerator is the Excess Contributions for the Plan Year, and the
     denominator is the account balance attributable to the Participant's Pay
     Conversion Account as of the end of the Plan Year minus the income or plus
     the loss allocable to such account balance for the Plan Year.  Income or
     loss for the period from the end of the Plan Year to the date of
     distribution shall not be allocated to the Excess Contributions when
     calculating the amount of the corrective distribution.  For the Plan Year
     beginning in 1987, any reasonable method may be used provided it is
     consistently applied.

            Income or loss allocable to an Excess Aggregate Contribution for the
     Plan Year shall be determined by multiplying the income or loss for the
     Plan Year allocable to the Participant's Voluntary Contribution and
     Employer Contribution Accounts by a fraction, where the numerator is the
     Excess Aggregate Contributions for the Plan Year, and the denominator is
     the account balance attributable to the Participant's Voluntary
     Contribution and Employer Contribution Accounts as of the end of the Plan
     Year minus the income or plus the loss allocable to such account balance
     for the Plan Year.  Income or loss for the period from the end of the Plan
     Year to the date of distribution shall not be allocated to the Excess
     Aggregate Contributions when calculating the amount of the corrective
     distribution.  For the Plan Year beginning in 1987, any reasonable method
     may be used provided it is consistently applied.

                                      -36-
<PAGE>
 
            If any plan of the Employer includes a cash or deferred arrangement
     under Code Section 401 (k) and provides for recharacterization of salary
     reduction contributions as employee contributions in order to satisfy the
     actual deferral percentage test, such recharacterized amounts shall be
     subject to the average contribution percentage test set forth in Subsection
     4.4.3 Determination of the amount of Excess Aggregate Contributions
     resulting from application of the foregoing test may be made only after
     determining the Excess Contributions to be recharacterized as employee
     contributions for the plan year of the 401 (k) plan that ends with or
     within the Plan Year of this Plan.

            The Employer will use its best efforts to distribute or reduce
     Excess Contributions and Excess Aggregate Contributions no later than 2 1/2
     months after the end of the Plan Year of the deferral or contribution, and
     in no event shall the distribution or reduction occur later than 12 months
     after the end of the Plan Year of the deferral or contribution.
     Distributions pursuant to this Section may be made without the consent of
     the Participant or the Participant's spouse. The Employer will also use its
     best efforts to determine and contribute to this Plan the maximum amount
     permitted under the rules of Code Sections 401(k) and 401(m); however, no
     liability shall result from the Employees' loss of any deferral of taxation
     for federal or state income purposes nor for interest on any amounts
     subject to pay reduction elections.

            The Administrator may apply the mathematical nondiscrimination tests
     and determine the extent of the reduction as of any dates during the Plan
     Year, based on the then available facts and any reasonable projections.

            If the Administrator has previously determined that a reduction of
     contributions for the Plan Year is necessary, a Highly Compensated Employee
     who becomes eligible to participate as of an Entry Date other than the
     first day of the Plan Year may not designate or contribute an Elective
     Deferral level (on an annualized basis) greater than the projected average
     percentage for Highly Compensated Employees as determined by the Employer
     at that time, after giving effect to the mandated reduction.
     Notwithstanding anything in this Section 4.4 to the contrary, the Employer
     may in its discretion meet the nondiscrimination tests of Code Sections
     401(k)(3) and 401(m)(2) by restructuring the Plan into component plans to
     the extent permitted under Treasury Regulation (S) 1.401(a)(4)-9(c) or
     other regulations issued by the Secretary of the Treasury.

             4.4.2 - ACTUAL DEFERRAL PERCENTAGE TEST.  The mathematical
     nondiscrimination tests of Code Section 401(k) are satisfied for a Plan
     Year when the actual deferral percentage for eligible Highly Compensated
     Employees for such year bears a relationship to the actual deferral
     percentage for all eligible Non-highly Compensated Employees for such year
     which is either (a) not more than a ratio of 1.25 to 1, or (b) not more
     than a ratio of 2 to 1, provided that the actual deferral 

                                      -37-
<PAGE>
 
     percentage for eligible Highly Compensated Employees does not exceed that
     of the eligible Non-highly Compensated Employees by more than two
     percentage points. The "actual deferral percentage" for each group is
     determined by averaging the ratios (calculated separately for each
     Participant in the group) of (i) the amount of Elective Deferrals and fail-
     safe contributions under Section 4.3 actually paid over to the Plan on
     behalf of each Employee for the Plan Year, unreduced by any Excess Deferral
     Amount that has not been returned to the Employee before the end of the
     taxable year in which the deferrals were made, to (ii) the Employee's
     414(s) Compensation for such Plan Year. Deferral ratios and the actual
     deferral percentage shall be rounded to the nearest one-hundredth of one
     percent.

            For the purpose of determining the ratio described above for a
     Highly Compensated Employee the following rules shall apply: (a) if such
     Highly Compensated Employee is a 5-percent owner (as defined in Code
     Section 414(q)(5)) or in the group consisting of the ten Highly Compensated
     Employees paid the greatest 415 Compensation for the Plan Year, the
     deferrals, contributions and 414(s) Compensation of such Highly Compensated
     Employee shall include deferrals, contributions and 414(s) Compensation of
     Family Members to the extent provided in regulations, and such Family
     Members shall be disregarded in determining the average deferral percentage
     for the group of Non-highly Compensated Employees; and (b) the deferrals
     shall include any amounts deferred on behalf of the Highly Compensated
     Employee under any other qualified cash or deferred arrangement maintained
     by the Employer.

            If the ratio of a Highly Compensated Employee has been determined by
     aggregating the contributions and compensation of Family Members, then any
     reduction of contributions required to pass the Actual Deferral Percentage
     test will be allocated among the highly Compensated Employee and the Family
     Members. The excess aggregate contributions determined by applying the
     leveling method in Subsection 4.4.1 are allocated among the Highly
     Compensated Employee and the Family Members in proportion to the Elective
     Deferrals (and contributions treated as Elective Deferrals) of each
     individual that are combined to determine the ratio.

            At the Administrators election, all or part of any Qualified Non-
     elective Contributions and Qualified Matching Contributions made under this
     or any other qualified plan maintained by an Affiliate with respect to
     those Employees who are eligible to participate in the Plan may be treated
     as Elective Deferrals for purposes of the actual deferral percentage test
     provided the requirements of Treas. Reg. (S) 1.401(k)-1(b)(5) are
     satisfied.

             4.4.3 - ACTUAL CONTRIBUTION PERCENTAGE TEST.  The mathematical
     nondiscrimination tests of Code Section 401 (m) are satisfied for a Plan
     Year when the actual contribution percentage for eligible Highly
     Compensated Employees for such year bears a relationship to the actual
     contribution percentage for all eligible Non-highly Compensated Employees
     for 

                                      -38-
<PAGE>
 
     such year which is either (a) not more than a ratio of 1.25 to 1, or (b)
     not more than a ratio of 2 to 1, provided that the average contribution
     percentage for eligible Highly Compensated Employees does not exceed that
     of the eligible Non-highly Compensated Employees by more than two
     percentage points. The "actual contribution percentage" for each group is
     determined by averaging the ratios (calculated separately for each
     Participant in the group) of (i) Matching Contributions paid over to the
     Plan on behalf of the Employee for the Plan Year, to (ii) the Employee's
     414(s) Compensation for such Plan Year. Contribution ratios and the average
     contribution percentage shall be rounded to the nearest one-hundredth of
     one percent.

            For the purpose of determining the ratio described above for a
     Highly Compensated Employee, the following rules shall apply: (a) if such
     Highly Compensated Employee is a 5-percent owner (as defined in Code
     Section 414(q)(5)) or in the group consisting of the ten Highly Compensated
     Employees paid the greatest 415 Compensation for the Plan Year, the
     deferrals, contributions and 414(s) Compensation of such Highly Compensated
     Employee shall include deferrals, contributions and 414(s) Compensation of
     Family Members to the extent provided in regulations, and such Family
     Members shall be disregarded in determining the average contribution
     percentage for the group of Non-highly Compensated Employees; and (b) the
     contributions of such Highly Compensated Employee shall include matching
     contributions (as defined in Code Section 401(m)(4)(A)) and voluntary
     employee after-tax contributions made on his behalf under any other
     qualified plan maintained by the Employer.

            If the ratio of a Highly Compensated Employee has been determined by
     aggregating the contributions and compensation of Family Members, then any
     reduction of contributions required to pass the Actual Contribution
     Percentage test will be allocated among the Highly Compensated Employee and
     the Family Members.  The excess aggregate contributions determined by
     applying the leveling method in Subsection 4.4.1 are allocated among the
     Highly Compensated Employee and the Family Members in proportion to the
     employee contributions and Matching Contributions of each individual that
     are combined to determine the ratio.

            At the Administrator's election, all or part of Elective Deferrals
     under the Plan and all or part of any Qualified Non-elective Contributions
     and Elective Contributions made under any other qualified plan maintained
     by an Affiliate with respect to those Employees who are eligible to
     participate in the Plan may be treated as  Matching Contributions for
     purposes of the actual contribution percentage test, provided the
     requirements of Treas.  Reg. (S) 1.401(m)-1(b)(5) are satisfied.

                                      -39-
<PAGE>
 
             4.4.4 - AGGREGATION OF PLANS.  If the Employer maintains two or
     more plans that are treated as a single plan for purposes of Code Sections
     401(a)(4) or 410(b) (other than Code Section 410(b)(2)(A)(ii) as in effect
     for Plan Years which begin after December 31, 1988):

                    (a) All cash or deferred arrangements that are included in
             such plans are treated as a single arrangement for purposes of the
             actual deferral percentage test and Code Sections 401(a)(4), 401(k)
             and 410(b); and

                    (b) All voluntary employee after-tax contributions and
             matching contributions (as defined in Code Section 401(m)(4)(A))
             made under such plans are treated as made under the same plan for
             purposes of Code Sections 401 (a)(4), 401(m) and 410(b).

            The Administrator may elect to aggregate two or more cash or
     deferred arrangements as a single arrangement for purposes of determining
     whether or not such arrangements satisfy Code Sections 401(a)(4), 401(k),
     and 410(b).  In such case, the cash or deferral arrangements included in
     such plans and the plans including such arrangements shall be treated as
     one arrangement and as one plan for purposes of the actual deferral
     percentage test and Code Sections 401(a)(4), 401(k) and 410(b).  The
     Administrator may elect to aggregate two or more plans to which voluntary
     employee after-tax contributions, matching contributions (as defined in
     Code Section 401(m)(4)(A)) or both, are made.  In such case, the aggregated
     plans must satisfy the actual contribution percentage test and Code Section
     401(m) with respect to the amount of the employee after-tax contributions
     and matching contributions and must satisfy Code Sections 401(a)(4) and
     410(b) as if such aggregated plans were a single plan.

            Notwithstanding anything in this Subsection 4.4.4 to the contrary,
     contributions and allocations under an Employee Stock Ownership Plan, as
     described in Code Section 4975(e)(7), shall not be combined with the Plan,
     and for Plan Years beginning after December 31, 1989, contributions and
     allocations under another plan may not be aggregated with this Plan unless
     such other plan has the same plan year as this Plan.

            4.4.5 - ADDITIONAL LIMITATION.  Notwithstanding anything in this
     Section 4.4 to the contrary, the actual deferral percentage test and the
     actual contribution percentage test shall be satisfied for any Plan Year
     only if the sum of the actual deferral percentage and the actual
     contribution percentage of eligible Highly Compensated Employees for such
     Plan Year does not exceed the aggregate limit for purposes of the
     calculations required by this Subsection: (a) the actual deferral

                                      -40-
<PAGE>
 
     percentage of eligible Highly Compensated Employees shall be determined
     after use of amounts treated as Elective Deferrals pursuant to Subsection
     4.4.2 to satisfy the actual deferral percentage test; (b) the actual
     contribution percentage of eligible Highly Compensated Employees shall be
     determined after use of the amounts treated as Matching Contributions
     pursuant to Subsection 4.4.3 to satisfy the actual contribution percentage
     test, provided that the use of Elective Deferrals to meet such requirements
     is limited to the amount necessary to meet the requirements of clause (b)
     of the first sentence of Subsection 4.4.3; and (c) the actual deferral
     percentage and actual contribution percentage of eligible Highly
     Compensated Employees shall be determined after any corrective
     distributions of Excess Deferrals, Excess Contributions or Excess Aggregate
     Contributions pursuant to Subsections 4.1.2(4), 4.4.1, 4.4.2 and 4.4.3. If
     the sum of the actual deferral percentage and the actual contribution
     percentage of eligible Highly Compensated Employees, as calculated pursuant
     to this Subsection, exceeds the aggregate limit, the actual deferral
     percentage of eligible Highly Compensated Employees shall be reduced to the
     extent necessary to satisfy the aggregate limit.  For purposes of this
     Subsection, "aggregate limit" means the greater of (A) the sum of:

                    (a) 125% of the greater of (i) the actual deferral
             percentage of eligible Non-highly Compensated Employees for the
             Plan Year, or (ii) the actual contribution percentage of eligible
             Non-highly Compensated Employees for the Plan Year, and

                    (b) two percentage points plus the lesser of (i) or (ii)
             above.  In no event, however, shall this amount exceed 200% of the
             lesser of (i) or (ii) above,

             or (B) the sum of:

                    (a)  125% of the lesser of (i) the actual deferral
             percentage of eligible Non-highly Compensated Employees for the
             Plan Year, or (ii) the actual contribution percentage of eligible
             Non-highly Compensated Employees for the Plan Year, and

                    (b) two percentage points plus the greater of (i) or (ii)
             above.  In no event, however, shall this amount exceed 200% of the
             greater of (i) or (ii) above.

                                      -41-
<PAGE>
 
     SECTION 4.5 - ROLLOVER CONTRIBUTIONS AND TRANSFERS FROM QUALIFIED PLANS.

             4.5.1 - TRUSTEE AUTHORIZED TO ACCEPT ROLLOVER CONTRIBUTIONS (PRE-
     1993). This Subsection 4.5.1 applies to rollovers of amounts distributed
     prior to January 1, 1993.  Sections of the Code are designated in this
     Subsection by their section numbers as codified on December 31, 1992. With
     the written consent of the Administrator, the Trustee shall accept rollover
     contributions from any individual who has become an Employee (whether or
     not eligible to participate in the Plan) if either of the following
     conditions have been satisfied:

                  (a) The amount contributed by the Employee consists only of
        any portion of (i) money and (ii) the cash proceeds from the sale of
        properties the Employee received in a distribution from an employees'
        trust described in Code Section 401(a) and exempt under Code Section
        501(a) (other than a trust forming part of a plan under which the
        Employee was allocated contributions when the Employee was self-employed
        or a Key Employee in a Top Heavy Plan), the distribution either
        constituted a lump sum distribution as defined in Code Section
        401(e)(4)(A) (without reference to Code Sections 402(e)(4)(B), and (H)),
        or the distribution is paid to the Employee within one taxable year of
        the Employee on account of termination of the Plan (or in the case of a
        profit sharing or stock bonus plan, a complete discontinuance of
        contributions to the plan) within the meaning of Code Sections 402(a)(5)
        or 402(a)(6), and the transfer to the Trustee occurs on or before the
        60th day following receipt by the Employee of the distributed assets;
        provided, that the money so transferred to the Trustee may not exceed
        (1) the fair market value of the Employee's distribution from the trust
        plus the excess of the fair market value of any property sold over its
        fair market value on the date of distribution less (2) the amounts
        considered as contributed by the Employee (but reduced by amounts
        previously distributed to the Employee which were not includable in the
        Employee's gross income).

                  (b) The amount contributed constitutes a qualifying rollover
        contribution under Code Section 408(d). Generally, this requires that
        the contribution consist only of money from the Employee's individual
        retirement account described in Code Section 408(a), or the entire value
        of an individual retirement annuity described in Code Section 408(b),
        and no amount in the account and no part of the value of the annuity is
        attributable to any source other than a qualified total distribution as
        defined in Code Section 402(a)(5)(E)(i) from an employees' trust
        described in Code Section 

                                      -42-
<PAGE>
 
        401(a), which is exempt from taxation under Code Section 501(a) (other
        than a trust forming part of a plan under which the Employee was
        allocated contributions when the Employee was self-employed or a Key
        Employee in a Top Heavy Plan), or an annuity plan described in Code
        Section 403(a) (but, to the extent applicable, excluding a distribution
        made within five years before the rollover to this Plan if the Employee
        was treated as a five percent owner with respect to such distribution
        under Code Section 402(a)(5)(F)(ii)), and any earnings on the sum, and
        further that the transfer to the Trustee occurs on or before the 60th
        day following receipt by the Employee of the amount from the account or
        the annuity. Also, no amount distributed under a Qualified Domestic
        Relations Order to a spouse or former spouse as Alternate Payee or
        treated as a rollover contribution under Code Section 403(a)(4)(B) may
        be rolled into this Plan.

            Accumulated deductible employee contributions within the meaning of
     Code Section 72(o)(5) may not be rolled over to this Plan.

            The Trustee and the Administrator may require the Employee to
     provide evidence satisfactory to them that the foregoing conditions have
     been satisfied.  In the event that a contribution (or any portion)
     purported to be a rollover contribution does not qualify as a rollover
     contribution, the contribution (or the nonqualifying portion) will be
     returned to the Employee.  Rollover contributions shall be allocated to the
     Participant's Rollover Account.  Separate Rollover Accounts may be
     established or consolidated at the Administrator's discretion, for separate
     rollover.

             4.5.2 - TRANSFERS FROM TRUSTEED STOCK PLAN.  As of any date
     subsequent to July 1, 1983, if an individual who had assets in Accounts
     under the Trusteed Stock Plan became covered under the former Diversified
     Energies, Inc.  Employees Savings Plan (the "Savings Plan"), all assets in
     those Accounts attributable to the period of participation in the Trusteed
     Stock Plan prior to the change of status would thereafter be held,
     administered and distributed pursuant to the terms of the Savings Plan on
     and after the later of (a) the first Accounting Date on or after the
     Participant became covered under the Savings Plan if then covered, or (b)
     if the Participant was covered under a collective bargaining agreement to
     which a Participating Affiliate was a party and which provided for
     participation of Employees in the Trusteed Stock Plan, the first Accounting
     Date on which the Participant was covered under the Savings Plan on or
     after the date the individual ceased to have retreat rights or seniority
     rights pursuant to that agreement.  Clause (b) of the preceding sentence
     shall not apply if the collective bargaining agreement expressly provided
     for coverage under the Savings Plan.  Unless and until the assets became
     subject to the terms of the Savings 

                                      -43-
<PAGE>
 
     Plan pursuant to this Subsection, the assets remained subject to the
     Trusteed Stock Plan.

            Assets that became subject to the provisions of the Savings Plan
     shall not at any time thereafter be subject to the Trusteed Stock Plan,
     provided, however, that any Section 411 (d)(6) protected benefits that
     existed under the terms of the Trusteed Stock Plan on January 1, 1989,
     shall not be reduced or eliminated as a result of a "transfer" to the
     Savings Plan.

            Prior to the date the assets of the Trusteed Stock Plan became
     subject to the provisions of the Savings Plan, if the individual was
     already covered under the Savings Plan, the individual could not make any
     total in-service withdrawal under the Trusteed Stock Plan unless and until
     that person suspended or terminated all salary reduction contributions to
     the Savings Plan.

             4.5.3 - TRANSFERS FROM CENGAS PLAN.  The Plan is authorized to
     accept the transfer of funds from the Minnegasco, Inc.  Retirement Plan for
     Employees of the Former Cengas Division (the "Cengas Plan") which represent
     employee contributions and earnings under the Cengas Plan for Participants,
     who have elected to have such funds transferred in accordance with the
     procedures established by the Administrator.  Such transferred funds shall
     be separately identified under the Plan for each affected Employee in an
     Account entitled "Cengas Transfer Account." Except for rules relating to
     spouses, the Cengas Transfer Accounts shall be administered and treated
     under the Plan in the same manner as Voluntary Contribution Accounts (for
     contributions for periods on or after July 1, 1983) without regard,
     however, to any limitations on the amount of such contributions.  Funds
     transferred from the Cengas Plan are not subject to matching contributions
     by Participating Affiliates.

             4.5.4 - TRANSFERS FROM ENSCAN PLAN.  The Plan is authorized to
     accept the transfer of funds from the EnScan, Inc.  Profit Sharing Plan
     (the "EnScan Plan") which represent vested account balances of Participants
     at the time the EnScan Plan was terminated.  Such transferred funds shall
     be separately identified under the Plan for each affected Employee in an
     Account entitled "EnScan Transfer Account." Funds transferred from the
     EnScan Plan are not subject to matching contributions by Participating
     Affiliates.

             4.5.5 - TRANSFERS FROM MIDWEST GAS PLANS.  During the period
     described in the agreement dated December 23, 1992 between Arkla, Inc. and
     Midwest Power Systems Inc. (as amended), the Plan is authorized to accept
     the transfer of funds from the Iowa Public Service Savings Investment Plan
     For Salaried Employees and the Iowa Public Service Savings Investment Plan
     For Bargaining Unit Employees (the "Midwest Gas Plans").  The funds shall
     represent vested and nonvested account balances of Employees who have
     elected to have such funds transferred in accordance with procedures
     established by the Administrator.  The Plan will not 

                                      -44-
<PAGE>
 
     accept transfers of account balances that include an outstanding
     participant loan until such loan has been repaid in full. Amounts
     transferred from an Employee's Pre-Tax Account, After-Tax Account and
     Rollover Account under the Midwest Gas Plans shall be credited to the
     Employee's Pay Conversion Account, Voluntary Contribution Account and
     Rollover Account, respectively, under this Plan.

            Transferred funds from, Matching Accounts under the Midwest Gas Plan
     shall be separately identified under the Plan for each affected Employee in
     an Account entitled "Midwest Employer Matching Account."  Funds transferred
     from ESOP Funds under the Midwest Gas Plans shall be referred to as the
     "Midwest Employer ESOP Account." Transfers to Midwest Employer Matching
     Accounts and Midwest Employer ESOP Accounts shall not be subject to any
     limitations on the making of contributions and are not eligible for
     Matching Contributions from Participating Affiliates.

            4.5.6 - OTHER TRANSFERS.  This paragraph shall apply prior to May 1,
     1994, to transfers (other than direct rollovers) that are not expressly
     permitted in Subsections 4.5.2, 4.5.3, 4.5.4 and 4.5.5. Transfers shall not
     be permitted under this Subsection 4.5.6 for periods after April 30, 1994.

            The Administrator may establish rules which permit the direct
     transfer to the Trustee of assets held in any employees' trust described in
     Code Section 401(a) and exempt under Code Section 501(a) with respect to
     any Employee or category of Employees of a Participating Affiliate.  The
     rules may be in addition to or interpretive of the following rules which
     apply to transfers.  Generally, all transfers shall only be made in the
     form of money and shall be allocated to a Rollover Account for the
     individual in question.  However, money attributable to employee non-
     deductible contributions shall be allocated to the respective Voluntary
     Contribution Accounts.  Transfers of money which the Administrator believes
     will be subject to restrictions applicable to plans described in Code
     Section 401(k) shall be allocated to Pay Conversion Accounts.  Money may
     not be transferred to the Plan pursuant to this Subsection 4.5.6 without
     the written consent of the Employee's spouse, if any, in a form approved by
     the Administrator.  If the Administrator determines that the spousal
     survivor annuity rules may apply to a proposed transfer, the transfer may
     not be made; this prohibition does not apply to transfers identified in
     Subsections 4.5.2, 4.5.3, 4.5.4 and 4.5.5. No money attributable to
     qualified voluntary employee contributions described in Code attributable
     Section 219(e)(2) may be transferred to this Plan.  No transfer of money
     attributable to an Employee may be made to this Plan from a plan to which
     an Affiliate is or has been a participating employer unless all the
     Employee's money in the transferor plan is non-forfeitable under the terms
     of the transferor plan, and will be so treated under the terms of this
     Plan.

                                      -45-
<PAGE>
 
            Generally, transfers of less than $1,000 (or such other amount
     designated by the Committee) from plans in which Affiliates are not
     participating shall not be accepted.  Prior to May 1, 1994, transfers must
     be received by the 20th of a calendar month in order to be credited for
     investment purposes for the following calendar month.  No transferred funds
     shall be eligible to be invested in Stock prior to May 1, 1994.  No
     transfer shall be eligible for Matching Contributions from Participating
     Affiliates.  No transfer may be made if in the opinion of the Administrator
     such a transfer will adversely affect the exempt status of the Trust under
     Code Section 501(a).  As a condition of a transfer, the Administrator may
     require such information to be provided as it may determine to be relevant.
     If any funds so transferred do not meet the transfer rules of the Plan,
     those transfers shall be treated as voluntary after-tax employee
     contributions to the extent permitted under the Plan, or shall be returned
     to the Employee.

             4.5.7 - EFFECT ON PARTICIPATION IN PLAN.  Direct transfers or
     rollovers may generally be made without regard to whether an Employee has
     become a Participant pursuant to Article 3, but if the individual who
     requests to make a transfer or rollover is not a Participant, the transfer
     or rollover will be permitted only if the individual is (i) a Full Time
     Employee, or (ii) a Part Time Employee (other than a Relief or Temporary
     Employee) who is scheduled to work more than 1,000 hours in a 12-
     consecutive-month period.  Nothing herein shall alter the requirements to
     become a Participant under Article 3.

             4.5.8 - Acceptance of Direct Rollovers and Rollovers (Post-1992).
     The Trustee shall accept, with the express written consent of the
     Administrator or the consent of the Administrative Delegate, a rollover
     contribution or a direct rollover on behalf of any individual who has
     become an Employee (whether or not eligible to otherwise participate in the
     Plan) if :

                    (a) the amount contributed or transferred is all or part of
             an eligible rollover distribution, as defined in Subsection 8.14.2,
             made after December 31, 1992, and

                    (b) if the rollover is not a direct rollover (as defined in
             Subsection 8.14.2), the contribution (i) occurs on or before the
             60th day following receipt of the distribution and (ii) consists
             only of money and the same properties (or the proceeds of the sale
             thereof) such Employee received in the distribution.

            Property in the form of a note representing a participant loan may
     not be rolled over into this Plan.

                                      -46-
<PAGE>
 
            In addition, the Trustee may accept after December 31, 1992, with
     the express written consent of the Administrator or the consent of the
     Administrative Delegate, a rollover contribution of an amount that
     constitutes a qualifying rollover contribution under Code Section 408(d).
     Generally, this requires that the contribution consist of an amount from an
     individual retirement account described in Code Section 408(a), or an
     amount from an individual retirement annuity described in Code Section
     408(b) (and no other amounts), and no amount in said account and no part of
     the value of said annuity is attributable to any source other than a
     rollover contribution (as defined in Code Section 402) from an employee's
     trust described in Code Section 401(a) which is exempt from tax under Code
     Section 501(a) or from an annuity plan described in Code Section 403(a)
     (and any earnings on such rollover contribution), and the entire amount
     received (including property other money) is paid into the Plan not later
     than the 60th day after the day on which the individual receives the
     payment or the distribution.

            Accumulated deductible employee contributions within the meaning of
     Code Section 72(o)(5) may not be rolled over to this Plan.

            The Trustee and the Administrator may require the Employee to
     provide evidence satisfactory to them that the foregoing conditions have
     been satisfied.  In the event that a contribution (or any portion)
     purported to be a rollover contribution does not qualify as a rollover
     contribution, the contribution (or the nonqualifying portion) will be
     returned to the Employee.  Rollover contributions shall be allocated to the
     Participant's Rollover Account.

      SECTION 4.6 - MAKE-UP CONTRIBUTIONS FOR OMITTED PARTICIPANTS. If, after
the Employer's contribution pursuant to Section 4.2 or 4.3 has been made and
allocated, it should appear that, through oversight or a mistake of fact or law,
a Participant (or an Employee who should have been considered a Participant) who
should have been entitled to share in such contribution received no allocation
or received an allocation which was less than he should have received, the
Employer may, at its election and in lieu of reallocating the prior
contributions, make a special make-up contribution for the Account of such
Participant in an amount adequate to provide for him the same percentage of his
Basic Earnings as if the oversight or mistake had not been made.  Contributions
pursuant to this Section 4.6 shall be allocated to a Participant's Account in
accordance with Section 4.2 or 4.3 as designated by the Employer.

     SECTION 4.7 - VOLUNTARY AFTER-TAX CONTRIBUTIONS.

             4.7.1 - AMOUNT.  The Plan shall not accept voluntary after-tax
     contributions effective May 1, 1994.  The following provisions of this
     Section 4.7 shall apply to voluntary after-tax contributions made prior to
     May 1, 1994.  For Plan Years prior to January 1, 1989, any Participant who
     has entered into a pay reduction agreement that will result in pre-tax
     contributions to the Plan of at least 6% of Basic 

                                      -47-
<PAGE>
 
     Earnings or the maximum pre-tax contribution permitted by law, whichever is
     less, may elect to make after-tax contributions to the Trust during any
     Plan Year in which the Participant is eligible to make contributions
     pursuant to Section 4.1. From December 31, 1988, to April 30, 1994, any
     Participant can elect to make after-tax contributions. The contributions
     shall be made in accordance with uniform rules to be established by the
     Administrator. The "maximum pre-tax contribution permitted by law" is the
     largest integral percentage contribution that would neither exceed the
     statutory limit on elective deferrals nor cause the Participant's Annual
     Additions for the Plan Year to exceed the limits of Code Section 415(c).
     Voluntary contributions will not be matched by Employer contributions, and
     will not have any effect on a Participant's eligibility to share in
     contributions of Participating Affiliates under Sections 4.2 or 4.3.

            Subject to uniform rules which may be established by the
     Administrator, voluntary contributions made under Section 4.7 by a
     Participant in any Plan Year may be in an amount which, together with all
     such voluntary after-tax non-matching contributions made by the Participant
     to this Plan and any other qualified plan maintained by an Affiliate (and
     not previously withdrawn), will cause the Participant's total voluntary
     contributions to equal but not exceed 10% of the Participant's Basic
     Earnings for the Plan Year provided, however, that the amount which may be
     contributed in a Plan Year shall, in any event, be limited as provided in
     Article 5. In the event that it is determined that a voluntary contribution
     exceeds these limitations, the excess shall be paid to the Participant as
     soon as administratively feasible.

            4.7.2 - PAYMENT.  Voluntary contributions may be made by payroll
     deduction or by any other means the Administrator shall prescribe by
     uniform rules. Not less frequently than monthly, Participating Affiliates
     shall remit to the Trustee the contributions so collected.

             4.7.3 - ALLOCATION TO ACCOUNT.  The amount contributed by each
     Participant shall be allocated to a Voluntary Contribution Account for the
     Participant maintained under this Plan as of the date determined by the
     Administrator pursuant to uniform rules.

             4.7.4 - TERMINATION OF CONTRIBUTIONS.  Upon notice to the Employer
     on a form provided by the Administrator and signed by the Participant, a
     Participant may terminate voluntary contributions effective as of the first
     day of a month if the Employer receives the notice by the 20th day of the
     preceding month.  For Plan Years beginning prior to January 1, 1989, a
     Participant shall automatically be deemed to terminate voluntary
     contributions as of the date the Participant's pay reduction contributions
     terminate or are changed to a level such that further contributions are not
     permitted under Subsection 4.7. 1.  Any Participant who has terminated
     voluntary 

                                      -48-
<PAGE>
 
     contributions may resume voluntary contributions as of any subsequent
     January 1, provided the Participant is otherwise eligible to do so. A
     termination of pay reduction contributions that results from a personal
     leave pursuant to the Special Personal Leave and Reduced Work Week Program
     shall not cause a termination of the Participant's election to make
     voluntary contributions. Voluntary contributions may resume as of the first
     day of the month on or immediately following the date the Participant
     returns to active employment from the personal leave, provided that the
     conditions of Subsection 4.7.1 are still satisfied as of that date.

            All voluntary contribution elections in effect on April 30, 1994,
     shall automatically terminate on May 1, 1994.

 ARTICLE 5. RESTRICTIONS ON ANNUAL ADDITIONS

     SECTION 5.1 - GENERAL RESTRICTIONS.  Annual Additions under the Plan shall
be subject to the rules of this Article 5.  The provisions of this Article are
subject to any additional limitations in other sections of the Plan.  The
restrictions contained in this Article apply to qualified plans and only such
plans maintained by Affiliates, whether or not such plans have previously been
terminated.

      SECTION 5.2 - MAXIMUM PERMISSIBLE AMOUNT. Annual Additions that would be
allocated to accounts of a person under this Plan and under any other plan as of
an Accounting Date within a Limitation Year in excess of the remaining Maximum
Permissible Amount (based on 415 Compensation up to such Accounting Date) shall
be reduced to the extent of any such excess.  The remaining Maximum Permissible
Amount is determined by subtracting from the Maximum Permissible Amount for the
Limitation Year the allocations of Annual Additions to such person's accounts
under defined contribution plans or welfare benefit plans, as defined in Code
Section 419(e), as of Accounting Dates preceding the current Accounting Date
which are within the Limitation Year.  Annual Additions attributable to a
welfare benefit fund will be deemed to have been allocated prior to any defined
contribution plan allocations regardless of the actual Accounting Date.  Prior
to determining the Participant's actual 415 Compensation for the Limitation
Year, the Employer may determine the Maximum Permissible Amount for a
Participant on the basis of a reasonable estimation of the Participant's 415
Compensation for the Limitation Year, uniformly determined for all Participants
similarly situated.  As soon as is administratively feasible after the end of
the Limitation Year, the Maximum Permissible Amount for the Limitation Year will
be determined on the basis of the Participant's actual 415 Compensation for the
Limitation Year.

      SECTION 5.3 - DIFFERING ACCOUNTING DATES.  If the Accounting Date under
this Plan does not coincide with an Accounting Date under any other defined
contribution plan or welfare benefit fund of an Affiliate on which allocations
are made, the reduction of the Annual Additions mandated by Section 5.2 shall be
accomplished by reducing the allocation of Annual Additions to the accounts of
said person under this Plan.  Any such reduction shall be effected by reducing
the person's contributions made as of a date within the Limitation Year in the
following order: Participant voluntary after-tax contributions, unmatched
Elective Deferrals, matched Elective Deferrals 

                                      -49-
<PAGE>
 
(together with the corresponding Matching Contributions), and, finally,
forfeitures that cannot be used to offset Employer contributions. If
contributions or forfeitures for more than one Affiliate are present, any
reduction of such amount shall be made proportionately.

      SECTION 5.4 - COINCIDENTAL ACCOUNTING DATES.  If an Accounting Date of the
Plan coincides with an Accounting Date of any other defined contribution plan or
welfare benefit fund of an Affiliate in which allocations are made, the
reduction of Annual Additions mandated by Section 5.2 shall be accomplished by
reducing the allocation of Annual Additions to the accounts of said person under
said plans and funds as follows:

            (a) If all of said other plans and funds contain a provision
     substantially similar to this Article 5, then the reduction shall first be
     accomplished by reducing a person's after-tax contributions made at any
     time within the Limitation Year, then from Affiliate contributions which
     constitute pay reduction contributions, then from Affiliate contributions
     which are not pay reduction contributions and from forfeitures, and finally
     from any contributions to a welfare benefit fund (as defined in Code
     Section 419(e)) of an Affiliate.  If contributions or forfeitures for more
     than one Affiliate are present, any reduction of such amounts shall be made
     proportionately.  If there are contributions of the same priority category
     present in more than one plan or fund, and less than all of the plans or
     funds, contributions in the highest priority category shall be reduced to
     zero before any reduction shall be made in a lower priority category.  The
     amount of the reduction in each priority category as of said Accounting
     Date shall be an amount equal to the product of the remaining Maximum
     Permissible Amount described in Section 5.2 and a fraction, the numerator
     of which is the amount to be allocated under this Plan in that priority
     category as of the allocation date without regard to this Article 5, and
     the denominator of which is the amount that would otherwise be allocated as
     of said Accounting Date in that priority category under all defined
     contribution plans and welfare benefit funds, without regard to this
     Article 5. This paragraph shall be applied to all categories until the
     required reduction has been effected.

            (b) If one or more of the other defined contribution plans having an
     Accounting Date coinciding with the Accounting Date under this Plan do not
     have a provision similar to this Article 5, the provisions of Section 5.2
     shall be applied to this Plan after giving effect to allocation of Annual
     Additions of such other plans.

     SECTION 5.5 - EFFECT OF REDUCTION. If, as a result of the preceding
paragraphs of this Article 5, the allocation of Annual Additions under this Plan
is reduced, such reduction shall be treated as follows:

            (a) The amount of such reduction consisting of the person's
     voluntary after-tax contribution or Elective Deferral shall be paid to such
     person as soon as administratively feasible.

                                      -50-
<PAGE>
 
            (b) The amount of such reduction consisting of Employer
     contributions (other than Elective Deferrals) shall be allocated to a
     suspense account for the Employer and held therein until the next
     succeeding date on which Employer contributions could be applied under this
     Plan.  Any amounts in the suspense account shall be allocated as soon as
     practicable in accordance with Subsection 4.2.3, provided, however, that in
     no event shall any such amount be allocated to the Account of a Highly
     Compensated Employee whose contributions are reduced pursuant to Section
     4.4. In the event of termination of the Plan, the suspense account shall
     revert to the Employer which made said contributions to the extent it may
     not then be allocated to any person pursuant to the terms of the Plan
     relating to allocation of Employer contributions.

      SECTION 5.6 - LIMITING CONTRIBUTIONS TO SUSPENSE ACCOUNT. The Employer
shall not contribute any amount that would cause an allocation to the suspense
account under this Article as of the date the contribution is allocated.  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
such suspense account if the date of contribution were the date of allocation.
The suspense account shall not participate in the allocation of investment gains
or losses.

 ARTICLE 6. PERIODIC ADJUSTMENT OF ACCOUNTS AND FORFEITURES

      SECTION 6.1 - ADJUSTMENTS.

             6.1.1 - PERIODIC PROCESSING PRIOR TO MAY 1, 1994.  As of each
     Accounting Date prior to May 1, 1994, the Accounts of each Participant and
     Beneficiary shall be revalued in accordance with this Subsection 6.1.1.  As
     of each Accounting Date, the Trustee shall value the assets of the Trust,
     other than assets of the Trust attributable to Accounts which are
     separately invested, at their fair market value and determine the net
     investment gain or loss of such assets since the preceding Accounting Date.
     In determining the net investment gain or loss (i) the accrual basis of
     accounting shall be used (unrealized appreciation or depreciation shall be
     taken into account) and (ii) contributions to the Trust and payments or
     distributions from the Trust to provide benefits under the Plan for
     Participants and Beneficiaries shall not be considered as gains or losses
     of the Trust.  The net investment gain or loss so calculated shall be
     allocated, as of the Accounting Date, to the respective Accounts containing
     such assets and which are existing on said Accounting Date in proportion to
     the value of each such Account on the immediately preceding Accounting
     Date. In making such allocation, Account balances may be adjusted to
     reflect the amount and timing of pay reduction contributions, withdrawals,
     and payments and distributions from Accounts.  Such adjustments shall be
     made in accordance with uniform and nondiscriminatory rules established by
     the Employer and approved by the Trustee.

                                      -51-
<PAGE>
 
            If any Participant or Beneficiary who has an interest in the Trust
     elects or has elected to have any part of his interest invested in more
     than one separate investment fund, the value of his Account shall consist
     of the total of his proportionate interest in each separate fund.  Each
     separate fund shall be valued on an Accounting Date.  Similar rules shall
     be applicable to separate trusts under the Plan, if more than one.

            For purposes of valuation of the Trust Fund and distribution of the
     accrued vested benefit of each Participant, the term "Accounting Date"
     shall mean the date upon which an Account may be valued for purposes of
     investment direction and distribution of accrued vested benefits.  The
     Trustee shall, following the end of each Accounting Date, value all assets
     of the Trust Fund as of that day in the following manner:

     (1)     The Trustee shall first compute the fair market value of the assets
             in each investment fund designated by the Administrator for
             direction of investment by the Participants. This market value
             shall be equal to the market price of the fund on the prior
             business day applied to the balance of the fund as of the close of
             business on the current business day.

     (2)     The Trustee shall, following the computation of the fair market
             value, compute each Participant's share in the fund and assign a
             gain or loss to each Participant's Account.

     (3)     The Trustee shall then account for any requests for additions or
             withdrawals made to or from a specific designated investment fund
             by any Participant, including allocations of Employer contributions
             and forfeitures made as of the Accounting Date.

            In completing the valuation procedure described above, such
     adjustments in the amounts credited to such Accounts shall be deemed to
     have been made on the business day to which the investment activity
     relates.  No Employer contribution made by a Participating Affiliate
     pursuant to this Plan shall be taken into account until the Accounting Date
     coinciding with or next following the date such contribution was both
     actually paid to the Trustee by a Participating Affiliate and allocated
     among the accounts of Participants.  It is intended that this Section
     operate to distribute among each Account in the Trust Fund, all income of
     the Trust Fund and changes in the value of the Trust Fund's assets.

            The value of each Account, as adjusted by the foregoing provisions
     of this Subsection 6.1.1, increased by contributions allocated to such
     Account and reduced 

                                      -52-
<PAGE>
 
     by payments and distributions from such Account since the preceding
     Accounting Date, shall be the value of said Account on the Accounting Date.

             6.1.2 - DAILY PROCESSING AFTER APRIL 30, 1994.  As of each
     Accounting Date after April 30, 1994, the Accounts of each Participant and
     Beneficiary shall be revalued in accordance with this Subsection 6.1.2. The
     Committee or its Administrative Delegate shall, following the end of each
     Accounting Date, allocate net gains or losses and process additions to and
     withdrawals from Participant account in the following manner:

     (1)     The Trustee shall first compute and/or obtain from an internal or
             external pricing service the fair market value of each investment
             fund designated by the Committee for direction of investment by the
             Participants of this Plan.  Each Account invested in each of the
             investment funds shall be adjusted each Accounting Date by applying
             the closing market price of the investment fund on the current
             business day to the share/unit balance of each Account invested in
             the investment fund as of the close of business on the current
             business day.

     (2)     The Trustee shall then account for any requests for additions,
             withdrawals or loans made to or from a specific designated
             investment fund by any Participant, including allocations of
             contributions, loan repayments and forfeitures.  Contributions
             received by the Trustee shall be allocated to Participant Accounts
             as soon as administratively practicable following the date such
             contribution was received by the Trustee.  No contribution under
             this Plan shall be taken into account until the Accounting Date
             coinciding with or next following the Accounting Date such
             contribution was both actually paid to the Trustee and allocated
             among Participant Accounts.

     (3)     Notwithstanding paragraphs 1 and 2 above, in the event a pooled
             investment fund is created as a designated investment fund for the
             Plan, valuation of the pooled investment fund and allocation of
             earnings of the pooled investment shall be governed by the written
             agreement providing for the administration of the pooled investment
             fund.

     (4)     Notwithstanding paragraphs 1 and 2 above, Loan Accounts shall be
             valued at the amount of unpaid principal and accrued interest as of
             the Accounting Date.

                                      -53-
<PAGE>
 
     It is intended that this Section operate to distribute among each
     Participant Account, all income of the Trust and changes in the value of
     the assets of the Trust.

             SECTION 6.2 - ADJUSTMENT ON TERMINATION.  In the event of
     termination of employment of a Participant under circumstances requiring a
     distribution of benefits to him or to his Beneficiaries, his Account
     balance shall be valued (i) for periods prior to May 1, 1994, as of the
     Accounting Date coinciding with or next following the date on which the
     distribution application is submitted or the termination occurs, whichever
     is later, in the same manner as Accounts are to be adjusted on each
     Accounting Date, or (ii) for periods after April 30, 1994, as of the
     Accounting Date prior to the date of distribution.

             SECTION 6.3 - ADJUSTMENT ON DIRECTION.  A valuation of the Trust
     shall be made as of any other date specified by the Administrator and such
     date shall be an Accounting Date.

             SECTION 6.4 - FORFEITURES.  Any credit balance of an Employer
     Contribution Account or Midwest Employer Matching Account which has been
     forfeited (including a forfeiture under Section 8.12) shall be applied in
     accordance with Subsection 4.2.2.

ARTICLE 7.  FUNDING AND INVESTMENT OPTIONS

             SECTION 7.1 - ESTABLISHMENT OF FUNDING POLICY. The Administrator
     shall (a) establish a funding policy for the Plan consistent with the needs
     of the Plan and in accordance with applicable law and (b) communicate this
     policy to the Trustee in writing, and direct and supervise the Trustee's
     actions to see that this policy is carried out.  The Administrator may,
     however, delegate this function to an investment manager.  An investment
     manager (if appointed) shall be charged with the power to direct the
     Trustee as to the management, acquisition or disposal of any or all assets
     of the Trust (as designated in the delegation) and must be registered as an
     investment adviser under the Investment Advisers Act of 1940, be a bank as
     defined in said Act or be an insurance company qualified to manage, acquire
     or dispose of assets of the Plan under the laws of more than one state, and
     must have acknowledged in writing that the investment manager is a
     fiduciary with respect to the Plan; provided that this shall not apply to
     Accounts separately invested at the direction of the Participant or
     Beneficiary.

             7.1.1 - EMPLOYER CONTRIBUTION AND VOLUNTARY CONTRIBUTION ACCOUNTS.
     Generally, except to the extent elected otherwise as provided below, all
     assets of the Trust attributable to Employer Contribution Accounts and all
     contributions attributable to Voluntary Contribution Accounts for periods
     prior to July 1, 1983, and on or after July 1, 1983 with respect to amounts
     transferred to this Plan from the Trusteed Stock Plan, are to be invested
     in Stock.  For periods prior to May 1, 1994, contributions with respect to
     these types of Accounts in a form other than Stock shall 

                                      -54-
<PAGE>
 
     be credited to the appropriate Cash Account, and contributions in the form
     of Stock shall be credited to the appropriate Stock Account. Contributions,
     rollovers or transfers made under the provisions of this Plan attributable
     to Voluntary Contribution Accounts, Rollover Accounts, Cengas Transfer
     Accounts, EnScan Transfer Accounts, Midwest Employer Matching Accounts and
     Midwest Employer ESOP Accounts for periods on or after July 1, 1983, and
     prior to May 1, 1994, shall be invested and held in segregated accounts
     pursuant to Section 7.2 and shall not be invested in Stock.

            To the extent that the Trustee, prior to May 1, 1994, is unable to
     acquire Stock for Stock Accounts in sufficient quantities at prices
     considered reasonable by the Trustee, the Trustee is authorized to invest
     the assets in the corresponding Cash Accounts temporarily in securities
     issued or guaranteed by the United States of America, or any United States
     government agency, or in short-term commercial paper, term savings accounts
     and certificates of deposit (including those of the Trustee), mutual funds,
     common trust funds or collective trust funds, or pooled investments of the
     Trustee or related companies, or assets may be held temporarily in cash.

            Effective May 1, 1994, Participants may direct the investment of any
     portion of their Accounts in Stock through a pooled fund.  The pooled fund
     shall be governed by a separate written service agreement between the
     Administrator and the Trustee and by the terms of the pooled investment
     Trust Agreement.

            Commencing on July 1, 1983, Participants may elect that any new
     Participating Affiliate contributions to Employer Contribution Accounts
     made pursuant to this Plan may be invested in segregated funds pursuant to
     Section 7.2. Commencing as of January 1, 1984, Participants in the Savings
     Plan may elect to transfer amounts in Employer Contribution Accounts
     (regardless of when made) and Voluntary Contribution Accounts attributable
     to contributions for periods prior to July 1, 1983, or attributable to
     contributions for periods on or after July 1, 1983 for amounts transferred
     to the Savings Plan from the Trusteed Stock Plan, to segregated funds
     pursuant to Section 7.2, subject to the following rules and limitations.
     Prior to May 1, 1994, amounts in Cash Accounts may be transferred without
     limitation and shall be transferred prior to transfers attributable to the
     corresponding Stock Account. Transfers attributable to Stock Accounts
     (prior to May 1, 1994) shall be made as soon as practicable after a
     direction to transfer is made, but the Trustee in its discretion may defer
     the liquidation of Stock if it determines that deferral is necessary or
     desirable in order to comply with applicable security laws or to avoid
     adversely affecting the price of Stock.

            Prior to May 1, 1994, the liquidation and reinvestment of Stock
     Accounts by active Employees shall be restricted in accordance with this
     paragraph.  The 

                                      -55-
<PAGE>
 
     Administrator may, by uniform rule, limit the number of shares of Stock
     that may be liquidated and transferred with respect to each Employer
     Contribution Account or Voluntary Contribution Account within specified
     periods of time. Unless and until the Administrator promulgates rules
     regarding this matter, no Participant may direct the liquidation and
     transfer to segregated funds of more than 1,000 shares (1,750 shares after
     November 28, 1990) of Stock in any calendar quarter. This limitation does
     not apply to liquidations of Stock made pursuant to a former Employee's
     election to take a cash distribution or to transfer benefits to a successor
     employer's qualified plan. The transfer shall be executed as of the last
     day of the quarter. The method and timing of all elections shall comply
     with Section 7.2. Once funds have been transferred from Stock or Cash
     Accounts pursuant to a Participant election, they may not be reinvested in
     Stock or Cash Accounts. This paragraph shall have no application after
     April 30, 1994.

            The Administrator may establish uniform rules under which
     Participants, prior to May 1, 1994, may be allowed to rescind a direction
     to liquidate Stock in connection with contribution from the Plan, except
     that such rules shall not permit the rescission after the earlier of four
     business days following the date as of which the distribution was to be
     made, or the date the shares in question were liquidated.

             7.1.2 - OTHER ACCOUNTS.  All assets of the Trust that are not
     attributable to Employer Contribution or Voluntary Contribution Accounts
     shall be invested in segregated funds under Section 7.2. No assets
     attributable to those types of Accounts shall be invested in Stock prior to
     May 1, 1994.  Effective May 1, 1994, these Accounts may be invested at the
     Participant's direction in the pooled fund that includes the Trust's
     holdings of Stock.  The pooled fund shall be governed by a separate written
     service agreement between the Administrator and the Trustee and by the
     terms of the pooled investment Trust Agreement.

      SECTION 7 2 - SEPARATE FUNDS.

             7.2.1 - IN GENERAL. Other provisions of the Plan and Trust provide
     that the entire Trust shall be held, administered and invested as a single
     fund.  In recognition of the fact that existing and future Participants and
     Beneficiaries may have diverse economic situations which make it desirable
     to permit some degree of individual selection of different types of
     investments in the Trust, the Administrator may establish separate funds
     from time to time, subject to the following provisions of this Section 7.2.
     A pooled investment fund shall be treated as a separate fund under Section
     7.2 to the extent the provisions of this Section do not conflict with the
     terms of the service agreement and Trust Agreement executed in connection
     with the pooled fund.

                                      -56-
<PAGE>
 
             7.2.2 - ESTABLISHMENT OF SEPARATE FUNDS.  The Administrator may at
     any time or from time to time establish separate funds by written
     resolution.  Any separate fund shall at all times remain a part of the
     Trust and subject to all of the Trust provisions, and the total of such
     separate funds existing at any time, in addition to finds that are not so
     separately invested, shall comprise the total Trust attributable to
     Accounts.

            In establishing separate funds, the Administrator may authorize, but
     shall not require, each Participant or Beneficiary having an interest in
     the Trust to transfer assets allocated to him from one separate fund to
     another and, by a separate election, to allocate future contributions to
     any separate fund, at such time or times and upon such terms, restrictions,
     rules and conditions as the Administrator may determine; provided, however,
     that all such terms, restrictions, rules and conditions shall:

                    (a) Be uniform, requiring persons in like circumstances to
             be treated in the same manner (although the Administrator's rules
             may distinguish between types of Accounts); and

                    (b) Grant to each Participant and Beneficiary the right to
             select the separate fund or funds (authorized by the Administrator)
             in which the assets allocated to him and, by a separate election,
             future contributions are to be invested.

                    (c) Specify the general nature or type of investments to be
             utilized for each separate fund.

            Separate funds established pursuant to this Section may be created
     as a part of a trust fund, an insurance contract, or both.  However, all
     assets of the Plan must be held either in trust, in an insurance contract,
     or in a combination of both.

            Prior to May 1, 1994, except as otherwise provided by the
     Administrator, Participants may change their investment elections each
     calendar quarter in accordance with uniform rules established by the
     Administrator.  Effective July 1, 1994, investment changes may be made on
     any Accounting Date.

            7.2.3 - VALUATION OF SEPARATE FUNDS AND ACCOUNTS.  Each separate
     fund shall be valued in the same manner and at the same times as the Trust
     is required to be valued, as provided in Section 6. 1.

            7.2.4 - CONSOLIDATION OF FUNDS.  At such time or times as the
     Administrator may determine, one or more separate funds may be
     consolidated, using fair market value as of the date of consolidation.  The
     consolidation is to be governed 

                                      -57-
<PAGE>
 
     by uniform terms, restrictions, rules and conditions as the Administrator
     may determine. The consent of any individual Participant or Beneficiary
     shall not be required to permit a consolidation.

      SECTION 7.3 - ACQUISITION OF STOCK FOR STOCK ACCOUNTS.  If at any time
prior to May 1, 1994, there are balances in Cash Accounts, the Trustee shall use
those balances or property to acquire Stock for the corresponding Stock Accounts
as soon as practicable.  Stock may be purchased from any Affiliate (for shares
purchased from DEI prior to November 29, 1990, or from Arkla, Inc. after
November 28, 1990, the Stock may be either authorized and unissued or treasury
shares) or from existing shareholders, whether in private placements or
otherwise.

     Stock so acquired prior to May 1, 1994, shall be allocated to Stock
Accounts of Participants and Beneficiaries in proportion to their corresponding
Cash Account balances in both Voluntary Contribution Accounts and Employer
Contribution Accounts at the time of acquisition.  The Trustee shall maintain
records of the basis of Stock allocated to accounts in a uniform and consistent
manner, based upon the average cost basis of all Stock being allocated as of any
date or within a time period (not in excess of 12 months) specified by the
Trustee.  This requirement also applies to Stock acquired from suspense
accounts, forfeitures or Stock acquired from an Account which is being
distributed all or partly in the form of __________ distribution in the form of
Stock is to be made to a distributee, and there are assets in the Participant's
Cash Account, the Trustee may purchase Stock for the Participant's Account with
those assets for the purpose of making the distribution.

      SECTION 7.4 - VOTING AND SALE OF STOCK.

             7.4.1 - VOTING.  The Trustee shall be authorized to vote the shares
     of Stock held in the Trust pursuant to this Section.  As soon as
     practicable after notice of any shareholders' meeting given to
     shareholders, the Administrator or Administrative Delegate shall prepare
     and deliver to each individual who has a Stock Account, or a directed
     investment in a pooled investment trust which holds Stock, a notice and a
     form of proxy to direct the Trustee as to how the Trustee shall vote at
     that meeting, or any adjournment of that meeting, that number of full
     shares of Stock allocated to that Participant's Account as of the most
     recent date for which an adjustment has been completed pursuant to the
     Plan.  The notice shall instruct each Participant who has Stock in an
     Account to return the proxy to the Trustee, or to such other entity
     (including the Administrator) as the Administrator may select.  If an
     independent entity other than the Trustee is directed to collect and tally
     the proxies, the entity shall certify the results to the Trustee and shall
     also deliver all proxies to the Trustee.  The Trustee is not required to
     independently verify the results which have been certified to it.

            The Trustee shall vote all shares of Stock held by it (including
     fractional shares) for which it has received instructions in accordance
     with those instructions. The Trustee shall vote all shares of Stock held by
     it in suspense accounts and shares 

                                      -58-
<PAGE>
 
     of allocated Stock for which it has not received instructions in the manner
     directed by the Employee Benefits Administrative Committee of NorAm Energy
     Corp.

             7.4.2 - SALE OF STOCK.  The provisions under this subsection shall
     not restrict in any way the application of Subsection 7.1.1.

            In the event of a tender offer for Stock, the Trustee shall provide
     each Participant or Beneficiary who has Stock in his or her Account an
     election form and information regarding the tender offer, with instructions
     to have the election form returned to the Trustee by a date to be set by
     the Trustee.  The election form shall clearly state that the failure to
     return the election form within the allocated time shall be considered as
     an election to have Stock in his or her Account not tendered.

            The Trustee shall tender all full shares of Stock which the
     Participants and Beneficiaries have elected to have tendered.  The Trustee
     shall not tender any shares of Stock with respect to which Participants or
     Beneficiaries had the option to have tendered, but did not affirmatively
     elect to have tendered in accordance with the instructions relative to the
     election.  Any shares of Stock in a suspense account or otherwise not
     allocated to an Account of a Participant or Beneficiary shall be tendered
     or not tendered by the Trustee, in accordance with written instructions
     given to the Trustee by the Administrator.

            The information to be given to Participants and Beneficiaries in
     connection with this election shall be provided to the Trustee by the
     Administrator, and the Administrator shall use its best efforts to provide
     full and fair disclosure of information relevant to the election.

            The elections of Participants and Beneficiaries shall only apply to
     shares of Stock in their respective Accounts as of the date of the tender,
     if any, as determined by the Trustee.

 ARTICLE 8. VESTING AND DISTRIBUTION OF BENEFITS

      SECTION 8.1. - RETIREMENT.   A Participant whose termination of employment
with all Affiliates occurs on or after the date the Participant attains age 60
shall have a 100% vested interest in his Account.  The Participant's Account, as
adjusted pursuant to Article 6, shall be distributed to the Participant at the
time and in the manner specified in Sections 8.7 and 8.8.

      SECTION 8.2 - DEATH.   In the event a Participant dies prior to
termination of employment with all Affiliates, the Participant's Account shall
be 100% vested.

             8.2.1 - DISTRIBUTEE.  The entire Account of a Participant, as
     adjusted pursuant to Article 6, shall be distributed to the person, if any,
     who is legally married 

                                      -59-
<PAGE>
 
     to the Participant at the time of the Participant's death. If there is no
     surviving spouse or the surviving spouse consents to a waiver of benefits
     in the manner described in Subsection 8.2.2, the entire Account shall be
     distributed to the Participant's Beneficiaries upon the Participant's
     death. Distribution of benefits pursuant to this Section shall be at the
     time and in the manner specified in Sections 8.2.3, 8.2.4, 8.7 and 8.8.
     Beneficiaries shall also be eligible to elect any of the withdrawal options
     available under Section 8.9 to Participants who have attained age 59 1/2.

            If distribution is to be made to more than one person, it shall be
     made in the proportions designated by the Participant in a writing signed
     and filed with the Employer prior to the Participant's death.  Except as
     provided in the last paragraph of Subsection 8.2. 1, if a Participant
     designates more than one person to receive a benefit and if any of the
     designees predecease the Participant or die prior to complete distribution
     to the designee of his share without provision having been made for that
     contingency in the designation, the Trustee, pursuant to the
     Administrator's instructions, shall distribute that share or the balance of
     the benefits to the surviving designee or designees proportionately as the
     portion designated by the Participant for each bears to the total portion
     designated for all survivors.

            If a Participant files no Beneficiary designation or revokes a
     designation previously filed without filing a new designation, or if all
     persons so designated shall predecease the Participant or die prior to
     complete distribution to them, the Trustee, in accordance with the
     Administrator's instructions, shall distribute the death benefit or the
     balance of the benefits to the following persons who shall be deemed
     Beneficiaries: to the Participant's surviving spouse, or if none, to the
     Participant's surviving issue per stirpes and not per capita, or if none,
     then to the Participant's estate.

            A Beneficiary shall be entitled to disclaim all or any portion of
     the distribution payable under this Section.  In the event such a
     disclaimer is made, the disclaimed amount shall be payable in the manner
     specified in the Participant's Beneficiary designation, or if not so
     specified, to the remaining Beneficiary or Beneficiaries as if the
     disclaiming Beneficiary died on the date before the Participant's death.  A
     Beneficiary who disclaims any distribution shall not have any power of
     appointment over the amount disclaimed nor any other power of any nature to
     direct or control the disposition of the disclaimed amount.

            Notwithstanding the above, if any death benefit becomes payable to
     the spouse of the deceased Participant or to the trustees of a trust to
     which a transfer from the estate of the deceased Participant would qualify
     for the marital deduction described in Code Section 2056, and if the
     surviving spouse elects, the death benefits shall be paid to the spouse or
     the trustees only in a manner that will quality the death benefits for the
     marital deduction described in Code Section 2056 and, unless 

                                      -60-
<PAGE>
 
     specifically directed by the Participant to the contrary pursuant to an
     effective Beneficiary designation, any benefits remaining after the death
     of the spouse shall be paid to the spouse's estate or the trustees, as the
     case may be.

             8.2.2 - SPOUSAL CONSENT TO DESIGNATION OF NON-SPOUSE BENEFICIARY. A
     surviving spouse's consent to a waiver of benefits must be in writing, must
     acknowledge the effect of the waiver and must be witnessed by a notary
     public.  The consent must also designate the Beneficiaries (specified by
     name or by class, contingent or not) or the form of benefit, or acknowledge
     that the spouse has the right to limit consent only to a specific
     Beneficiary or form of benefits, and that the spouse voluntarily elects to
     relinquish one or both of these rights.  A spouse may not revoke a consent
     without the written consent of the Participant.  Any Beneficiary
     designation may be revoked or changed by written instrument signed and
     filed prior to the Participant's death.  No change, other than the
     revocation of a prior designation, may be made by a married Participant
     without the written consent of the Participant's spouse as provided above.
     A subsequent marriage shall void any previous designations, except as
     otherwise required under a Qualified Domestic Relations Order.

             8.2.3 - DEATH AFTER COMMENCEMENT OF BENEFITS.  In the event a
     Participant dies after payment of benefits is deemed to have commenced,
     remaining payments, if any, shall continue to the Participant's Beneficiary
     on the same basis as payable prior to the Participant's death; provided,
     however, that the Beneficiary shall have the right to accelerate payments,
     unless otherwise specifically provided to the contrary in the Beneficiary
     designation.  Benefits payable pursuant to an annuity contract shall be
     payable in accordance with the terms of the contract.

            8.2.4 - DEATH PRIOR TO COMMENCEMENT OF BENEFITS.  If a Participant
     (or surviving spouse of the Participant, as provided below) dies before
     distribution is deemed to have commenced, except as otherwise provided
     below, the Participant's Account shall be distributed to his Beneficiary in
     the manner and at the time specified in Sections 8.7, 8.8 and 8.9 and no
     later than December 31 of the calendar year which contains the fifth
     anniversary of the date of the Participant's death.

            This five-year distribution rule shall not apply if:  (1) any
     portion of the benefits of the Participant (or of the deceased spouse of
     the Participant, as provided below) is payable to or for the benefit of a
     Designated Beneficiary; (2) this portion will be distributed in one of the
     payment forms specified in Section 8.7, which payment form shall not
     provide for distribution beyond the life of the Designated Beneficiary or
     beyond a fixed period equal to the life expectancy of the Designated
     Beneficiary; and (3) the distributions commence no later than December 31
     of the calendar year immediately following the calendar year in which the
     Participant died. If the surviving spouse is the Beneficiary and dies
     before payments are deemed to 

                                      -61-
<PAGE>
 
     have begun, the five-year distribution rule and the exception to it stated
     in this paragraph are to be applied as if the surviving spouse were the
     Participant and the spouse's date of death shall be substituted for the
     Participant's date of death.

            This five-year distribution rule shall also not apply if:  (1) the
     portion of a Participant's interest to which the surviving spouse is
     entitled will be distributed in one of the payment forms specified in
     Section 8.7, which payment form shall not provide for distribution beyond
     the life of the surviving spouse or beyond a fixed period equal to the life
     expectancy of the surviving spouse; and (2) the distributions commence no
     later than December 31 of the calendar year in which the Participant would
     have attained age 70  1/2.

      SECTION 8.3 - DISABILITY. In the event a Participant terminates his
employment with the Employer because of his Disability, such Participant shall
have a 100% vested interest in his Account.  Such a Participant's entire
Account, as adjusted pursuant to Article 6, shall be distributed to the
Participant in accordance with Sections 8.7 and 8.8.

      SECTION 8.4 - RESIGNATION OR DISCHARGE. If a Participant's employment is
terminated with all Affiliates prior to the Participant's 60th birthday for any
reason other than death or Disability, the Trustee shall distribute to him the
vested portion of his Account, as adjusted pursuant to Article 6, in the manner
and at the time specified in Sections 8.7 and 8.8. Each such Participant's Pay
Conversion Account, Voluntary Contribution Account, Cengas Transfer Account,
EnScan Transfer Account, Midwest Employer ESOP Account, Rollover Account and
Loan Account shall be fully vested at all times.

     The vested portion of a Participant's Employer Contribution Account is the
percentage of this account determined in accordance with the following tables,
depending on the Vesting Period of Service (or Years of Service for Part Time or
Relief Employees) for which a Participant is given credit pursuant to this
Section.


<TABLE>
<CAPTION>
 VESTING PERIOD OF SERVICE   VESTED PERCENTAGE
---------------------------  -----------------
----------------------------------------------
<S>                          <C>
     Less than 3 years                       0
----------------------------------------------
             3                              50
----------------------------------------------
             4                              75
----------------------------------------------
      5 or more years                      100
</TABLE>

For Plan Years commencing prior to January 1, 1989, however, the vested portion
of each such Participant's Employer Contribution Account under the Trusteed
Stock Plan is the percentage of the Participant's Employer Contribution Account
determined from the following table:

                                      -62-
<PAGE>
 
<TABLE>
<CAPTION>
VESTING PERIOD OF SERVICE      VESTED PERCENTAGE
-------------------------      -----------------
------------------------------------------------
<C>                        <S> <C>
    Less than 5 years                          0
------------------------------------------------
                        5                     50
------------------------------------------------
                        6                     60
------------------------------------------------
                        7                     70
------------------------------------------------
                        8                     80
------------------------------------------------
                        9                     90
------------------------------------------------
    10 or more years                         100
</TABLE>


For Plan Years commencing January 1, 1989, and December 31, 1989, the vested
portion of each such Participant's Employer Contribution Account under the
Trusteed Stock Plan is the percentage of the Participant's Employer Contribution
Account determined from the following table:


<TABLE>
<CAPTION>
 VESTING PERIOD OF SERVICE   VESTED PERCENTAGE
---------------------------  -----------------
----------------------------------------------
<S>                          <C>
     Less than 3 years                       0
----------------------------------------------
             3                              20
----------------------------------------------
             4                              40
----------------------------------------------
             5                              60
----------------------------------------------
             6                              80
----------------------------------------------
      7 or more years                      100
</TABLE>


     However, a Participant who was actively employed by any Affiliate and had a
positive balance in his or her Account on November 28, 1990, shall be 100%
vested for purposes of all Accounts on such date if not already fully vested.  A
Participant who was actively employed by EnScan, Inc. on both February 28 and
February 29, 1992, with a positive balance in his or her Account that was not
fully vested as of February 28, 1992, shall be 100% vested in all Accounts as of
February 29, 1992.  A Participant who was actively employed by Minneapolis
Energy Center, Inc. on August 19, 1993, with a positive Account balance that was
not fully vested prior to that date, shall be 100% vested in all Accounts as of
August 19, 1993.

                                      -63-
<PAGE>
 
     A Participant who is actively employed by any Affiliate on his Normal
Retirement Date shall be 100% vested in all Accounts.

     If a Participant has a Midwest Employer Matching Account that was
transferred from the Iowa Public Service Savings Investment Plan For Bargaining
Unit Employees, the vested portion of such account is the percentage determined
in accordance with the following table, depending on the Vesting Period of
Service (or Years of Service for Part Time or Relief Employees) for which a
Participant is given credit pursuant to this Section.


<TABLE>
<CAPTION>
 VESTING PERIOD OF SERVICE   VESTED PERCENTAGE
---------------------------  -----------------
----------------------------------------------
<S>                          <C>
     Less than 1 year                        0
----------------------------------------------
             1                              25
----------------------------------------------
             2                              50
----------------------------------------------
             3                              75
----------------------------------------------
      4 or more years                      100
</TABLE>

     If a Participant has a Midwest Employer Matching Account that was
transferred from the Iowa Public Service Savings Investment Plan For Salaried
Employees, such Account shall be 100% vested.

     If a Participant is less than 100% vested and has a Loan Account, a portion
of the Loan Account balance shall be counted toward the vested portion of the
Employer Contribution Account in the same ratio that the original loan was
deducted from the Participant's Employer Contribution Account.  The same
adjustment for outstanding loans shall apply to partially vested Midwest
Employer Matching Accounts.

     If the Plan's vesting schedule is amended or the Plan is amended in any way
that directly or indirectly affects the computation of a Participant's
nonforfeitable percentage, or if the Plan is deemed amended by an automatic
change to or from a top heavy vesting schedule, each Participant with at least
three (3) years of service with the Employer may elect within a reasonable
period after the adoption of the amendment or change to have his nonforfeitable
percentage computed under the Plan without regard to such amendment or change.
The period during which the election may be made shall commence with the date
the amendment is adopted or deemed to be made and shall end on the latest of

          (1) 60 days after the amendment is adopted;

          (2) 60 days after the amendment becomes effective; or

                                      -64-
<PAGE>
 
          (3) 60 days after the Participant is issued written notice of the
              amendment by the Employer.

           8.4.1 - DETERMINATION OF VESTING PERIOD OF SERVICE.  A Participant's
     Vesting Period of Service shall be equal to the Participant's Period of
     Service (Years of Service for Part Time and Relief Employees), including
     Plan Years before the effective date of the Plan, except as  limited below
     and except that Periods of Service after five One-Year Periods of Severance
     (five consecutive One-Year Breaks in Service for Part Time and Relief
     Employees) will not be taken into account for purposes of determining the
     vested portion of benefits attributable to contributions for Plan Years
     prior to such Periods of Severance (or Breaks in Service).  Plan Years of
     Part Time and Relief Employees with fewer than 1,000 Hours of Service shall
     not be credited for vesting purposes.

          In addition, if the number of consecutive One-Year Periods of
     Severance or One-Year Breaks in Service equals or exceeds five years, a
     Participant who does not have any vested right to his Employer Contribution
     Account or Midwest Employer Matching Account prior to the Period of
     Severance or Breaks in Service shall not be given credit for Plan Years
     preceding such Periods of Severance or Breaks in Service for purposes of
     vesting.  The aggregate number of credited Plan Years prior to such Periods
     of Severance or Breaks in Service shall not include any Plan Years not
     required to be taken into account because of any prior Periods of Severance
     or Breaks in Service.

           8.4.2 - FORFEITURE OF NONVESTED PORTION OF ACCOUNT.  The portion of a
     Participant's Employer Contribution Account or Midwest Employer Matching
     Account which is not vested shall be forfeited as of the final Accounting
     Date of the Plan Year during which the Participant completes five One-Year
     Periods of Severance (or five consecutive One-Year Breaks in Service for
     Part Time and Relief Employees), and said forfeiture shall be allocated as
     provided in Section 6.4.

          Notwithstanding the preceding paragraph, if a Participant receives a
     complete distribution of his vested Account balance after termination of
     employment with the Employer at a time when he has less than a 100% vested
     interest in his Employer Contribution Account or Midwest Employer Matching
     Account, he shall immediately forfeit the nonvested portion of such Account
     or Accounts if it has not previously been forfeited.  If the distribution
     exceeds $3,500 or exceeded $3,500 at the time of any prior distribution,
     the preceding sentence will apply only if the distribution is made with the
     Participant's consent.  The forfeiture shall be applied as provided in
     Section 6.4.

          In the event a partial distribution has been made to a Participant
     from his Employer Contribution Account or Midwest Employer Matching Account
     at a time 

                                      -65-
<PAGE>
 
     when he had less than a 100% vested interest in such Account, and the
     Participant has not repaid the amount of the distribution in accordance
     with the following paragraph, the remaining portion of his Employer
     Contribution Account or Midwest Employer Matching Account will be
     maintained in a separate subaccount until the Participant becomes 100%
     vested. His vested interest in such subaccount, at any relevant time prior
     to the time he is fully vested in such account, will be equal to an amount
     determined by the formula X = P(AB + D) -D, where P is the vested
     percentage at the relevant time, AB is the account balance of the separate
     account at the relevant time, and D is the amount of the prior
     distribution. If at any time the entire vested portion of the subaccount is
     distributed, the nonvested portion shall be forfeited.

          If a Participant has received (or is deemed to have received) a
     distribution on termination of employment which is less than the full value
     of his Account, has had an amount forfeited under this Subsection 8.4.2,
     resumes employment covered under the Plan, and repays the amount of the
     distribution from the Participant's Employer Contribution Account or
     Midwest Employer Matching Account, any amounts forfeited hereunder shall be
     restored by the Employer within a reasonable time after such repayment,
     unadjusted by any gains or losses, without regard to the limitations on
     Annual Additions specified in Section 5.1. The right to repay a
     distribution and have forfeited amounts restored shall expire as of the
     close of the first period of five consecutive One-Year Periods of Severance
     (or Breaks in Service for Part Time or Relief Employees) after receiving
     the distribution or, if earlier, five years after the first day the
     Participant is subsequently employed by the Employer.  For purposes of this
     rule, if the value of an Employee's vested Account balance is zero, the
     Employee shall be deemed to have received a distribution of such vested
     Account on the date of termination.

          If a Participant has forfeited a portion of his Employer Contribution
     Account or Midwest Employer Matching Account, subsequently becomes eligible
     to share in contributions of the Employer and did not receive a complete
     distribution of such Accounts, a separate Employer Contribution Account or
     Midwest Employer Matching Account shall be established for the Participant
     for each subsequent period of eligibility.  Notwithstanding any provision
     herein to the contrary, a separate Account from which forfeitures have
     previously been deducted and not restored to that Account shall be 100%
     vested.

      SECTION 8.5 - TERMINATION OF PLAN.  Notwithstanding any provision of the
Plan to the contrary, if the Plan is terminated or if contributions to the Plan
are completely discontinued as provided in the Plan, all Accounts shall become
or continue to be nonforfeitable.  The Trust shall be valued as of the date of
such termination or discontinuance and, after crediting any increase or charging
any decrease to all Accounts then existing in the manner provided in Article 6,
the Trustee 

                                      -66-
<PAGE>
 
shall hold or distribute the full amount then credited to each Account as
provided in Sections 8.7 and 8.8.

     If the Plan shall at any time be terminated (or if contributions are
permanently discontinued), the Trust shall continue, and the Trustee shall
continue to act until all assets of the Trust have been distributed in
accordance with the terms of the Plan and the plan of termination.

      SECTION 8.6 - DISTRIBUTION BY TRUSTEE.  The Trustee shall pay and
distribute benefits hereunder in accordance with the instructions of the
Administrator in the manner provided in Section 8.7 and at the times provided in
Section 8.8.

     SECTION 8.7 - MANNER OF PAYING BENEFITS.

           8.7.1 - GENERAL FORMS OF DISTRIBUTION.  Distributions from the Plan
     shall be made in the forms of payment described in this Subsection, except
     to the extent partial withdrawals are permitted under Section 8.9. Prior to
     December 31, 1988, the Administrator, in its sole discretion (after
     consultation with the distributee), may direct the Trustee to distribute
     any benefit payable under the Plan in one of the forms described in this
     Subsection 8.7.1 or in Subsection 8.7.4, if applicable.  Effective December
     31, 1988, the Participant or Beneficiary, as the case may be, shall select
     from the following forms of distribution (or an annuity described in
     Subsection 8.7.4, if applicable) for any benefit payable under Article 8;
     provided, however, that any benefit payable hereunder will be distributable
     in a single distribution if the total nonforfeitable value of all Accounts
     immediately prior to the date of distribution of benefits is not more than
     $3,500 and has never exceeded $3,500 at the time of any prior distribution:

               (i)  In a single distribution.

               (ii) In two or more installments over such period of time as the
          Participant or Beneficiary shall determine, but not extending beyond
          ten years. The Participant or Beneficiary shall select annual,
          quarterly or monthly payments.  However, for distributions prior to
          December 31, 1988, the Administrator shall determine the period of
          time and the frequency of the payments.  In the event distribution in
          installments is selected, any undistributed funds shall remain in the
          Trust to be invested by the Trustee. After the adjustment of Accounts
          required or permitted by Article 6 has been made, the balance of the
          Participant's or Beneficiary's Account shall be divided by the number
          of installments remaining to be paid in order to determine the amount
          of each installment to be paid until the next adjustment of Accounts
          under Article 6 occurs.  Installments paid prior to the date by which
          distributions must commence under Subsection 8.8.2 shall not be
          subject to a minimum distribution requirement.  If installment
          distributions 

                                      -67-
<PAGE>
 
          are made, each Account or subaccount, and each investment fund within
          each Account, shall be debited ratably, unless the Administrator
          directs otherwise.

               (iii)  By a combination of the methods specified in (i) and (ii)
          above.

          Effective December 31, 1988, if a Participant is rehired by an
     Affiliate while installment payments are continuing, the Participant may
     elect to suspend payments during the subsequent period of employment by
     giving written notice to the Administrator.  Prior to December 31, 1988,
     the Administrator (rather than the Participant) has discretion to suspend
     installments upon rehiring the Participant.

          8.7.2 - IN KIND DISTRIBUTIONS.  The rules of this Subsection 8.7.2
     shall apply both to withdrawals under Section 8.9 and to final
     distributions pursuant to Subsection 8.7.1. In general, benefits will be
     distributed in cash; however, distribution from Stock Accounts prior to May
     1, 1994, shall be in Stock if the Participant elects.  Distributions from a
     pooled fund holding Stock on or after May 1, 1994, shall also be in the
     form of Stock if the Participant elects.  The number of shares
     distributable from the pooled fund shall be the number of whole shares
     determined by dividing the value of the Participant's vested units in the
     pooled fund by the current market value of NorAm, Energy Corp. common
     stock.  A Participant's investment in the pooled fund which holds Stock
     shall be distributed in cash if the Participant makes no election to
     receive Stock.

          The rules in this paragraph apply to distributions prior to May 1,
     1994. Fractional shares in Stock Accounts shall be converted and
     distributed in cash, but if the corresponding Cash Account contains
     sufficient assets, the Cash Account will be used to purchase an additional
     fraction of a share of Stock in order to create a whole share and eliminate
     any fractional share in the Stock Account.  If the Participant requests a
     cash distribution (with the Administrates consent, if distributed prior to
     December 31, 1989), the Stock Account will be distributed in cash after the
     Stock is purchased with cash in the Trust on the basis of average cost
     (fair market value).  Stock purchased in this way shall be allocated to
     other Participants in relation to the amounts deducted from their Accounts
     to purchase the Stock.  If the Participant makes no election to receive
     Stock or cash, the Stock Account will be distributed in Stock.

           8.7.3 - ADDITIONAL RULES GOVERNING DISTRIBUTIONS. No method of
     distribution may be elected whereby the present value of the payments to be
     made to a Participant, determined as of the date payment of his benefits is
     to commence, is less than or equal to 50% of the present value of the total
     payments to be made to the Participant and his Beneficiaries, unless the
     Beneficiary is the Participant's surviving spouse.

                                      -68-
<PAGE>
 
           8.7.4 - JOINT AND SURVIVOR ANNUITY REQUIREMENTS.  If the Participant
     has a Cengas Transfer Account, the following provisions of Subsection 8.7.4
     shall apply to the Cengas Transfer Account in the event the Participant is
     living on the date benefit payments would commence (or was married at the
     time of the Participant's death, if the Participant dies before payments of
     benefits commence and the Participant's spouse survives until the time
     benefits are to commence).

          Unless an optional form of benefit under Subsection 8.7.1 is selected
     pursuant to a qualified election within the applicable election period, a
     Participant's benefit provided by assets attributable to a Cengas Transfer
     Account shall be applied to the purchase of a Qualified Joint and Survivor
     Annuity or, if the Participant is dead on the date benefit payments are to
     commence, a Participant's benefit shall be applied toward the purchase of a
     Qualified Survivor Annuity.  The Administrator shall direct the Trustee to
     purchase an annuity contract based on considerations the Administrator in
     its sole discretion deems appropriate.  Once an annuity has been purchased,
     all benefits due to those assets shall be determined pursuant to the terms
     of the annuity. In the case of a Qualified Joint and Survivor Annuity, the
     applicable election period is the ninety (90) day period ending on the date
     benefit payments would commence.

          Unless the Participant can establish to the satisfaction of the
     Administrator that the Participant has no spouse or the spouse cannot be
     located, any election must be consented to by the Participant's spouse in
     order to be a qualified election.  The spouse's consent to an election of
     an optional form of benefit must be witnessed by a notary public.  The
     consent will be valid only for the spouse who signs the consent, or in the
     event of a deemed qualified election, the designated spouse.  A Participant
     may revoke without limit any prior elections of an optional form of payment
     without the consent of the spouse at any time before the commencement of
     benefits.  If the optional form is revoked, an optional form cannot be
     subsequently elected without the spouse's consent as provided above.
     However, a Participant may not modify any election consented to by a spouse
     without the spouse's consent as provided above. A spouse's consent may not
     be revoked without the written consent of the Participant.

          In case of a Qualified Joint and Survivor Annuity, within a reasonable
     period prior to the commencement of benefits the Administrator shall
     provide each Participant with a written explanation of (i) the terms and
     conditions of the Qualified Joint and Survivor Annuity, (ii) the
     Participant's right to make and the effect of an election to waive the
     Qualified Joint and Survivor Annuity, (iii) the rights of a Participant's
     spouse; and (iv) the right to make and the effect of a revocation of a
     previous election to waive the Qualified Joint and Survivor Annuity.

           8.7.5 - DEFERRED ANNUITY CONTRACTS.  A Participant may elect to
     receive benefits in the form of a deferred annuity contract prior to the
     time set forth in 

                                      -69-
<PAGE>
 
     Section 8.8, provided the Participant selects the issuer of the contract
     and makes suitable arrangements for the purchase of the contract, and:

               (i) In the event that the assets of the Plan which are to be
          distributed are subject to the provisions of Subsection 8.7.4, the
          contract is a single premium nontransferable, deferred Qualified Joint
          and Survivor Annuity; or

               (ii) In the event that assets of the Plan which are to be
          distributed are not subject to the provisions of Subsection 8.7.4, the
          contract is a single premium, nontransferable, deferred annuity
          contract for a period certain; provided, however, that no annuity may
          be purchased with those assets which provides benefits conditioned on
          the survival of any person.

      SECTION 8.8 - COMMENCEMENT OF DISTRIBUTION.

           8.8.1 - GENERAL.  In general, unless a Participant elects a later
     date in writing pursuant to Subsection 8.8.3, payment of benefits shall
     commence as soon as practicable after the Accounting Date which follows
     Participant's termination of employment, provided that the Participant has
     submitted a request for distribution (which, prior to May 1, 1994, must be
     received by the 20th day of the month in which falls the Accounting Date).
     Prior to December 31, 1988, deferral of distributions beyond age 65 is
     permitted only with the Administrator's consent.

          Prior to December 31, 1988, if a Participant terminates employment
     with all Affiliates due to Disability, the Participant's entire Account
     shall be distributed as soon as practicable; provided, however, that if the
     Participant is the beneficiary of a disability insurance policy under which
     benefits would be reduced if payments were made under the Plan without
     regard to this sentence, the Administrator, after consultation with the
     Participant, may direct the Trustee to defer the commencement of
     distribution of benefits to any date on or prior to the Participant's
     Normal Retirement Date, or the Participant's death if earlier.

          Notwithstanding any provision of this Section 8.8 to the contrary, the
     distribution of Loan Accounts shall comply with the terms of the
     Participant Loan Program and with the terms of the promissory note, consent
     or other agreements entered into in connection with the loan.

           8.8.2 - REQUIRED BEGINNING DATE. The commencement of distribution of
     a Participant's benefits shall be made in accordance with Code Section
     401(a)(9) and the regulations thereunder, and those provisions are
     incorporated in the Plan by reference.  Except as provided in the next
     sentence and in Subsection 8.8.5, final distribution of all benefits
     attributable to a Participant's Account must commence not 

                                      -70-
<PAGE>
 
     later than April 1 of the calendar year following the later of the calendar
     year during which the Participant retires or the calendar year in which the
     Participant attains age 70 1/2. Distribution shall commence not later than
     April 1 of the calendar year following the calendar year during which the
     Participant attains age 70 1/2 (regardless of the Participant's date of
     retirement) if (i) the Participant is a five-percent Key Employee (as
     defined in Subsection 12.1.2(c) and Code Section 416(i)), determined by
     using the five-Plan-Year period ending in the calendar year in which the
     Participant attains age 70 1/2 as the testing period, or (ii) for Plan
     Years commencing after December 31, 1988, the Participant had not attained
     age 70 1/2 before January 1, 1988, or was a five-percent Key Employee at
     any time during the Plan Year ending with or within the calendar year in
     which the Participant attains age 66 1/2 or during any subsequent Plan
     Year.

          Distributions that are required to begin under Code Section 401(a)(9)
     are restricted to the forms of distribution described in Section 8.7.
     Specifically, any installment payments under this Subsection shall be
     limited in duration to a period of 10 years or less

          8.8.3 - $3,500 RULE.  If a Participant's nonforfeitable Account
     exceeds $3,500 or exceeded $3,500 at the time of any prior distribution,
     the Employer may not make a distribution of benefits during the
     Participant's life without the consent of the Participant prior to the
     required beginning date under Subsection 8.8.2.

          If a Participant's or Beneficiary's nonforfeitable Account does not
     exceed $3,500 and has never exceeded $3,500 at the time of any prior
     distribution, a lump sum distribution shall be made as soon as practicable
     after the Accounting Date which follows the Participant's termination of
     employment.

           8.8.4 - DECEASED PARTICIPANTS.  In the case of a deceased
     Participant, distribution of his Account to his Beneficiary shall commence
     as soon as possible, subject to the express rules of Section 8.2 relating
     to deferrals.

           8.8.5  - TEFRA ELECTIONS.  Nothing in this Plan shall be construed as
     revoking any election made before January 1, 1984 under Section 242(b)(2)
     of the Tax Equity and Fiscal Responsibility Act of 1982 as to the timing or
     method of distributions, to the extent such an election may apply to a
     Participant's Rollover Account.

           8.8.6 - TRANSFERS. For Plan Years beginning before January 1, 1993,
     if a distribution to a Participant is required or permitted under this
     Article 8 for any reason and the Participant is a participant in another
     qualified defined contribution plan maintained by an Affiliate which is
     designed to accept transfers, the entire Account shall be distributed to
     such other plan if the Participant so requests, the other 

                                      -71-
<PAGE>
 
     plan agrees to accept the transfer, and all withholding requirements,
     waivers, or any required spousal consent (as determined by the
     Administrator) is obtained.

           8.8.7 - LIMITATIONS ON DISTRIBUTIONS.  Except as otherwise required
     in Section 4.4 and Article 5, or under the terms of a Qualified Domestic
     Relations Order, amounts held in the Trust which are attributable to
     Elective Deferrals may not be distributed to Participants or other
     Beneficiaries earlier than (i) the Participant's separation from service,
     death or Disability, (ii) termination of the Plan without establishment of
     a successor plan, (iii) the date of the sale or other disposition by a
     Participating Affiliate of substantially all of the assets (within the
     meaning of Code Section 409(d)(2)) used by such corporation in a trade or
     business of such corporation with respect to an Employee who continues
     employment with the corporation acquiring such assets, (iv) the date of the
     sale or other disposition by a Participating Affiliate of such
     corporation's interest in a subsidiary (within the meaning of Code Section
     409(d)(3)) to an unrelated entity with respect to an Employee who continues
     employment with such subsidiary, (v) the Participant's attainment of age 59
     1/2, or (vi) upon hardship of the Participant in accordance with Subsection
     8.9.3. An event shall not be treated as described in clause (iii) or (iv)
     unless the Participating Affiliate continues to maintain the Plan after the
     disposition. An event shall not be treated as described in clause (ii),
     (iii), or (iv) with respect to any Participant unless the Participant
     receives a lump sum distribution (within the meaning of Code Section
     401(k)(10)(B)(ii)) by reason of the event.  This paragraph applies only to
     amounts held in a Participant's Pay Conversion Account.

          No amount shall be distributable from this Plan and Trust merely by
     reason of the completion of a stated period of participation or the lapse
     of a fixed number of years.

           8.8.8 - TRANSFERS TO SUCCESSOR EMPLOYER PLANS.  From August 31, 1993,
     until August 31, 1998, a Participant who became an employee of Midwest
     Power Systems Inc. ("Midwest Power") or an affiliate of Midwest Power
     directly from employment with the Employer in connection with a sale of
     assets between Arkla, Inc. and Midwest Power, may direct the Administrator
     to transfer all, but not less than all, of his or her vested and nonvested
     account balances under the Plan in cash to the trustee or trustees of the
     Iowa Public Service Savings Investment Plan For Salaried Employees or the
     Iowa Public Service Savings Investment Plan For Bargaining Unit Employees,
     as applicable ("Midwest's Thrift Plan").  A Participant in such group who
     does not elect to transfer his or her account balance on the date of the
     initial transfer to Midwest's Thrift Plan may elect to liquidate and
     transfer his or her account balance as of the first day of any calendar
     quarter thereafter during the period ending August 31, 1998, or, if
     earlier, the date on which the Participant is no longer employed by Midwest
     Power or an affiliate of Midwest Power.  The account balance of each
     Participant in such group who does not elect to transfer to Midwest's

                                      -72-
<PAGE>
 
     Thrift Plan within the foregoing time period will be distributed in
     accordance with the terms of this Plan.  Transfers to Midwest's Thrift Plan
     are conditioned upon the Administrator receiving such assurances as are
     reasonable that the applicable provisions of the Code have been satisfied,
     as determined within the sole discretion of the Administrator.

          Within the six-month period beginning February 1, 1993, the account
     balance of a Participant who became an employee of UtiliCorp United Inc.
     ("UtiliCorp") or an affiliate of UtiliCorp directly from employment with
     the Employer in connection with a sale of assets between Arkla, Inc. and
     UtiliCorp shall be transferred in cash to the trustee or trustees of the
     UtiliCorp Savings Plan.  The transfer shall not, however, include amounts
     that were invested in Stock on the date of the transfer unless the
     Participant provides written consent.  Any such Participant who does not
     elect to transfer his or her account balance invested in Stock on the date
     of the initial transfer to the UtiliCorp Savings Plan may elect to
     liquidate and transfer in cash his or her remaining account balance as of
     the first day of any calendar quarter thereafter, but in no event later
     than February 1, 1995, or, if earlier, the date on which the Participant is
     no longer employed by UtiliCorp or an affiliate of UtiliCorp.  The
     remaining account balance of each Participant in such group who does not
     elect to transfer to the UtiliCorp Savings Plan within the foregoing time
     period will be distributed in accordance with the terms of this Plan.
     Transfers to the UtiliCorp 401(k) plan are conditioned upon the
     Administrator receiving such assurances as are reasonable that the
     applicable provisions of the Code have been satisfied, as determined within
     the sole discretion of the Administrator, including assurances as to the
     continued qualification of the transferor and transferee plans under
     Section 401(a) of the Code.

          Nothing in the Subsection 8.8.8 shall be construed as eliminating or
     reducing a Participant's "Section 411 (d)(6) protected benefits" (as
     defined in Treasury Reg. (S) 1.411(d)-4) except to the extent permitted by
     regulation.

      SECTION 8.9 - WITHDRAWALS.  Under the circumstances described in this
Section 8.9, a Participant may elect to receive a withdrawal prior to the
Participant's required beginning date, as described in Subsection 8.8.2. Any
distributions from the Plan that are not made pursuant to this Section must be
taken in one of the forms described in Section 8.7 and shall be paid only after
termination of employment or attainment of age 70 1/2.  Effective July 1, 1994,
in those situations where a Participant is eligible for a withdrawal from more
than one Account under this Section 8.9, the order in which withdrawals shall be
taken from various Accounts will be determined pursuant to a hierarchy
established by the Administrator and communicated in writing to the
Administrative Delegate.  Withdrawals pursuant to Subsection 8.9.1, however,
shall follow the hierarchy set forth in that subsection.

                                      -73-
<PAGE>
 
           8.9.1 - WITHDRAWALS FROM VOLUNTARY CONTRIBUTION, CENGAS TRANSFER,
     ENSCAN TRANSFER, MIDWEST EMPLOYER ESOP AND ROLLOVER ACCOUNTS.  No more than
     once per quarter, any Participant may withdraw part or all of the assets in
     the Participant's Voluntary Contribution Account, Cengas Transfer Account,
     EnScan Transfer Account, Midwest Employer ESOP Account, or Rollover
     Account. Withdrawals from such Accounts shall be made in the following
     order: (1) the Participant's after-tax contributions in the Voluntary
     Contribution Account made on or before December 31, 1986, (2) after-tax
     contributions in the Cengas Transfer Account, but only if spousal consent
     is obtained, (3) after-tax contributions made after December 31, 1986, in
     the Voluntary Contribution Account with earnings attributable to such
     contributions, (4) all other earnings from the Voluntary Contribution
     Account, (5) if spousal consent is obtained, the remaining balance of
     Cengas Transfer Account, (6) the EnScan Transfer Account, (7) the Midwest
     Employer ESOP Account, and (8) the Rollover Account.  However, if the
     Participant is married at the time of the withdrawal, no withdrawal may be
     made from the Participant's Cengas Transfer Account without the express
     written consent of the Participant's spouse in the manner prescribed in
     Subsection 8.7.4. Beginning July 1, 1994, withdrawals shall be taken from
     investment funds in which an Account is invested on a pro rata basis; prior
     to May 1, 1994, Participants can direct from which investment funds the
     withdrawal shall be taken.

           8.9.2  - WITHDRAWALS FROM EMPLOYER CONTRIBUTION AND MIDWEST EMPLOYER
     MATCHING ACCOUNTS.  A Participant may withdraw amounts from his vested
     Employer Contribution Account or Midwest Employer Matching Account in the
     following circumstances:

          (1)  Full Vesting or Completion of Five Years of Participation in Plan
               -- An individual who has 60 or more months of Vesting Period of
               Service (or 5 or more Years of Service for Relief and Part Time
               Employees) and 60 or more months of participation in this Plan
               (including periods of participation in the Trusteed Stock Plan)
               may, prior to May 1, 1994, withdraw amounts from the person's
               Employer Contribution Account or Midwest Employer Matching
               Account, both before and after termination of employment with all
               affiliates. Beginning July 1, 1994, this withdrawal option is
               available to any Participant who is fully vested in the Account
               from which the withdrawal is taken, regardless of his term of
               service or participation.  Prior to July 1, 1994, such
               withdrawals may be taken as of the last day of any calendar
               month.  Beginning July 1, 1994, such withdrawals may be taken as
               of any Accounting Date.  A condition of the withdrawal is that
               prior to or simultaneously with the withdrawal, the entire amount

                                      -74-
<PAGE>
 
               of the Participant's Voluntary Contribution Account, EnScan
               Transfer Account, Midwest Employer ESOP Account, and Rollover
               Account, and, to the extent spousal consent has been obtained,
               Cengas Transfer Account must be or must have been withdrawn
               pursuant to Subsection 8.9.1.

                    Partial withdrawals from the Employer Contribution Account
               or Midwest Employer Matching Account shall not be permitted under
               this rule prior to July 1, 1994, except to the extent the
               Participant has an immediate and heavy financial need (as defined
               in Subsection 8.9.3) and the partial withdrawal is necessary and
               sufficient to satisfy the financial need.  Partial withdrawals
               are permitted for any reason after June 30, 1994.  No more than
               one withdrawal shall be permitted under this rule in any 12
               consecutive month period (one per calendar quarter beginning July
               1, 1994), except that withdrawals under circumstances which would
               satisfy the hardship criteria of Subsection 8.9.3 shall not be
               counted in applying these limitations.

          (2)  After Age 59 1/2 - A Participant who is fully vested may withdraw
               all or any part of his Employer Contribution Account or Midwest
               Employer Matching Account on or after the date he attains age 
               59 1/2. Withdrawals under this rule may be taken only once per
               calendar quarter. Prior or simultaneous withdrawal of the
               Participant's Pay Conversion Account, Voluntary Contribution
               Account, Cengas Transfer Account (if spousal consent has been,
               obtained), EnScan Transfer Account, Midwest Employer ESOP
               Account, and Rollover Account shall be required. Prior to July 1,
               1994, such withdrawals shall be paid as of the last day of a
               calendar month. Effective July 1, 1994, such withdrawals shall be
               paid as of any Accounting Date. A Participant eligible for a
               withdrawal under this rule may alternatively elect a withdrawal
               under the preceding rule in paragraph (1) for fully vested
               Participants, in which case prior or simultaneous withdrawal of
               the Pay Conversion Account would not be required.

          (3)  Retirement -- A Participant who is fully vested and has retired
               from all Affiliates (i.e., terminated employment after attaining
               age 55), may withdraw all or any part of his Employer
               Contribution Account or Midwest Employer 

                                      -75-
<PAGE>
 
               Matching Account. Withdrawals under this rule may be taken only
               once per calendar quarter. Prior or simultaneous withdrawal of
               the Participant's Voluntary Contribution Account, Cengas Transfer
               Account, EnScan Transfer Account, Midwest Employer ESOP Account
               or Rollover Account shall not be required, regardless of the
               duration of the Participant's Vesting Period of Service or
               participation in the Plan. Prior to July 1, 1994, such
               withdrawals shall be paid as of the last day of a calendar month.
               Effective July 1, 1994, such withdrawals shall be paid as of any
               Accounting Date.

          (4)  Disability -- A Participant may withdraw all of his vested
               Midwest Employer Matching Account on or after the date he becomes
               Disabled.  Prior or simultaneous withdrawal of the Participant's
               Voluntary Contribution Account, Cengas Transfer Account, EnScan
               Transfer Account, Midwest Employer ESOP Account or Rollover
               Account shall not be required, regardless of the duration of the
               Participant's Vesting Period of Service or participation in the
               Plan.  Prior to July 1, 1994, such withdrawals shall be paid as
               of the last day of a calendar month.  Effective July 1, 1994,
               such withdrawals shall be paid as of any Accounting Date.

           8.9.3 - WITHDRAWALS FROM PAY CONVERSION ACCOUNTS.  A Participant may
     withdraw amounts from his Pay Conversion Account in the following
     circumstances:

     (1)  Hardship Distributions - A Participant may make withdrawals from his
          Elective Deferrals, excluding earnings thereon, for the purpose of
          enabling the Participant to meet a financial hardship.  For purposes
          of this Subsection 8.9.3, a distribution is on account of a financial
          hardship only if the distribution is made on account of an immediate
          and heavy financial need of the Employee and is necessary to satisfy
          such financial need.

                    (a) Immediate and Heavy Financial Need. Beginning December
               31, 1989, a distribution will be deemed to be made on account of
               an immediate and heavy financial need of the Employee only if the
               distribution is on account of:

                         (1) the purchase (excluding mortgage payments) of a
                    principal residence for the Employee;

                                      -76-
<PAGE>
 
                         (2) the payment of tuition for the next semester or
               quarter of post-secondary education for the Employee, the
               Employee's spouse, children, or dependents;

                         (3) medical expenses described in Code Section 213(d)
               incurred by the Employee, the Employee's spouse, or any dependent
               of the Employee (as defined in Code Section 152);

                         (4) a significant ($500 or more) uninsured casualty
               loss for the Employee or the Employee's dependents;

                         (5) expenses to maintain the structural integrity of
               the Employee's principal residence;

                         (6) the threatened or imminent eviction of the Employee
               from his principal residence or foreclosure on the mortgage of
               the Employee's principal residence; or

                         (7) funeral expenses for a family member.

                    Prior to December 31, 1988, a distribution will be deemed to
          be made on account of an immediate and heavy financial need of the
          Employee only if the distribution is on account of the purchase of a
          primary residence for the Employee, the payment of educational
          expenses for the Employee or the Employee's dependents, extraordinary
          uninsured medical expenses for the Employee or the Employees
          dependents, a significant uninsured casualty loss for the Employee or
          the Employee's dependents, or other financial hardships of a similar
          nature.

                    (b) Necessity to Satisfy Financial Need.  A distribution
          will not be treated as necessary to satisfy an immediate and heavy
          financial need of an employee to the extent the gross amount of the
          distribution before taxes and penalties is in excess of the amount
          required to relieve the financial need or to the extent such need
          could be satisfied from other resources that are reasonably available
          to the Employee.  A distribution may be treated as necessary to

                                      -77-
<PAGE>
 
          satisfy a financial need of the Employee if the Employer reasonably
          relies upon a written statement of the Employee in which the Employee
          represents that the need cannot be relieved:

                    (1) through reimbursement or compensation by insurance
               or otherwise;

                    (2) by reasonable liquidation of the Employees assets, to
               the extent such liquidation would not itself cause immediate and
               heavy financial need;

                    (3) by cessation of Elective Contributions (pre-tax and
               after-tax) under the Plan; or

                    (4) by other distributions or nontaxable (at the time of the
               loan) loans from plans maintained by the Employer or by any other
               employer, or by borrowing from commercial sources on reasonable
               commercial terms.

          For purposes Of this paragraph, the Employee's resources shall be
          deemed to include those assets of his spouse and minor children that
          are reasonably available to the Employee.

                    A Participant will not be deemed to have other reasonably
          available sources of funds if the use of those funds would result in
          the Participant losing tax benefits or paying a tax or interest
          penalty, or would necessitate the borrowing of funds from other
          sources. Notwithstanding the above, assets that are currently
          available for withdrawal under other provisions of the Plan are deemed
          to be reasonably available to the Participant.

                    Amounts shall be distributed as a hardship withdrawal only
          upon the Administrative Delegate's approval.  The Administrative
          Delegate will require as a condition of a withdrawal that the
          applicant provide it with sufficient evidence (as determined pursuant
          to guidelines established by the Employer) to satisfy the foregoing
          requirements.

                                      -78-
<PAGE>
 
          (2)  After Age 59 1/2. A Participant may withdraw all or any part of
               his Pay Conversion Account on or after the date he attains age
               59 1/2 withdrawals under this rule may be taken only once per
               calendar quarter. Prior to July 1, 1994, such withdrawals shall
               be paid as of the last day of a calendar month. Effective July 1,
               1994, such withdrawals shall be paid as of any Accounting Date.

               Termination of Employment or Disability - A Participant who is
               Disabled or has retired or terminated employment with all
               Affiliates may withdraw part or all of the Participant's Pay
               Conversion Account as of the last day of any month, if prior to
               July 1, 1994, and as of any Accounting Date, if after June 30,
               1994.  Only one such withdrawal shall be permitted in any
               calendar quarter.

                8.9.4 - PROCEDURES AND PENALTIES.

                    (a) Procedures.  No withdrawal may be made under Section 8.9
               unless the Participant making the withdrawal gives notice of
               intent to withdraw assets (or makes a request for a hardship
               withdrawal under Subsection 8.9.3). Prior to July 1, 1994, notice
               must be provided in writing to the Administrator by the 20th of
               the month prior to the Accounting Date as of which the withdrawal
               is to be made. If the 20th of the month falls on a weekend or a
               legal holiday, such written notice must be given no later than
               the first business day following the 20th of the month.

               The withdrawal request shall specify the fund or funds from which
               the withdrawals are to be made. Beginning July 1, 1994, notice
               must be given to the Administrative Delegate by telephone
               according to rules and procedures agreed to by the Administrative
               Delegate and the Administrator. The Administrator may establish
               uniform rules relating to the selection of funds and Accounts
               from which withdrawals are to be made.

                    (b) Termination of Participation.  Any withdrawal from an
               Employer Contribution Account or Midwest Employer Matching
               Account under Subsection 8.9.2 by a Participant under conditions
               which would not justify a hardship withdrawal of that amount
               under Subsection 8.9.3 

                                      -79-
<PAGE>
 
               (without regard to assets in the Employer Contribution Account or
               Pay Conversion Account) will, for periods prior to May 1, 1994,
               be deemed to be an election by the Participant to voluntarily
               terminate pay reduction contributions as provided in Subsection
               4.1.2, except that if the pay reduction contributions have
               previously been terminated (and not recommenced), the withdrawal
               shall be deemed to be a new voluntary termination of
               contributions. There is no deemed termination due to a withdrawal
               from a Voluntary Contribution Account, Rollover Account, Cengas
               Transfer Account, EnScan Transfer Account, Midwest Employer ESOP
               Account or Pay Conversion Account, or from an Employer
               Contribution Account or Midwest Employer Matching Account if made
               under conditions which would justify a hardship withdrawal under
               Subsection 8.9.3 (without regard to assets in the Employer
               Contribution Account or Pay Conversion Account). Effective May 1,
               1994, a withdrawal under Subsection 8.9.2 shall not be deemed a
               voluntary termination of pay reduction contributions under any
               conditions.

      SECTION 8.10- CLAIMS PROCEDURE.  The Employer or Administrative Delegate
shall notify a Participant in writing within ninety (90) days of his written
application for benefits (including in-service withdrawals or loans) or his
eligibility or noneligibility for benefits under the Plan.  If the Employer or
Administrative Delegate determines that a Participant is not eligible for
benefits or full benefits, the notice shall set forth (1) the specific reasons
for such denial, (2) a specific reference to the provision of the Plan on which
the denial is based, (3) a description of any additional information or material
necessary for the claimant to perfect his claim, and a description of why it is
needed, and (4) an explanation of the Plan's claims review procedure and other
appropriate information as to the steps to be taken if the Participant wishes to
have his claim reviewed.  If the Employer determines that there are special
circumstances requiring additional time to make a decision, the Employer shall
notify the Participant of the special circumstances and the date by which a
decision is expected to be made, and may extend the time for up to an additional
90-day period. If the Employer or Administrative Delegate determines that a
Participant is not eligible for benefits, or if the Participant believes that he
is entitled to greater or different benefits, he shall have the opportunity to
have his claim reviewed by the Employer by filing a petition for review with the
Employer within sixty (60) days after receipt by him of the notice issued by the
Employer.  Said petition shall state the specific reasons the Participant
believes he is entitled to benefits or greater or different benefits.  Within
sixty (60) days after receipt by the Employer of said petition, the Employer
shall afford the Participant (and his counsel, if any) an opportunity to present
his position to the Employer orally or in writing, and said Participant (or his
counsel) shall have the right to review the pertinent documents, and the
Employer shall notify the Participant of its decision in writing within said
sixty (60) day period, stating specifically the basis of said decision written
in a manner calculated to be understood by the 

                                      -80-
<PAGE>
 
Participant and the specific provisions of the Plan on which the decision is
based. If, because of the need for a hearing, the sixty (60) day period is not
sufficient, the decision may be deferred for up to another sixty (60) day period
at the election of the Employer, but notice of this deferral shall be given to
the Participant.

     In the event of the death of a Participant, the same procedure shall be
applicable to his Beneficiaries.

      SECTION 8.11 - INCOMPETENTS.  Every person receiving or claiming benefits
under the Plan is conclusively presumed to be competent until the date the
Administrator receives written notice that the person is incompetent and that a
guardian, conservator or other person legally vested with the care of the person
or the person's estate has been appointed.  However, if the Administrator
determines that persons to whom benefits are payable under the Plan are unable
to handle their affairs by reason of physical or mental conditions, the
Administrator may cause payments under the Plan to be made for their benefit to
a member of their family or to any other persons providing for their care; and
the Administrator, the Participating Affiliates and the Trustee shall be
relieved of all liability for any such payments made in good faith.

      SECTION 8.12 - MISSING PERSONS.  The amount of a Participant's Account,
including any vested amounts, shall be forfeited and used to reduce
contributions under Section 4.2 (or if the Employer does not make contributions
under Section 4.2, then under Section 4.3) to the Plan for the Plan Year ending
four years after the later of (i) the date of termination of employment of the
Participant for whom such Account was maintained, or (ii) the last date a
payment from said Account was made, if at least one such payment was made, or
(iii) the first date a payment from said Account was directed to be made if no
payments had been made, if the Employer, after diligent inquiry, is unable to
locate the Participant or his Beneficiary for purposes of making distribution.
Notwithstanding the foregoing, if at any subsequent date such person is located,
the Employer shall contribute funds to the Trust, to be placed in an Account for
such individual, in an amount equal to the amount of reduction of Employer
contributions effected pursuant to the preceding sentence attributable to his
Account, but reduced by any amount paid by the Trustee or the Employer to any
state or political subdivision under any escheat law or statute.

      SECTION 8.13 - NO DUPLICATE BENEFITS.  Except as expressly provided in the
Plan to the contrary, all benefits under the Plan are subject to valid Qualified
Domestic Relations Orders, and there shall be no duplication of benefits under
the Plan.

      SECTION 8.14 - DIRECT ROLLOVERS.

           8.14.1  - GENERAL RULE.  This Section 8.14 applies to distributions
     made on or after January 1, 1993.  Notwithstanding any provision of the
     Plan to the contrary that would otherwise limit a distributee's election
     under this Section 8.14, a distributee may elect, at the time and in the
     manner prescribed by the Administrator, 

                                      -81-
<PAGE>
 
     to have any portion of an eligible rollover distribution paid directly to
     an eligible retirement plan specified by the distributee in a direct
     rollover.

           8.14.2 - DEFINITIONS.

               (a) Eligible rollover distribution: An eligible rollover
          distribution is any distribution of all or any portion of the balance
          to the credit of the distributee, except that an eligible rollover
          distribution does not include: any distribution that is one of a
          series of substantially equal periodic payments (not less frequently
          than annually) made for the life (or life expectancy) of the
          distributee or the joint lives (or joint life expectancies) of the
          distributee and the distributee's Designated Beneficiary, or for a
          specified period of ten years or more; any distribution to the extent
          such distribution is required under Code Section 401(a)(9); and the
          portion of any distribution that is not includable in gross income
          (determined without regard to the exclusion for net unrealized
          appreciation with respect to employer securities).

               (b) Eligible retirement plan: An eligible retirement plan is an
          individual retirement account described in Code Section 408(a), an
          individual retirement annuity described in Code Section 408(b), an
          annuity plan described in Code Section 403(a), or a qualified trust
          described in Code Section 401(a), that accepts the distributee's
          eligible rollover distribution.  However, in the case of an eligible
          rollover distribution to the surviving spouse, an eligible retirement
          plan is an individual retirement account or individual retirement
          annuity.

               (c) Distributee: A distributee includes an Employee or former
          Employee.  In addition, the Employee's or former Employee's surviving
          spouse and the Employee's or former Employee's spouse or former spouse
          who is the Alternate Payee under a Qualified Domestic Relations Order
          are distributees with regard to the interest of the spouse or former
          spouse.

               (d) Direct rollover:  A direct rollover is a payment by the plan
          to the eligible retirement plan specified by the distributee.

ARTICLE 9.   ADMINISTRATION

                                      -82-
<PAGE>
 
      SECTION 9.1 - ADMINISTRATOR.  The Administrator shall be a named fiduciary
of the Plan, and as Administrator shall administer the Plan in accordance with
its terms and shall have all powers necessary to carry out its terms.

      SECTION 9.2 - DELEGATION.  The Administrator, or NorAm Energy Corp.,
acting on behalf of the Administrator, shall have the power, by resolution, to
delegate specific fiduciary duties and responsibilities (other than those of the
Trustee with respect to the custody and control of the assets of  the Trust).
Such delegations may be to officers or other employees of the Participating
Affiliates or to other individuals or entities.  Any delegation by the
Administrator or NorAm Energy Corp. may, if specifically stated, allow further
delegations by the individual or entity to whom the delegation has been made.
Any delegation may be rescinded by the Administrator or NorAm Energy Corp. at
any time.  Each person or entity to whom a fiduciary duty or responsibility has
been delegated shall be responsible for the exercise of such duties or
responsibilities and shall not be responsible for the acts or failure to act of
any other fiduciary, except as required by law.

      SECTION 9.3 - COMMITTEE. The Administrator of NorAm Energy Corp., in the
exercise of the power to delegate fiduciary duties pursuant to Section 9.2, may
establish a Committee and appoint its members to assist in Plan administration.
If so established, the Committee shall be a named fiduciary and, unless
otherwise provided by resolution of the Administrator, shall have the power and
responsibility to:

          (a) Adopt rules and regulations for Plan administration not
     inconsistent with the Plan's declared purposes and specific provisions;

          (b) Interpret and construe Plan provisions;

          (c) Determine from time to time the status of all Employees,
     Participants, and Beneficiaries for the purposes of the Plan;

          (d) Determine the rights of Employees, Participants, and Beneficiaries
     to benefits under the Plan, the amount thereof and the method and time or
     times of payment of the same;

          (e) Appoint an Administrative Delegate who shall perform, without
     discretionary authority or control, administrative functions within the
     framework of policies, interpretations, rules, practices, and procedures
     made by the Committee or other named fiduciary.  Any action made or taken
     by the Administrative Delegate may be appealed by an affected Participant
     to the Committee in accordance with the claim review procedures established
     by the Committee in accordance with Section 8.10 and any other uniform,
     nondiscriminatory rules and policies.  Any decisions which require
     interpretations of Plan provisions not previously made by the Committee
     shall be made only by the Committee.  The Administrative Delegate shall 

                                      -83-
<PAGE>
 
     not be considered a named fiduciary with respect to the services it
     provides as an Administrative Delegate;

          (f) Instruct the Trustee as to the disbursement of Trust assets;

          (g) Make amendments to the Plan as may be necessary to conform the
     Plan to the requirements of statutory law changes, and any rulings, court
     decisions and regulations which may affect the Plan.  The Committee shall
     have the authority to make additional amendments to the Plan as the
     Committee may determine to be necessary or desirable to carry out the
     purposes of the Plan, subject to the right of the Board of Directors of
     NorAm Energy Corp. (or its delegate) to review and revise the amendments,
     and subject to the condition that the Committee shall not have the
     authority to amend the Plan so as to increase any Participating Affiliate's
     liability under the Plan (except as required by law) and subject further to
     the requirement that the Committee shall, as requested by the Board of
     Directors of NorAm Energy Corp., prepare and submit to the Board reports on
     all amendments to the Plan; and

          (h) Delegate any of its powers and responsibilities, in its sole
     discretion, to the Administrator's Director of Compensation and Benefits or
     its Director of Investments.

     Members of the Committee shall serve for indefinite terms.  Any member of
the Committee may resign by delivering a written resignation to the
Administrator (to be effective on delivery or on a later date specified in the
resignation) and may be removed by resolution of the Board of Directors of NorAm
Energy Corp. Any member of the Committee who is also an Employee, upon
termination of employment, shall cease to be a member of the Committee.
Vacancies may be filled by the Chief Executive Officer of the Administrator to
serve until such vacancies are filled by the Board of Directors of NorAm Energy
Corp. The Committee may elect a Chairman and a Secretary. The Secretary (if
elected) may but need not be one of the members of the Committee.  The Committee
may authorize one or more of their number to make or to direct the making of any
payment on behalf of the Committee or to execute or deliver any instrument on
behalf of the Committee, including instructions to the Trustee as to the
disbursement or investment of the Trust, and may employ counsel (who may be
counsel for the Administrator or for NorAm Energy Corp.) and agents, and such
clerical, medical and accounting services as may be required in carrying out the
provisions of the Plan.  The Committee shall hold meetings at times and places
they determine.  A majority of the members of the Committee shall constitute a
quorum for transacting business.  All resolutions or actions taken by the
Committee at a meeting shall be by majority vote of those present. Action by the
Committee may be taken without a formal meeting by the written authorization of
all of the members of the Committee.

      SECTION 9.4 - REPORTS AND RECORDS. The Administrator and those to whom the
Administrator or NorAm Energy Corp. has delegated fiduciary duties shall keep
records of all their proceedings 

                                      -84-
<PAGE>
 
and actions, and shall maintain all such books of account, records and other
data as shall be necessary for proper Plan administration and for compliance
with applicable law.

      SECTION 9.5 - ESTABLISHMENT OF FUNDING POLICY AND INVESTMENT MANAGEMENT.
The Administrator shall (a) establish a funding policy for the Plan consistent
with the needs of the Plan and in accordance with applicable law, and (b)
communicate this policy to the Trustee in writing, and direct and supervise the
Trustee's actions to see that this policy is carried out.  For funds other than
Stock, the Administrator may appoint an investment manager who shall be charged
with the power to direct the Trustee as to the management, acquisition or
disposal of any or all assets of the Trust (as designated in the delegation)
other than Stock, and must be registered as an investment adviser under the
Investment Advisers Act of 1940, be a bank as defined in that Act, or be an
insurance company qualified to manage, acquire or dispose of assets under the
laws of more than one state, and, in all cases, must have acknowledged in
writing that it is a fiduciary of the Plan.

      SECTION 9.6 - PAYMENT OF EXPENSES. The Administrator may pay all expenses
of administering the Plan, including but not limited to Trustee's fees, attorney
fees, and expenses incurred by persons or entities to whom fiduciary duties have
been delegated.  If said expenses are not paid by the Administrator, they shall
be a lien against and paid from the Trust, except for items the payment of which
would constitute a prohibited transaction.  Expenses which in the opinion of the
Administrator are attributable to a single Account or a classification of
Accounts, at the direction of the Administrator, may be charged to that Account
or to the Accounts within that classification.

      SECTION 9.7 - INDEMNIFICATION.  To the extent permitted by law, the
Administrator shall indemnify the members of the Committee, if created,
individual trustees and others to whom the Administrator has delegated fiduciary
duties pursuant to Sections 9.2 and 9.3 who are either employees, officers or
directors of the Administrator, against any and all claims, loss, damages,
expense and liability arising from their responsibilities in connection with the
Plan which are not covered by insurance (without recourse) paid for by the
Administrator, unless the same is determined to be due to gross negligence or
intentional misconduct.

 ARTICLE 10.   AMENDMENT TO AND TERMINATION OF PLAN

      SECTION 10.1 - AMENDMENTS.  The Administrator shall have the right at any
time and from time to time by resolution adopted by its Board of Directors to
modify or amend the Plan, in full or in part, in any respect, and each such
amendment shall become effective as of any current, prior or later date
specified in such resolution upon the filing with the Trustee of a certified
copy of the resolution of the Board of Directors of the Administrator containing
such amendment; provided, however, that:

          (a) No such amendment shall substantially enlarge the duties and
     responsibilities of the Trustee without its written consent thereto;

                                      -85-
<PAGE>
 
          (b) No such amendment shall either directly or indirectly have the
     effect of giving an Affiliate any interest in any part of the corpus or
     income of the Trust or cause any part of the Trust to be used for or
     diverted to purposes other than for the exclusive benefit of Participants
     and their Beneficiaries; and

          (c) No amendment to the Plan shall be effective to the extent that it
     has the effect of decreasing a Participant's accrued benefit.
     Notwithstanding the preceding sentence, a Participant's accrued benefit may
     be reduced to the extent permitted under Code Section 412(c)(8).  For
     purposes of this paragraph, a Plan amendment which has the effect of (1)
     eliminating or reducing an early retirement benefit or a retirement-type
     subsidy, or (2) eliminating an optional form of benefit, with respect to
     benefits attributable to service before the amendment shall be treated as
     reducing accrued benefits.  In the case of a retirement-type subsidy, the
     preceding sentence shall apply only with respect to a Participant who
     satisfies (either before or after the amendment) the preamendment
     conditions for the subsidy.  In general, a retirement-type subsidy is a
     subsidy that continues after retirement, but does not include a qualified
     disability benefit, a medical benefit, a social security supplement, a
     death benefit (including life insurance), or a plant shutdown benefit (that
     does not continue after retirement age).  Furthermore, no Plan amendment
     shall have the effect of decreasing a Participant's vested interest
     determined without regard to such amendment as of the later of the date
     such amendment is adopted or becomes effective.

     Any amendment adopted under the provisions of this Section 10.1 shall be
deemed a part of the Plan as if incorporated herein, and the Plan shall be
deemed accordingly amended.

      SECTION 10.2 - TERMINATION OF PLAN.  The Administrator has established the
Plan with the bona fide intention and expectation that it will be able to make
its contributions indefinitely, but the Participating Affiliates are not and
shall not be under any obligation or liability whatsoever to continue their
contributions or to maintain the Plan for any given length of time, and may in
their sole and absolute discretion discontinue such contributions or terminate
their participation in the Plan at any time without any liability whatsoever for
such discontinuance or termination.

      SECTION 10.3 - TIME OF TERMINATION. The Plan hereby created shall
automatically terminate with respect to a Participating Affiliate upon the
happening of either of the following events:

          (a) Complete discontinuance of contributions by it;

          (b) Adjudication of the Participating Affiliate as bankrupt, or a
     general assignment by the Participating Affiliate to or for the benefit of
     creditors, or dissolution of the Participating Affiliate.

                                      -86-
<PAGE>
 
      SECTION 10.4. DISTRIBUTIONS.  Upon termination of the Plan with respect to
a Participating Affiliate for any reason whatsoever, the portion of Accounts
attributable to contributions from the Participating Affiliate shall be
nonforfeitable and the Trustee shall distribute the assets of the Trust
according to the provisions of Section 8.5.

      SECTION 10.5 - PARTIAL TERMINATION.  Upon termination of the Plan with
respect to a group of Participants which constitutes a partial termination of
the Plan, the Trustee shall allocate and segregate for the benefit of Employees
then or theretofore employed by the Participating Affiliate with respect to
which the Plan is being terminated, the proportionate interest of such persons
in the Trust attributable to contributions from the Participating Affiliate, as
determined by the Trustee.  The Accounts of all such persons shall become or
continue to be nonforfeitable, and the Trustee shall distribute such segregated
assets of the Trust to said persons according to the provisions of Section 8.5
as if it were a total termination of the Plan.

 ARTICLE 11.   MISCELLANEOUS

      SECTION 11.1 - NO GUARANTY OF EMPLOYMENT.  The adoption and maintenance of
the Plan and Trust shall not be deemed to be a contract between the Employer and
any Employee.  Nothing herein contained shall be deemed to give any Employee the
right to be retained in the employ of the Employer or to interfere with the
Employer's right to discharge any Employee at any time, nor shall it be deemed
to give the Employer the right to require any Employee to remain in its employ,
nor shall it interfere with the Employee's right to terminate his employment at
any time.

      SECTION 11.2 - CONSTRUCTION OF AGREEMENT.  This Plan shall be construed
according to the laws of the State of Minnesota to the extent not preempted by
Federal law; provided, however, that if any provision is susceptible to more
than one interpretation, such interpretation shall be given thereto as is
consistent with this Plan and the Trust being a qualified plan and trust within
the meaning of Code Section 401.  If any provision of this instrument shall be
held by a court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereof shall continue to be fully effective.

     Notwithstanding any provision to the contrary in the Plan, the
Administrator (or, if applicable, the Committee appointed for purposes of the
Plan) has total and complete authority to determine conclusively for all parties
all questions arising in the administration of the Plan.  The Administrator has
the authority to interpret and construe the terms of the Plan and to determine
all questions of eligibility and status of Employees, Participants and, if
applicable, their Beneficiaries, under the Plan and the amounts of their
respective interests.  Administrator (or Committee) determinations are binding
on all persons, subject to the claims procedures under the Plan.

      SECTION 11.3 - SPENDTHRIFT PROVISION.  Except as otherwise provided by
law, benefits payable hereunder and any interest of a Participant or Beneficiary
in the Trust shall not be subject to assignment, transfer or anticipation or
otherwise alienable either by voluntary or involuntary act or by operation of
law, nor subject to attachment, execution, garnishment, levy, sequestration or
other 

                                      -87-
<PAGE>
 
seizure under any legal or equitable process. However, the benefits payable
hereunder may be subject to the creation, assignment or recognition of a right
pursuant to a Qualified Domestic Relations Order.

      SECTION 11.4 - HEADINGS.  Headings and sub-headings in this Plan are
inserted for convenience of reference only and are not to be considered in the
interpretation or construction of Plan provisions.

      SECTION 11.5 - LIMITATION ON PARTICIPATING AFFILIATES' AND TRUSTEE'S
LIABILITY.  Neither the Trustee nor the Participating Affiliates guarantee the
benefits payable under the Plan and Trust Agreement, and payments to
Participants and Beneficiaries shall be made exclusively from the assets of the
Trust.

      SECTION 11.6 - MERGER.  The Plan may be merged or consolidated with any
other plan, and assets or liabilities of the Plan may be transferred to any
other plan, but only if each person having an interest in the Trust would (if
the Plan were 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 the Plan had then terminated).

      SECTION 11.7 - COUNTERPARTS.  The Plan and the Trust may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.

      SECTION 11.8 - EXCLUSIVE BENEFIT.  In no event shall any part of the trust
assets be paid to or become vested in any Affiliate, or be used for any purpose
whatsoever other than for the exclusive benefit of Participants and their
Beneficiaries, except as provided in other Sections of the Plan and except that
contributions of a Participating Affiliate may be returned if:

     (1) The contribution was conditioned on the qualification of the Plan under
         Code Section 401 (a), the Plan does not so qualify and the contribution
         is returned within one year after the Plan is found to not so qualify,
         all contributions by the Participating Affiliate being conditioned on
         said qualification;

     (2) The contribution was made due to a mistake of fact, the contribution is
         returned within one year of the mistaken payment of the contribution
         and the return satisfies the requirements of the last paragraph of this
         Section; or

     (3) The contribution was conditioned on its deductibility under Code
         Section 404, the deduction is disallowed under said section, the
         contribution is returned within one year of the disallowance of the
         deduction, and the return satisfies the requirements of the last
         paragraph of this Section.

                                      -88-
<PAGE>
 
     The return of a contribution (or a portion of a contribution) to the
Participating Affiliate satisfies the requirements of this paragraph if the
amount so returned (a) does not exceed the amount which was attributable to the
mistake of fact or error in determining the deduction, as the case may be, (b)
does not include the net earnings attributable to such excess contributions, (c)
is reduced by any net losses attributable to the excess contribution, and (d)
does not reduce the Account of any Participant to less than such Account would
have been had the returned contribution never been made.

 ARTICLE 12.   TOP HEAVY PLAN PROVISIONS

     Notwithstanding any provision of the Plan to the contrary, the provisions
of this Article shall govern for any Plan Year in which the Plan is a Top Heavy
Plan as of the Determination Date of the Plan.

      SECTION 12.1 - SPECIAL DEFINITIONS.  Whenever used in this Plan the
following terms shall have the respective meanings set forth below, unless the
context clearly requires otherwise, and when the defined meaning is intended the
term is capitalized.

           12.1.1 - "DETERMINATION DATE" for a Plan Year of the Plan means the
     last day of the preceding Plan Year of the Plan, or in the case of the
     first Plan Year of the Plan, the last day of such Plan Year.

           12.1.2 - "KEY EMPLOYEE" means any Employee or former Employee
     (including any deceased Employee) of an Affiliate who, at any time during
     the Plan Year containing the Determination Date for the Plan Year which is
     being tested for top heaviness or during any of the four (4) preceding Plan
     Years (including Plan Years commencing before 1984) -- which period is
     referred to as the "testing period" -- is (a) an officer (that is, an
     administrative executive who is in regular and continued service) of an
     Affiliate (but in no event shall more than fifty persons or, if lesser, the
     greater of three (3) persons or ten percent (10%) of the number of
     Employees of all Affiliates as of the Determination Date for the Plan Year
     which is being tested for top heaviness, be treated as officers) if such
     person's Top Heavy Compensation for any of said Plan Years in which he was
     an officer exceeds 50 percent of the maximum dollar limitation of Code
     Section 415(b)(1)(A) for the calendar year in which ends the Plan Year
     which is being tested for top heaviness, (b) is one of the ten (10)
     employees owning (or considered as owning within the meaning or based on
     the principles of Code Section 318) during a Plan Year in the testing
     period both more than  1/2% ownership interest and the largest percentage
     ownership interest in any of the Affiliates during such Plan Year of
     ownership if such person's Top Heavy Compensation exceeds the maximum
     dollar limitation of Code Section 415(c)(1)(A) for the calendar year in
     which such Plan Year ends, (c) a person owning (or considered as owning
     within the meaning or based on the principles of Code Section 318) more
     than five percent (5%) of the outstanding interest in any 

                                      -89-
<PAGE>
 
     Affiliate, or (d) a person owning (or considered as owning within the
     meaning or based on the principles of Code Section 318) more than one
     percent (1%) of the outstanding interest in any Affiliate if such person's
     Top Heavy Compensation for the Plan Year exceeds $150,000.

          Organizations other than corporations may be considered as having
     officers for Plan Years commencing after February 28, 1985.  Them is no
     minimum number of officers that must be taken into account, and the limited
     number of officers considered shall be those with the highest one-year Top
     Heavy Compensation received while an officer for the Plan Year including
     the Determination Date for the Plan Year which is being tested for top
     heaviness and the preceding four (4) Plan Years.

          For purposes of determining under (b) the persons owning the largest
     interests, if two persons have the same interest, the person whose Top
     Heavy Compensation for the Plan Year of ownership in the testing period is
     the highest, shall be deemed to have a larger interest.  If a person's
     ownership changes during a Plan Year, his interest is the largest interest
     owned at any time during the Plan Year.

          For purposes of applying subparagraph (C) of Code Section 318(a)(2),
     five percent (5%) shall be substituted for fifty percent (50%).  A person's
     interest in all outstanding stock or all outstanding stock with voting
     power shall be utilized in the determination of ownership interest in a
     corporation.  A person's interest in capital or profits shall be utilized
     in the determination of ownership interest in a noncorporate entity.  The
     rules of subsections (b), (c), and (m) of Code Section 414 shall not be
     applicable for purposes of determining ownership in Affiliates under this
     paragraph for purposes of testing the five percent (5%) and one percent
     (1%) limits but shall be taken into account in determining whether an
     individual has Top Heavy Compensation in excess of $150,000.  A Beneficiary
     of a deceased Participant who was a Key Employee shall be considered to be
     the Key Employee with respect to the benefits received.

           12.1.3 - "PERMISSIVE AGGREGATION GROUP" means the Required
     Aggregation Group of plans plus any other plan or plans of Affiliates
     which, when considered as a group with the Required Aggregation Group,
     would continue to satisfy the requirements of Code Sections 401(a)(4) and
     410.

           12.1.4 - "REQUIRED AGGREGATION GROUP" means:

               (a) Each qualified plan maintained by Affiliates in which at
          least one Key Employee participates in the Plan Year containing the
          Determination Date or any of the four (4) preceding Plan Years; and

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               (b) Any other qualified plan of Affiliates which enables such
          plan to meet the requirements of Code Sections 401(a)(4) and 410.

           12.1.5 - "SUPER TOP HEAVY PLAN" means a qualified plan maintained by
     an Affiliate where, as of the Determination Date for the Plan Year, the
     plan would meet the test for a Top Heavy Plan if ninety percent (90%) were
     substituted for sixty percent (60%) in each place it appears in the
     definition of a Top Heavy Plan.

           12.1.6 - "TOP HEAVY COMPENSATION" of an individual for any Plan Year
     shall mean, generally, the individual's 415 Compensation.  However, for
     Plan Years beginning after December 31, 1988, Top Heavy Compensation shall
     also include that portion of his compensation for a taxable year that he
     has elected to defer under Code Sections 125, 402(a)(8), 402(h)(1)(B) and
     403(b).

           12.1.7 - "TOP HEAVY PLAN" means for Plan Years commencing after
     December 31, 1983, a qualified plan maintained by an Affiliate where, as of
     the Determination Date for the plan year of that plan, any of the following
     exists:

               (a) The Top Heavy Ratio for such plan exceeds sixty percent (60%)
          and the plan is not a part of any Required Aggregation Group or
          Permissive Aggregation Group of plans;

               (b) Such plan is a part of a Required Aggregation Group of plans
          (but not a part of a Permissive Aggregation Group) and the Top Heavy
          Ratio for the group of plans exceeds sixty percent (60%); or

               (c) Such plan is a part of a Required Aggregation Group and a
          Permissive Aggregation Group and the Top Heavy Ratio for the Required
          Aggregation Group and the Permissive Aggregation Group exceeds sixty
          percent (60%).

           12.1.8 - "TOP HEAVY RATIO" for a group of qualified plans maintained
     by an Affiliate means a fraction, the numerator of which is the sum of
     account balances under the defined contribution plans (including any
     simplified employee benefit plan) for all Key Employees and the present
     value of accrued benefits under the defined benefit plans for all Key
     Employees, and the denominator of which is the sum of the account balances
     under the defined contribution plans (including any simplified employee
     benefit plan) for all participants and the present value of accrued
     benefits under the defined benefit plans for all participants as of the
     Determination Date. Both the numerator and denominator of the Top Heavy
     Ratio are adjusted for 

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<PAGE>
 
     a distribution of any part of an account balance or an accrued benefit made
     in the five-year period ending on the Determination Date.

          For purposes of determining the Top Heavy Ratio, the following rules
     apply. The value of account balances and the present value of accrued
     benefits will be determined as of the most recent Accounting Date that
     falls within or ends with the twelve-month period ending on the
     Determination Date.  Contributions allocated to accounts for the first year
     of a plan which are to be allocated as of a date not later than the
     Determination Date but have not been made as of that date shall be counted
     as a part of the account balance.  A similar rule shall apply for all years
     of plans subject to minimum funding standards, including contributions
     which have been waived, or not made and result in a funding deficiency.
     The account balances and accrued benefits of a participant who is not a Key
     Employee but who was a Key Employee in a prior year will be disregarded.
     For Plan Years beginning after December 31, 1984, the accrued benefit of a
     person who has not performed any services for a Participating Affiliate
     during the five (5) year period ending on the Determination Date is
     excluded from the calculation to determine top heaviness.  The account
     balances and accrued benefits under plans other than said plan being tested
     for top heaviness which are maintained by an entity other than the Employer
     attributable to periods such entity was not an Affiliate shall be
     disregarded.  The beneficiaries of account balances and accrued benefits of
     a deceased participant shall be treated as a participant with respect to
     the benefits received.  The calculation of the Top Heavy Ratio, and the
     extent to which distributions, rollovers, and transfers are taken into
     account will be made in accordance with Code Section 416 and the
     regulations thereunder.  Deductible employee contributions will not be
     taken into account for purposes of computing the Top Heavy Ratio.  When
     aggregating plans, the value of account balances and accrued benefits will
     be calculated with reference to the Determination Dates that fall within
     the same calendar year.  The present value of accrued benefits for a
     defined benefit plan shall be determined as of the Determination Date using
     reasonable actuarial assumptions specified by the Employer, but if none are
     specified, then an interest rate of five percent (5%) per annum and the
     1984 Unisex Pension Mortality Table shall be used.  The references to plans
     only include qualified plans.

           12.1.9 - "VALUATION DATE" for purposes of determining the value of
     plan accounts of a Top Heavy Plan shall be the same date as the
     Determination Date.

      SECTION 12.2 - MINIMUM ALLOCATION.  The provisions of this Section shall
not apply to an individual to the extent the individual is covered under any
other plan or plans of the Employer or its Affiliate, and the Employer has
provided that the minimum allocation or benefit requirement applicable to Top
Heavy Plans will be met other than as provided in this Section.  Any
contribution to be made to the Trustee by the Employer for a Plan Year and
forfeitures, if any, shall be allocated among the individuals entitled to
participate in the Employer's contribution to the Trustee for the 

                                      -92-
<PAGE>
 
Plan Year in the proportion that the Top Heavy Compensation for the Plan Year
paid by the Employer to each such individual bears to the Top Heavy Compensation
paid by the Employer to all such individuals. Allocations shall be made even if
under other Plan provisions the individual would not otherwise be entitled to
receive an allocation for the Plan Year because of (i) the individual's failure
to complete 1,000 Hours of Service during the Plan Year, or (ii) the
individual's failure to make mandatory employee contributions to the Plan, or
(iii) the individual's Basic Earnings was less than a stated amount. In the
event the Employer or an Affiliate maintains any other plan which with this Plan
is a part of a Permissive Aggregation Group and any other plans not in the
Permissive Aggregation Group to which the Employer or an Affiliate contributes,
the following rules shall apply to the allocation of Employer contributions and
forfeitures, if any, pursuant to this Section.

          (a) If such other plan or plans are defined contribution plus, and an
     individual does not participate in such other plan or plans, the Employer's
     contributions and forfeitures, if any, credited to the Account of an
     individual who is not a Key Employee for the Plan Year shall in no event be
     less than the lesser of (i) three percent (3%) of the individual's Top
     Heavy Compensation (four percent (4%) of an individual's (whether or not
     the individual is a Key Employee) Top Heavy Compensation if the Plan is Top
     Heavy and the limitations of Section 12.4 would otherwise apply); or (ii)
     the percentage of Top Heavy Compensation allocated under this Plan and all
     other defined contribution plans to the accounts of the Key Employee whose
     total allocation (expressed as a percentage of Top Heavy Compensation) of
     Employer and Affiliate contributions and forfeitures, if any, is the
     highest for the Plan Year.

          (b) If such other plan or plans are defined contribution plans and the
     individual participates in at least two (2) defined contribution plans, the
     minimum Employer contribution described in subsection  (a) above shall be
     reduced by the contributions of the Employer and Affiliates and
     forfeitures, if any, made on the individual's behalf to each other plan or
     plans in which the individual also participates.

          (c) If such other plan or plans include a defined benefit plan in
     which an individual does not participate and this Plan enables the defined
     benefit plan to meet the requirements of Code Sections 401(a)(4) and 410
     and is a part of a Required Aggregation Group, Employer contributions and
     forfeitures, if any, credited to the Account of an individual who is not a
     Key Employee shall not be less than three percent (3%) of his Top Heavy
     Compensation (four percent (4%) of an individual's Top Heavy Compensation
     (whether or not the individual is a Key Employee) if the Plan is Top Heavy
     and the limitations of Section 12.4 would otherwise apply), reduced by
     Employer and Affiliate contributions or forfeitures, if any, made and
     required to be made on the individual's behalf under any other defined
     contribution plan maintained by the Employer or Affiliate in which the
     individual participates.

                                      -93-
<PAGE>
 
          (d) If such other plan or plans include a defined benefit plan in
     which an individual does participate, the amount of Employer contributions
     and forfeitures, if any, credited to the Account of an individual who is
     not a Key Employee shall in no event be less than five percent (5%) of his
     Top Heavy Compensation (seven and one-half percent (7 1/2%) of an
     individual's Top Heavy Compensation (whether or not the individual is a Key
     Employee) if the Plan is Top Heavy and the limitations of Section 12.4
     would otherwise apply), reduced by Employer and Affiliate contributions,
     and forfeitures, if any, to his account in any other defined contribution
     plan in which the individual participates (including any provisions in the
     plan that provides for a minimum benefit), and reduced further by the
     comparable contribution that would have to be made to this Plan to provide
     the individual's accrued benefit (including any provisions in the plan that
     provides for a minimum benefit) under the defined benefit plan.

     In the event the Employer or an Affiliate does not maintain any other plan
which with this Plan is a part of a Permissive Aggregation Group, the following
rules shall apply to the allocation of Employer contributions and forfeitures,
if any, pursuant to this Section.  The Employer contributions and forfeitures,
if any, credited to the Account of an individual who is not a Key Employee for
the Plan Year shall in no event be less than the lesser of three percent (3%) of
the individual's Top Heavy Compensation, or the percentage of Top Heavy
Compensation allocated under this Plan to the Account of the Key Employee whose
total allocation (expressed as a percentage of Top Heavy Compensation) of
Employer contributions and forfeitures, if any, is the highest for the Plan
Year.

     Any amounts not allocated because of the limitations set forth previously
in this Section shall be allocated in accordance with the allocation provisions
set forth in Article 5 of the Plan.  The minimum allocation set forth in
subparagraphs (a) and (b) of this Section is determined without regard to any
Social Security contribution.  The amount of the minimum allocations described
in this Section shall be computed as of the last day of the Plan Year for each
plan that is within the same calendar year.

     For purposes of determining the minimum allocation pursuant to this
Section, the amount of any contribution made by the Employer on behalf of a Non-
Key Employee shall not include Elective Deferrals under the Plan or Elective
Contributions under any other plan maintained by an Affiliate.  For Plan Years
beginning after December 31, 1988, if the Plan uses Matching Contributions to
satisfy the minimum allocation requirements described in this Section, such
contributions may not be treated as Matching Contributions for purposes of Code
Sections 401(k) and 401(m).

      SECTION 12.3 - VESTED ACCOUNT BALANCE.  For any Plan Year in which this
Plan is Top Heavy, an individual shall be vested in his Account in accordance
with the first vesting schedule set forth in Section 8.4, except that an
individual shall be 20% vested upon completion of two Vesting Periods of Service
or Years of Service.

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<PAGE>
 
      SECTION 12.4 - LIMITATION ON BENEFITS.  If the Participant is a
Participant in the Plan and any defined benefit plan maintained by the Employer
or an Affiliate, the sum of such Participant's defined benefit plan fraction and
defined contribution plan fraction, as determined pursuant to Code Section
415(e) (as modified by Code Section 416(h)) for any plan year may not exceed one
(1).  The Employer may, in calculating the defined contribution plan fraction,
elect to apply the transitional rule provided in Code Section 415(e)(6) as
modified by Code Section 416(h)(4).  Provided the Plan is not a Super Top Heavy
Plan, and Code Section 416(h) would otherwise be applicable to the Plan, a
Participant's defined benefit plan fraction will be determined solely in
accordance with Code Section 415(e) and additional minimum contributions or
benefits will be provided all Participants in accordance with Section 12.2.

 ARTICLE 13.   PARTICIPATION BY AFFILIATES

      SECTION 13.1 - IN GENERAL.  The Administrator may be a member of a group
of corporations or businesses which are Affiliates, and one or more of said
Affiliates may wish to adopt the Plan. The provisions of this Article set forth
the terms and conditions relating to said adoption of the Plan by an Affiliate.

      SECTION 13.2 - ADOPTION.  The Administrator may permit any other Affiliate
to adopt the Plan and thereby become a Participating Affiliate by action by the
Affiliate's Board of Directors or other governing body and by the execution of a
written acceptance of such adoption by the Administrator. Notice of this
adoption shall be given by the Administrator to the Trustee, but shall not be
required to make the adoption effective.  The adoption shall specify the
effective date of the adoption and any other special provisions applicable to
the Participating Affiliate.  For example, a special definition of Basic
Earnings, eligibility or benefit accrual provisions may be applicable to the
Participating Affiliate.  After the effective date of the adoption of the Plan
by the Participating Affiliate, common-law Employees of the Participating
Affiliate shall be considered Employees.

     The adoption of this Plan by the Participating Affiliate shall not be
deemed to be a contract between the Participating Affiliate and any of its
Employees.  In addition, the Participating Affiliate does not guarantee the
benefits payable under the Plan.  Except as specifically provided in the Plan to
the contrary, in no event shall any part of the Plan assets be paid to _____
vested in the Participating Affiliate.

      SECTION 13.3 - ADMINISTRATION.  In the event that a Participating
Affiliate adopts the ________ except for the specific provisions contained in
the adoption document, in this Article, or in any resolution made by the
Administrator's Board of Directors, the Administrator shall have complete
authority and control to administer the Plan and to delegate specific fiduciary
duties and responsibilities and shall be deemed the Administrator for all
purposes. Any administration or delegation pursuant to this Plan may be
rescinded by the Administrator at any time. The Administrator in its sole
discretion shall also have the authority to allocate the responsibility for
payment of expenses of the administration of the Plan among itself and the
various Participating Affiliates in an equitable manner.

                                      -95-
<PAGE>
 
      SECTION 13.4 - AMENDMENT.  Whether or not Affiliates have adopted the
Plan, only the Administrator shall have the right to amend the Plan and to
specify the effective date of such amendment.  However, any amendment of the
Plan shall be communicated to each Participating Affiliate.  Unless a
Participating Affiliate elects to withdraw from the Plan within five days of
notice of the amendment, it shall be deemed to have agreed to and accepted the
amendment.

      SECTION 13.5 - TERMINATION OR WITHDRAWAL.  Any Participating Affiliate may
discontinue contributions or withdraw from the Plan by delivering a notice
adopted by the Participating Affiliate's Board of Directors or other governing
body to the Administrator and other Participating Affiliates, specifying the
date of its discontinuance or withdrawal.  The Administrator shall certify such
discontinuance or withdrawal to the Trustee.  Such notice shall specify whether
such Participating Affiliate intends to continue a plan through the use of a
separate document.  If a Participating Affiliate completely discontinues
contributions to the Plan, is adjudicated bankrupt, is assigned to or for the
benefit of creditors, or is dissolved, such an event shall terminate its
participation in the Plan.  A withdrawal or termination of participation by a
Participating Affiliate shall not constitute a termination of the Plan, unless
the Administrator and all Participating Affiliates withdraw and/or terminate
their participation in the Plan.  A withdrawal or termination of participation
in the Plan by a Participating Affiliate shall not constitute a partial
termination of the Plan, unless specified in writing by the withdrawing
Participating Affiliate, or except as may result by operation of law.

     If a Participating Affiliate is withdrawing from the Plan and has
established a substantially identical plan, the Trustee of the Plan shall
transfer the assets of Participants who are employed by the withdrawing
Participating Affiliate at the time of the withdrawal to the funding agent of
said plan.  If a Participating Affiliate is withdrawing or terminating from the
Plan and his not established a substantially identical plan, the Trustee shall:
(a) transfer any assets in the suspense account established in accordance with
Section 5.5 attributable to the Participating Affiliate's contributions to the
Affiliate to the extent it may not then be allocated pursuant to Section 4.2,
4.3, or 4.6 to the Accounts of Participants who are employed by the withdrawing
Participating Affiliate at the time of the withdrawal or termination; and (b)
credit any increase or charge any decrease to all such Accounts then existing in
the manner provided in Article 6, and hold or distribute the full amount then
credited to each such Account at the same time and in the manner specified in
Sections 8.7 and 8.8. The provisions of Section 8.5 shall apply if the entire
Plan is being terminated.  In such event, any allocation to Participants shall
be made to Participants employed by all Participating Affiliates and the
Administrator in proportion to their Basic Earnings as of the date of the
allocation in that Plan Year.

      SECTION 13.6 - APPLICATION OF TERMS OF THE PLAN.

           13.6.1 - ELIGIBILITY.  Eligibility to participate in the Plan shall
     be determined separately with respect to each Participating Affiliate.

                                      -96-
<PAGE>
 
           13.6.2 - DETERMINATION OF CONTRIBUTIONS.  The Administrator and each
     Participating Affiliate shall determine and make its own contributions to
     the Plan, including the individual discretion to make a special
     contribution for the Accounts of Employees who received less of an
     allocation due to an oversight or mistake of fact or law.  Each
     Participating Affiliate may make its contribution under the Plan for any
     Plan Year, or partial payments of such contribution, at any time during
     such Plan Year or within the time following the close of such Plan Year
     which is prescribed by law for the filing of the Participating Affiliate's
     Federal income tax return (or consolidated return, if applicable) for its
     fiscal year for Federal income tax purposes within or with which the Plan
     Year ends (including extensions thereof).  The provisions of Section 11.8
     shall apply to the contributions of each Participating Affiliate.

          The portion of an Employee's pay reduction amount to be contributed to
     an Employee's Pay Conversion Account shall be collected and remitted to the
     Trustee or the Employee, as the case may be, as soon as possible following
     reduction of pay by the Participating Affiliate who employs such Employee
     at the time.  The Participating Affiliate will use its best efforts to
     determine and contribute to the Plan the maximum amount permitted under the
     rules of Code Sections 401(k) and 401(m), however, no liability shall
     result from the Employee's loss of any deferral of taxation for Federal or
     state income tax purposes, nor for interest on any amounts subject to pay
     reduction elections.

           13.6.3 - ALLOCATION OF CONTRIBUTIONS.  Each Participating Affiliate
     shall make a contribution to the Plan for each eligible Participant who
     makes a pay reduction contribution pursuant to Section 4.1 for a Plan Year
     attributable to Basic Earnings paid by such Participating Affiliate.  This
     contribution is a matching percentage of the amount contributed for an
     eligible Participant under the pay reduction election for said period to
     the Plan (and not returned pursuant to the Plan). Such matching percentage
     shall be determined by the Employer in accordance with Section 4.2.
     Contributions under Sections 4.3 and 4.6 made by each Participating
     Affiliate shall be allocated among eligible Participants in proportion to
     the Basic Earnings paid by each such Participating Affiliate for the period
     with respect to which the contributions are made.  If active employment at
     the end of the Plan Year by a Participant is a requirement prior to
     allocation of a contribution to a Participant, a Participant is actively
     employed if employed by a Participating Affiliate on the last day of the
     Plan Year.  If such individual works for more than one Participating
     Affiliate, and contributions under the Plan are allocated on Basic Earnings
     up to a maximum dollar amount, the contributions to be allocated pursuant
     to this paragraph shall be made on the pro rata portion of the maximum
     dollar amount of such eligible Participant's Basic Earnings paid by such
     Participating Affiliate.  Contributions shall be subject to the limitations
     of the Plan, and in particular Article 5.

                                      -97-
<PAGE>
 
           13.6.4 - DISTRIBUTIONS.  No distributions with respect to termination
     of employment shall be made until termination of employment with all
     Affiliates whether or not they are participating in this Plan, except with
     respect to transfers to other qualified plans.

      SECTION 13.7 - INTERPRETATION.  If any question arises with respect to the
interpretation of this Plan due to the existence of Participating Affiliates
that have adopted the Plan, the Administrator shall establish uniform rules to
resolve such questions that shall conclusively bind all Participating Affiliates
and their Employees.

     Executed this ____ day of ____________, 1994.

                              MINNEGASCO, A DIVISION OF NORAM
                                    ENERGY CORP.



                              By______________________________________________
                                    Rick L. Spurlock
                                    Senior Vice President of Administration
                                         and Human Resources

                                      -98-