**Exhibit 10.2**

 

THE CALIFORNIA COASTAL COMMUNITIES, INC.

 

RETIREMENT PLAN

 

 

Generally Effective January 1, 1989

(Amended and Restated through December 19, 2001)

 

----

 

TABLE OF CONTENTS
|                                                                                                                                                                                                                          | ** ** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|
|                                                                                                                                                                                                                     |       |       |
| ARTICLE I  DEFINITIONS                                                                                                                                                                                              |       |       |
|                                                                                                                                                                                                                     |       |       |
| ARTICLE II  ELIGIBILITY                                                                                                                                                                                             |       |       |
|                                                                                                                                                                                                                     |       |       |
| ARTICLE III  RETIREMENT, TERMINATION, OR DEATH                                                                                                                                                                      |       |       |
|                                                                                                                                                                                                                     |       |       |
| ARTICLE IV  FUNDING OF BENEFITS                                                                                                                                                                                     |       |       |
|                                                                                                                                                                                                                     |       |       |
| ARTICLE V  TRUST AGREEMENT AND TRUST FUND                                                                                                                                                                           |       |       |
|                                                                                                                                                                                                                     |       |       |
| ARTICLE VI  CERTAIN LIMITATIONS ON BENEFITS                                                                                                                                                                         |       |       |
|                                                                                                                                                                                                                     |       |       |
| ARTICLE VII  PLAN ADMINISTRATION                                                                                                                                                                                    |       |       |
|                                                                                                                                                                                                                     |       |       |
| ARTICLE VIII AMENDMENT  AND TERMINATION; PARTICIPATION AND WITHDRAWAL BY COMPANIES; PLAN MERGERS                                                                                                                    |       |       |
|                                                                                                                                                                                                                     |       |       |
| ARTICLE IX  TOP-HEAVY PROVISIONS                                                                                                                                                                                    |       |       |
|                                                                                                                                                                                                                     |       |       |
| ARTICLE X  GENERAL PROVISIONS                                                                                                                                                                                       |       |       |
|                                                                                                                                                                                                                     |       |       |
| ARTICLE XI SPECIAL  PROVISIONS RELATING TO THE CUTBACK OF OPERATIONS AT THE HAMPTON LOCATION                                                                                                                        |       |       |
|                                                                                                                                                                                                                     |       |       |
| ARTICLE XII SPECIAL  PROVISIONS RELATING TO THE CUTBACK OF OPERATIONS AT THE LA JOLLA LOCATION                                                                                                                      |       |       |
|                                                                                                                                                                                                                     |       |       |
| ARTICLE XIII  ADDITIONAL SPECIAL RULES                                                                                                                                                                              |       |       |
|                                                                                                                                                                                                                     |       |       |
| ARTICLE XIV SPECIAL  PROVISIONS RELATING TO FORMER PARTICIPANTS IN THE ENGINEERING RESEARCH,  INCORPORATED RETIREMENT PLAN FOR SALARIED EMPLOYEES AND THE ENGINEERING  RESEARCH, INC. HOURLY EMPLOYEES PENSION PLAN |       |       |
|                                                                                                                                                                                                                     |       |       |
| ARTICLE XV SPECIAL  VESTING RULES IN CONNECTION WITH CORPORATE OFFICE SHUTDOWN AND COMPANY  STREAMLINING                                                                                                            |       |       |

 

i

----

 

THE CALIFORNIA COASTAL COMMUNITIES, INC.

RETIREMENT PLAN

Effective December 31, 1993, the name of the BolsaChica Company Retirement Plan was officially changed to the Koll Real EstateGroup Retirement Plan (the “Plan”) and Plan benefits were frozen.(1)  Effective January 1, 1999 the Plan wasrenamed The California Coastal Communities, Inc. Retirement Plan.  The Plan has been amended to incorporatecertain “GUST” required changes, but benefit accruals under this Plan remainfrozen.

----

(1)             EffectiveSeptember 30, 1993, The Bolsa Chica Company changed its name to Koll RealEstate Group, Inc.  Consequently, as ofSeptember 30, 1993, all references in this document to the Bolsa Chica Companyshould be read as references to the Koll Real Estate Group, Inc.   Effective January 1, 1999 all references tothe Bolsa Chica Company should be read as references to California CoastalCommunities, Inc.

The Bolsa Chica Company Retirement Plan (formerlyknown as The Henley Properties Inc. Retirement Plan and, prior to January 1,1990, known as The Henley Group, Inc. Retirement Plan) was originally adopted,effective June 1, 1986, continuation of the Signal Companies, Inc. RetirementPlan.

In connection with the change of the corporate name ofHenley Properties Inc. to The Bolsa Chica Company and the merger (the “1992Merger”) of HP Merger Co., a wholly owned subsidiary of The Bolsa ChicaCompany (known prior to the 1992 Merger as Henley Properties Inc.), with andinto The Henley Group, Inc., the name of the Plan was changed to The BolsaChica Company Retirement Plan.

The Henley Group, Inc. Retirement Plan was adopted asa pension plan for the benefit of the employees of The Henley Group, Inc., aDelaware corporation, effective June 1, 1986, by a resolution of Henley’sBoard of Directors, as a continuation of the Predecessor Plan.  In connection with the distribution as ofDecember 31, 1989 to shareholders of the Company of the stock of asubsidiary of the Company, the Plan was divided into two Plans, the Company wasrenamed Henley Properties Inc. and, effective January 1, 1990, the Plan becameknown as The Henley Properties Inc. Retirement Plan.

The Plan was adopted as a continuation of andsuccessor to The Signal Companies, Inc. Retirement Plan (the “Signal RetirementPlan” or “Predecessor Plan”) for individuals

(i)                                     who

(A)                              wereactively employed on January 1, 1986 by The Henley Group, Inc. (“Henley”)or a business that became a subsidiary or division of Henley in connection withthe distribution by Allied-Signal Inc. (“Allied-Signal”) to theowners of its common stock of all of the shares of Henley common stock as ofMay 27, 1986 (the “Spinoff”); or

 

 

1

----

 

(B)                                wereactively employed on January 1, 1986 by a member of the Allied-Signalcontrolled group of corporations and became Employees in connection with theSpinoff; and

(ii)                                  whoparticipated or were eligible to participate in the Predecessor Plan onDecember 31, 1985,

subject to a transfer of all assets allocable to suchindividuals to the Plan from the Predecessor Plan.  Benefits payable under this Plan shall notduplicate benefits payable under the Predecessor Plan.

The Plan is intended to be tax-exempt andqualified under the provisions of Section 401 and other applicableprovisions of the Internal Revenue Code of 1986, as amended, and to comply withSection 7(e)(4) of the Fair Labor Standards Act of 1938, as amended, andwith all applicable provisions of the Employee Retirement Income Security Actof 1974 as of their effective dates or sooner.

Pursuant to Notice 88-131, the Plan was amendedto limit compensation for purposes of computing accrued benefits under the Planto $200,000 as of January 1, 1989 (Model Amendment 1), and to prohibit theadditional accrual of benefits for highly compensated participants afterMay 1, 1989 (Model Amendment 2).

The Plan was amended and restated to comply with theTax Reform Act of 1986 and Section 401(a)(4) of the Internal Revenue Codeas of January 1, 1989.  The accruedbenefit of highly compensated participants has been retroactively adjusted toreflect the accrual of benefits after May 1, 1989 in accordance with theterms of this Amended and Restated plan.

The Plan was also amended and restated effectiveJanuary 1, 1990 in connection with the corporate reorganization described aboveand to make certain other changes.  ThePlan was again amended and restated effective August 1, 1992 and again as ofthe dates indicated in this document to reflect the name changes describedabove and to make certain other changes.

Subject to Notice 88-131, the rights and obligationsof each person covered by the Plan who retires or whose employment otherwiseterminates prior to the effective date of any amendment or restatement shall bedetermined in accordance with the Plan as in effect as of the date of his retirementor termination as the case may be.

Effective December 31, 1993, benefit accruals underthis Plan were frozen.

This Plan documentcontains changes requested by the Internal Revenue Service in April and May of1996 as part of the determination letter process.   The Plan document also contains changes madeas part of the IRS determination letter process in 2001, includingincorporation into this amended and restated Plan document of  Amendment No. 1, which was executed onDecember 14, 1999.

 

2

----

 

**ARTICLE I**

** **

**DEFINITIONS**

 

## Section 1.1             General. Whenever the following terms are used inthe Plan with the first letter capitalized, they shall have the meaningspecified below unless the context clearly indicates to the contrary.

## Section 1.2             AccruedBenefit.  An Employee’s “AccruedBenefit” as of his Separation from the Service shall have the meaning given inSection 3.10.

## Section 1.3             ActuarialEquivalent.  “Actuarial Equivalent”shall mean the equivalent of a given benefit, or a given amount, payable inanother manner, determined using factors independent of sex, pursuant to thefollowing actuarial assumptions:

#### (a)           7.5% interest(provided that for the purpose of determining the Actuarial Equivalent ofmonthly payments that may instead be paid as a lump sum pursuant to Section 3.13,the interest rate used shall be no greater than the immediate or deferred rate(in effect as of the first day of each Plan Year), whichever is appropriate,used by the Pension Benefit Guaranty Corporation to determine the present valueof a lump sum distribution upon plan termination), and

#### (b)           mortality based onthe 1984 Unisex Pension Table.

#### (c)           In the case of aParticipant who has not reached his Early Retirement Date and who has electedto receive a Disability Retirement Benefit under Section 3.5, the ages inthe table specified in subparagraph (b) above will be set forward 5 yearsin the calculation of the Disability Retirement Benefit of such Participant.

SECTION 1.3 OF THE PLAN WAS AMENDED BY AMENDMENT NO.1, EFFECTIVE AS OF JANUARY 1, 2000, TO READ AS FOLLOWS:

“Actuarial Equivalent.  “Actuarial Equivalent” shall mean theequivalent of a given benefit, or a given amount, payable in anothermanner.  Determination of a Participant’svested accrued benefit for purposes other than a lump sum payment shall bebased on an interest rate of 7.5% and mortality specified in the 1984 UnisexPension Table.

In the case of a Participant who has not reached hisEarly Retirement Date and who has elected to receive a Disability RetirementBenefit under Section 3.5, the ages in the table specified above will be setforward 5 years in the calculation of the Disability Retirement Benefit of suchParticipant.

For purposes ofdetermining (i) whether the present value of a Participant’s accrued benefitexceeds $5,000 for purposes of Section 3.13 and (ii) the amount of a lumpsum benefit, the Actuarial Equivalent shall be calculated using the Applicable

 

3

----

 

Interest Rate under Section 417(e) of the Code for thesecond full calendar month before the date of distribution, and the ApplicableMortality Table under Section 417(e) of the Code.

Notwithstanding any other provision of the Plan to thecontrary, the present value of the accrued lump sum retirement benefit due anEmployee who became a Participant prior to January 1, 2000 shall not be lessthan the present value of such Participant’s vested accrued benefit as ofDecember 31, 1999 utilizing an interest rate that is equal to 7.5% (providedthe interest rate used shall be no greater than the immediate or deferred rate,in effect as of the first day of each Plan Year, whichever is appropriate, usedby the Pension Benefit Guaranty Corporation to determine the present value of alump sum distribution upon plan termination) and mortality table specifiedabove for purposes other than a lump sum payment.”

## Section 1.4             Administratoror Administrative Committee.  “Administrator”or “Administrative Committee” shall mean the Bolsa Chica AdministrativeCommittee, appointed in accordance with Article VII.  Effective September 30, 1993, “Administrator”or “Administrative Committee” means Koll Real Estate Group, Inc., and anyofficer of Koll Real Estate Group, Inc. is authorized to act on behalf of theAdministrator or the Administrative Committee.

## Section 1.5             AggregateGroup.  “Aggregate Group” shall meanthe plan or plans required to be considered with this Plan for purposes ofsatisfying the requirements of Section 401(a)(4) and Section 410 ofthe Code.

## Section 1.6             AnniversaryDate.  “Anniversary Date” of aParticipant shall mean the anniversary of the date on which he became anEmployee for the first time or after a Severance from Service Date.

## Section 1.7             AverageFinal Compensation.  “Average FinalCompensation” of a Participant shall mean his average monthly Compensationduring the highest sixty consecutive full calendar months during which hereceived Compensation as an Employee in his last one hundred twenty suchmonths.  If he has less than one hundredtwenty such months there shall be substituted the number of such months he has accumulated.  For purposes of determining consecutiveness,calendar months other than full calendar months during which he receivedCompensation as an Employee shall be ignored. Subject to Section 1.16(g), Compensation for any twelve-month periodincluded in the calculation of Average Final Compensation shall not exceed$200,000, adjusted for changes in the cost of living as provided inSection 415(d) of the Code.

Effective December31, 1993, the Average Final Compensation of a Participant shall be calculatedfor a consecutive monthly period under Section 1.7 of the Plan ending no laterthan December 31, 1993, and no Compensation paid or earned after December 31,1993 shall be taken into account. Accordingly, the Average Final Compensation of each Participant shall bea fixed

 

4

----

 

dollar amount as of December 31, 1993 which shall notbe subsequently adjusted for any Compensation earned or paid after December 31,1993.

## Section 1.8             Beneficiary. “Beneficiary” shall mean a personproperly designated by a Participant or Former Participant in accordance withthe Plan and the rules, if any, promulgated by the Administrator, to receiveBenefits, solely in accordance with Section 3.6, 3.7 or 3.9, in the eventof the death of the Participant or Former Participant.

## Section 1.9             Benefit. The “Benefit” of a Participant shallmean a payment payable at the times and over the applicable period specified inArticle III.

## Section 1.10           Board ofDirectors.  “Board of Directors”shall mean the Board of Directors or the Executive Committee of the Board ofDirectors of Bolsa Chica.  EffectiveSeptember 30, 1993, “Board of Directors” shall mean the Board of Directors ofKoll Real Estate Group, Inc.

## Section 1.11           BolsaChica.  “Bolsa Chica” shall mean TheBolsa Chica Company, a Delaware corporation, formerly known as HenleyProperties Inc.  Effective September 30,1993, Bolsa Chica became Koll Real Estate Group, Inc. and, effective September30, 1993 all references in this Plan to Bolsa Chica should be read asreferences to Koll Real Estate Group, Inc.  Effective January 1, 1999, all references in this Plan to Bolsa Chicashould be read as references to California Coastal Communities, Inc.

## Section 1.12           Code. “Code” shall mean the Internal RevenueCode of 1986, as amended.  All citations tosections of the Code are to such sections as they may from time to time beamended or renumbered.

## Section 1.13           Commissioner. “Commissioner” means the Commissioner ofthe Internal Revenue Service.

## Section 1.14           Committee. “Committee” shall mean the Administratoror Administrative Committee.

## Section 1.15           Company;Companies.  As the context requires, “Company”or “Companies” shall mean Bolsa Chica (as defined in Section 1.11), anycorporation which adopts the Plan as a whole or as to one or more divisions orclassifications in accordance with Section 8.4, and any successorcorporation which continues the Plan under Section 8.9, acting throughtheir respective officers.

## Section 1.16           Compensation. (a) “Compensation” of a Participant forany Plan Year shall mean

##### (i)                                     hisfixed, basic and regularly recurring straight-time pay which for purposesof this Plan shall include the amount, if any, by which such pay wasvoluntarily reduced in accordance with a qualified cash or deferred arrangementunder a qualified savings or thrift plan of any of the Companies,

 

5

----

 

##### (ii)                                  anyadditional shift differential pay,

##### (iii)                               allamounts which an Employee on sick leave would have received as his fixed, basicand regular recurring straight-time pay had he not collected sick leavepay during such leave (but excluding any statutory benefits or insuredbenefits),

##### (iv)                              paymentfor overtime hours,

##### (v)                                 commissionsor sales, production or nonincentive bonus payments, and

##### (vi)                              exceptas provided in subsection, any annual year-end bonus or incentivecompensation award attributable to such Plan Year (whether or not paid withinsuch Plan Year and whether paid in cash or in securities), expressed as anaverage monthly rate of pay for the entire Plan Year.  For purposes of computing such average monthlyrate of pay, a Participant’s Compensation for an entire Plan Year shall bedivided by the number of months in such Plan Year during which Compensation waspaid for such Plan Year.

#### (b)           For purposes of thePlan and notwithstanding any other provision of this Section 1.16, aParticipant’s Compensation for an entire Plan Year shall not exceed $200,000,adjusted for changes in the cost of living as provided in section 415(d)of the Code.  In determining theCompensation of a Participant for purposes of this limitation, the rules ofsection 414(q)(6) of the Code shall apply, except that in applying suchrules, the term “family” shall include only the spouse of the Participant andany lineal descendants of the Participant who have not attained age 19 before theclose of the year.

#### (c)           “Compensation” shallnot include lump sum severance payments, inducement or completion bonuses forperiods of overseas or on-location employment, overseas or on-locationdifferential payments, insurance, long-term disability pay, any profitsharing payments, any public or private retirement contributions or benefits,any retainers, any insurance benefits or Company-paid premiums, paymentsfrom any stock option and award plan or any savings and stock purchase plan orany other special benefits, provided, however, that recurring overseas bonuseswhich constitute incentive compensation awards and are paid on a regular basisshall be included in Compensation.

#### (d)           “Compensation” shallnot include any portion of salary or any bonus or incentive compensation awardthe payment of which has been deferred at the election of the Participant;provided, however, that such deferred salary, bonus or incentive compensationattributable to a year used to calculate Average Final Compensation and actuallypaid in a year used to calculate Average Final Compensation will be treated asCompensation in the year paid.

#### (e)           Subject to (f) below, theCompensation of an Employee who was a participant in the Predecessor Plan onDecember 31, 1985 and became a Participant in this Plan in connection withthe Spinoff of Henley by Allied-Signal shall include all amounts earnedduring employment by a member of the Allied-Signal controlled group ofcorporations prior to

####  

6

----

####  

#### January 1,1986 that would have been treated as Compensation pursuant to Section 1.14of the Predecessor Plan.

#### (f)            Notwithstanding theforegoing provisions of Section 1.7 and this Section 1.16,Compensation shall not include any amount earned by the Participant prior toJanuary 1, 1990 if the Participant’s accrued benefit under this Plan wastransferred to The Henley Group, Inc. Retirement Plan in connection with thedistribution as of December 31, 1989 to shareholders of the Company of thestock of The Henley Group, Inc. (formerly known as New Henley Inc.) and thedivision of the Plan into two Plans.

#### (g)           In addition to otherapplicable limitations set forth in the Plan and notwithstanding any otherprovision of the Plan to the contrary, for Plan Years beginning on or afterJanuary 1, 1994, the annual Compensation (if any) of each Employee taken intoaccount under the Plan shall not exceed the OBRA ‘93 annual compensationlimit.  The OBRA ‘93 annual Compensationlimit is $150,000, as adjusted by the Commissioner of Internal Revenue forincreases in the cost of living in accordance with Code Section 401(a)(17)(B).  The cost-of-living adjustment in effect for acalendar year applies to any period not exceeding 12 months, over whichCompensation is determined (“Determination Period”) beginning in that calendaryear.  If a Determination Period consistsof fewer than 12 months, the OBRA ‘93 annual Compensation limit will bemultiplied by a fraction, the numerator of which is the number of months in theDetermination Period, and the denominator of which is 12.

For Plan Years beginning on or after January 1, 1994,any reference in this Plan to the limit under Code Section 401(a)(17) shallmean the OBRA ‘93 annual Compensation limit set forth in this provision.

In determining the $150,000 (indexed) limit, thefamily aggregation rules of Code Section 414(q)(6) apply, but the term “family”includes only the spouse of the Participant and any lineal descendants of theParticipant who have not attained age 19 before the close of the PlanYear.  To the extent required by applicableRegulations, if the limitation is reached for a family group, then thelimitation amount will be prorated among each member of the family group in theproportion that each family member’s compensation bears to the totalCompensation of the family group.

Notwithstandingany other provision in the Plan, for purposes of calculating each Section 401(a)(17)Employee’s Accrued Benefit under this Plan, the Accrued Benefit will be the sumof (a) the Employee’s Accrued Benefit as of the last day of the last Plan Yearbeginning before January 1, 1994, frozen in accordance with Regulation 1.401(a)(4)-13,and (b) the Employee’s Accrued Benefit determined under the benefit formulaapplicable for the Plan Year beginning on or after January 1, 1994, as appliedto the Employee’s years of service credited to the Employee for Plan Yearsbeginning or after January 1, 1994 for purposes of benefit accruals.  A Section 401(a)(17) Employee means anEmployee whose current Accrued Benefit as of a date on or after the first dayof the first Plan Year beginning on or after January 1, 1994, is based onCompensation for a year beginning prior to the first day of the first Plan Yearbeginning on or after January 1, 1994, that exceeded $150,000.

 

7

----

 

#### (h)           “Compensation” shallinclude any amounts treated as ‘compensation’ under any of the Related Planswith respect to a period when the Participant is entitled to Credited Servicepursuant to Section 1.19(a)(v).

## Section 1.17           ContingentAnnuitant.  “Contingent Annuitant”shall mean a person properly designated by a Participant or Former Participantto receive benefits, solely in accordance with Section 3.6 or 3.7 in theevent of the Participant’s death after payment of an annuity hereundercommences.

## Section 1.18           CoveredCompensation.  “Covered Compensation”means the average (without indexing) of the Taxable Wage Base (as definedbelow) in effect for each calendar year during the 35-year period ending withthe calendar year in which the Participant attains (or will attain) SocialSecurity Retirement Age.  The TaxableWage Base in effect for any year following the year in which the determinationis being made will be assumed to be equal to the Taxable Wage Base in effectfor the calendar year in which the determination is being made.  The Taxable Wage Base is the contribution andbenefit base in effect under Section 230 of the Social Security Act as ofthe beginning of the calendar year.

Effective December 31, 1993, the Covered Compensationof each Participant shall be calculated under Section 1.18 of the Plan as ofDecember 31, 1993.  For purposes of suchcalculation, it shall be assumed that the Taxable Wage Base for each year inthe remainder of the 35-year period applicable to the Participant shall remainat the Taxable Wage Base in effect for that Participant for the 1993 calendaryear.  Accordingly, the CoveredCompensation of each Participant shall be set at a fixed dollar amount as ofDecember 31, 1993 and shall not be adjusted for (i) Compensation or otherremuneration the Participant may in fact earn after December 31, 1993 or (ii)any changes in the Taxable Wage Base for calendar years after the 1993 calendaryear.

Section 1.19           CreditedService.  (a) Except as provided insubparagraph (g), (h) or (i) and consistent with the rules of subparagraphs (b)through (f), the Credited Service of a Participant means the total number ofmonths (for which he receives or is entitled to receive Compensation) of anEmployee’s latest period of uninterrupted employment (beginning on the Employee’semployment commencement date or reemployment commencement date, whichever isapplicable) with the Company (including any business treated as a Company underSection 10.15), beginning on or after January 1, 1986 and ending onhis Severance from Service Date, but not later than the date he ceases to beeligible to continue to be a Participant in accordance with Section 2.1(b).  An individual’s Credited Service also shallinclude the following periods of time regardless of whether he receivesCompensation therefor from the Company:

##### (i)                                     anyperiod of absence from active employment with the Company prior to his NormalRetirement Date due to Disability, provided the Participant has not elected toreceive the Disability Retirement Benefit Payable under Section 3.5;

##### (ii)                                  anyperiod of absence from active employment with the Company prior to his NormalRetirement Date due to service in the United

#####  

8

----

 

##### States Armed Forces, provided he isreemployed by the Company in accordance with applicable statutes following hisdischarge from military service;

##### (iii)                               anyperiod of absence from active employment with the Company prior to his NormalRetirement Date due to a Company directed or authorized leave of absence;and/or

##### (iv)                              anyperiod of service provided for in Sections 8.8.2 and 8.8.3.

##### (v)                                 effectivefor an Employee’s latest period of uninterrupted employment with the Companybeginning on or after January 1, 1990 and ending on the earliest of (1)December 31, 1993, (2) the Employee’s Separation from the Service, (3) theEmployee’s Severance from Service Date, or (4) the date that the Employeeceases to be eligible to continue to be a Participant in accordance withSection 2.1(b), any period prior to the individual becoming an Employee duringwhich the individual is an ‘employee’ earning ‘credited service’ under any ofthe Related Plans, or would have earned ‘qualified service’ under the FisherScientific International Inc. Retirement Plan, but for the individual’sdecision not to participate in said Plan.

#### (b)           In computing theCredited Service of any Employee, which shall be expressed as years andtwelfths thereof, a Participant shall be credited with a full calendar month ofservice only if his employment commences during the first fifteen days of suchmonth, or is terminated after the first fifteen days of such month.  No Employee shall receive credit for morethan one (1) month of Credited Service for any one (1) calendar month nor shallhe receive credit for more than twelve (12) months of Credited Service duringany Plan Year.

#### (c)           An Employee will bedeemed to have voluntarily terminated his employment if and as of the date anyof the following occurs:

##### (i)                                     hefails or refuses to return to work for the Company promptly after a sick leaveor after a Company directed or authorized leave of absence expires, or after herecovers from disability; or

##### (ii)                                  heleaves the employ of the Company for service in the Armed Forces of the UnitedStates and fails to make application for reemployment by the Company inaccordance with applicable statutes following his discharge from militaryservice.

When an Employeeis treated as voluntarily terminated as a result of any of the causes listedabove, his Credited Service will include the calendar month in which suchvoluntary termination occurs unless such voluntary termination occurs duringthe first fifteen days of such calendar month.

 

9

----

 

#### (d)           Continuation oftemporary layoff for lack of work for a period in excess of twelve months shallbe considered a discharge effective as of the expiration of twelve months ofthe layoff.

#### (e)           If an Employee whohas met the requirements for a Vested Retirement Benefit set forth hereinbegins a Period of Severance and subsequently returns to the employ of theCompany, his participation in the Plan shall be reinstated immediately.  He shall retain his previously accumulatedCredited Service and he shall be credited with additional Credited Service forhis continuous eligible employment with the Company after such return.

#### (f)            If a Participantwho has not met the requirements for a Vested Retirement Benefit set forthherein begins a Period of Severance and subsequently returns to the employ ofthe Company, his participation in the Plan shall be reinstatedimmediately.  If the total period of timeelapsed from the Severance from Service Date to the effective date of hisreemployment is less than the period of his previously accumulated VestingService, he shall retain his previously accumulated Credited Service and shallbe credited with Credited Service under this Plan for his continuous eligibleemployment during such new period.  Ifthe total period of time elapsed from his Severance from Service Date to theeffective date of his reemployment equals or exceeds the greater of five (5)years or his previously accumulated Vesting Service, he shall forfeit hispreviously accumulated Credited Service and shall be credited with CreditedService for his continuous eligible employment during such new period.

#### (g)           Notwithstanding anyother provision of this Section 1.19, the Credited Service of eachParticipant

##### (i)                                     who

###### (A)                              wasactively employed on January 1, 1986 by Henley or a business that became asubsidiary or division of Henley in connection with the Spinoff of Henley byAllied-Signal as of May 27, 1986; or

###### (B)                                wasactively employed on January 1, 1986 by a member of the Allied-Signalcontrolled group of corporations and became an Employee in connection with theSpinoff; and

##### (ii)                                  whowas a participant in the Predecessor Plan on December 31, 1985

shall, subject tothe transfer of all assets allocable to such Employee from the trust under thePredecessor Plan to the Trust Fund, include all Credited Service underSection 1.16 of the Predecessor Plan. Notwithstanding anything herein to the contrary, for purposes ofcalculating the Credited Service of any Employee who is a Participant in thePlan on or after June 1, 1992 and whose Credited Service is calculated inpart by reference to Section 1.16(a) of The Signal Companies, Inc.Retirement Plan, such Section 1.16(a) of The Signal Companies, Inc.Retirement Plan shall be modified so as to provide for the calculation ofCredited Service from the participant’s date of hire.

10

----

 

#### (h)           Except as providedin subsection 1.19(a)(iv) and (v) of this Plan, the Credited Service of aParticipant shall not include any period of employment with the Company duringwhich such Participant was excluded from eligibility to participate in the Planby subsection 2.1 or during which such Participant was not an Employee.

#### (i)            Notwithstanding anyother provision of this Section 1.19, the term “Credited Service” shall notinclude the Credited Service of a Participant to the extent such Participant’saccrued benefit under this Plan was transferred to The Henley Group, Inc.Retirement Plan in connection with the distribution as of December 31, 1989 toshareholders of the Company of the stock of The Henley Group, Inc. (formerlyknown as New Henley Inc.) and the division of the Plan into two plans.

#### (j)            Effective December31, 1993, the Credited Service of each Participant shall, for benefit accrualpurposes under the Plan, be fixed and frozen as of December 31, 1993, and noCredited Service shall, for benefit accrual purposes, be earned for any servicerendered after December 31, 1993. However, Credited Service may continue to be earned after December 31,1993, in accordance with the provisions of Section 1.19 of the Plan, solely andexclusively for purposes of the early retirement subsidies available under thePlan as of December 31, 1993 and protected under Internal Revenue Code Section411(d)(6).

## Section 1.20           DeterminationDate.  “Determination Date” means thedate specified in Section 9.2.

## Section 1.21           Disability;Disabled.  “Disability” of aParticipant or “Disabled” when used with reference to a Participant shall meanthat he has been found by the Company employing the Participant, on the basisof competent medical evidence, before December 31, 1993 and while employed bythe Company to be unable, by reason of a medically determinable physical ormental impairment which can be expected to result in death or to be ofpermanent duration, to engage in the level of gainful activity determined understandards adopted by such Company for purposes of this Plan.  The determination by each Company that anemployee is “Disabled” for purposes of this Plan shall be made under standardsadopted by each Company and applied uniformly, which standards may include theSocial Security Act definition of disability, the definition applicable to suchCompany’s long-term disability programs, if any, or such otherdefinitions as may be adopted from time to time by each Company.  Such determination shall be subject to theapproval of the Administrator.

## Section 1.22           DisabilityRetirement Date.  “DisabilityRetirement Date” of a Participant shall mean the first day of any monthcoincident with or following his Disability, provided the Participant has atleast 10 years of Credited Service at his Disability and elects to retirebefore age 65.

## Section 1.23           EarlyCommencement Date.  “EarlyCommencement Date” shall mean the first day of the month as of which aParticipant elects to begin receiving payments prior to his Normal RetirementDate.

## Section 1.24           Early Retirement Benefit.  “Early Retirement Benefit” shall mean theBenefit payable under Section 3.4.

 

11

----

 

## Section 1.25           EarlyRetirement Date.  “Early RetirementDate” of a Participant shall generally mean the first day of the month, sodesignated by an Employee, preceding his Normal Retirement Date, and which iscoincident with or following the later of his 55th birthday and his completionof ten (10) years of Credited Service or such other date as is provided inSection 3.3.

## Section 1.26           Employee. “Employee” shall mean any employee ofany Company (including any person treated as an Employee underSection 10.15) excluding

#### (a)           an employee who willnot complete 1,000 Hours of Service during a Plan Year,

#### (b)           a temporaryemployee, that is, one who is employed by a Company for the specific purpose ofworking on a designated project for the duration of such project, and

#### (c)           a director who isnot otherwise an Employee.

#### (d)           a LeasedEmployee.  For these purposes, a LeasedEmployee means an individual not otherwise an Employee who, pursuant to anagreement between an Employer and a leasing organization, has performed, on asubstantially full-time basis for the individual’s initial 12-month period ofperforming services for the Employer or for any Plan Year, services of a typehistorically performed by employees in the business field of the Employerunless the individual is covered by a money purchase pension plan maintained bythe leasing organization and meeting the requirements of Code Section 414(n)(5)(B),and leased employees do not constitute more than 20% of all Non-HighlyCompensated Employees of all Affiliated Companies within the meaning of CodeSection 414(n)(5)(C)(ii).

SECTION 1.26 OF THE PLAN WAS AMENDED BY AMENDMENT NO.1, EFFECTIVE AS OF JANUARY 1, 1997, TO READ AS FOLLOWS:

“(d) a LeasedEmployee.  For these purposes a LeasedEmployee means any person, other than a common law employee of a Company, whopursuant to an agreement between that Company and any other person (“leasingorganization”) has performed services for the recipient Company (or for suchrecipient and one or more related persons determined in accordance with CodeSection 414(n)(6)) on a substantially full-time basis for a period of at leastone (1) year (as determined in accordance with the applicable provisions of theproposed Income Tax Regulations section 1.414(n)-1(b)(10)), and such servicesare performed under the primary direction or control of the recipient Company,unless such individual is covered by a money purchase plan maintained by theleasing organization and meeting the requirements of Code Section 414(n)(5)(B),and leased employees do not constitute more than 20% of all Non-HighlyCompensated Employees of all Affiliated Companies within the meaning of CodeSection 414(n)(5)(C)(ii).”

 

12

----

 

## Section 1.27           ERISA. “ERISA” shall mean the EmployeeRetirement Income Security Act of 1974, as amended.

## Section 1.28           FormerParticipant.  “Former Participant”shall mean a person who has Separated from the Service and has become entitledto a Benefit under the Plan.

## Section 1.29           Henley. “Henley” shall mean the corporate entityknown as The Henley Group, Inc. during the period commencing on May 27, 1986and ending December 31, 1989.

## Section 1.30           HenleyProperties.  “Henley Properties”shall mean Henley Properties Inc., a Delaware corporation known prior toJanuary 1, 1990 as The Henley Group, Inc. and after the 1992 Merger (as definedin the preamble) as The Bolsa Chica Company.

## Section 1.31           Hour ofService.  (a) “Hour of Service” of anEmployee shall mean the following:

##### (i)                                     Eachhour for which he is paid or entitled to payment (as determined underregulations of the Secretary of Labor without reference to the limitations ofSection 1.19) by a Company,

##### (ii)                                  Eachhour in or attributable to a period of time during which he performs no duties(irrespective of whether he has had a Separation from the Service) due to avacation, holiday, illness, incapacity (including pregnancy or disability),layoff, jury duty, military duty or a leave of absence, for which he is so paidor so entitled to payment; provided, however, that

###### (A)                              nomore than five hundred and one Hours of Service shall be credited under thisparagraph to an Employee on account of any such period, and

###### (B)                                nosuch hours shall be credited to an Employee if attributable to payments made ordue under a plan maintained solely for the purpose of complying with applicableworker’s compensation, unemployment compensation or disability insurance lawsor to a payment which solely reimburses the Employee for medical or medicallyrelated expenses incurred by him.

##### (iii)                               Eachhour for which he is entitled to back pay, irrespective of mitigation ofdamages, whether awarded or agreed to by a Company.

#### (b)           Hours of Service undersubsection (a) (ii) and (a)(iii) shall be calculated in accordance with 29CFR Section 2530.200b-2(b). Each Hour of Service shall be attributed to the Plan Year or initialeligibility year in which it occurs except to the extent that the Company, in

####  

13

----

####  

#### accordancewith 29 CFR Section 2530.200b-2(c), credits such Hour to anothercomputation period under a reasonable method consistently applied.

#### (c)           Where his Company’srecords do not readily permit determination of an Employee’s actual hours,Hours of Service before 1976 shall be the product of

##### (i)                                     Forty,and

##### (ii)                                  Thenumber of weeks in which he had an Hour of Service.

#### (d)           Where his Company’srecords or procedures do not readily permit determination of an Employee’sactual hours, Hours of Service may be credited under an equivalency methodunder which an Employee who is customarily employed for at least thirty (30)hours per week throughout each Plan Year (except for holidays and vacations)shall be credited with 190 Hours of Service for each month in which hecompletes at least one (1) Hour of Service in accordance with the provisions ofthis Section 1.28 (regardless of whether the number of Hours of Serviceactually completed in such month exceeds 190).

#### (e)           Hours of Serviceshall include hours performed or paid for by any company, which was then orsubsequently became controlled by a Company.

#### (f)            Notwithstanding anyother provision of this Section 1.31, the Hours of Service of eachEmployee who became a Participant in connection with the Spinoff of Henley byAllied-Signal as of May 27, 1986 and who participated in thePredecessor Plan on December 31, 1985 shall include all Hours of Serviceunder Section 1.25 of the Predecessor Plan.

## Section 1.32           InvestmentCommittee.  “Investment Committee”shall mean the Investment Committee designated by the Board of Directors tohave the investment responsibilities under the Plan described inArticle VII.  Effective September30, 1993, the Board of Directors or its delegate shall serve as the Investment Committee.

## Section 1.33           InsuranceCompany.  “Insurance Company” shallmean any insurance company selected by the Administrator to provide contractsof insurance or annuity contracts to the Trustee for the purpose of fundingbenefits under the Plan.

## Section 1.34           KeyEmployee.  “Key Employee” shall meanan Employee described in Section 9.1.4 of the Plan and in Section 416of the Code.

## Section 1.35           MaximumPermissible Amount.  “MaximumPermissible Amount” means the amount, as adjusted, specified inSection 6.3.

## Section 1.36           Military Leave.  Any Employee who leaves the Company directlyto perform service in the Armed Forces of the United States or the UnitedStates Public Health Service under conditions entitling him to reemploymentrights as provided in the laws of the United States, shall, solely for thepurposes of the Plan and irrespective of whether he is compensated by anyCompany during such period of service be presumed an Employee on MilitaryLeave.  Such presumption shall cease toapply if such Employee voluntarily resigns from the Company during such periodof service, or if he fails to make application for

##  

14

----

##  

## reemploymentwithin the period specified by such laws for the preservation of hisreemployment rights.

## Section 1.37           MinimumBenefit.  “Minimum Benefit” means thebenefit described in Section 9.6.

## Section 1.38           NormalRetirement Benefit.  “NormalRetirement Benefit” shall mean the Benefit payable under Section 3.2.

## Section 1.39           NormalRetirement Date.  “Normal RetirementDate” of a Participant or Former Participant shall mean the first day of thecalendar month coincident with or next following his sixty-fifthbirthday, on which date such Participant or Former Participant shall beentitled to the Normal Retirement Benefit provided in Section 3.2.

## Section 1.40           Participant. “Participant” shall mean any personincluded in the Plan as provided in Article II, until such time as suchParticipant has a Separation from the Service.

## Section 1.41           Periodof Severance.  “Period of Severance”shall mean the period of time commencing on the Severance from Service Date andending on the date on which an Employee again performs an Hour of Servicewithin the meaning of 29 CFR Section  2530.200b-2(a)(1).

Solely for the purpose of determining whether a Periodof Severance has occurred, in the case of an Employee who is absent from workfor maternity or paternity reasons, a period of absence of two years or lessshall not be taken into account.  Anabsence from work for maternity or paternity reasons means an absence (i) byreason of the pregnancy of the Employee, (ii) by reason of thebirth of a child of the Employee, (iii) by reason of the placementof a child with the Employee in connection with the adoption of such child bysuch Employee, or (iv) for purposes of caring for such child for aperiod beginning immediately following such birth or placement.

## Section 1.42           Plan. The “Plan” shall mean The Bolsa ChicaCompany Retirement Plan (formerly known as the Henley Properties Inc.Retirement Plan and, prior to January 1, 1990, known as The Henley Group, Inc.Retirement Plan), as amended and restated from time to time.  Effective December 31, 1993, “Plan” shallmean the Koll Real Estate Group Retirement Plan, as amended and restated fromtime to time.

SECTION 1.42 OF THE PLAN WAS AMENDED BY AMENDMENT NO.1, EFFECTIVE AS OF JANUARY 1, 1999, BY ADDING THE FOLLOWING SENTENCE:

“Effective January 1, 1999, “Plan” shall mean theCalifornia Coastal Communities, Inc. Retirement Plan, as amended and restatedfrom time to time.”

## Section 1.43           Plan Enrolled Actuary.  The term “Plan Enrolled Actuary” shall meanthat person who is enrolled by the Joint Board for the Enrollment of Actuariesestablished under

##  

15

----

##  

## subtitle C ofTitle III of ERISA and who has been engaged by the Committee on behalf of allParticipants to make and render all necessary actuarial determinations,statements, opinions, assumptions, reports, and valuations under the Plan asrequired by law or requested by the Administrator.

## Section 1.44           PlanYear.  “Plan Year” shall mean thecalendar year, including such years preceding the adoption of the Plan.

## Section 1.45           PredecessorPlan.  “Predecessor Plan” shall meanThe Signal Companies, Inc. Retirement Plan, as in effect on December 31,1985.

## Section 1.46           RelatedPlan.  “Related Plan” shall mean thePneumo Abex Corporation Retirement Plan, the New Hampshire Oak, Inc. RetirementPlan, the Wheelabrator Technologies Inc. Retirement Plan and the FisherScientific International Inc. Retirement Plan.

## Section 1.47           RetirementBenefit.  “Retirement Benefit” shallmean either the Early Retirement Benefit, the Normal Retirement Benefit, theDisability Retirement Benefit or the Optional Retirement Benefit described inArticle III.

## Section 1.48           Separationfrom the Service.  “Separation fromthe Service” of an Employee shall mean his resignation, treatment asvoluntarily terminated, discharge, Normal Retirement, Disability Retirement orEarly Retirement from the Company, or his death.

## Section 1.49           Severancefrom Service Date.  “Severance fromService Date” shall mean the earlier of (a) the date on which anEmployee quits, retires, is discharged, dies or is treated as voluntarilyterminated, (b) the date on which an Employee on Military Leave (i) voluntarilyresigns from the Company or (ii) in the case of an Employee onMilitary Leave who fails to apply for reemployment, the day next following thelast day of the period specified by the laws of the United States for thepreservation of such Employee’s reemployment rights, (c) the daynext following the date of expiration of a period of educational leave, or (d) thefirst anniversary of the first date of a period in which an Employee remainsabsent from service (with or without pay) for any reason other than quit,retirement, discharge, death or voluntary termination, such as vacation,holiday, sickness, disability, leave of absence or layoff, provided that (e) withthe prior approval of the Company, the Severance from Service Date of anEmployee who receives salary continuation in respect of termination ofemployment may be a date no earlier than the first anniversary, and no laterthan the second anniversary, of the last date of a period during which salarycontinuation is provided.  A one-yearperiod of severance is a 12 consecutive month period, beginning on theSeverance from Service Date, during which the employee does not perform an hourof service for the employer.

## Section 1.50           Spinoff. “Spinoff” shall have the meaningassigned to such term in the Preamble to the Plan.

## Section 1.51           SocialSecurity Retirement Age.  “SocialSecurity Retirement Age” means:

##### (i)                                     Age65 with respect to any Employee who was born before January 1, 1938;

 

16

----

 

##### (ii)                                  Age66 with respect to any Employee who was born after December 31, 1937 andbefore January 1, 1955; and

##### (iii)                               Age67 with respect to any Employee who was born after December 31, 1954.

## Section 1.52           Trust. “Trust” shall mean the trust establishedpursuant to the Trust Agreement.

## Section 1.53           TrustAgreement.  “Trust Agreement” shallmean the trust agreement under the Plan as it may be amended from time to time,providing for the investment and administration of the Trust Fund.  By this reference the Trust Agreement isincorporated herein.

## Section 1.54           TrustFund.  “Trust Fund” shall mean thefund established under the Trust Agreement by contributions made pursuant tothe Plan and from which any amounts payable under the Plan are to be paid.

## Section 1.55           Trustee. “Trustee” shall mean the Trustee underthe Trust Agreement.

## Section 1.56           VestedRetirement Benefit.  “VestedRetirement Benefit” shall have the meaning given in Section 3.10.

## Section 1.57           VestingService.  (a) The Vesting Service ofa Participant shall mean the aggregate number of whole year periods of serviceafter he first became an Employee and prior to any Period of Severance whetheror not such periods of service were completed consecutively.

#### (b)           The Vesting Serviceof a Participant shall also include the following Periods of Severance:  (i) a Period of Severance which begins as ofthe date the Participant quits, is discharged or retires and ends within twelvemonths of such date; and (ii) a Period of Severance which begins asof the date of any absence from service for any reason not described in (i)above which is then followed by a quit, discharge or retirement and whichthereafter ends within twelve months of the original absence.

#### (c)           The Vesting Serviceof a nonvested Participant who has incurred a Period of Severance of one yearor more and is subsequently reemployed shall not include previously earnedVesting Service if, at the time of such reemployment, the Period of Severanceequals or exceeds the greater of five (5) years or the previously earnedVesting Service (whether or not consecutive). For purposes of this subsection, in the case of an Employee who isabsent from work for maternity or paternity reasons, the 12-consecutive-monthperiod beginning on the first anniversary of the first date of such absenceshall not be counted as part of a Period of Severance.  An absence from work for maternity orpaternity reasons means an absence (1) by reason of the pregnancyof the Employee, (2) by reason of a birth of a child of theEmployee, (3) by reason of the placement of a child with theEmployee in connection with the adoption of such child by such Employee, or (4) forpurposes of caring for such child for a period beginning immediately followingsuch birth or placement.

#### (d)           Notwithstanding any other provisionof this Section, the Vesting Service of each Employee who became a Participantin connection with the spinoff of Henley by

####  

17

----

####  

#### Allied-Signalas of May 27, 1986 and who participated in the Predecessor Plan onDecember 31, 1985 shall include all Vesting Service underSection 1.49 of the Predecessor Plan.

#### (e)           For purposes of thisSection, service with any member of the controlled group of corporations ofwhich the Company is a member (within the meaning of section 414(b), (c)or (m) of the Internal Revenue Code) shall be considered service as anEmployee.

#### (f)            For purposes ofthis Section, service from January 1, 1990 through December 31, 1993 that istreated as ‘vesting service’ under any Related Plan will be considered to beVesting Service under this Plan.

#### (g)           For purposes of thisSection, service of any employee who is a leased employee to any employeraggregated under Code Section 414(b), (c), or (m) will be credited whether ornot such individual is eligible to participate in the Plan.

# **ARTICLE II**

# **ELIGIBILITY**

## Section 2.1             Requirementsfor Participation.

#### (a)           Any Employee

##### (i)                                     who

###### (A)                              wasactively employed on January 1, 1986 by Henley or a business that became asubsidiary or division of Henley in connection with the Spinoff of Henley byAllied-Signal as of May 27, 1986; or

###### (B)                                wasactively employed on January 1, 1986 by a member of the Allied-Signalcontrolled group of corporations and became an Employee in connection with theSpinoff; and

##### (ii)                                  whowas a participant in the Predecessor Plan on December 31, 1985, shall be aParticipant in this Plan as of January 1, 1986.

#### (b)           Any Employee who

##### (i)                                     onthe first day of any calendar month after December 1985 an Employee shallbecome a Plan Participant if he or she has completed either one three hundredsixty-five day period commencing with the first day for which he isentitled to be credited with an Hour of Service within the meaning of 29 CFR Section 2530.200b-2(a)(1) upon employment or reemployment, or one calendaryear commencing with or after such first period, during which three hundredsixty-five day period or year he had

#####  

18

----

#####  

##### completed one thousand or more Hours ofService as an Employee, and

##### (ii)                                  isnot

###### (A)                              anEmployee in a division of a Company as to which the Plan has not been adopted,or a Company as to which the Plan was adopted only for positions orclassifications excluding the Employee, or

###### (B)                                anEmployee in a bargaining unit covered by a collective bargaining agreement inexistence on March 4, 1975 (unless such agreement provided for coveragehereunder of Employees in such unit) or a bargaining unit which becomes coveredby a collective bargaining agreement after such date, with respect to which retirementbenefits were the subject of good faith bargaining (unless such agreementprovides for coverage hereunder of Employees in such unit), or

###### (C)                                acitizen of a country other than the United States and a resident of a countryother than the United States, or

###### (D)                               acitizen of a country other than the United States and an Employee of anyCompany determined by the Administrator to be predominantly involved ininternational operations, unless the Administrator otherwise determines thatsuch Employee is eligible to participate in this Plan, on the basis of uniformstandards applied in a nondiscriminatory manner to all Employees similarlysituated, shall be eligible to become a Participant.  Service rendered for a member of the Allied-Signalcontrolled group of corporations prior to May 27, 1986 by an Employee whowas eligible to become a participant in the Predecessor Plan onDecember 31, 1985, became an Employee in connection with the spinoff ofHenley by Allied-Signal and was actively employed on January 1, 1986by a member of the Allied-Signal controlled group of corporations shallbe considered service as an Employee for purposes of this subsection.

#### (c)           For purposes of determiningeligibility to participate in the Plan under this Section 2.1, servicewith any member of the controlled group of corporations of which the Company isa member (within the meaning of section 414(b), (c) or (m) of the Code)shall be considered service as an Employee.

19

----

####  

#### (d)           EffectiveJanuary 1, 1990, for purposes of determining eligibility to participate in thePlan under this Section, service from January 1, 1990 through December 31, 1993that is counted toward eligibility under any Related Plan shall be consideredservice as an Employee.

## Section 2.2             Terminationof Participation.  A Participantshall cease to be a Participant on the date on which he is deemed to haveSeparated from the Service. A Former Participant who returns to the employ ofthe Company shall be reinstated as a Participant immediately and his CreditedService and Vesting Service as of such date shall be calculated in accordancewith the rules in Section 1.19 and Section 1.56, respectively.

## Section 2.3             Forfeitures. If a Participant has a Separation fromthe Service for any reason prior to his acquisition of a Vested RetirementBenefit, his Accrued Benefit shall be forfeited when his continuous Period ofSeverance equals or exceeds the greater of five (5) years or his previouslyearned Vesting Service (whether or not completed consecutively).

## Section 2.4             Freeze. Notwithstanding anything to the contraryin the Plan, there shall be no new Participants in the Plan after December 31,1993, and any Employees who would otherwise commence their participation in thePlan after December 31, 1993 shall not be eligible for such participation andshall not accrue any retirement or other benefits under the Plan. Accordingly,the participant group in the Plan shall be fixed and frozen as of December 31,1993.

# **ARTICLE III**

# **RETIREMENT,TERMINATION, OR DEATH**

## Section 3.1             NormalRetirement.  A Participant may retireon his Normal Retirement Date or the first day of any month thereafter.

IN THE JANUARY 1, 1989RESTATEMENTSECTION 3.2 WAS AMENDED TO READ AS FOLLOWS

## Section 3.2             NormalRetirement Benefit.

#### (a)           AParticipant who retires on or after his Normal Retirement Date shall receive aNormal Retirement Benefit which shall not be less than the Participant’sAccrued Benefit provided  in Section3.10(c) subsections (i) , (ii), (iii) or (iv) below. His Normal RetirementBenefit shall consist of a monthly payment commencing on the first day of themonth coincident with or next following the date he retires and ending with themonth in which his death occurs.

#### (b)           Exceptas provided in subsections (c) through (k), his Normal Retirement Benefit shallbe the sum of (i) , (ii) and (iii):

20

----

#####  

##### (i)                                     1.1%of his Average Final Compensation up to Covered Compensation multiplied by hisCredited Service (but not more than 35 years);

##### (ii)                                  1.5%of his Average Final Compensation in excess of Covered Compensation multipliedby his Credited Service (but not more than 35 years);

##### (iii)                               1.5%of his Average Final Compensation multiplied by Credited Service in excess of35 years.

#### (c)           AParticipant’s Normal Retirement Benefit shall not

##### (i)                                     inthe case of a Participant who had his Separation from the Service at the timehe was employed by Air Cruisers Corporation or Signal Landmark, and except asprovided in subsections (d) through (k), be less than the greater of (a)$20.00 times his Credited Service, or (b) 1% of his Average FinalCompensation multiplied by his Credited Service, or

##### (ii)                                  inthe case of a Participant who had his Separation from the Service at the timehe was employed by a Company other than one described in (c)(i), and except asprovided in subsections (d) through (k), be less than 1.25% of his AverageFinal Compensation multiplied by his Credited Service; provided, however,that for this purpose Average Final Compensation shall be computed by takinginto account only the Compensation described in subsections 1.15(a)(i) and(iii) of this Plan, provided that

##### (iii)                               inthe case of a Participant who had his Separation from the Service at the timehe was employed at the La Jolla facility or the Hampton facility of theCompany, shall not be less than the greater of his Normal Retirement Benefitcalculated in accordance with subsection (c)(i) or subsection (c)(ii) above.

#### (d)           Notwithstandinganything in the Plan to the contrary, in no event shall a Participant’s orFormer Participant’s monthly Benefit payment under Section 3.2, 3.5, 3.4(b) or3.10 be less than the largest monthly Benefit payment under Section 3.4(b) towhich he could have become entitled by electing, at any time, Early Retirementunder Section 3.3.

#### (e)           TheNormal Retirement Benefit of a Participant specified below shall be adjusted asfollows:

##### (i)                                     Inthe case of a Participant who holds or has held an account in the GarrettSecured Benefit Account in The Henley Savings and Stock Purchase Plan (the “SavingsPlan”), his Normal Retirement Benefit shall be,

21

----

######  

###### (A)                              inthe case of a Participant who elects pursuant to the Savings Plan to transferhis entire account balance held in the Garrett Secured Benefit Account to thisPlan, the Normal Retirement Benefit provided hereunder without regard to thissubparagraph (e) and

###### (B)                                inthe case of a Participant who elects pursuant to the Savings Plan not totransfer his account balance in the Garrett Secured Benefit Account to thisPlan, the Normal Retirement Benefit provided under subparagraph (b) of thisSection 3.2, offset by the value of the account balance not transferred (the “Offset”).Except in the case of a Participant eligible for a Normal Retirement Benefitunder the Predecessor Plan on December 31, 1983, the Offset shall becalculated at the earlier of the time the Participant reaches Normal RetirementDate or the time the Participant has a Separation from the Service (the “OffsetCalculation Date”). Any portion of a Participant’s Garrett Secured BenefitAccount withdrawn prior to the Offset Calculation Date and afterDecember 31, 1983 shall be disregarded, and for purposes of calculatingthe Offset, the Participant’s balance in such account shall be assumed to bethe amount which would have been his balance at the Offset Calculation Date hadno prior withdrawals been made. Solely for purposes of calculating the Offset,the actuarial assumptions set forth in this paragraph shall apply. The Offsetshall be calculated as follows:  (1)the portion of the Participant’s account which would have existed as ofDecember 31, 1983 absent Amendment IV to the Garrett Severance Plan istreated as earning a 1.75% semi-annual interest rate (the “Assumed Rate”) tothe  Offset Calculation Date (the “OffsetPortion”) and is then subtracted from the Participant’s actual account balanceon the Offset Calculation Date (the result is the “Remainder Amount”); (2)the Offset Portion, treated as earning the Assumed Rate from the OffsetCalculation Date to Normal Retirement Date, if later and the Remainder Amount,treated as earning a 7 1/2% annual interest rate from the Offset CalculationDate to Normal Retirement Date, if later, are added together; (3) thesum of (1) and (2) is divided by 153.31 and in the case of a Participant eligiblefor a Normal Retirement Benefit under the Predecessor Plan on December 31,1983, the Offset shall be calculated on the basis of the Participant’s GarrettSecured Benefit Account at the Participant’s Normal Retirement Date, plus theamount allocated to such Participant’s account by virtue

22

----

######  

###### of Amendment IV to the Garrett Severance Plan, divided by 153.31;

##### (ii)                                  Inthe case of a Participant who was a member of the Equity Group Amended EmployeeRetirement Plan (the “Equity Plan”) as of December 31, 1971, whosecontributions to such plan had not been returned pursuant to Article VIII ofthe Wheelabrator-Frye Inc. Salaried Employees’ Retirement Plan, the NormalRetirement Benefit shall be increased by the greater of (a) one-twelfthof the product of two-thirds percent of his final average earnings, as definedin the Equity Plan times the number of his years of service under the EquityPlan or (b) the amount necessary to make his Normal Retirement Benefithereunder equal to the benefit he would have received if he had retired inDecember 1971.

#### (f)            Inthe case of an Employee of a Company who was a participant on December 31,1983 in a plan which merged with the Predecessor Plan on January 1, 1984,the provisions of which plan require any adjustments for additional benefits,offset benefits, predecessor plan benefits or, except in the case of UOP RealtyDevelopment Company or Wolverine Tube Corporation, any amounts representingemployee contributions which are withdrawn by the Participant at retirement,such adjustments shall be applied in the manner specified in such plan againstthe Normal Retirement Benefit provided under subparagraph (b) to determine theamount payable hereunder to such participant.

#### (g)           Inthe case of an Employee other than an Employee of UOP Realty DevelopmentCompany or Wolverine Tube Corporation who was a participant onDecember 31, 1983 in a plan which merged with the Predecessor Plan onJanuary 1, 1984, who made employee contributions to any retirement plan or any other pension or profit sharingplan of any Company which contribution increased the amount of any retirementbenefit payable under such plans, the provisions of such plans in effect onDecember 31, 1983 shall govern the timing and manner of the payment ofsuch contributions or benefits provided, however, that the interest rateused to accumulate such employee contributions after December 31, 1983shall in no event be less than the interest rate provided in the definition ofActuarial Equivalent under this Plan and the accumulated amount at retirementwill be converted to an annuity using the lump sum factor described in Section3.8.

#### (h)           TheNormal Retirement Benefit of any Participant who was transferred from a Companydescribed in (c)(i) to a Company described in (c)(ii) or from a Companydescribed in (c)(ii) to a Company described in (c)(i) shall be calculated asthough the Employee had, at all times, been employed by his Employer on thedate of his Separation from the Service, provided that in no event willhis Normal Retirement Benefit be less than his Accrued Benefit on the date ofany transfer.

#### (i)            TheBenefit of a Participant who elects an Optional Retirement Benefit underSection 3.6 and the Benefit of a Participant who is married on his Normal orEarly Retirement Date and has not elected not to receive the automaticStatutory Joint and Survivor

23

----

####  

#### Annuity provided under Section 3.7, shall be determined under theprovisions of Section 3.6 or 3.7, respectively.

#### (j)            Inthe case of an Employee who made contributions to any retirement plan sponsoredby UOP, Inc., which merged with the Predecessor Plan on January 1, 1984,which contributions were not withdrawn prior to or as of his Normal RetirementDate, the Normal Retirement Benefit payable under this section shall be increasedby the amount of such contributions accumulated to such date at the interestrate applicable under the prior plan (but after December 31, 1983, in noevent less than the interest rate specified in the definition of ActuarialEquivalent hereunder) expressed as the actuarial equivalent of a single lifeannuity.

BEFORE JANUARY 1, 1989SECTION 3.2(b) READ AS FOLLOWS

(b)           Notwithstanding (i), (ii), (iii) or(iv) above, except as provided in subsections (c) through (k), his NormalRetirement Benefit shall be:

(i)                                     1.5%of his Average Final Compensation multiplied by his Credited Service, minus;

(ii)                                  1.5%of his Primary Social Security Benefit multiplied by his Credited Service (notin excess of 33 1/3 years), provided that;

(iii)                               ifthe amount determined under clause (ii) exceeds $60, and if he was aParticipant in the Signal Retirement Plan (as defined in the Predecessor Plan)on April 1, 1971, the excess over such $60 shall be disregarded.

Before January 1, 1989,Primary Social Security Benefit was defined in Section 1.42 of the Plan asfollows:  “Primary Social SecurityBenefit” means the estimated monthly benefit that a Participant would beentitled to receive at age 65, under the Social Security Act in effect on theJanuary 1 coincident with or next preceding the earlier of Separation from theService, his Disability or the day preceding his 65th birthday, whichever isapplicable, without regard to whether the Participant receives such benefit andwithout regard to any changes made after said January 1. For purposes of thePlan, such estimated amount shall be determined using the following basis todetermine the Participant’s history of covered earnings:

(a)           the Participant’s average totalcompensation for the five full calendar years immediately preceding his Separationfrom the Service, Disability or the day preceding his 65th birthday, whicheveris applicable;

(b)           the assumption that earnings forcalendar years preceding the Separation from the Service, Disability or the daypreceding his 65th birthday, whichever is applicable, increase at the same rateas the Average Per Worker Total Wages as reported by the Social SecurityAdministration;

24

----

 

(c)           the participant’s earnings for eachyear in and subsequent to the calendar year of Separation from the Service orDisability to the December 31 preceding his 65th birthday are equal to earningsfor the calendar year preceding Separation from the Service;

(d)           estimated using a table of amountsfor varying pay ranges reflecting the foregoing assumptions.

The Participant shall havethe right to supply the Company with his actual salary history, documented in amanner acceptable to the Administrator, which salary history must be obtainedfrom the Social Security Administration. If a Participant or his survivingspouse supplies actual Social Security earnings on a timely basis (in no eventlater than 12 months from the last date on which the Participant worked) thePrimary Social Security Benefit will be redetermined using such earnings andhis Benefit will be adjusted accordingly, but only if such redeterminationresults in a greater benefit to the Participant. Failure to provide the Companywith a record of actual earnings on a timely basis will entitle the Company tocalculate the offset in the manner described above land may result in an offsetwhich is greater (and therefore result in a lesser benefit) than an offsetcalculated with reference to actual earnings.

IN THE AUGUST 1, 1992 ANDSUBSEQUENT AMENDMENTS AND RESTATEMENTS,WAS AMENDED TO READ AS FOLLOWS

Section 3.2.            Normal Retirement Benefit.  (a) Participant who retires on or after hisNormal Retirement Date shall receive a Normal Retirement Benefit which shallnot be less than the Participant’s Accrued Benefit provided inSection 3.10(c) subsection (i), (ii), (iii) or (iv) below. His NormalRetirement Benefit shall consist of a monthly payment commencing on the firstday of the month coincident with or next following the date he retires andending with the month in which his death occurs.

(b)           Effective January 1, 1990, except asprovided in subsections (c) through (i), his Normal Retirement Benefit shall bethe greater of (A) the sum of (i) , (ii) and (iii), less (iv), and (B)the sum of (i) , (ii) and (iii) determined without regard to the CreditedService described in Section 1.19(a)(v) or the Compensation described inSection 1.16(h):

(i)                                     1.1%of his Average Final Compensation up to Covered Compensation multiplied by hisCredited Service (but not more than 35 years);

(ii)                                  1.5%of his Average Final Compensation in excess of Covered Compensation multipliedby his Credited Service (but not more than 35 years);

(iii)                               1.5%of his Average Final Compensation multiplied by Credited Service in excess of35 years.

(iv)                              His “normalretirement benefit” payable under any Related Plan which is based on CreditedService described in Section 1.19(a)(v).

(c)           A Participant’s Normal RetirementBenefit shall not

25

----

 

(i)                                     exceptas provided in subsections (c) through (i), be less than 1.25% of hisAverage Final Compensation multiplied by his Credited Service; provided,however, that for this purpose Average Final Compensation shall becomputed by taking into account only the Compensation described insubsections 1.16(a)(i) and (iii) of this Plan, provided that

(ii)                                  inthe case of a Participant who had his Separation from the Service at the timehe was employed at the La Jolla facility or the Hampton facility of theCompany, be less than the greater of (A) his Normal Retirement Benefitcalculated in accordance with subsection(i) above or (B) the greater of(1) $20.00 times his Credited Service or (2) 1% of his AverageFinal Compensation multiplied by his Credited Service.

(d)           Notwithstanding anything in the Planto the contrary, in no event shall a Participant’s or Former Participant’smonthly Benefit payment under Section 3.2, 3.5, 3.4(b) or 3.10 be lessthan the largest monthly Benefit payment under Section 3.4(b) to which hecould have become entitled by electing, at any time, Early Retirement underSection 3.3.

(e)           In the case of an Employee of a Companywho was a participant on December 31, 1983 in a plan which merged with thePredecessor Plan on January 1, 1984, the provisions of which plan requireany adjustments for additional benefits, offset benefits, predecessor planbenefits or, except in the case of UOP Realty Development Company, any amountsrepresenting employee contributions which are withdrawn by the Participant atretirement, such adjustments shall be applied in the manner specified in suchplan against the Normal Retirement Benefit provided under subparagraph (b)to determine the amount payable hereunder to such participant.

(f)            In the case of an Employee otherthan an Employee of UOP Realty Development Company who was a participant onDecember 31, 1983 in a plan which merged with the Predecessor Plan onJanuary 1, 1984, who made employee contributions to any retirement plan orany other pension or profit sharing plan of any Company which contributionincreased the amount of any retirement benefit payable under such plans, theprovisions of such plans in effect on December 31, 1983 shall govern thetiming and manner of the payment of such contributions or benefits provided,however, that the interest rate used to accumulate such employeecontributions after December 31, 1983 shall in no event be less than theinterest rate provided in the definition of Actuarial Equivalent under thisPlan and the accumulated amount at retirement will be converted to an annuityusing the lump sum factor described in Section 3.8.

(g)           The Normal Retirement Benefit of anyParticipant who was transferred from a Company described in (c)(i) to aCompany described in (c)(ii) or from a Company described in (c)(ii) to aCompany described in (c)(i) shall be calculated as though the Employee had, atall times, been employed by his Employer on the date of his Separation from theService, provided that in no event will his Normal Retirement Benefit beless than his Accrued Benefit on the date of any transfer.

26

----

 

(h)           The Benefit of a Participant whoelects an Optional Retirement Benefit under Section 3.6 and the Benefit ofa Participant who is married on his Normal or Early Retirement Date and has notelected not to receive the automatic Statutory Joint and Survivor Annuityprovided under Section 3.7, shall be determined under the provisions ofSection 3.6 or 3.7, respectively.

(i)            In the case of an Employee who madecontributions to any retirement plan sponsored by UOP, Inc., which merged withthe Predecessor Plan on January 1, 1984, which contributions were notwithdrawn prior to or as of his Normal Retirement Date, the Normal RetirementBenefit payable under this section shall be increased by the amount ofsuch contributions accumulated to such date at the interest rate applicableunder the prior plan (but after December 31, 1983, in no event less thanthe interest rate specified in the definition of Actuarial Equivalenthereunder) expressed as the actuarial equivalent of a single life annuity.

## Section 3.3             Early Retirement.  (a) A Participant may voluntarily retire onhis Early Retirement Date upon written notice to the Administrator designatingsuch date. A Participant who undergoes a Separation from the Service after hehas qualified for Early Retirement may elect to have Benefits commence inaccordance with this Section at or after such Separation, and thedesignated effective date of such election shall be his Early CommencementDate.

#### (b)           Notwithstanding the foregoing, anyEmployee who was eligible to retire as of December 31, 1985 under theterms of the Predecessor Plan shall be eligible to retire under this Plan.

#### (c)           Notwithstanding the foregoing, anyEmployee or former Employee who was an employee participating onDecember 31, 1983 in the UOP Pension Plan, or in any like plan maintainedby UOP, Inc. on such date, or any Employee who would otherwise have become aparticipant in such a plan upon completing the applicable eligibilityrequirements, shall be eligible to retire on or after his fifty-fifth birthdayand the completion of five years of Vesting Service.

#### (d)           Notwithstanding the foregoing, anyEmployee or former Employee who was a Participant on December 31, 1983 inthe Signal Retirement Plan (as defined in the Predecessor Plan) shall beentitled to retire under this Plan with respect to his Accrued Benefit as of December31, 1988 at the time and using the reduction factors specified in the SignalRetirement Plan in effect on such date.

## Section 3.4             Early Retirement Benefit.  (a) A Participant who retires on his EarlyRetirement Date, or Former Participant who at the time of his Separation fromthe Service has qualified for Early Retirement, shall receive a benefit whichshall be no less than his Accrued Benefit provided under Section 3.10(c),appropriately reduced, as provided under Section 3.4(b)(ii) and, subjectto the provisions of Sections 3.6 and 3.7, shall consist of a monthlypayment commencing upon his Early Commencement Date and ending with the monthin which his death occurs.

#### (b)           The amount of each such monthlypayment shall, subject to Section 3.2(d), be an amount determined byreducing

27

----

#####  

##### (i)                                     hisNormal Retirement Benefit, computed under Section 3.2(b) on the basis ofhis Credited Service completed prior to his Early Retirement Date plus thenumber of years and fractional years from his Separation from the Service tohis Normal Retirement Date, multiplied by a fraction, the numerator of which ishis Credited Service and the denominator of which is his Credited Service plusthe number of years and fractional years from his Separation from the Serviceto his Normal Retirement Date, and under Section 3.2(c) on thebasis of his Credited Service completed prior to his Early Retirement Date, by

##### (ii)                                  1/3of 1% for each of the first 60 months (if any) by which his Early CommencementDate precedes the first day of the month coincident with or next following his60th birthday; provided, however, that for Participants who attain age 55 inthe year 2009 or later, the reduction factor provided for under thissubparagraph (ii) shall be equal to 1/3 of 1% for each of the first 36 monthsand 5/12 of 1% for each additional month up to 24 months (if any) by which hisEarly Commencement Date precedes the first day of the month coincident with ornext following his 60th birthday.

#### (c)           AnEmployee or former Employee who was a Participant in the Signal Retirement Plan(as defined in the Predecessor Plan) on December 31, 1983 shall, inaddition to the monthly payment provided in subparagraph (b) above,receive a temporary additional Early Retirement Benefit of $150.00 per month endingwith the earliest of the month in which he dies, the month before his 62ndbirthday or the date of eligibility for full or reduced Social Securitybenefits.

#### (d)           Inthe case of an Employee who is eligible to retire before age fifty-five byvirtue of subparagraph (b) or (d) of Section 3.3, the EarlyRetirement Benefit payable hereunder shall be further reduced before age fifty-fiveby an Actuarial Equivalent reduction factor for the months, if any, by whichhis Early Commencement Date precedes the first day of the month coincident withor next following his fifty-fifth birthday.

#### (e)           Inthe case of an Employee who made contributions to any retirement plan sponsoredby UOP, Inc., which merged with the Predecessor Plan on January 1, 1984,which contributions were not withdrawn prior to or as of his Early RetirementDate, the Early Retirement Benefit payable under this section shall beincreased by the amount of such contributions accumulated to such date at theinterest rate applicable under the Predecessor Plan (but afterDecember 31, 1983, in no event less than the interest rate specified inthe definition of Actuarial Equivalent hereunder) expressed as the actuarialequivalent of a single life annuity.

## Section 3.5             DisabilityRetirement Benefit.  (a) AParticipant who has at least ten years of Credited Service at his date ofDisability, and who retires on his Disability Retirement Date prior to December31, 1993, may elect, in a manner prescribed by the Committee, to receive aDisability Retirement Benefit which shall be no less than his Accrued Benefit,appropriately reduced, as provided under Section 3.10(c) and, subject tothe provisions of Sections 3.6 and 3.7,

28

----

##  

## shall consist of a monthly payment on the first day of each calendarmonth commencing with his Disability Retirement Date and ending with the monthin which his death occurs or, if earlier, the month in which his Disabilityceases.

#### (b)           Theamount of each such monthly payment shall be the greater of (x) theamount computed by reducing (i) his Normal Retirement Benefit, computedunder Section 3.2(b) on the basis of his Credited Service completed priorto his Disability Retirement Date multiplied by a fraction, the numerator ofwhich is his Credited Service, and the denominator of which is his CreditedService plus the number of years and fractional years from his DisabilityRetirement Date to his Normal Retirement Date, by (ii) 1/3 of 1%for each of the first 60 months (if any) by which his Disability RetirementDate precedes his 60th birthday, provided, however, that for Participants whoattain age 55 in the year 2009 or later, the reduction factor shall be 1/3 of1% for each of the first 36 months and 5/12 of 1% for each additional month upto 24 months (if any) by which his Disability Retirement Date precedes his 60thbirthday; and with an Actuarial Equivalent reduction factor applied for eachmonth in excess of such first 60 months, or (y) the amount of hisNormal Retirement Benefit computed under Section 3.2(c)(i) or (ii) on thebasis of Credited Service completed prior to his Disability Retirement Date,whichever is applicable to such Participant, reduced by the amount referred toin (x)(ii) of this Section 3.5(b), but with such reduction limited to 50%.

#### (c)           Ifa Former Participant’s Disability ceases and he thereupon again becomes anEmployee his Disability Retirement Benefit shall cease and he shall resumestatus as a Participant. Such Former Participant shall accrue Credited Servicein accordance with the terms of the Plan for any period prior to his Normal RetirementDate after resuming status as a Participant. The Normal Retirement Benefitpayable to such Participant on his Normal Retirement Date shall be redeterminedby taking into account total Credited Service including the period ofdisability, Compensation, etc. as required by the terms of the Plan andbenefits already paid hereunder.

#### (d)           Inthe case of an Employee who made contributions to any retirement plan sponsoredby UOP, Inc., which merged with the Predecessor Plan on January 1, 1984,which contributions were not withdrawn prior to or as of his DisabilityRetirement Date, the Disability Retirement Benefit payable under this sectionshall be increased by the amount of such contributions accumulated to such dateat the interest rate applicable under the prior plan (but afterDecember 31, 1983, in no event less than the interest rate specified inthe definition of Actuarial Equivalent hereunder) expressed as the actuarialequivalent of a single life annuity.

## Section 3.6             OptionalRetirement Benefit.  (a) AParticipant or Former Participant entitled to receive a Normal or EarlyRetirement Benefit or a Participant who is entitled to receive a DisabilityRetirement Benefit, shall generally receive the joint and survivor annuityprovided in Section 3.7 (so long as such Participant is otherwisedescribed in Section 3.7), unless such Participant elects not to receivesuch annuity and elects instead to receive a distribution in a form specifiedin subsections (i), (ii), (iii) or (iv) below. In addition, to be effective,any election made under this Section 3.6 must be made by the Participanthimself, must be in writing on a form prescribed by the Administrator, mustname the Beneficiary if a form of joint annuity is chosen, must be signed bythe Participant and, if required by the Administrator, by the Participant’sspouse and must be filed with the Administrator prior to the date his benefitsare to

29

----

####  

## commence. A Participant to whom Section 3.7 does not apply and whomakes no written election under this Section shall receive a Benefit inaccordance with subsection (i) below. A Participant may elect, inaccordance with the requirements of the Administrator, to receive his Benefitin any one of the following manners:

##### (i)                                     ANormal, Early or Disability Retirement Benefit, as the case may be, in the formof a single life annuity,

##### (ii)                                  Areduced monthly Benefit payable during his Normal, Early or Disability RetirementBenefit period with the provision that if he dies after his Normal, Early, orDisability Retirement Date, as the case may be, survived by his properlydesignated Contingent Annuitant, such Contingent Annuitant shall receive amonthly Benefit in the same amount (or in 50%, 66 2/3% or 75% of that amount ifthe Participant shall so elect) until the first day of the calendar month inwhich the Contingent Annuitant’s death occurs provided, however,that if the Contingent Annuitant is other than the Participant’s spouse, notless than 50% of the actuarial value of the Participant’s Normal, Early, orDisability Retirement Benefit must be applied to provide Benefits payable tothe Participant during his life under this subsection. (This election shall nottake effect if the Contingent Annuitant does not survive until the commencementof payments under this subsection),

##### (iii)                               Anincreased retirement benefit payable during the Participant’s lifetime untilage 62, decreased after age 62 by the expected Social Security Benefit andpayable at such reduced rate during the remainder of the Participant’s life, soas to produce, as nearly as possible, a level retirement income. Such benefitshall be payable, at the Participant’s option, in the form of a life annuity ora contingent annuity with 50%, 66 2/3%, 75% or 100% payable to the Participant’sdesignated Contingent Annuitant in the event of the Participant’s death anduntil the first day of the calendar month in which the Contingent Annuitant’sdeath occurs, provided, however, that notwithstanding anything tothe contrary in this Plan, effective January 1, 1985, distributions will bemade in accordance with the Regulations under Code Section 401(a)(9), includingthe minimum distribution incidental benefit requirement of Code Section401(a)(9)(G). (An election of a benefit payable to a Contingent Annuitantpursuant to this section shall not take effect if the Contingent Annuitant doesnot survive until the commencement of payments under this subsection), or

##### (iv)                              Areduced retirement benefit payable during the Participant’s life, with aguarantee that not less than a fixed number of payments will be made to theParticipant or, if the Participant dies prior to the expiration of such fixednumber of years, to the Participant and the

30

----

#####  

##### Participant’sBeneficiary, in the aggregate. The Participant may select a guarantee of 60,120 or 180 payments. If a Participant elects this option, the Participant shallalso designate the Beneficiary to whom monthly payments will be continued ifthe Participant dies before having received the fixed number of payments. TheParticipant shall (subject to the consent requirements of this Section) havethe right to change such Beneficiary prior to the Participant’s annuitystarting date upon giving notice in writing to the Administrator. If aParticipant elects this option and dies in active employment with a Company,the Beneficiary will not be entitled to any rights or benefits under the Plan,except in accordance with Section 3.9 hereof.

#### (b)           Notwithstanding(i), (ii), (iii) or (iv) above, the payment of the Actuarial Equivalent of anystream of payments or of any annuity paid to Beneficiaries shall be paidpursuant to the requirements of Section 3.15.

#### (c)           AFormer Participant entitled to a Normal Retirement Benefit in a form prescribedin this section or pursuant to Section 3.7 who has previously left theemploy of the Company shall be notified of such entitlement as provided inSection 10.8 of the Plan.

#### (d)           Subjectto the foregoing provisions of this Section 3.6 and to the provisions ofSection 3.7, a Participant or Former Participant who (i) made employeecontributions to the UOP Pension Plan prior to January 1, 1984, (ii) electsafter October 1, 1988 and prior to March 1, 1990 to withdraw all suchcontributions with accrued interest, and (iii) has an accruedbenefit under the Plan immediately following such withdrawal the present valueof which (determined using the Actuarial Equivalent definition applicable tosmall benefit cashouts under Section 3.13) is equal to $3,500 or less, mayelect to receive an immediate lump sum distribution of such remaining accruedbenefit.

SECTION 3.6 OF THEPLAN WAS AMENDED BY AMENDMENT NO. 1,EFFECTIVE AS OF JANUARY 1, 1998, BY SUBSTITUTING THE NUMBER “$5,000” FORTHE NUMBER “$3,500” WHEREVER THE LATTER APPEARS THEREIN.

## Section 3.7             StatutoryJoint and Survivor Annuity.  (a)Notwithstanding anything in the Plan to the contrary, the Benefit, if any, of aParticipant or Former Participant commencing on his “Annuity Starting Date”(meaning either the first day of the first period with respect to which anamount is received as a life annuity; or in the case of a benefit not payablein the form of an annuity, the first day on which all events have occurredwhich entitle the Participant to an annuity) shall be a statutory joint andsurvivor annuity which is immediately available, as described in subsection, if

##### (i)                                     hewas married upon his Annuity Starting Date,

31

----

#####  

##### (ii)                                  henotified the Administrator in writing prior to his Annuity Starting Date thathe was married, and

##### (iii)                               hehas not otherwise elected under subsection.

#### (b)           Thejoint and survivor annuity of a Participant or Former Participant shall be aBenefit, reduced as provided in subsection, consisting of monthly payments tohim beginning on his Annuity Starting Date and ending with the calendar monthin which his death occurs with the provision that, if he dies after his AnnuityStarting Date survived by the spouse to whom he was married on his AnnuityStarting Date, such spouse shall receive monthly payments of fifty percent ofsuch reduced Benefit beginning on the first day of the calendar month followingthe month in which the Participant or Former Participant dies. Payments to suchParticipant’s or Former Participant’s spouse continue until the first day ofthe calendar month following the spouse’s death.

#### (c)           Thereduced Benefit payable under this Section to a Participant or FormerParticipant during his lifetime shall be at a monthly rate such that his jointand survivor annuity is the Actuarial Equivalent of his Disability, Early orNormal Retirement Benefit, as the case may be.

#### (d)           AParticipant or Former Participant referred to in subsection (a) may electin writing, in the manner prescribed by the Administrator and with the consentof such Participant’s or Former Participant’s spouse, if required by theAdministrator, not to receive a joint and survivor annuity (in which case heshall receive his Benefit as otherwise provided in the Plan). Such an electionmust satisfy the requirements of Section 3.14(b). Such an election shallbe made not earlier than:

##### (i)                                     90days before the commencement of the distribution of any part of an AccruedBenefit under this Plan,

and not later than thelater of

##### (ii)                                  hisAnnuity Starting Date, or

##### (iii)                               theninetieth (90th) day after the mailing or personal delivery to him ofinformation referred to in subsection 3.7(e).

Such an election may berevoked, or revoked and re-elected, at any time during the applicable electionperiod described in this subsection 3.7(d). A Participant may requestadditional information regarding the notices he receives undersubsection 3.7(e). However, such a request for additional information mustbe made within 60 days after the notices have been mailed or personallydelivered. Should a Participant request additional information, then theapplicable election period described in this subsection 3.7(d) shall beextended so that it ends 90 days after the requested additional information hasbeen mailed or personally delivered to the Participant. If a Participant (i) hasseparated from service, (ii) is entitled to receive or is currentlyreceiving a Qualified Joint and Survivor Annuity under CodeSection 401(a)(11), and (iii) has not had an electiondescribed in this subsection 3.7(d) made available to him, then the Planshall provide to such a Participant an election to receive the balance of hisbenefits in the form of an Optional

32

----

 

Retirement Benefit,described in Section 3.6. Such a Participant shall have 90 days afternotice of the election is mailed or personally delivered to him in which tomake the election described in the preceding sentence. If the Participant hasdied, then the election shall be made available to the Participant’s personalrepresentative. The balance of the Participant’s benefits distributed undersuch an election may be adjusted, if applicable, for payments previouslydistributed in the form of a Qualified Joint and Survivor Annuity.

#### (e)           EachParticipant or Former Participant shall receive from the Committee nontechnicalexplanations of the availability and consequences of the election providedhereunder at such time and in such a manner so as to comply with all InternalRevenue Service Regulations that may be promulgated in this regard.

#### (f)            Duringthe period described in subsection, a participant or Former Participant whoproperly elected thereunder not to receive a joint and survivor annuity mayrevoke such election and after any such revocation, an election undersubsectionmay be made again prior to the expiration of such election period.

SECTION 3.7 OF THE PLANWAS AMENDED BY AMENDMENT NO. 1, EFFECTIVE ASOF JANUARY 1, 1997, BY ADDING A NEW SUBSECTION (g) TO READ AS FOLLOWS:

“(g)         Waiver of Notice.  The Annuity Starting Date for a distributionin a form other than a Qualified Joint and Survivor Annuity may be less than 30days after receipt of the written explanation described in subsection (e) aboveprovided: (a) the Participant has been provided with information that clearlyindicates that the Participant has at least 30 days to consider whether towaive the Qualified Joint and Survivor Annuity and elect (with spousal consent)to a form of distribution other than a Qualified Joint and Survivor Annuity;(b) the Participant is permitted to revoke any affirmative distributionelection at least until the annuity starting date or, if later, at any timeprior to the expiration of the 7-day period that begins the day after theexplanation of the Qualified Joint and Survivor Annuity is provided to theParticipant; and (c) the Annuity Starting Date is a date after the date thatthe written explanation was provided to the Participant.”

## Section 3.8             Actuarial Equivalence.  The Participant’s Optional Retirement Benefitunder Section 3.6 or the Benefit provided under Section 3.7 shall bethe Actuarial Equivalent of his Normal, Early, or Disability RetirementBenefit, said Equivalent being computed as of the date payments commence.

## Section 3.9             Death Benefit - QualifiedPreretirement Survivor Annuity.  (a)If a Participant dies after becoming eligible for an Early Retirement Benefitwhile he is an Employee (including a Participant who was so eligible, wasDisabled and did not elect to receive a Disability Retirement Benefit and aFormer Participant who was eligible at the time of his Separation from theService to receive Early Retirement Benefits, but who elected to defer hisEarly Commencement Date beyond such Separation from the Service), and issurvived by a spouse, such spouse shall receive a Benefit equal to one-half ofthe amount such Participant

33

----

##  

## would have received (other than pursuant toSection 3.4(e)) had he retired immediately preceding his death and had heelected to receive a single life annuity.

#### (b)           Subjectto the limitation imposed by Section 3.6(b), in the event of the death ofa Participant who is not survived by a spouse (or if the spouse dies afterBenefits described in subparagraph (a) above have commenced) but issurvived by one or more children of the Participant under the age of 21, each periodicpayment of the Benefit described in subparagraph (a) above shall be paidin equal shares among all of such children who are under the age of 21 at thetime of such payment, and shall continue to be paid until the last of suchchildren either attains age 21 or dies.

#### (c)           Notwithstandingthe foregoing and subject to the limitation imposed by Section 3.6(b), in thecase of an Employee other than an Employee of UOP Realty Development Company orWolverine Tube Corporation who was a Participant on December 31, 1983 in aplan which merged with the Predecessor Plan on January 1, 1984, the DeathBenefit payable hereunder to a Participant’s spouse or beneficiary shall in noevent be less than the amount of any employee contributions made to such plans,accumulated to the earlier of the date benefits commence payment or theParticipant’s Normal Retirement Date, at the interest rate applicable under thePredecessor Plan (but after December 31, 1983, in no event less than theinterest rate specified in the term Actuarial Equivalent under this Plan), lessany benefits received by the Participant or Beneficiary.

#### (d)           Notwithstandingthe foregoing, the death benefit payable hereunder in respect of anyParticipant or Former Participant who was at any time prior to January 1,1984 a participant in the Retirement Plan for Employees of the GarrettCorporation and its Participating Subsidiary Companies and had elected to becovered by the death benefit provisions thereunder shall in no event be lessthan the death benefit which would have been payable under such plan if he haddied on December 31, 1983.

#### (e)           Thereshall be paid a death benefit in the case of any Employee of Air CruisersCorporation who is a retired Participant who (1) retired on aNormal or Early Retirement Date, (2) was at least age 55 at thetime of termination, (3) has at least 10 years of Vesting Serviceand (4) has not elected to take a death benefit under any otherplan covering former employees of the Garrett Corporation. This death benefitis equal to $5,000 minus (1) the sum of all medical payments paidon behalf of such retired Participant or his dependents for treatment orservices because of injury or sickness incurred by such Participant ordependents after the Participant reached Normal Retirement Date as providedunder any retiree health care benefits provision of any Garrett Corporationhealth care plan covering former employees of the Garrett Corporation, and (2) anylife insurance paid on behalf of such retired Participant under the ExtendedDeath Benefit Clause of the Garrett Corporation Group Life Insurance Plan.

#### (f)            Inthe case of an Employee who was a participant on December 31, 1983 in aplan which merged with the Predecessor Plan on January 1, 1984 whichprovided for the payment of a death benefit to the surviving spouse of anyEmployee who died after a stated period of service, a Death Benefit shall bepayable  hereunder to the survivingspouse of such an Employee in an amount equal to the greater of the amountwhich would have been payable to

34

----

 

#### such spouse had such Employee died on December 31, 1983 or theDeath Benefit payable under subparagraph (a).

#### (g)           Inaddition to the Death Benefit payable hereunder, the death benefits providedunder Sections 4.7(a) and 4.7(b)(1) of the Retirement Plan for Employees of theGarrett Corporation and its Participating Subsidiaries shall continue to beprovided to the extent applicable.

#### (h)           Inthe case of any Employee who has transferred his Garrett Secured BenefitAccount balance to this Plan pursuant to the applicable provisions of theSavings Plan, the Death Benefit payable hereunder shall in no event be lessthan the value of the account so transferred accumulated to the earlier of thedate benefits commence payment or the Participant’s Normal Retirement Date atthe interest rate specified in the definition of Actuarial Equivalent underthis Plan, less any benefits received by the Participant or Beneficiary.

#### (i)            Inthe case of the death of any Employee or former Employee who made contributionsto any retirement plan sponsored by UOP, Inc. which was merged with thePredecessor Plan on January 1, 1984, and the death of any and all personsto whom benefits were being paid under Section 3.6 or 3.7 on behalf of theEmployee following the Employee’s death, there shall be paid in a lump sum tothe Beneficiary of the Employee the amount of any contributions made to suchplan by the Employee accumulated to the earlier of the date benefits commencepayment or the Employee’s Normal Retirement Date at the interest rate applicableunder such plan, but after December 31, 1983 in no event at a rate lessthan the interest rate specified in the definition of Actuarial Equivalentunder this Plan, less any benefits paid with respect to such contributions tothe Employee and to such other person or persons under Section 3.6 or 3.7,except that if benefits are payable under Section 3.9(a) following the Employee’sdeath, the amount of such contributions accumulated with interest as providedfor above shall be paid to the Employee’s spouse in the form of an actuarialequivalent life annuity based on such spouse’s age at the date of death of theEmployee unless such spouse shall elect in writing to receive suchcontributions in the form of a lump sum payment.

#### (j)            Ifa Participant who has fulfilled the requirements for a Vested RetirementBenefit dies before his entire Benefit has been paid to him and before theearliest date which the  Participantcould have designated as his Early Retirement Date, or if a Former Participantwho has fulfilled the requirements for a Vested Retirement Benefit dies beforehis Benefit commences payment, his surviving spouse, if any, shall be entitledto receive the greater of the benefits, if any, described in subsection 3.9(f)above or benefits having the effect of a Qualified Preretirement SurvivorAnnuity, as described below, unless such spouse had not been married to theParticipant or Former Participant for at least one year at the time of hisdeath. The benefits payable to the spouse of a Participant (or FormerParticipant) who dies before the earliest date which the Participant could havedesignated as his Early Retirement Date shall commence with the month in whichthe Participant would have reached the earliest date which could have beendesignated as his Early Retirement Date or the first day of any monththereafter up to and including the first day of the month next following thedate on which the Participant would have attained age 65, as elected by thespouse, and shall be equal to one-half of the amount which would have beenpayable to such Participant if he had (a) separated from service on thedate of death; (b) survived to the earliest date which could have beendesignated as his Early Retirement

35

----

####  

#### Date or the first day of any month thereafter, as elected by the spouseand (c) commenced payment on such date with an immediate straight lifeannuity. The benefit payable to the spouse of a Former Participant who diesafter the earliest date which the Former Participant could have designated ashis Early Commencement Date but before his Benefit commences payment shallcommence with the month following the date of death or the first day of anymonth thereafter up to and including the first day of the month next followingthe date on which the Participant would have attained age 65, as elected by thespouse, and shall be equal to one-half the amount which would have been payableto such Former Participant if he had commenced payment with an immediatestraight life annuity on the day before such Former Participant’s death or thefirst day of any month thereafter up to and including the first day of themonth next following the date on which the Participant would have attained age65, as elected by the spouse.

#### (k)           Subjectto the limitation imposed by Section 3.6(b), in the case of the death of anyParticipant who formerly participated in the MPB Retirement Plan, the DeathBenefit, if any, payable hereunder to the surviving spouse of such Participantshall be increased by one-twelfth of the amount of employee contributions plusinterest remaining in the MPB Retirement Plan as of December 31, 1983,increased by 8.75% interest (or, if greater, the rate specified herein underthe definition of Actuarial Equivalent) from such date to such Participant’sdeath, divided by the lump sum factor described in Section 3.8. If no otherDeath Benefit is payable hereunder, the amount of the foregoing increase may bepaid as a lump sum with the consent of the surviving spouse. If payment of theadditional annuity benefit is deferred beyond such Participant’s date of death,the balance at the date of death shall be increased to the actual benefitcommencement date at the rate of interest specified under the definition ofActuarial Equivalent hereunder and converted to a monthly benefit using anActuarial Equivalent conversion factor.

#### (l)            Exceptas expressly herein provided, no Benefit shall be payable hereunder upon thedeath of a Participant or Former Participant.

IN THE AUGUST 1, 1992 RESTATEMENT SECTIONS 3.9(c) THROUGH 3.9(l) WERE REPLACED WITH THE FOLLOWING

(c)           Notwithstanding the foregoing andsubject to the limitation imposed by Section 3.6(b), in the case of anEmployee other than an Employee of UOP Realty Development Company who was aParticipant on December 31, 1983 in a plan which merged with thePredecessor Plan on January 1, 1984, the Death Benefit payable hereunderto a Participant’s spouse or beneficiary shall in no event be less than theamount of any employee contributions made to such plans, accumulated to the earlierof the date benefits commence payment or the Participant’s Normal RetirementDate, at the interest rate applicable under the Predecessor Plan (but afterDecember 31, 1983, in no event less than the interest rate specified inthe term Actuarial Equivalent under this Plan), less any benefits received bythe Participant or Beneficiary.

(d)           In the case of an Employee who was aparticipant on December 31, 1983 in a plan which merged with thePredecessor Plan on January 1, 1984 which provided for the payment of adeath benefit to the surviving spouse of any Employee who died after a statedperiod of service, a Death Benefit shall be payable hereunder to the survivingspouse of such an

36

----

 

Employee in an amount equal to the greater of theamount which would have been payable to such spouse had such Employee died onDecember 31, 1983 or the Death Benefit payable under subparagraph (a)..

(e)           In the case of the death of anyEmployee or former Employee who made contributions to any retirement plansponsored by UOP, Inc. which was merged with the Predecessor Plan onJanuary 1, 1984, and the death of any and all persons to whom benefitswere being paid under Section 3.6 or 3.7 on behalf of the Employeefollowing the Employee’s death, there shall be paid in a lump sum to theBeneficiary of the Employee the amount of any contributions made to such planby the Employee accumulated to the earlier of the date benefits commencepayment or the Employee’s Normal Retirement Date at the interest rateapplicable under such plan, but after December 31, 1983 in no event at arate less than the interest rate specified in the definition of ActuarialEquivalent under this Plan, less any benefits paid with respect to suchcontributions to the Employee and to such other person or persons underSection 3.6 or 3.7, except that if benefits are payable underSection 3.9(a) following the Employee’s death, the amount of suchcontributions accumulated with interest as provided for above shall be paid tothe Employee’s spouse in the form of an actuarial equivalent life annuity basedon such spouse’s age at the date of death of the Employee unless such spouseshall elect in writing to receive such contributions in the form of a lump sumpayment.

(f)            If a Participant who has fulfilledthe requirements for a Vested Retirement Benefit dies before his entire Benefithas been paid to him and before the earliest date which the Participant couldhave designated as his Early Retirement Date, or if a Former Participant whohas fulfilled the requirements for a Vested Retirement Benefit dies before hisBenefit commences payment, his surviving spouse, if any, shall be entitled toreceive the greater of the benefits, if any, described insubsection 3.9(d) above or benefits having the effect of a Qualified PreretirementSurvivor Annuity, as described below, unless such spouse had not been marriedto the Participant or Former Participant for at least one year at the time ofhis death. The benefits payable to the spouse of a Participant (or FormerParticipant) who dies before the earliest date which the Participant could havedesignated as his Early Retirement Date shall commence with the month in whichthe Participant would have reached the earliest date which could have beendesignated as his Early Retirement Date or the first day of any monththereafter up to and including the first day of the month next following thedate on which the Participant would have attained age 65, as elected by thespouse, and shall be equal to one-half of the amount which would have been payableto such Participant if he had (a) separated from service on thedate of death; (b) survived to the earliest date which could havebeen designated as his Early Retirement Date or the first day of any monththereafter, as elected by the spouse and (c) commenced payment onsuch date with an immediate straight life annuity. The benefit payable to thespouse of a Former Participant who dies after the earliest date which theFormer Participant could have designated as his Early Commencement Date butbefore his Benefit commences payment shall commence with the month followingthe date of death or the first day of any month thereafter up to and includingthe first day of the month next following the date on which the Participantwould have attained age 65, as elected by the spouse, and shall equal to one-halfthe amount which would have been payable to such Former Participant if he hadcommenced payment with an immediate straight life annuity on the day beforesuch Former Participant’s death or the first day of any month thereafter up toand including the first day of the month next following the date on which theParticipant would have attained age 65, as elected by the spouse.

37

----

 

(g)           Except as expressly herein provided,no Benefit shall be payable hereunder upon the death of a Participant or FormerParticipant.

(h)           If the spousal benefit describedabove is not fully subsidized, the Participant may waive the spousal benefitdescribed above by following the procedures described below.

(i)                                     Notice. During the Applicable Period (definedbelow), the Committee will provide the Participant with an explanation of theterms and conditions of the spousal benefit, the Participant’s right to make,and the effect of, an election to waive the spousal benefit, the rights of theParticipant’s spouse to approve such a waiver, the Participant’s right torevoke such a waiver at any time before the Participant’s death and the effectof the Participant’s right to revoke such a waiver.

(ii)                                  Procedure. A Participant’s waiver of the spousalbenefit must be made on a form prepared by, and delivered to the Committeeduring the period (“Applicable Period”) that begins with the first day of thePlan Year in which the Participant attains age 35 and ends with the death ofthe Participant; provided, however, if a Participant ceases to be an Employeebefore the first day of the Plan Year in which the Participant attains age 35,this period will begin on the day the Participant ceases to be an Employee. AParticipant may revoke such a waiver at any time before the first to occur ofthe Participant’s Annuity Starting Date or the Participant’s death bydelivering a subsequent form to the Committee that satisfies the waiverprovisions of this Plan.

(iii)                               SpousalConsent.  The Participant’s survivingspouse must waive any rights to the spousal benefit in a written document thatacknowledges the effect of the waiver, and that is witnessed by a notary publicor, to the extent permitted by the Company, by a Company representative. Spousalconsent will be irrevocable; provided, however, that spousal consent will bedeemed to be revoked if the Participant changes his or her waiver election.

(iv)                              WaiverUnnecessary.  If the Participant islegally separated or abandoned (within the meaning of local law) and theParticipant has a court order to that effect (and there is no QualifiedDomestic Relations Order as defined in Code Section 414(p) that providesotherwise), or the surviving spouse cannot be located, then the waiverdescribed in the preceding paragraph need not be filed with the Committee whena married Participant waives a spousal benefit under this Plan.

38

----

 

(v)                                 Effectof Waiver. Any waiver by a spouse obtained pursuant to these procedures (orestablishment that the consent of a spouse could not be obtained) will beeffective only with respect to that spouse.

(i)            The surviving spouse need not beginreceiving a qualified preretirement survivor annuity prior to the time theParticipant would have attained age 65 except where the present value of thenonforfeitable benefit does not exceed $3,500.

## Section 3.10           VestedRetirement Benefit. (a) Each Participant who has completed five (5) yearsof Vesting Service or who has reached his Normal Retirement Date while anEmployee shall be entitled to a Vested Retirement Benefit equal to his AccruedBenefit. In the event of his Separation from the Service prior to his Normal,Early or Disability Retirement Date, a vested Former Participant shall, uponthe earlier of his Normal Retirement Date or his attainment of age 55 (orapplicable earlier retirement age) become entitled to receive a Normal, Earlybut with an Actuarial Equivalent early reduction factor applied or OptionalRetirement Benefit as he shall elect (or in the absence of such election, asdetermined in the manner of Section 3.2, 3.4 or 3.7), all in an amountequal or Actuarially Equivalent to his Accrued Benefit payable at age 65. Inaddition, any Employee or former Employee who was a Participant in the SignalRetirement Plan (as defined in the Predecessor Plan) on December 31, 1983and who completes five years of Vesting Service and attains his thirty-fifthbirthday, shall be entitled to a Vested Retirement Benefit equal to his AccruedBenefit as of such date. In the event of his Separation from the Service priorto his Normal, Early, or Disability Retirement Date, a vested FormerParticipant shall upon his Normal or Early Retirement Date become entitled to aNormal, Early but with an Actuarial Equivalent early reduction factor appliedor Optional Retirement Benefit as he shall elect (or in the absence of suchelection, as determined in the manner of Section 3.2, 3.4, or 3.7), all inan amount equal or Actuarially Equivalent to his Accrued Benefit payable at age65.

#### (b)           AnEmployee’s “Accrued Benefit” as of his Separation from the Service shall beequal to his Normal Retirement Benefit computed under Section 3.2(b) onthe basis of his Credited Service completed prior to such Separation plus thenumber of years and fractional years from the date of such Separation to hisNormal Retirement Date, multiplied by a fraction, the numerator of which is hisCredited Service and the denominator of which is his Credited Service plus thenumber of years and fractional years from the date of such Separation to hisNormal Retirement Date, and under Section 3.2(c) on the basis of hisCredited Service completed prior to such Separation.

#### (c)           Ifthe Plan’s vesting schedule is amended, the vested percentage of every Employeewho is a Participant on the amendment adoption date or the amendment effectivedate, whichever is later, may not be less than the Participant’s vestedpercentage determined under the Plan without regard to the amendment. Inaddition, if the Plan’s vesting schedule is amended, each such Participant whohas completed 3 Years of Service and whose vested percentage is determinedunder the new vesting schedule may elect to have his or her vested percentagedetermined under the old vesting schedule if the old vesting schedule would bemore favorable.

#### (d)           AnEmployee’s right to his or her normal retirement benefit is nonforfeitable onattainment of age 65.

39

----

####  

BEFORE THE JANUARY 1, 1989 RESTATEMENTREAD AS FOLLOWS

(c)           An Employee’s “Accrued Benefit” as ofhis Separation from the Service shall be equal to his Normal Retirement Benefitcomputed under Section 3.2 on the basis of his Credited Service completedprior to such Separation but with the amount referred to in Section 3.2(b)(ii)not to exceed 50% of his Primary Insurance Amount multiplied by a fraction, thenumerator of which is his Credited Service and the denominator of which is hisCredited Service plus the number of years and fractional years from the date ofsuch Separation to his Normal Retirement Date.

(d)           Notwithstanding the foregoing:

(i)                                     the“Accrued Benefit” of any Employee or former Employee who was a Participant inthe Signal Retirement Plan (as defined in the Predecessor Plan) shall not beless than the amount of such “Accrued Benefit” as of December 31, 1983determined under the provisions of such plan and the actuarial equivalencetables specified in such plan in effect on December 31, 1983;

(ii)                                  the“Accrued Benefit” as of December 31, 1983 of any Employee or formerEmployee who was a participant in any plan which merged with the PredecessorPlan effective January 1, 1984 shall not be less than his “Accrued Benefit”as of December 31, 1983 determined under the terms of such other plan and,for Participants eligible to commence benefits on December 31, 1983,further determined by reference to the actuarial equivalence tables or interestassumption actually specified in such other plan on December 31, 1983;

(iii)                               the“Accrued Benefit” as of December 31, 1983 of any Employee or formerEmployee who was a participant in the Equity Plan prior to January 1,1984, shall not be less than the amount of such “Accrued Benefit” as ofDecember 31, 1983 determined under the terms of the Equity Plan;

(iv)                              the “AccruedBenefit” of any Employee or former Employee who was a participant in a planwhich merged with the Predecessor Plan on January 1, 1984, shall not beless than the amount of any employee contributions made by the Employee to suchplan (which contributions were not withdrawn prior to the earlier of his EarlyCommencement Date or Normal Retirement Date), expressed as an actuarialequivalent single life annuity, accumulated to the earlier of his Normal RetirementDate or Early Commencement Date at the interest rate applicable under suchplan, but after December 31, 1983, in no event at a rate less than theinterest rate specified in the definition of Actuarial Equivalent under thisPlan;

40

----

 

(v)                                 the“Accrued Benefit” of any Employee who transferred the balance of his account inthe Garrett Secured Benefit Account to this Plan under the provisions of theSavings Plan shall be the gross accrued benefit prior to the Offset specifiedin Section 4.2(e)(i)(b), including the value of the account transferredaccumulated to the earlier of Normal Retirement Date or Early Commencement Dateat the rate specified in such plan, but in no event at a rate less than theinterest rate specified in the definition of Actuarial Equivalent under thisPlan; and

(vi)                              the “AccruedBenefit” of any Employee or former Employee who was a participant in thePredecessor Plan on December 31, 1985 and became a Participant in thisPlan in connection with the spinoff of Henley by Allied-Signal as of May 27,1986 shall not be less than his “Accrued Benefit” as of December 31, 1985determined under the terms of the Predecessor Plan and the actuarialequivalence factors specified in the Predecessor Plan, subject to a transfer ofall assets allocable to such Participant from the trust under the PredecessorPlan to the Trust Fund as of January 1, 1986.

(vii)                           the “AccruedBenefit” of a non-highly compensated Participant shall not be less than hisAccrued Benefit computed under the terms of the Plan immediately prior to April30, 1991, the adoption date of this Amended and Restated Plan. The “AccruedBenefit” of any highly compensated Participant shall not be less than hisAccrued Benefit on December 31, 1988. The Accrued Benefit of any person whobecomes a highly compensated person after December 31, 1988 shall not be lessthan his Accrued Benefit as of December 31 of the year prior to the year inwhich he becomes a highly compensated participant.

IN THE AUGUST 1, 1992 RESTATEMENTWAS REPLACED WITH THE FOLLOWING

(c)           Notwithstanding the foregoing, the “AccruedBenefit” of a non-highly compensated Participant shall not be less than hisAccrued Benefit computed under the terms of the Plan immediately prior toApril 30, 1991, the adoption date of the prior amended and restatedversion of the Plan. The “Accrued Benefit” of any highly compensatedParticipant shall not be less than his Accrued Benefit on December 31,1988. The Accrued Benefit of any person who becomes a highly compensated personafter December 31, 1988 shall not be less than his Accrued Benefit as ofDecember 31 of the year prior to the year in which he becomes a highlycompensated participant.

(d)           AnEmployee or former Employee who made contributions to any retirement plansponsored by UOP, Inc. which was merged with the Predecessor Plan onJanuary 1, 1984 may, by written election at any time after Separation fromthe Service and prior

41

----

 

to or as of the date any monthly benefit first becomespayable hereunder, withdraw such contributions with interest at the ratesspecified in Section 3.2(i) above, accumulated to the end of the calendar monthimmediately preceding the date of such written election.

(e)           If the present value of theParticipant’s vested Accrued Benefit is zero at the time of his Separation fromthe Service, then that Participant shall be deemed to have received animmediate distribution of that vested Accrued Benefit on his Severance fromService Date.

(f)            The Accrued Benefit for each Section401(a)(17) employee (defined below) under this Plan will be the sum of (i) theemployee’s Accrued Benefit as of December 31, 1993 and (ii) the employee’sAccrued Benefit (if any) determined under the benefit formula applicable for aPlan Year beginning on or after January 1, 1994, as applied to the employee’syears of service (if any) credited to the employee for Plan Years beginning onor after January 1, 1994 for purposes of benefit accruals. A Section 401(a)(17)employee means an employee whose current Accrued Benefit as of a date on orafter the first day of the first Plan Year beginning on or after January 1,1994, is based on Compensation for a year beginning prior to the first day ofthe first Plan Year beginning on or after January 1, 1994, that exceeded$150,000.

(g)           Notwithstanding anything to thecontrary in the Plan, no Participant shall accrue any additional retirementbenefits under the Plan after December 31, 1993, and the Accrued Benefit ofeach Participant shall be fixed and frozen on December 31, 1993 on the basis ofthe Participant’s Average Final Compensation (through December 31, 1993), yearsof Credited Service and Covered Compensation through December 31, 1993. Accordingly,the Normal Retirement Benefit under Section 3.2 of the Plan, the EarlyRetirement Benefit under Section 3.4 of the Plan, the Disability RetirementBenefit under Section 3.5 of the Plan, and the Vested Retirement Benefit underSection 3.10 of the Plan which each Participant may have accrued throughDecember 31, 1993 shall be fixed and frozen in accordance with the principlesset out in Section 1.7 (Average Final Compensation), Section 1.19 (CreditedService), and Section 1.18 (Covered Compensation).

## Section 3.11           Suspensionof Benefits.  (a) Payment of anybenefit derived from Company contributions to which a Participant wouldotherwise be entitled shall be suspended for any calendar month in which theParticipant completes 40 or more hours of service with the Company or with anymember of the controlled group; provided, however, that individual companiesmay adopt non-discriminatory procedures to permit payment of benefits duringreemployment. Any suspension shall be effected in accordance with Department ofLabor Regulations § 2530.203-3 (29 CFR 2530.203-3), as amended, and rulesand operational guidelines promulgated by the Committee consistent with suchregulations.

#### (b)           Subject toSection 1.19, a Participant shall accrue Credited Service in accordancewith the terms of the Plan for any period for which his benefit payments aresuspended. The benefit to which a Participant is entitled under the Plan shallbe recomputed as of the first day of the month following the end of thesuspension of benefits by taking into account such additional Credited Service,Compensation, etc. as required by the terms of the Plan and the benefitsalready paid thereunder, but in no event shall the Benefit payable following

42

----

####  

#### the suspension be less than the Benefit to which such Participant wasentitled immediately prior to the suspension.

## Section 3.12           DirectRollover.  Effective for distributionsmade on or after January 1, 1993, notwithstanding any provision of this Plan tothe contrary that would otherwise limit a Distributee’s election under thisPlan, a Distributee may elect, at the time and in the manner prescribed by theCommittee, to have any portion of an Eligible Rollover Distribution paiddirectly to an Eligible Retirement Plan specified by the Distributee in aDirect Rollover. For these purposes, the following definitions apply:

#### (a)           AnEligible Rollover Distribution is any distribution of all or any portion of thebalance to the credit of the Distributee, except that an Eligible RolloverDistribution does not include: any distribution that is one of a series ofsubstantially equal periodic payments (not less frequently than annually) madefor the life (or life expectancy) of the Distributee or the joint lives (orjoint life expectancies) of the Distributee and the Distributee’s designatedBeneficiary, or for a specified period of 10 years or more; any distribution tothe extent that distribution is required under section 401(a)(9) of the Code;and the portion of any distribution that is not includible in gross income(determined without regard to the exclusion for net unrealized appreciationwith respect to employer securities).

#### (b)           AnEligible Retirement Plan is an individual retirement account described in Codesection 408(a), an individual retirement annuity described in Code section408(b), an annuity plan described in Code section 403(a), or a qualified trustdescribed in Code section 401(a), that accepts the Distributee’s EligibleRollover Distribution. However, in the case of an Eligible RolloverDistribution to the surviving spouse, an Eligible Retirement Plan is anindividual retirement account or individual retirement annuity.

#### (c)           ADistributee includes an Employee or former Employee. In addition, the Employee’sor former Employee’s surviving spouse and the Employee’s or former Employee’sspouse or former spouse who is the alternate payee under a Qualified DomesticRelations Order, as defined in Code section 414(p), are Distributees withregard to the interest of the spouse or former spouse.

#### (d)           ADirect Rollover is a payment by the Plan to the Eligible Retirement Planspecified by the Distributee.

## Section 3.13           Paymentof Small Amounts.  The ActuarialEquivalent, if $3,500 or less, of any Accrued Benefit payable in respect of aParticipant shall be paid in a lump sum in lieu of monthly or other periodicpayments.

#### (a)           For purposes ofdetermining an employee’s accrued benefit under the Plan, the Plan maydisregard service performed by the employee with respect to which the employeehas received (i) a distribution of the present value of his entirenonforfeitable benefit if such distribution was in an amount (not more than$3,500) permitted under regulations prescribed by the Secretary of theTreasury, or (ii) a distribution of the present value of the employee’snonforfeitable benefit attributable to such service which he elected to receive.Clause (i) applies only if such distribution was made on termination of theemployee’s

43

----

####  

#### participation in the Plan. Clause (ii) applies only if suchdistribution was made on termination of the employee’s participation in theplan or under such other circumstances as may be provided under regulationsprescribed by the Secretary of the Treasury.

#### (b)           Forpurposes of determining an employee’s accrued benefit under the Plan, the Planwill not disregard service as provided in the preceding paragraph (a) if theemployee (i) received a distribution under paragraph (a) which was less thanthe present value of the Participant’s accrued benefit, the employee resumesemployment covered under the Plan, and the employee repays the full amount ofsuch distribution with interest at the rate determined for purposes ofsubsection 411(c)(2)(C). Such repayment must be made (I) in the case of awithdrawal on account of separation from service, before the earlier of 5 yearsafter the first date on which the employee is subsequently re-employed by theemployer, or the close of the first period of 5 consecutive 1-year breaks inservice commencing after the withdrawal; or (II) in the case of any otherwithdrawal, 5 years after the date of the withdrawal.

#### (c)           ThisPlan precludes the immediate distribution of any benefit where the presentvalue of the nonforfeitable accrued benefit (taking into account benefitsderived from both employer and employee contributions) is in excess of $3,500without the consent of the Participant and, when applicable, the Participant’sspouse. For these purposes, an immediate distribution means the distribution ofany part of the benefit before the later of age 62 or normal retirement age.

SECTION 3.13 OFTHE PLAN WAS AMENDED BY AMENDMENT NO. 1,EFFECTIVE AS OF JANUARY 1, 1998, BY SUBSTITUTING THE NUMBER “$5,000” FORTHE NUMBER “$3,500” WHEREVER THE LATTER APPEARS THEREIN.

## Section 3.14           SpecialElection Provisions.  (a) QualifiedPreretirement Survivor Annuity coverage shall be automatically implemented foreach Participant upon attainment of his or her right to a Vested RetirementBenefit or on such other date specified in the regulations prescribed underSection 417(a) of the Code, and shall automatically continue until theParticipant dies, is divorced, or his spouse dies.

#### (b)           Notwithstanding any otherprovision of this Plan, any election by a Participant or Former Participant ofa form of benefit payment other than that having the effect of a StatutoryJoint and Survivor Annuity described in Section 3.7 shall be effectiveonly if the Participant’s spouse consents to it in writing, such consent iswitnessed by a Plan representative designated by the Administrator or a notarypublic, such election designates a beneficiary (or a form of benefits) whichmay not be changed without spousal consent (unless the consent of the spouseexpressly permits designations by the Participant without any requirement offurther consent by the spouse), and the spouse’s consent acknowledges theeffect of the election. Spousal consent shall not be required if the Participantestablishes to the satisfaction of the Plan representative that such consentmay not be obtained because there is no spouse or the spouse cannot be located.Any consent shall be effective only with respect to the spouse who gave it.

44

----

####  

## Section 3.15           Distributionof Vested Retirement Benefit.  (a)Notwithstanding anything in the Plan to the contrary, unless otherwise electedby the Employee in writing, payment of a Vested Retirement Benefit under thePlan shall commence not later than the sixtieth (60th) day following the lastday of the Plan Year in which occurs the later of his attainment of age 65 orhis termination of employment.

#### (b)           Paymentof benefits to an Employee under the Plan must commence, regardless of hiselection, no later than April 1 of the calendar year following thecalendar year in which he attains age 70-1/2. The first payment required underthis Section 3.15 must be made by the required beginning date, the secondmust be made not later than the end of the calendar year in which the requiredbeginning date occurs and each succeeding payment must be made no later thanthe end of each succeeding calendar year.

SECTION 3.15(b) OF THE PLAN WAS AMENDED BY AMENDMENTNO. 1,EFFECTIVE AS OF JANUARY 1, 1997, BY ADDING THE FOLLOWING PARAGRAPHS:

“Notwithstanding the above, in the case of anindividual who is not a 5% owner and who attains age seventy and one-half (701⁄2)on or after January 1, 1999, the benefit of such Participant shall bedistributed, or commence to be distributed, not later than the first day ofApril following the later of the calendar year of termination of employment orthe calendar year in which the Participant attains age seventy and one-half(701⁄2).

A Participant is treated as a 5-percent owner forpurposes of this section if such Participant is a 5-percent owner as defined insection 416 of the Code at any time during the plan year ending with or withinthe calendar year in which such owner attains age 701⁄2. Once distributions havebegun to a 5-percent owner under this section, they must continue to bedistributed, even if the Participant ceases to be a 5-percent owner in asubsequent year.

Except with respect to a 5-percent owner, aParticipant’s accrued benefit is actuarially increased to take into account theperiod after age 701⁄2 in which the Employee does not receive any benefits underthe Plan.”

#### (c)           Ifbenefits shall become payable to an Employee under the Plan for a periodextending beyond his lifetime, (i) such period shall not exceed the lifeexpectancy of the Employee or if such benefits are payable to the Employee’sspouse or another individual, the lives or the joint life and last survivorexpectancy of the Employee and such spouse or individual, and (ii) notwithstandinganything to the contrary in this Plan, distributions will be made in accordancewith the Regulations under Code Section 401(a)(9), including the minimumdistribution incidental benefit requirement of Code Section 401(a)(9)(G).

#### (d)           If benefits shallbecome payable upon the death of an Employee prior to his receipt of anybenefits under this Plan, (i) such benefits shall not extend beyond (A) 5years or (B) if such benefits are payable to the Employee’s spouseor another individual, the life or life expectancy of such spouse orindividual, and (ii) such benefits shall commence to be paid no

45

----

####  

#### later than one year after the date of the Employee’s death (or suchlater date as permitted by applicable law). Notwithstanding the foregoing,benefits payable to an Employee’s surviving spouse may commence on a date whichis later than the date provided in the preceding sentence, but in no eventlater than the date on which the Employee would have attained age 70-1/2. Ifany benefits become payable upon the death of an Employee after his pensioncommencement date, such benefits will be paid out under a method ofdistribution which is at least as rapid as the method which was in effect atthe time of the Employee’s death.

# **ARTICLE IV**

# **FUNDINGOF BENEFITS**

## Section 4.1             FundingPolicy and Method.  TheAdministrative Committee shall establish a funding policy and method consistentwith the objectives of the Plan and the requirements of ERISA. Participantsshall neither be required nor permitted to make contributions under the Plan.

## Section 4.2             CompanyContributions.  The Company shallcontribute and pay to the Trustee, to be held and administered in trust, suchamounts at such times as shall be required by the funding policy and methodestablished pursuant to Section 4.1 and as shall be in accordance with therules promulgated by the Administrative Committee pursuant to Section 7.6in effectuation of such funding policy and method.

## Section 4.3             Reductionof Company Contributions.  Forfeituresarising under the Plan from termination of employment, death or for any otherreason shall not be applied to increase the benefits any person would receivefrom the Plan prior to termination or the complete discontinuance of Companycontributions thereto, but shall instead be used, to the extent not anticipatedin determining actuarial costs hereunder, to reduce subsequent Companycontributions to the Plan.

# **ARTICLE V**

# **TRUSTAGREEMENT AND TRUST FUND**

## Section 5.1             TrustAgreement.  Bolsa Chica has enteredinto a master trust agreement with the Trustee, providing for theadministration of the Trust Fund, in such form and containing such provisionsas Bolsa Chica has deemed appropriate, including, but not by way of limitation,provisions with respect to the powers and authority of the Trustee, the rightof Bolsa Chica to discharge or replace the Trustee at any time, the authorityof Bolsa Chica to amend or terminate the master trust agreement and to settlethe accounts of the Trustee on behalf of all persons having an interest in theTrust Fund, and a provision that it shall be impossible at any time prior tothe satisfaction of all liabilities under the Plan with respect to Participantsand their Beneficiaries for any part of the corpus or income of the Trust Fundto be used for or diverted to purposes other than for the exclusive benefit ofParticipants and their Beneficiaries. The master trust agreement shallconstitute the Trust Agreement for the Plan and shall be a part of the Plan,

46

----

##  

## and the rights and duties of any person under the Plan shall be subjectto all applicable terms and provisions of the master trust agreement.

## Section 5.2             TrustFund.  The Trust Fund shall be heldby the Trustee, pursuant to the terms of the master trust agreement, for theexclusive purposes of providing benefits to Participants and theirBeneficiaries and defraying reasonable expenses of administering the Plan, tothe extent such expenses are not paid by the Company, and no assets of the Planshall inure to the benefit of the Company except to the extent permitted byERISA; provided, however, that any contribution made as a result of erroneousactuarial calculations will be returned within one year from the date ofcontribution to the Company which made the contribution. No person shall haveany interest in or right to any part of the earnings of the Trust Fund, or anyright in, or to, any part of the assets thereof, except as and to the extentexpressly provided in the Plan and in the master trust agreement.

# **ARTICLE VI**

# **CERTAINLIMITATIONS ON BENEFITS**

## Section 6.1             SpecialDefinitions.  For purposes of thisArticle VI, which is effective January 1, 1987, the following capitalizedterms shall have the following respective meanings:

Bolsa Chica Group: either (i) the controlledgroup of corporations (within the meaning of section 1563(a) of theInternal Revenue Code, determined without regard to section 1563(a)(4) and(e)(3)(C) thereof) whose common parent is Bolsa Chica, or (ii) thegroup of trades or businesses which are under “common control” (as defined insection 414(c) of the Internal Revenue Code and regulations prescribedunder said section) whose common parent is Bolsa Chica, determined in eithercase by substituting for the phrase “at least 80 percent” each place it appearsin section 1563(a)(1) the phrase “more than 50 percent.” The Bolsa ChicaGroup also includes affiliated entities within the meaning of Code Section414(m).

Defined Contribution Plan: any pension, profit-sharing or stockbonus plan of the Bolsa Chica Group which (a) satisfies theapplicable qualification requirements of the Internal Revenue Code and (b) providesfor an individual account for each participant thereunder and for benefitsbased solely on the amount contributed to the participant’s account, and anyincome, expenses, gains and losses, and any forfeitures of accounts of otherparticipants which may be allocated to such participant’s account.

Defined Contribution PlanFraction:  a fraction,the numerator of which is the sum of the Participant’s annual additions as ofthe close of the Plan Year under all Defined Contribution Plans (whether or notterminated), and the denominator of which is the sum of the lesser of thefollowing amounts determined for such year and for each prior year of servicewith the Bolsa Chica Group:

(a)           1.25times the dollar limitation in effect under Internal Revenue Code section 415(c)(1)(A)for such year, or

47

----

 

(b)           1.4 times the amount which may betaken into account under Internal Revenue Code section 415(c)(1)(B).

Defined Benefit Plan: any pension plan of the Bolsa ChicaGroup which (a) satisfies the applicable qualification requirementsof the Internal Revenue Code and (b) is not a Defined ContributionPlan.

Defined Benefit PlanFraction:  a fraction,the numerator of which is the sum of the Participant’s projected annualbenefits under all Defined Benefit Plans of the Bolsa Chica Group (whether ornot terminated) and the denominator of which is the lesser of:

(A)                              1.25times the dollar limitation of Internal Revenue Code section 415(b)(1)(A)in effect for the Plan Year, or

(B)                                1.4times the Participant’s average compensation for the three consecutive PlanYears that produce the highest average.

Aggregate EmployeeContribution:  for anyParticipant with respect to any Plan Year, the aggregate of all contributionsother than “rollover amounts” or “rollover contributions” (as such terms aredefined in section 402(a)(5), 403(a)(4), 408(d)(3) or 409(b)(3)(C) of theInternal Revenue Code) and other than “deductible employee contributions” (assuch term is defined in section 72(o)(5) of the Internal Revenue Code)made by such Participant for such Plan Year under all Defined ContributionPlans.

Aggregate EmployerContribution:  for anyParticipant with respect to any Plan Year, the sum of:

(a)           all amounts allocated to the accountof such Participant in respect of forfeitures, and in respect of contributionsmade by one or more members of the Bolsa Chica Group under all DefinedContribution Plans, plus

(b)           the Aggregate Employee Contributionof such Participant for such Plan Year, plus

(c)           amounts described insections 415(l)(1) and 419A(d)(2) of the Code.

Aggregate Annual Benefit: for any Participant, the aggregate ofhis projected benefits under all Defined Benefit Plans where each suchprojected benefit is expressed as a benefit payable annually in the form of astraight life annuity (with no ancillary benefits) and where benefitsattributable to any participant contributions or rollover contributions (asdefined in sections 402(a)(5), 403(a)(4) and 408(d)(3) of the InternalRevenue Code) are excluded.

Social SecurityRetirement Age:  theage used as the retirement age under section 216(l) of the Social SecurityAct, applying such section without regard to the age increase factor andas if the early retirement age under section 216(1)(2) of the SocialSecurity Act were age 62.

LimitationYear:  the calendaryear.

48

----

 

Compensation: the Participant’s wages, salaries, feesfor professional services, other amounts received for personal servicesactually rendered in the course of employment with the Bolsa Chica Group andany additional items of compensation specified in section l.415-2(d)(l)(i)of the Treasury Regulations promulgated under Code section 415, butexcluding any amounts which are not includible as compensation undersection 1.415-2(d)(2) of the Treasury Regulations promulgated under Codesection 415.

SECTION 6.1 OF THEPLAN WAS AMENDED BY AMENDMENT NO. 1,EFFECTIVE AS OF JANUARY 1, 1997, BY ADDING THE FOLLOWING PARAGRAPHTO THE DEFINITION OF “COMPENSATION:”

“For Limitation Yearsbeginning after December 31, 1997, for purposes of applying the limitations ofthis section, compensation paid or made available during such Limitation Yearshall include any Elective Deferral (as defined in Code Section 402(g)(3)), andany amount which is contributed or deferred by the Employer at the election ofthe Employee and which is not includible in the gross income of the Employee byreason of Code Sections 125, 132(f)(4), or 457.”

## Section 6.2             InitialLimitation on Amounts Allocated to Accounts of Defined Contribution Plans.  Notwithstanding any other provision of aDefined Contribution Plan, the aggregate of all amounts allocated to aParticipant shall not exceed such amount as would cause the Aggregate EmployerContribution for such Participant with respect to such Plan Year to exceed invalue the lesser of (a) $30,000 (or, if greater, 1/4 of the dollar limitationreferred to in Section 6.3.l(a)(i)), or (b) twenty-five percent (25%)of such Participant’s compensation (within the meaning ofsection 415(c)(3) of the Internal Revenue Code) from the Bolsa Chica Groupfor such Plan Year; provided, however, that the $30,000 amount referred to inthe foregoing shall be deemed to be automatically increased (without thenecessity for an amendment of a Defined Contribution Plan) to the full extentpermitted under regulations promulgated from time to time by the Secretary ofthe Treasury or his delegate pursuant to section 415(d) of the InternalRevenue Code.

## Section 6.3             InitialLimitation on Benefits Under Defined Benefit Plans.

### Section 6.3.1          Initial Limitation on Benefits. (a) Notwithstanding any other provisionin a Defined Benefit Plan, a Participant’s benefit under such Defined BenefitPlan, assuming payment in the form of a single life annuity commencing on hisnormal retirement date, as of the end of any Plan Year shall not exceed invalue an amount which would cause his Aggregate Annual Benefit as of the end ofsuch Plan Year to exceed the smallest of the following (the “MaximumPermissible Amount”):

##### (i)                                     $90,000;or

##### (ii)                                  100% of theParticipant’s average annual compensation during the period of consecutivecalendar years (not more than three (3))

49

----

#####  

##### during whichsuch Participant both was an active participant in one or more Defined BenefitPlans and had the greatest aggregate compensation from the Bolsa Chica Group;

provided, however, thatthe amount set forth in clause (i) above shall be deemed to beautomatically increased (without the necessity for an amendment of a DefinedBenefit Plan) to the full extent permitted under regulations promulgated fromtime to time by the Secretary of the Treasury or his delegate pursuant tosection 415(d) of the Internal Revenue Code. Notwithstanding theforegoing, (1) in the case of a Participant who has completed lessthan 10 years of participation in a Defined Benefit Plan, his Aggregate AnnualBenefit shall not be deemed to exceed the limitation specified in (i) above asof the end of any Limitation Year unless it also exceeds the product of theamount determined under (i) above multiplied by a fraction, the numerator of whichis his number of years (or parts thereof) of participation in a Defined BenefitPlan and the denominator of which is 10, (2) in the case of aParticipant who has completed less than 10 years of service with one or moremembers of the Bolsa Chica Group, his Aggregate Annual Benefit shall not bedeemed to exceed the limitation specified in (ii) above as of the end of anyLimitation Year unless it also exceeds the product of the amount determinedunder (ii) above multiplied by a fraction, the numerator of which is his numberof years (or parts thereof) of service with one or more members of the BolsaChica Group and the denominator of which is 10, and (3) in the caseof a Participant who has at no time been a participant in a DefinedContribution Plan, his Aggregate Annual Benefit shall be deemed not to exceedthe limitations specified in (i) and (ii) as of the end of any Limitation Yearunless it also exceeds $10,000 as of the end of such Limitation Year or as ofthe end of any prior Limitation Year and, if such Participant has completedless than 10 years of service with one or more members of the Bolsa ChicaGroup, the $10,000 limitation shall be reduced to the product obtained bymultiplying $10,000 by a fraction, the numerator of which is the Participant’syears (or parts thereof) of service with one or more members of the Bolsa ChicaGroup and the denominator of which is 10. The fractions referred to inclauses (1) and (2) of the preceding sentence shall in no event be lessthan one-tenth (1/10) and the limitations referred to in the preceding sentenceshall be applied separately with respect to each benefit increase under thePlan, but only to the extent specified in regulations promulgated by theSecretary of the Treasury or his delegate pursuant to section 415(b)(5)(D)of the Code. For purposes of this Section 6.3, survivor benefits payableto a Participant’s spouse under a joint and survivor form of retirement incomeshall not be taken into account except to the extent that the annual rate ofsuch survivor benefits exceeds the annual rate of the benefits payable as suchretirement income during the joint lives of the Participant and his spouse.

### Section 6.3.2          Certain Actuarial Adjustments.

#### (a)           Ifthe annual benefit of the Participant begins before the Participant’s SocialSecurity Retirement Age, but on or after age 62, the defined benefit dollarlimitation will be determined as follows:

(1)           Age 65.  If a Participant’s social security retirementage is 65, the dollar limitation for benefits commencing on or after age 62 isdetermined by reducing the defined benefit dollar limitation by 5/9 of 1% foreach month by which benefits commence before the month in which the Participantattains age 65.

50

----

 

(2)           Greaterthan Age 65.  If a Participant’ssocial security retirement age is greater than age 65, the dollar limitationfor benefits beginning on or after age 62 is determined by reducing the definedbenefit dollar limitation by 5/9 of 1% for each of the first 36 months and 5/12of 1% for each additional month (up to 24 months) by which benefits beginbefore the month of the Participant’s social security retirement age.

#### (b)           Ifthe annual benefit of a Participant begins before age 62, the defined benefit dollarlimitation will be the actuarial equivalent of an annual benefit beginning atage 62, as determined above, reduced for each month by which benefits beginbefore the month in which the Participant attains age 62. To determineactuarial equivalence, the interest rate assumption is the greater ofthe rate specified in the Plan’s definition of Actuarial Equivalent, or 5%. Anydecrease in the defined benefit dollar limitation determined in accordance withthis provision shall not reflect the mortality decrement to the extent thatbenefits will not be forfeited upon the death of the Participant.

#### (c)           Ifthe annual benefit of a Participant begins after the Participant’s socialsecurity retirement age, the defined benefit dollar limitation is increased sothat it is the actuarial equivalent of an annual benefit beginning at theParticipant’s social security retirement age. To determine actuarialequivalence, the interest rate assumption used will be the lesser of therate specified in the Plan’s definition of Actuarial Equivalent or 5%.

#### (d)           If the benefit theParticipant would otherwise accrue in a limitation year would produce an annualbenefit in excess of the maximum permissible amount, the rate of theParticipant’s benefit accrual will be reduced so that the annual benefit willequal the maximum permissible amount. For a participant in one or more definedbenefit plans of the Bolsa Chica Group as of the first day of the firstlimitation year beginning after December 31, 1986, the application of thelimits of this Article VIII will not cause the maximum permissible amount underall such defined benefit plans to be less than the individual’s current accruedbenefit (defined below). The preceding sentence applies only if the definedbenefit plans met the requirements of Code Section 415, for all limitationyears beginning before May 6, 1986. A Participant’s current accruedbenefit is the Participant’s accrued benefit, determined as if the Participanthad separated from service at the close of the last limitation year beginningbefore January 1, 1987, expressed as an annual benefit. In determining aParticipant’s current accrued benefit, changes in the terms and conditions ofthe plan after May 5, 1986 and cost of living adjustments afterMay 5, 1986 are disregarded.

51

----

 

Section 6.4             LimitationApplicable to Certain Persons Under Defined Benefit Plans.

### Section 6.4.1          Limitationon Early Terminations.  In the eventof termination of the Plan, the benefit of any “Highly Compensated Employee”and/or “Former Highly Compensated Employee” (both within the meaning of CodeSection 414(g) and applicable regulations thereunder) shall be limited toa benefit that is nondiscriminatory under Code Section 401(a)(4).

### Section 6.4.2          RestrictedBenefits.  In the event oftermination of this Plan, the provisions of this Section 6.4 shall applyto restrict the annual benefit under the Plan to any Participant or formerParticipant who is among the twenty-five (25) highest paid Highly CompensatedEmployees and/or Former Highly Compensated Employees (including an Employee whois not presently a Participant but who may later become a Participant) to thefollowing amount:  the payments thatwould be made to such Employee under a single life annuity that is theActuarial Equivalent of the sum of the Employee’s Accrued Benefit and theEmployee’s “other benefits” under the Plan, within the meaning of theregulations under Code Section 411(d)(2), including any periodic income,any withdrawal values payable to a living Employee and any death benefits notprovided for by insurance on the Employee’s life.

### Section 6.4.3          UnrestrictedBenefits.  Notwithstanding theforegoing, the restrictions of this Section 6 shall not apply to anyEmployee described in Section 6.4.2 if:

#### (a)           afterpayment of all “other benefits” under the Plan referred to inSection 6.4.2, the value of Plan assets equals or exceeds one hundred tenpercent (110%) of the value of current liabilities as defined in CodeSection 412(1)(7); or

#### (b)           thevalue of the “other benefits” under the Plan referred to in Section 6.4.2for such Employee is less than one percent (1%) of the value of currentliabilities, within the meaning of Code Section 412(1)(7).

### Section 6.4.4          Discontinuanceof This Section.  The provisions ofSection 6.4.1 through 6.4.4 shall be null and void without amendment tothe Plan in the event that by ruling of the Commissioner of Internal Revenuethe limitations herein set forth are no longer necessary to prevent theprohibited discrimination that may occur in the event of an early terminationof the Plan.

### Section 6.4.5          AdditionalLimitation.  After the AggregateEmployer Contribution to be made and the Aggregate Annual Benefit to be paidwith respect to a Participant for a Plan Year has been determined in accordancewith the applicable provisions of all Defined Contribution Plans and DefinedBenefit Plans in which such Participant is a participant, the following sumshall be computed as of the end of such Plan Year:

#### (a)           theDefined Contribution Plan Fraction determined for the Plan Year and givingeffect to all prior plan years under any Defined Contribution Plan; plus

#### (b)           the Defined BenefitPlan Fraction determined for the Plan Year and giving effect to the Participant’sbenefits under all Defined Benefit Plans.

52

----

 

If the foregoing sum exceeds1.0 after the determination of the Maximum Permissible Amount thereunder(including limitations prescribed for compliance with section 415(e) ofthe Internal Revenue Code), the aggregate of all amounts allocated to suchParticipant’s accounts in any Defined Contribution Plan for such Plan Yearshall be reduced until such sum does not exceed 1.0.

SECTION6.4.5 OF THE PLAN WAS AMENDED BY AMENDMENT NO. 1,EFFECTIVE AS OF JANUARY 1, 1999, BY ADDING THE FOLLOWING SENTENCE:

“For Limitation Yearsbeginning after December 31, 1999, the additional limitation as prescribed inthis section shall not apply.”

### Section 6.4.6          Pre-1983Predecessor Plan Benefit.  In thecase of an individual who was a Participant of the Predecessor Plan (or in anyplan which merged with the Predecessor Plan effective January 1, 1984) onor before January 1, 1983, the Maximum Permissible Amount for suchindividual shall not be less than the individual’s Retirement Benefit undersuch Plan (or such other plan) as of January 1, 1983. The precedingsentence applies only if the applicable plan met the requirements ofsection 415 of the Code, as in effect on July 1, 1982, for all PlanYears beginning prior to January 1, 1983.

# **ARTICLE VII**

# **PLANADMINISTRATION**

Section 7.1             Establishmentof the Administrative Committee.  Thegeneral administration of the Plan and the responsibility for carrying out itsprovisions shall be placed in the Administrative Committee. If the Company isnot serving as the Administrative Committee, the Administrative Committee shallconsist of not less than two nor more than seven persons appointed from time totime by the Board of Directors to serve at its pleasure. Any member of theAdministrative Committee may resign by delivering his written resignation toBolsa Chica and the secretary of the Administrative Committee. TheAdministrative Committee shall be the Plan Administrator (within the meaning ofsection 3 of ERISA and section 414(g) of the Internal Revenue Code)with such authority, responsibilities and obligations as ERISA and the InternalRevenue Code grant to and impose upon persons so designated. For purposes ofERISA, the Administrative Committee shall be a “named fiduciary” under thePlan.

Section7.2             Establishment ofthe Investment Committee.  Theresponsibility for the formulation of the general investment practices andpolicies of the Plan and its related Trust Fund and for effectuating suchpractices and policies shall be placed in the Investment Committee. If theCompany is not serving as the Investment Committee, the Investment Committeeshall consist of not less than three nor more than seven persons appointed fromtime to time by the Board of Directors to serve at its pleasure. Any member ofthe Investment Committee may resign by delivering his written resignation toBolsa Chica and the secretary of

53

----

 

the Investment Committee.For purposes of ERISA, the Investment Committee shall be a “named fiduciary”under the Plan. Effective September 30, 1993, the Board of Directors or itsdelegate shall serve as the Investment Committee.

Section 7.3             Organizationof the Committees.  If the Company isnot serving as the Committee, the members of the Committee shall elect achairman from their number, and shall also elect a secretary who may be butneed not be one of the members of the Committee. No member of a Committee whois also an Employee receiving regular compensation as such shall receive anycompensation for his services as a member of such Committee. No bond or othersecurity shall be required of any member of a Committee in any jurisdiction. Nomember of a Committee shall, in such capacity, act or participate in any actiondirectly affecting his own benefits under the Plan other than an action whichaffects the benefits of Participants generally.

Section 7.4             Powersof the Administrative Committee.  Thepowers of the Administrative Committee shall include, but are not limited to,the following:

#### (a)           appointingsuch committees with such powers as it shall determine, including an executivecommittee to exercise all powers of the Administrative Committee betweenmeetings of the Administrative Committee;

#### (b)           determiningthe times and places for holding meetings of the Administrative Committee andthe notice to be given of such meetings;

#### (c)           employingsuch agents and assistants, such counsel (who may be counsel to the Company orto Bolsa Chica) and such clerical, medical, accounting and actuarial servicesor advisers as the Administrative Committee may require in carrying out theprovisions of the Plan;

#### (d)           authorizingone or more of their number or any agent to make any payment, or to execute ordeliver any instrument, on behalf of the Administrative Committee, except thatall requisitions for funds from, and requests, directions, notifications andinstructions to the Trustee shall be signed either by two members of theAdministrative Committee or by one member and the secretary thereof;

#### (e)           fixingand determining the proportion of expenses of the Plan from time to time to bepaid by the Companies and requiring payment thereof;

#### (f)            establishingone or more subcommittees in each location at which Bolsa Chica or any of itssubsidiaries or affiliates does business, appointing the members of any suchsubcommittees, in such number and for such service as the AdministrativeCommittee shall deem appropriate, and delegating any power or duty granted tothe Administrative Committee by the Plan to any such subcommittees;

#### (g)           receivingand reviewing reports from the Trustee as to the financial condition of theTrust Fund, including its receipts and disbursements;

#### (h)           executing and filingwith the appropriate governmental agencies such registration and otherstatements, forms, applications, notifications, and other documents or

54

----

 

#### information as the Administrative Committee may from time to time deemappropriate in connection with the Plan;

#### (i)            approvingthe adoption of the Plan by any subsidiary or affiliate of the Company inaccordance with Section 8.4;

#### (j)            amendingthe Plan to the extent provided in Section 8.1; and

#### (k)           determiningall questions concerning eligibility, elections, contributions, and benefitsunder the Plan, construing all terms of the Plan, including any uncertainterms, and determining all questions concerning administration of the Plan.

Section 7.5             Powersof the Investment Committee.  Thepowers of the Investment Committee shall include, but not be limited to, thefollowing:

#### (a)           directingthe Trustee, or appointing one or more investment managers to direct theTrustee, subject to the conditions set forth in the master trust agreement andin paragraphbelow, in all matters concerning the investment of the Trust Fund;

#### (b)           authorizingone or more of their number or any agent to make any payment, or to execute ordeliver any instrument, on behalf of the Investment Committee, except that ifthe Company is not serving as the Investment Committee all requisitions forfunds from, and requests, directions, notifications and instructions to theTrustee shall be signed either by two members of the Investment Committee or byone member and the secretary thereof;

#### (c)           receivingand reviewing reports from the Trustee as to the financial condition of theTrust Fund, including its receipts and disbursements;

#### (d)           employingsuch agents and assistants, such counsel (who may be counsel to the Company orto Bolsa Chica) and such clerical, accounting, actuarial and investmentservices or advisers as the Investment Committee may require in carrying outits responsibilities under the Plan.

Section7.6             Duties of theAdministrative Committee.  TheAdministrative Committee shall have the general responsibility foradministering the Plan and carrying out its provisions. Subject to thelimitations of the Plan, the Administrative Committee from time to time shallestablish rules for the administration of the Plan and the transaction of itsbusiness and shall promulgate such rules as may be necessary to effectuate thefunding policy and method established pursuant to Section 4.1. If theCompany is not serving as the Administrative Committee, as to all matters ofadministration, interpretation and application not reserved to the Company orBolsa Chica, the determination of the Administrative Committee as to anydisputed question shall be conclusive. Any determination made by theAdministrative Committee shall be given deference in the event it is subject tojudicial review and shall be overturned only if it is arbitrary and capricious.It shall be the duty of the Administrative Committee to notify the Trustee inwriting of the amount of any benefit which shall be due to any Participant andin what form and when such benefit is to be paid. The Administrative Committeemay at any time or from time to time with respect to a Defined Benefit Plan (asdefined in Section 6.1) require the Trustee by a written direction to purchaseone or more annuities, in specific amounts, in the

55

----

 

names of Participants,their spouses, their contingent annuitants, and/or their beneficiaries from aninsurance company designated by the Administrative Committee.

Section 7.7             Actionsby a Committee.  If the Company isnot serving as the Committee, a majority of the members of a Committee at thetime in office shall constitute a quorum for the transaction of business at anymeeting and resolutions or other actions made or taken by a Committee shallrequire the affirmative vote of a majority of the members of such Committeeattending a meeting, or by a majority of members in office by writing without ameeting.

Section 7.8             ActuarialTables and Studies.  TheAdministrative Committee shall adopt from time to time such actuarial tables asmay be required in connection with the Plan. As an aid to the AdministrativeCommittee in adopting tables and to the Company in fixing the rates of itscontribution payable under a Defined Benefit Plan (as defined in Section 6.1),the actuary (who shall be enrolled by the Joint Board for the Enrollment ofActuaries established under ERISA) designated by the Administrative Committeeshall make periodical actuarial studies in relation to such Defined BenefitPlan, and shall recommend tables to the Administrative Committee and rates ofcontribution to the Company.

Section 7.9             Accounts. The Administrative Committee shallmaintain accounts showing the fiscal transactions of the Plan and shall keep inconvenient form such data as may be necessary for the effective operation andadministration and actuarial valuations of the Plan.

Section 7.10           DiscretionaryAction.  The Administrative Committeeshall have full discretionary authority to administer and interpret the Plan,including discretionary authority to determine eligibility for participationand for benefits under the Plan and discretionary authority to construeambiguous terms and to correct errors. The Plan Administrator may delegate itsadministrative duties. Any such delegation will carry with it the fulldiscretionary authority of the Plan Administrator to carry out these duties.Any determination by the Plan Administrator or its delegate will be final andconclusive upon all persons.

Section 7.11           ActionTaken in Good Faith.  To the extentpermitted by ERISA, the members of the Committees, the Company, Bolsa Chica,and their officers and directors shall be entitled to rely upon all tables,valuations, certificates, and reports, if any, furnished by the actuarydescribed at Section 7.8, upon all certificates and reports made by anyaccountant or by the Trustee, upon all opinions given by any legal counselselected or approved by a Committee, and upon all opinions given by anyinvestment adviser selected or approved by the Investment Committee, and themembers of the Committees, the Company, Bolsa Chica, and their officers anddirectors shall be fully protected in respect of any action taken or sufferedby them in good faith in reliance upon any such tables, valuations, certificates,reports, opinions or other advice of any actuary, accountant, Trustee,investment adviser or legal counsel, and all action so taken or suffered shallbe conclusive upon each of them and upon all Participants and Employees.

Section7.12           Indemnification. To the extent not contrary to ERISA, theCompany shall indemnify the Committees, each member of a Committee and anyother director, officer or employee of an employer who is designated to carryout any responsibilities under the Plan for any liability, joint and/orseveral, arising out of or connected with their duties hereunder, except suchliability as may arise from their gross negligence or willful misconduct.

56

----

 

Section 7.13           ClaimsProcedure.  Claims relating tobenefits under the Plan shall be filed with the Administrative Committee onsuch forms as it shall prescribe and make available on request. TheAdministrative Committee shall notify the claimant of its decision within 90days of such filing, unless it determines that more time is needed, in whichcase the Administrative Committee shall notify the claimant of the reason forthe delay and notify the claimant of its decision within 180 days of the filingof the claim. In the event a claim is denied, written notice thereof shall bemailed or delivered to the claimant, specifically setting forth the reasons forthe denial, citing the relevant provisions of the Plan and, if appropriate,explaining how the claimant can perfect his claim.

Section 7.14           ClaimsReview Procedure.  Any person whoseclaim filed pursuant to Section 7.13 has been denied may request theAdministrative Committee to give further consideration to his claim. A form formaking such a request shall be prescribed by the Administrative Committee andfurnished by the secretary of the Administrative Committee upon request. Aclaimant seeking such review shall complete and file such form, together with astatement of his position, with the Administrative Committee no later than 90days after the mailing or delivery of the written notice of denial provided forin Section 7.13. Pursuant to its discretionary authority to administer andinterpret the Plan and to determine eligibility for benefits under the terms ofthe Plan, no later than 60 days after the filing of such claim, the AdministrativeCommittee shall inform the claimant in writing of its decision regarding hisclaim and the specific reason therefor. Any such decision of the AdministrativeCommittee shall be binding upon the claimant.

Section 7.15           Responsibilitiesof Named Fiduciaries Other than the Committees.  The Trustee shall have such responsibilitieswith respect to the operation of the Plan as are set forth in the master trustagreement. Any investment adviser which the Investment Committee may employpursuant to Section 7.5 shall have the responsibility to direct theTrustee in investing and reinvesting the Trust Fund (or that portion thereofspecified by the Investment Committee in the instrument appointing suchadviser) and to report the book value and fair market value of each asset inthe Trust Fund (or such portion thereof) to the Committees periodically, assuch responsibilities may be more fully described in the master trustagreement.

Section 7.16           Allocationof Responsibilities.  The descriptionof the responsibilities and powers of the Committees and the description of theresponsibilities of the Trustee contained in the foregoing provisions of thisArticle VII shall constitute, for purposes of ERISA, procedures forallocating responsibilities for the operation and administration of the Planamong named fiduciaries.

Section7.17           Designation ofPersons to Carry Out Responsibilities of Named Fiduciaries.  The Committees, the Trustee and any investmentadviser which the Investment Committee may employ pursuant to Section 7.5may, except as to responsibilities involving management and control of assetsheld in the Trust Fund, designate one or more other persons to carry out any orall of their respective responsibilities under the Plan, provided that suchdesignation shall be made in writing, filed with the Plan’s records and madeavailable for inspection upon request by any Participant or Beneficiary underthe Plan.

57

----

 

# **ARTICLE VIII**

# **AMENDMENTAND TERMINATION; PARTICIPATION ANDWITHDRAWAL BY COMPANIES; PLAN MERGERS**

Section 8.1             Authorityto Amend or Terminate.  Bolsa Chicahopes and expects to continue the Plan indefinitely but reserves the right toterminate, or to modify, alter or amend the Plan or the Trust Agreement fromtime to time to any extent that it may, at its sole and complete discretion,deem advisable including, but without limiting the generality of the foregoing,any amendment deemed necessary to qualify or to ensure the continuedqualification of the Plan under the Internal Revenue Code. The foregoing rightshall be exercised only by action of Bolsa Chica, except that theAdministrative Committee, by a written instrument, duly executed by a majorityof its members, may make (a) any amendment which may be necessary or desirableto ensure the continued qualification of the Plan and its related trust underthe Internal Revenue Code or which may be necessary to comply with therequirements of ERISA, or any regulations or interpretations issued by theDepartment of Labor or the Internal Revenue Service with respect to therequirements of ERISA or the Internal Revenue Code, (b) any amendmentwhich is required by the provisions of any collective bargaining agreementbetween the Company and its employees and (c) any other amendment whichwill not involve an estimated annual cost under the Plan (determined at thetime of the amendment in a manner consistent with the requirements of ERISA) inexcess of $200,000. No such amendment shall increase the duties orresponsibilities of the Trustee without its consent thereto in writing. No suchamendment shall have the effect of diverting the whole or any part of theprincipal or income of the Trust Fund to purposes other than for the exclusivebenefit of Participants and others having an interest in the Plan, prior to thesatisfaction of all liabilities with respect to them. Effective September 30,1993, all amendments will be in writing and will be signed by an officer ofKoll Real Estate Group, Inc. or any successor to Koll Real Estate Group, Inc.that adopts the Plan. No such amendment shall eliminate or reduce Section411(d)(6) protected benefits that have already accrued.

Section 8.2             Effectof Termination.

#### (a)           Defined Benefit Plan. Upon the termination or partialtermination of a Defined Benefit Plan (as defined in Section 6.1), therights of all affected Participants to their respective accrued benefits underthe Plan shall be nonforfeitable to the extent then funded. Upon the withdrawalfrom a Defined Benefit Plan of any Company under circumstances constituting apartial termination of the Plan within the meaning of section 411(d)(3) ofthe Code, such rights of all affected Participants who are Employees of suchCompany shall likewise be nonforfeitable to the extent then funded. In eithersuch event, the Administrative Committee shall (except as provided inSection 8.3) direct the Trustee as to the allocation of the applicableassets of the Defined Benefit Plan, in accordance with the following provisionsof this Section 8.2. After providing for the expenses of the DefinedBenefit Plan, the assets remaining in the account of each Company withdrawingfrom the Defined Benefit Plan shall be used and applied for the benefit of itsEmployees, former Employees who are Participants, and the beneficiaries of theforegoing in the manner prescribed by section 4044 of ERISA (orcorresponding provision of any subsequent applicable law in effect at thetime). The Administrative Committee may require that the benefits accruedhereunder be paid in cash or in

58

----

####  

#### the form of immediate or deferred annuities or otherwise as it shalldetermine. After such allocation has been made, any residue of such applicableassets of the Defined Benefit Plan may be distributed to such Company if allliabilities of the Plan with respect to its Employees, former Employees who areParticipants, and the beneficiaries of the foregoing have been satisfied andthe distribution does not contravene any applicable provisions of law.

Whether or not a “partialtermination” within the meaning of this Section 8.2 has occurred in any givensituation shall be determined by the Administrator in light of existingInternal Revenue Service guidelines and other relevant authorities. However, inthe event of the disposition of a particular business operation, or theshutdown thereof, under conditions which do not constitute a “partialtermination”, the Administrator may declare that such disposition or shutdownshall nevertheless be treated as a “partial termination” for purposes of thisPlan. Any such declarations shall be made in a manner which does notdiscriminate in favor of officers, shareholders or highly compensatedindividuals.

#### (b)           DefinedContribution Plan.  Upon thetermination or partial termination of a Defined Contribution Plan (as definedin Section 6.1) or upon the complete discontinuance of contributions by aCompany under a Defined Contribution Plan, the value of each affectedParticipant’s account shall be fully vested in him. The assets of the TrustFund relating to such Defined Contribution Plan shall thereupon or thereafterbe distributed to such persons in accordance with the terms of such DefinedContribution Plan, or in such other manner, not inconsistent with therequirements of any applicable law or regulation, as the Company may in itssole discretion determine.

Section 8.3             TrustFund Continuation.  If a DefinedBenefit Plan or a Defined Contribution Plan is terminated but theAdministrative Committee determines that the Trust Fund shall be continuedpursuant to its terms and the provisions of this Section 8.3, no furthercontributions will thereafter be made by the Company, the rights of allParticipants to their accrued benefits under the Plan shall be nonforfeitableto the extent then funded, but the Trust Fund shall be administered as thoughthe Plan were otherwise in full force and effect, except that no furtherbenefits will accrue after the date of termination. If the Trust Fund issubsequently terminated, the Trust Fund shall then be allocated and disbursedin accordance with the provisions of Section 8.2.

Section 8.4             Participationby Companies.  The AdministrativeCommittee or Bolsa Chica may approve the adoption of the Plan by any subsidiaryor affiliate of the Company upon appropriate action by such subsidiary oraffiliate. In such event, or if any individuals become Employees of a Companyas a result of the acquisition of all or a part of the assets or business ofanother company, the Administrative Committee or Bolsa Chica may, subject tothe provisions of ERISA and the qualification requirements of the InternalRevenue Code, determine to what extent, if any, credit and benefits shall begranted for previous service with such subsidiary, affiliate or other company.

Section8.5             Withdrawal of aCompany.  Any company which is aCompany may, by appropriate action taken by it, terminate its participation inthe Plan, in which event the applicable provisions of Section 8.2 shallapply; provided, however, that if so directed by the Administrative Committee,the applicable assets of the Plan shall be segregated by the Trustee as

59

----

 

a separate trust and thePlan shall be continued as a separate plan for the employees of such companyunder which the board of directors of such company shall succeed to all thepowers and duties of Bolsa Chica hereunder.

Section 8.6             Mergerwith Other Plans.  The Plan shall notbe merged or consolidated with, nor transfer its assets or liabilities to, anyother plan unless each Participant would (if the Plan then terminated) receivea benefit immediately after the merger, consolidation or transfer which isequal to or greater than the benefit he would have been entitled to receiveimmediately before the merger, consolidation or transfer (if the plan had thenterminated).

Section 8.7             CertainEmployee Terminations.  Theprovisions of this Section 8.7 shall apply whenever, under circumstanceswhich do not constitute a partial termination of the Plan for purposes ofSection 8.2, the following events occur:

#### (a)           acompany other than a member of the Bolsa Chica Group (as defined inSection 6.1) (such company being hereinafter referred to in thisSection 8.7 as the “Acquiring Company”) purchases or otherwise acquiressome part or all of the assets or business of a Company and

#### (b)           inconnection with such purchase or other acquisition, a group of Participants whoare covered by a Defined Benefit Plan or a Defined Contribution Plan (asdefined in Section 6.1) (such Participants being hereinafter referred toin this Section 8.7 as the “Transferred Participants”) become employees ofthe Acquiring Company.

In its sole discretion,the Administrative Committee may determine to vest each such Participant in thefull amount of his account in the case of a Defined Contribution Plan or hisaccrued benefit in the case of a Defined Benefit Plan, and distribute hisinterest in the Trust Fund, as so determined, in accordance with theappropriate provisions of the Plan. In the alternative, in the case of aDefined Contribution Plan, after distribution to each Transferred Participantin such plan of the vested portion of his account, any remaining balance of theaccount of each such Transferred Participant shall be held as a separateaccount in his name until such time as the Administrative Committee shalldetermine, on the basis of evidence satisfactory to it, either that (i) suchTransferred Participant has completed a period of continuous service with theAcquiring Company which, when added to his Vesting Service, is equal to fiveyears or (ii) such Transferred Participant’s employment by theAcquiring Company has been terminated prior to his completion of such a periodof continuous service. Subject to the provisions of such Defined ContributionPlan regarding the manner and time of payment under the plan, if theAdministrative Committee makes the determination referred to in clause (i)of the preceding sentence with respect to any such Transferred Participant, theamount held in the separate account in his name shall thereafter be distributedto him in full; if the Administrative Committee makes the determination referredto in clauseof the preceding sentence with respect to any such TransferredParticipant, the amount theretofore held in the separate account in his nameshall be forfeited as of the last day of the plan year during which suchdetermination shall have been made, and the amount so forfeited shall beapplied in accordance with the forfeiture provisions of the DefinedContribution Plan.

60

----

 

THE JANUARY 1, 1989RESTATEMENT CONTAINEDTHE FOLLOWING SECTION 8.8

## Section 8.8             EmployeeTransfers.

### Section 8.8.1          Transfer to a Non-ParticipatingCompany.  In the event an Employee istransferred to employment of a member of Henley Properties (as defined inSection 6.1) other than a Participating Company (such company hereinafterreferred to as a “Non-Participating Company”), such Employee shall not bedeemed to have terminated his employment with the Participating Company or tohave retired for purposes of the Plan until the date as of which his employmentwith the last Non-Participating Company shall terminate. The Employee’s servicefor the purpose of eligibility for early retirement and vesting shall includeservice with the Non-Participating Company as if his period of employment withsuch Non-Participating Company were a period of employment with theParticipating Company.

### Section 8.8.2          Transfer from a Non-ParticipatingCompany.

In the event an employeeof a Non-Participating Company is transferred to the employment of aParticipating Company and becomes an Employee under the Plan, his service forthe purpose of eligibility for early retirement and vesting, shall bedetermined under the applicable provisions of the Plan as if his period ofemployment with the Non-Participating Company were a period of employment withthe Participating Company. Such Employee shall be entitled to participate inthe Plan on the first day of the month coincident with or next following thedate of such transfer of employment assuming his period of employment with theNon-Participating Company is sufficient to meet the Plan’s participationrequirement.

In addition to theforegoing, if the Employee was participating in a Defined Benefit Plan of aNon-Participating Company at the time of transfer, the Employee’s period ofemployment with the Non-Participating Company shall be included as a period ofemployment with the Participating Company under this Plan for the purpose ofdetermining the amount of Employee’s benefit under this Plan, except that (i)the benefit calculated under the provisions of this Plan shall be offset by theamount of the benefit payable under the other plan, calculated under the termsof the other plan as of the time of transfer, and (ii) if the separate benefitspayable to the Employee under the terms of each plan (and based solely on theservice credited under each such plan) exceed the benefit payable hereunder,the Employee shall receive such separate benefits from each plan on such termsand in the manner provided in each plan.

### Section 8.8.3          Transfers Between Defined BenefitPlans of a Participating Company.

In the event an employeewho is participating in another Defined Benefit Plan of a Participating Companyis transferred to a job classification which entitles the employee to become anEmployee under this Plan, his period of employment with the ParticipatingCompany under the other Defined Benefit Plan shall be included as a period ofemployment under this Plan for all purposes under this Plan, except that (i)the benefit calculated under the provisions of this Plan shall be offset by theamount of the benefit payable under the other plan based upon the Employee’sservice as of the time of transfer, and (ii) if the separate benefits payableto the Employee under the terms of each plan (based solely on the servicecredited under each such

61

----

 

plan) exceeds the benefitpayable hereunder, the Employee shall receive such separate benefits from eachplan on the terms and in the manner provided in each plan.

THE PRECEDING SECTION 8.8WAS DELETEDIN THE AUGUST 1, 1992 RESTATEMENTAND THE PLAN WAS RENUMBERED TO READ AS FOLLOWS

Section 8.8.            Suspension of Contributions.  A Company shall have the right to suspend itscontributions to the Plan at any time for a fixed period of time, and suchperiod shall be extended by subsequent action of such Company. Such suspensionshall not automatically become a discontinuance of contributions as underSection 8.2 until the time at which in the opinion of the Plan Enrolled Actuarysuch suspension affects the benefits to be paid or made available under thePlan. No such suspension shall be allowed to create an “accumulated fundingdeficiency” under Section 302(a)(2) of ERISA, unless the Plan is thenterminated under Section 8.2; provided that in the event of anunintentional creation of an accumulated funding deficiency, the Companiesshall have 90 days after such a deficiency is finally determined to correct itwithout such termination. In the event of such suspension the Plan shall otherwiseremain in full force and effect.

Section 8.9             Consolidation or Merger of BolsaChica.  In the event of theconsolidation or merger of Bolsa Chica with or into any other corporation, orthe sale by Bolsa Chica of substantially all of its assets, the resultingsuccessor may continue the Plan by adopting the same by resolution of its boardof directors and by executing a proper supplemental agreement to the mastertrust agreement with the Trustee.

If within ninety daysfrom the effective date of such consolidation, merger or sale of assets, suchnew corporation does not adopt the Plan, the rights of all affectedParticipants to their respective accrued benefits under the Plan shall benonforfeitable to the extent funded as of the effective date of suchconsolidation, merger or sale of assets.

**ARTICLE IX**

**TOP-HEAVYPROVISIONS**

Section 9.1             Certain Top-Heavy Plans.

#### (a)           DefinedBenefit Plans.  If, for any PlanYear, the sum of the present values of the Basic Accrued Benefits of allParticipants in a Defined Benefit Plan (as defined in Section 6.1) who are“Key Employees” of the Company exceeds 60 percent of the sum of the presentvalues of the Basic Accrued Benefits of all Participants in such DefinedBenefit Plan and the Defined Benefit Plan satisfies the other requirements ofsection 416 or any other successor section of the Internal RevenueCode, then the Defined Benefit Plan will be a “Top-Heavy Plan,” as such term isdefined in section 416(g) of the Internal Revenue Code and the limitationsspecified in this Article IX and in section 416 of the InternalRevenue Code shall apply to the Defined Benefit Plan for such Plan Year.

62

----

 

#### (b)           DefinedContribution Plan.  If, for any PlanYear, the sum of the accounts of all Participants in a Defined ContributionPlan (as defined in Section 6.1), who are “Key Employees” exceeds 60percent of the sum of the accounts of all Participants in such DefinedContribution Plan and the Defined Contribution Plan satisfies the otherrequirements of section 416 or any other successor section of theInternal Revenue Code, then the Defined Contribution Plan will be a “Top-HeavyPlan,” as such term is defined in section 416(g) of the Internal RevenueCode and the limitations specified in this Article IX and insection 416 of the Internal Revenue Code shall apply to the DefinedContribution Plan for such Plan Year.

#### (c)           BenefitsExcluded.  For purposes ofdetermining whether either a Defined Benefit Plan or a Defined ContributionPlan is a Top-Heavy Plan, for Plan Years beginning after December 31,1984, the Basic Accrued Benefit of an Employee who has not performed anyservice for the Company at any time during the five (5) year period ending onthe Determination Date shall be excluded.

#### (d)           KeyEmployee Defined.  For purposes ofthis Article IX, a “Key Employee” of the Company is an Employee who (a) isan officer of the Company having an annual compensation greater than 50 percentof the amount in effect under Internal Revenue Code section 415(b)(1)(A)for any Plan Year, (b) is among the 10 employee-shareholders of theCompany whose interests are both the largest and are greater than 1/2% and whohave annual compensation from the Company greater than the amount in effectunder Internal Revenue Code Section 415(c)(1)(A) for any Plan Year, (c) ownsa five percent (5%) or greater interest in the Company, or owns a one percent(1%) or greater interest in the Company and receives annual compensation ofmore than $150,000 or more, or (d) was an employee named in any oneof the above categories within any one of the preceding four (4) Plan Years.The term Key Employee also includes a beneficiary of a deceased Participant tothe extent that the Participant would have been considered a Key Employee.

Section 9.2             Determination Date.  For each Plan Year to which Section 9.1applies, the determination of the value of a Participant’s Basic AccruedBenefit in a Defined Benefit Plan or a Participant’s accounts in a DefinedContribution Plan shall be made on the last day of the preceding Plan Year, oron such other dates as the Secretary of the Treasury may, by regulations,prescribe. The Determination Date is also the valuation date.

Section 9.3             Calculation of Benefits.

#### (a)           DefinedBenefit Plans.  For purposes ofcalculating the value of a Participant’s basic Accrued Benefit, solely forpurposes of Section 9.1.1, a Participant’s Basic Accrued Benefit as of theDetermination Date shall include (a) all accumulated employer and allnondeductible Employee contributions, but shall not include any deductibleEmployee contributions, (b) the sum of all amounts distributed tothe Participant during the five (5) years preceding the Determination Date, and(c) any additional amounts as the Secretary of the Treasury may, byregulations, prescribe; provided, however, that any amounts contributed asrollover contributions (as defined in section 402(a)(5), 403(a)(4),408(d)(3), or 409(b)(3)(C) of the Internal Revenue Code) shall not be includedin (a) above, except as the Code or regulations thereunder may require.

63

----

 

#### (b)           DefinedContribution Plans.  For purposes ofcalculating the value of a Participant’s accounts solely for purposes ofSubsection 9.1.2, a Participant’s accounts on the Determination Date shallinclude:

##### (i)                                     thevalue of the accounts on such date;

##### (ii)                                  thesum of all accounts distributed to such Participant during the five (5) yearspreceding the Determination Date; and

##### (iii)                               anyadditional amounts as the Secretary of the Treasury may, by regulations,prescribe;

provided, however, thatany amounts contributed as rollover contributions (as defined insection 402(a)(5), 403(a)(4), 408(d)(3), or 409(b)(3)(C) of the InternalRevenue Code) shall not be included in (a) above, except as the Code orregulations thereunder may require.

Section 9.4             Aggregation Rules.

#### (a)           RequiredAggregation.  If, on theDetermination Date, any member of the controlled group of corporations (“ControlledGroup”) within the meaning of Code Section 414 of which the Company is a membermaintains one or more other plans which must be considered with this Plan forpurposes of satisfying the requirements of section 401(a)(4) andsection 410 of the Internal Revenue Code (the “Aggregate Group”), then anyvaluation made pursuant to Section 9.1 shall treat the Aggregate Group asone plan. The Aggregate Group shall also include each plan maintained by amember of the Controlled Group in which a Key Employee participates. TheAggregate Group shall include each terminated plan of the Controlled Group ifit was maintained within the last five (5) years ending on the DeterminationDate for the Plan Year in question and would, but for the fact it isterminated, be part of a required aggregation group for such Plan Year. If, fora Plan Year, the Aggregate Group, considered as one plan, is a Top-Heavy Plan,then each plan in the Aggregate Group shall be a Top-Heavy Plan.

#### (b)           PermissiveAggregation.  If, on theDetermination Date, any member of the Controlled Group maintains one or moreplans which are not required to be considered together for purposes ofsatisfying the requirements above, the Company may treat the plans as one planfor purposes of the valuation of benefits under Section 9.1. No planaggregated with another plan or plans at the election of the Company shall bedeemed a Top-Heavy Plan solely by virtue of such election.

Section 9.5             Special Vesting.  For any Plan Year in which the Plan isTop-Heavy under Section 9.1, the vesting provisions specified inSection 3.10 shall be inapplicable for such Plan Year, and a Participant’sright to receive benefits under this Plan shall become vested in accordancewith the following table:

| Years of Vesting Service | ** ** | ** ** | **Vesting Percentage** |
|--------------------------|------------|------------|------------------------|
| ** **               | ** ** | ** ** | ** **             | ** ** |
| less than 2              |       |       | 0                      |   |
| 2                        |       |       | 20                     |   |
| 3                        |       |       | 40                     |   |
| 4                        |       |       | 60                     |   |
| 5 or more                |       |       | 100                    |   |
|                          |            |            |                        |  |  |

 

64

----

 

Section 9.6             Minimum Benefit.

#### (a)           DefinedBenefit Plan.  For any Plan Year inwhich a Defined Benefit Plan (as defined in Section 6.1) is a Top-HeavyPlan under subsection 9.1, a Participant who is not a “Key Employee” mustaccrue a minimum benefit, expressed as a single life annuity commencing atnormal retirement age, which is no less than the “Applicable Percentage” of theParticipant’s “Average Compensation” for the “Testing Period.” For purposes ofthis subsection 9.6.1, (1) the Applicable Percentage is thelesser of (a) 2 percent for each year of a Participant’s Vesting Service(excluding years beginning before January 1, 1984 and years in which thePlan was not a Top-Heavy Plan under subsection 9.1.1) or (b) 20percent; (2) a Participant’s Average Compensation is calculated onthe basis of a period of not more than 5 consecutive years during which aParticipant received his highest aggregate Compensation from the Company; and (3) theTesting Period shall include all Plan Years except (i) Plan Years beginningbefore January 1, 1984, or (ii) Plan Years beginning after theclose of the last Plan Year in which the Defined Benefit Plan was a Top-HeavyPlan under subsection 9.1.1. For purposes of this subsection 9.6.1,the minimum benefit for a Top-Heavy Defined Benefit Plan shall be calculated inaccordance with regulations, now or hereinafter promulgated, undersection 416 of the Internal Revenue Code. If both defined contribution anddefined benefit plans exist, appropriate minimum contributions will be providedin each plan.

#### (b)           DefinedContribution Plan.  For any Plan Yearin which a Defined Contribution Plan (as defined in Section 6.1) isTop-Heavy under subsection 9.1.2, the amount of Company contribution forany Employee who has met the participation requirements of the Plan and who isnot a Key Employee shall be at least equal to the lesser of (a) 3 percent ofsuch Employee’s compensation (as defined in section 415 of the Code), or (b) thepercentage of such compensation contributed as a Company contribution for theKey Employee for whom such percentage is the highest for the Plan Year.

Section 9.7             Limitation on Benefits to anEmployee.  Subject to the exceptionprovided below, if, for any Plan Year, this Plan is a Top-Heavy Plan underSection 9.1, then the overall limitation imposed by section 415(e) ofthe Internal Revenue Code in the case of an Employee who is a Participant inboth a Defined Benefit Plan and a Defined Contribution Plan shall be applied bysubstituting “1.0” for “1.25” in paragraphs (2)(B) and (3)(B) ofsection 415(e) of the Code as the overall limitation.

#### (a)           Exception. The change in the 415(e) limitationspecified in Section 9.7 above shall not be applicable to a Plan for aPlan Year in which the Plan is a Top-Heavy Plan if, with respect to any Planwithin the Aggregate Group, (a) the sum of the present values of the BasicAccrued Benefits of all Participants who are Key Employees of any DefinedBenefit Plan or the sum of the account balances of all Participants who are KeyEmployees of any Defined Contribution Plan does not exceed 90 percent of asimilar sum for all Participants of such plans, and (b) either, inthe case of a Defined Contribution Plan, the minimum contribution described insubsection 9.6.2 above is increased to 4 percent or, in the case of aDefined Benefit Plan, the Applicable Percentage described in Section 9.6.1above is modified by replacing “three percent

65

----

 

#### (3%)” for “two percent (2%)” and by replacing “twenty percent (20%),increased by one (1) percentage point (but not by more than ten (10)) for eachPlan Year in which a plan is a Top-Heavy Plan” for “twenty percent (20%)”.

Section 9.8             Discontinuance of This Article. In the event that it shall be determinedby the Commissioner that the provisions of this Article IX are no longernecessary to qualify the Plan under the Internal Revenue Code, thisArticle shall thereupon be void without the necessity of further amendmentof the Plan.

Section 9.9             Incorporation by Reference.  Code Section 416(g)(3)(B) regardingdistributions from terminated plans and Code Section 416(g)(4)(B) regarding keyemployees who are no longer key employees are hereby incorporated by referenceinto this Plan.

**ARTICLE X**

**GENERAL PROVISIONS**

Section 10.1           Administration.  Effective September 30, 1993, Koll Real EstateGroup, Inc. or any successor to Koll Real Estate Group, Inc. that adopts thisPlan will serve as the Administrator.

Section 10.2           Source of Payment.  Benefits under this Plan shall be payable outof the Trust Fund or, in the case of a Defined Benefit Plan (as defined inSection 6.1), through the use of annuity contracts purchased with assetsof the Trust Fund, and neither Bolsa Chica, nor any Company shall have anyobligation, responsibility or liability to make any direct payment of benefitsdue under the Plan. Neither Bolsa Chica, nor any Company nor the Trustee makesany guarantee to Participants against the loss or depreciation in value of theTrust Fund or guarantees the payment of any benefits hereunder. No person shallhave any right under the Plan with respect to the Trust Fund, or against theTrustee, Bolsa Chica, or any Company, except as specifically provided herein orin ERISA.

Section 10.3           Payment of Expenses.  All expenses that shall arise in connectionwith the administration of this Plan and the master trust agreement, including,but not limited to, the compensation of the Trustee and of any actuary,accountant, counsel, investment adviser, other expert or other person who shallbe employed by a Committee in connection with the administration or investmentthereof, shall be paid from the Trust Fund or by the Companies; provided,however, that no person who is employed full-time by any Company shall receiveany compensation from the Plan except for reimbursement of expenses properlyand actually incurred.

Section 10.4           No Right to Employment.  Nothing herein contained shall be deemed togive an Employee the right to be retained in the service of his employer or tointerfere with the rights of his employer to discharge him at any time.

Section 10.5           Inalienability of Benefits.  Except as may be otherwise provided byapplicable law or pursuant to a qualified domestic relations order as definedin section 414(p) of the Internal Revenue Code, benefits provided underthis Plan shall not, prior to the actual receipt

66

----

 

thereof by the personentitled thereto, be subject in any manner to anticipation, assignment,alienation, sale, transfer, pledge, encumbrance, charge, attachment,garnishment, execution, levy or other legal or equitable process, whethervoluntary or involuntary, and any attempt to anticipate, assign, alienate,sell, transfer, pledge, encumber, charge, attach, garnish, execute or levy uponor otherwise dispose of any right to benefits hereunder shall be void. The Fundshall not in any manner be liable for, or subject to, the debts, contracts,liabilities, engagements or torts of any person entitled to benefits hereunder.

Section 10.6           Return of Company Contributions. Contributions by the Company areexpressly conditioned upon the (i) initial qualification of the Plan undersection 401 of the Internal Revenue Code of 1986, as amended, and(ii) deductibility of such contributions under section 404 of theInternal Revenue Code of 1986, as amended. Contributions shall be returned tothe Company within one year after (a) the date of denial of the initialqualification of the Plan, (b) the disallowance of a deduction, but onlyto the extent the deduction is disallowed, or (c) the payment of acontribution by mistake of fact.

Section 10.7           Payment Due an Incompetent.  If the Administrative Committee determinesthat any person to whom a payment is due hereunder is unable to care for hisaffairs because of physical or mental disability or because he is under 18years of age, it shall have the authority to cause payments becoming due tosuch person to be made to another for his benefit, without responsibility ofthe Administrative Committee or the Trustee to see to the application of suchpayments, and any payment made pursuant to such authority shall, to the extentthereof, operate as a complete discharge of the obligations of the Company, theAdministrative Committee, the Trustee and the Trust Fund.

Section 10.8           Missing Recipients.  In the event any amount shall become payablehereunder to a Participant, retired Participant, contingent annuitant,Beneficiary or the legal representative of any of the foregoing and if afterwritten notice from the Administrative Committee sent by registered mail tosuch person’s last known address as shown in the Administrative Committee’srecords and such other due diligence as the Administrative Committee deemsappropriate, such person or his personal representative shall not havepresented himself to the Administrative Committee within five years after themailing of such notice, then the Administrative Committee may determine thatsuch person’s interest in the Plan has terminated and the amounts otherwisepayable shall be forfeited and shall be reapplied in accordance withArticle IV of the Plan; provided, however, that if such person presentshimself after the expiration of the aforesaid period and provides properidentification satisfactory to the Administrative Committee, then such person’sforfeited benefit shall be reinstated and benefits determined in accordancewith Article III shall commence to be paid. Unless required by law, in noevent shall benefits under the Plan be paid retroactively for the period duringwhich such benefits were payable but unclaimed.

Section 10.9           Errors in Payment.  If any error shall result in the payment toany Participant or other person of more or less than he would have received butfor such error, the Administrative Committee shall be authorized to correctsuch error and to adjust the payments as far as possible in such manner thatthe actuarial equivalent of the benefits to which such Participant or otherperson was correctly entitled shall be paid.

67

----

 

Section 10.10         Multiple Defined Benefit Plans.  Notwithstanding Section 8.8.3, in theevent a group of Employees who are Participants in a Defined Benefit Plan (asdefined in Section 6.1) shall become covered by another Defined BenefitPlan established by the Bolsa Chica Group (as defined in Section 6.1), theCompany may authorize the Administrative Committee to direct the Trustee to payover and deliver to the trustee of such other plan such of the assets of theoriginal Defined Benefit Plan as the Administrative Committee may determine,but in no event shall the assets so transferred exceed that proportion of theoriginal Defined Benefit Plan’s assets which the actuarially determinedliability for the accrued benefit credited to the Employees of such group (on atermination basis) bears to the liability for all accrued benefits thereunder(on a termination basis).

Section 10.11         Notices, etc.

#### (a)           ByEmployee.  Wherever provision is madein the Plan for the filing of any notice, application, election or designation,such action shall, except where expressly provided herein to the contrary, beevidenced by the execution of such form, and on such notice, as the AdministrativeCommittee may specify for the purpose and shall be effective upon receiptunless the Plan otherwise provides.

#### (b)           ToEmployee.  Any communication,statement, or notice addressed to any Employee or claimant at his latest postoffice address as filed with the Company or the Administrative Committee will,on deposit in the United States mail with postage prepaid, be binding upon suchEmployee or claimant for all purposes of the Plan and, Subject to Section 10.8,neither the Trustee nor the Company shall be obligated to undertake a search toascertain the whereabouts of any Employee or claimant.

Section 10.12         Multiple Capacities.  Any person or group of persons may serve inmore than one fiduciary capacity with respect to the Plan.

Section 10.13         Severability.  In case any provisions of this Plan shall beheld illegal or invalid for any reason, the illegality or invalidity shall notaffect the remaining provisions of the Plan, but shall be fully severable, andthe Plan shall be construed and enforced as if the illegal or invalidprovisions had never been inserted in the Plan.

Section 10.14         Construction.  The Plan shall be construed and enforcedaccording to the laws of the State of California except to the extent otherwiserequired by ERISA or necessary for qualification under the Internal RevenueCode. Headings of Articles, Sections and Subsections herein contained areincluded solely for convenience of reference, and if there be any conflictbetween such headings and the text hereof, the text shall control. It isintended that the Plan in all respects conform to and be administered andinterpreted in a manner consistent with the requirements of ERISA and therequirements for qualification under the Internal Revenue Code. Accordingly,any provision required to be included herein, in order that the Plan soconform, shall be deemed to be included in the Plan, whether or not expresslyset forth.

Section 10.15         Special Transitional Rules inConnection with the Spinoff.  It isthe intent of the following transitional rules that this Plan be interpreted asassuring the uninterrupted continuation of the provisions of the PredecessorPlan for Employees of the Company who were

68

----

 

or would have beeneligible to participate in such plan before the Spinoff. (Nevertheless, the Companyreserves the right to amend this Plan as provided herein so long as no suchamendment adversely affects benefits accrued by such Employees prior to theeffective date of amendment.)  Therefore,subject to the exclusions set forth in Section 1.26, the term “Employee”as used in this Plan shall include any person who was employed during theperiod from January 1, 1986 through May 27, 1986 by Henley or abusiness that became a division or subsidiary of Henley in connection with theSpinoff. The term “Company”, as used in this Plan shall include, for periodsprior to the effective date of the Spinoff, Henley and any business that becamea subsidiary or division of Henley in connection with the Spinoff that waspreviously a Company within the meaning of Section 1.14 of the PredecessorPlan. In addition, subject to the transfer of sufficient assets undersection 414(1) of the Code from the trust under the Predecessor Plan tothe Trust Fund, the accrued benefit under this Plan as of January 1, 1986of each Employee of the Company who was a Participant in the Predecessor Planon December 31, 1985 shall be equal to his accrued benefit, on atermination basis, determined as of such date under the provisions of thePredecessor Plan as then in effect.

## Section 10.16         AdditionalSpecial Transitional Rule in Connection with Spinoffs of Henley and The FisherScientific Group Inc.

#### (a)           AnyEmployee who was a participant in the Predecessor Plan on December 31,1985 and transferred to employment with the Company directly from employment byAllied-Signal or its subsidiaries on or before June 1, 1987 shall, subject tothe transfer as of January 1, 1986 of all assets allocable to such Employeefrom the trust under the Predecessor Plan to the Trust Fund, be deemed for allpurposes under the Plan to have commenced employment with the Company as ofJanuary 1, 1986.

#### (b)           AnyEmployee who was a participant in the Predecessor Plan on December 31, 1985 andtransferred to employment with The Fisher Scientific Group Inc., directly fromemployment with Allied-Signal or its subsidiaries on or before June 1, 1987shall, subject to the transfer as of January 1, 1986 of all assets allocable tosuch Employee from the trust under the Predecessor Plan to the Trust Fund, bedeemed for all purposes under the Plan to have commenced employment with theCompany as of January 1, 1986.

ARTICLE X OF THE PLAN WASAMENDED BY AMENDMENT NO. 1, EFFECTIVE AS OF DECEMBER 12, 1994, BY ADDING A NEWSECTION 10.17, TO READ AS FOLLOWS:

“Notwithstanding any provision of this Plan to the contrary,contributions, benefits and service credit with respect to qualified militaryservice will be provided in accordance with Section 414(u) of the Code.”

69

----

 

**ARTICLE XI**

**SPECIAL PROVISIONSRELATING TO THE CUTBACKOF OPERATIONS AT THE HAMPTON LOCATION**

Section 11.1           Applicability.  The provisions of this Article XI shallbe applicable to each Participant or Former Participant in the Plan (a) who wasactively employed on December 31, 1985 in the Signal Engineered ProductsGroup, (b) whose regular place of employment on or after December 31,1985 was the Hampton office of the Company, regardless of whether suchParticipant may thereafter be transferred to another location, and(c) who, on or before July 1, 1986, agreed to a date for the involuntarytermination of his employment in connection with the Allied-Signal Inc.Streamlining Program. The Participants and Former Participants to whom thisArticle XI is applicable shall hereinafter be referred to as “HamptonParticipants.”

Section 11.2           Full Vesting.  Notwithstanding any other provision of thePlan, each Participant or Former Participant (a) who was actively employed onDecember 31, 1985 in the Signal Engineered Products Group and(b) whose regular place of employment on or after December 31, 1985was the Hampton office of the Company, regardless of whether such Participantmay thereafter be transferred to another location, shall be fully vested in hisAccrued Benefit.

Section 11.3           Special Rules Pertaining toHampton Participants Electing to Receive Periodic Salary Continuation Payments. In the case of any Hampton Participantwho elects, in connection with the Allied-Signal Inc. Streamlining Program andin accordance with procedures established by the Administrator, to receiveperiodic salary continuation payments rather than lump-sum salary continuationpayments, the following rules shall apply:

#### (a)           nosuch Hampton Participant shall be deemed to have Separated from the Serviceuntil the last day of the final period to which his or her periodic salarycontinuation payments relate (which date shall, for the purpose of thisArticle, be referred to hereinafter as his or her “Severance from Service Date”);and

#### (b)           theCompensation of each such Hampton Participant shall, for all purposes under thePlan, be deemed to include such periodic salary continuation payments.

Section 11.4           Special Rules Pertaining toHampton Participants Electing to Receive Salary Continuation.  In the case of any Hampton Participant who isnot, as of his Severance from Service Date, eligible to receive the immediatepayment of any Early or Normal Retirement Benefit under the Plan and who, inconnection with the Allied-Signal Inc. Streamlining Program and in accordancewith procedures established by the Administrator, elects to receive periodic orlump-sum salary continuation, the following rules shall apply:

#### (a)           ifsuch Hampton Participant’s Severance from Service Date, determined inaccordance with Section 12.3(a) or in accordance with the other provisionsof the Plan, whichever is applicable, is less than or equal to two years beforethe earliest date that such Hampton Participant could have designated as hisEarly Commencement Date under the Plan, such Hampton Participant, for thepurpose of determining his Credited Service (and for no other

70

----

 

purpose of determininghis Credited Service (and for no other purpose under the Plan), shall be deemedto remain an Employee of the Company until the earlier of (i) his deathand (ii) the earliest date that could have been designated as hisEarly Commencement Date; and

#### (b)           ifsuch Hampton Participant’s Severance from Service Date, determined inaccordance with Section 12.3(a) or in accordance with the otherprovisions of the Plan, whichever is applicable, is less than or equal to threeyears before the earliest date on which such Hampton Participant would havebeen eligible to receive an unreduced Retirement Benefit, such HamptonParticipant shall, for the purpose of determining his Credited Service (and forno other purpose under the Plan), be deemed to remain an Employee of theCompany until the earlier of (i) his death and (ii) theearliest date on which he would have been eligible to receive an unreducedRetirement Benefit.

## Section 11.5           SpecialRules Pertaining to Hampton Participants Electing to Receive “5+5”Benefits.  In the case of any HamptonParticipant who is eligible for and elects, in accordance with proceduresestablished by the Administrator, to receive “5+5” benefits rather thanperiodic or lump-sum salary continuation, the following rules shall applyupon such Hampton Participant’s Separation from the Service:

#### (a)           notwithstandingany other provision of this Plan, five years shall be added to such HamptonParticipant’s Credited Service under the Plan; and

#### (b)           fiveyears shall be added to such Hampton Participant’s age, solely for the purposesof (i) the determination of eligibility for Early or Normal RetirementBenefits under the Plan and (ii) the determination of the amount,if any, of applicable early reduction factors.

## Section 11.6           AdditionalSpecial Rule Pertaining to Hampton Participants.  Notwithstanding any other provision of thePlan, the Benefits of Hampton Participants shall not be reduced to cover thecost of Qualified Preretirement Survivor Annuity coverage.

# **ARTICLE XII**

# **SPECIAL PROVISIONS RELATING TO THE CUTBACKOF OPERATIONS AT THE LA JOLLA LOCATION**

## Section 12.1           Applicability.  The provisions of this Article XII shallbe applicable to each Participant or Former Participant in the Plan (a) whowas actively employed on September 30, 1985 by any member of thecontrolled group of corporations of which Allied-Signal Inc. was a member onthe date immediately preceding the Spinoff and (b) whose regular place ofemployment on or after June 30, 1985 was the La Jolla office of theCompany, regardless of whether such Participant may thereafter be transferredto another location.  The Participants towhom this Article XII is applicable shall hereinafter be referred to as “LaJolla Participants.”

## Section 12.2           FullVesting.  Notwithstanding any otherprovision of the Plan, each La Jolla Participant shall be fully vested in hisAccrued Benefit.

71

----

 

## Section 12.3           SpecialRules Pertaining to La Jolla Participants Electing to Receive PeriodicSalary Continuation Payments.  In thecase of any La Jolla Participant who, in connection with the cutback ofoperations at the La Jolla location, elects, in accordance with proceduresestablished by the Administrator, to receive periodic salary continuationpayments rather than a lump-sum salary continuation payment, the following rules shallapply:

#### (a)           nosuch La Jolla Participant shall be deemed to have Separated from the Serviceuntil the last day of the final period to which his or her periodic salarycontinuation payments relate (which date shall, for the purpose of thisArticle, be referred to hereinafter as his or her “Severance from Service Date”);and

#### (b)           theCompensation of such La Jolla Participant shall, for all purposes under thePlan, be deemed to include such periodic salary continuation payments.

## Section 12.4           SpecialRules Pertaining to La Jolla Participants Electing to Receive SalaryContinuation.  In the case of any LaJolla Participant who is not, as of his Severance from Service Date, eligibleto receive the immediate payment of any Early or Normal Retirement Benefitunder the Plan and who, in connection with the cutback of operations at the LaJolla location, elects, in accordance with procedures established by theAdministrator, to receive periodic or lump-sum salary continuation, thefollowing rules shall apply:

#### (a)           ifsuch La Jolla Participant’s Severance from Service Date, determined inaccordance with Section 12.3(a) or in accordance with the otherprovisions of the Plan, whichever is applicable, is less than or equal to twoyears before the earliest date that such La Jolla Participant could havedesignated as his Early Commencement Date under the Plan, such La JollaParticipant, for the purpose of determining his Credited Service (and for noother purpose under the Plan), shall be deemed to remain an Employee of theCompany until the earlier of (i) his death and (ii) theearliest date that could have been designated as his Early Commencement Date;

#### (b)           ifsuch La Jolla Participant’s Severance from Service Date, determined inaccordance with Section 12.3(a) or in accordance with the otherprovisions of the Plan, whichever is applicable, is less than or equal to threeyears before the earliest date on which such La Jolla Participant would havebeen eligible to receive an unreduced Retirement Benefit, such La JollaParticipant shall, for the purpose of determining his Credited Service (and forno other purpose under the Plan), be deemed to remain an Employee of theCompany until the earlier of (i) his death and (ii) theearliest date on which he would have been eligible to receive an unreducedRetirement Benefit.

## Section 12.5           SpecialRules Pertaining to La Jolla Participants Electing to Receive “5+5”Benefits.  In the case of any LaJolla Participant who, in connection with the cutback of operations at the LaJolla location, elects, in accordance with procedures established by theAdministrator, to receive “5+5” benefits rather than periodic or lump-sumsalary continuation, the following rules shall apply upon such La JollaParticipant’s Separation from the Service:

#### (a)           notwithstandingany other provision of this Plan, five years shall be added to such La JollaParticipant’s Credited Service under the Plan; and

72

----

 

#### (b)           fiveyears shall be added to such La Jolla Participant’s age, solely for thepurposes of (i) the determination of eligibility for Early or NormalRetirement Benefits under the Plan and (ii) the determination of theamount, if any, of applicable early reduction factors.

## Section 12.6           SpecialRule Pertaining to the Calculation of Normal Retirement Benefits.  Solely for the purpose of calculating NormalRetirement Benefits payable under the Plan to La Jolla Participants, the term “April 1,1971” appearing in subsection 3.2(b)(iii) of the Plan (prior to its January 1,1989 amendment and restatement) shall be deemed to read “July 1, 1971.”

# **ARTICLE XIII**

# **ADDITIONAL SPECIAL RULES**

## Section 13.1           SpecialRules for Employees of Schweizer Dipple, Inc.

For purposes ofdetermining the Vesting Service of any person who was an active employee ofSchweizer Dipple, Inc. on July 1, 1984, and for determining his orher eligibility for benefits under the Plan (including eligibility for earlyretirement or disability benefits), but not for purposes of determining theamount of such benefits, periods beginning at the later of such employee’sactual commencement of employment with Schweizer Dipple, Inc. or June 16,1978 shall be taken into account.  Forpurposes of determining the amount of any benefit under the Plan, CreditedService shall not include periods prior to July 1, 1984.

## Section 13.2           SpecialRules for Certain Employees of Signal Capital Corporation.  (a)  The following rules shallapply to each person who (i) was actively employed by EquileaseCorporation on December 31, 1987, (ii) was a member of thePension Plan for Salaried Employees of Equilease and Prestolite Wire (the “EquileasePlan”) on December 31, 1987, (iii) was actively employed byEquilease Corporation on January 1, 1987, and (iv) became anemployee of Signal Capital Corporation as of January 1, 1988.  The persons described in the foregoingsentence shall hereinafter be referred to as “Transferred Equilease Employees.”

#### (b)           EachTransferred Equilease Employee shall be a Participant in this Plan as of January 1,1988.

#### (c)           TheCredited Service of each Transferred Equilease Employee shall include all ofsuch Transferred Equilease Employee’s credited service as of December 31,1987 under Section 1.14 of the Equilease Plan.

#### (d)           TheVesting Service of each Transferred Equilease Employee shall include all ofsuch Transferred Equilease Employee’s eligibility service as of December 31,1987 under Section 1.17 of the Equilease Plan.

#### (e)           Thebenefit of a Transferred Equilease Employee shall be calculated in the mannerset forth in Section 8.8.3 of this Plan, to the extent that suchTransferred Equilease Employee is entitled to receive a benefit from theEquilease Plan.  The foregoing sentenceshall not apply if all assets allocable to such employee are transferred fromthe trust under the

73

----

 

#### Equilease Plan to the Trust Fund prior to thecalculation of such Transferred Equilease Employee’s benefit hereunder.

#### (f)            Subjectto the transfer of all assets allocable to a Transferred Equilease Employeefrom the trust under the Equilease Plan to the Trust Fund, such Transferred EquileasePlan to the Trust Fund, such Transferred Equilease Employee shall be entitledto a minimum vested benefit under this Plan equal or equivalent to his accruedbenefit as of December 31, 1987 under the Equilease Plan, determined as ofsuch date under the provisions of the Equilease Plan as then in effect andshall be entitled to the payment of such benefit in accordance with theprovisions of the Equilease Plan as in effect on December 31, 1987.  No Transferred Equilease Employee shall beentitled to receive any other benefit except in accordance with the terms ofthis Plan.

#### (g)           Nobenefit payable pursuant to this Section 13.2 shall duplicate any benefitpayable under the Equilease Plan.

## Section 13.3           SpecialRules Applicable to Certain Former Employees of Equilease Corporation.  (a)  The following rules shallapply to each Person who was (i) a retired member or terminated vestedmember of the Pension Plan for Salaried Employees of Equilease and PrestoliteWire (the “Equilease Plan”) on December 31, 1987, or who (ii) wasa member of the Equilease Plan on December 31, 1987, is not a TransferredEquilease Employee described in the preceding section and was as of January 1,1988 a “commuter” employee at the Hampton facility of the Company or receivingsalary continuation in connection with the shutdown of Equilease Corporation’soperations.  The persons described in theforegoing sentence shall hereinafter be referred to as “Former EquileaseEmployees”.

#### (b)           Subjectto the transfer from the trust under the Equilease Plan to the Trust Fund ofall Equilease Plan assets allocable to the Former Equilease Employees,

##### (i)            eachretired Former Equilease Employee shall receive from the Plan the benefit towhich he was entitled as of December 31, 1987 under the terms of theEquilease Plan as in effect on that date, payable in accordance with the termsof the Equilease Plan as in effect on that date,

##### (ii)           eachterminated vested Former Equilease Employee shall be entitled to receive fromthe Plan a benefit equal or actuarially equivalent to his accrued benefit as ofDecember 31, 1987 under the Equilease Plan, payable in accordance with theterms of the Equilease Plan as in effect on that date, and

##### (iii)          thebenefit under the Plan of each Former Equilease Employee who continues to workat the Hampton location as a “commuter” employee or receives salarycontinuation shall be calculated and payable in accordance with the terms ofthe Equilease Plan as in effect on December 31, 1987, including creditedservice under

74

----

 

##### section 1.14 of the Equilease Plan for periods of “commuter”employment and salary continuation.

#### (c)           Nobenefit payable pursuant to this Section 13.3 shall duplicate any benefitpayable under the Equilease Plan.

## Section 13.4           AdditionalSpecial Rules Applicable to Certain Employees of Signal CapitalCorporation.

#### (a)           Therules set forth in this subsection 13.4(a) shall apply to eachEmployee of Signal Capital Corporation who became an Employee in connectionwith the December 12, 1985 acquisition of assets of First City FinancialCorporation (“FCFC Employees”).  Forpurposes of determining each FCFC Employee’s eligibility to participate,Credited Service and Vesting Service under the Plan, periods of employmentprior to January 1, 1986 with FCFC or with any member of the controlledgroup of corporations of which FCFC was a member at the time of such employmentshall be taken into account.

#### (b)           Therules set forth in this subsection 13.4(b) shall apply to eachEmployee of Signal Capital Corporation who became an Employee in connectionwith the May 22, 1986 acquisition of assets of First Asset-Based Lending (“FABLEmployees”).  For purposes of determiningeach FABL Employee’s  Vesting Service andeligibility to participate in the Plan, periods of employment prior to May 22,1986 with FABL, but not periods of service with First National Bank and TrustCompany of Oklahoma City or First Oklahoma Bank Corporation, Inc., shallbe taken into account.

BEFORE ITS JANUARY 1,1989 RESTATEMENTTHE PLAN CONTAINED THE FOLLOWING SECTIONS 13.6 and 13.7

## Section 13.6           IRSNotice 99-131 [sic] Model Amendment 1. In addition to other applicable limitations which may be set forth inthe Plan and notwithstanding any other contrary provisions of the Plan,compensation taken into account under the Plan shall not exceed $200,000,adjusted for changes in the cost of living as provided in section 415(d) ofthe Internal Revenue Code, for the purpose of calculating a Plan participant’saccrued benefit (including the right to any optional benefit provided under thePlan) for any plan year commencing after December 31, 1988.  However, the accrued benefit determined inaccordance with this provision shall not be less than the accrued benefitdetermined on May 1, 1989, without regard to this provision.

Notwithstandingthe preceding sentence, the accrued benefit of any plan participant who is ahighly compensated employee, within the meaning of section 414(q)d of theCode, is reduced to the extent a benefit has accrued with respect tocompensation in excess of $200,000 during the 1989 plan year before the laterof the adoption or effective date of this provision.

## Section 13.7           IRSNotice 88-141 [sic] Model Amendment 2. Notwithstanding any other contrary provision of the Plan in calculatingthe accrued benefit (including the right to any optional benefit provided underthe Plan) of any plan participant who is a highly compensated employee withinthe meaning of section 414(q) of the Internal Revenue Code, such highlycompensated employee shall accrue no additional benefit under the Plan on orafter May 1, 1989,

75

----

 

## to the extent that such additional benefitaccrual exceeds the benefit which would otherwise accrue in accordance with theterms of the Plan as subsequently amended to comply with those qualificationrequirements described in Income Tax Regulations section 1.401(b)-1(b)(2)(ii) (TRA‘86).

This provisionshall be effective until the last day by which the Plan may be amendedretroactively to comply with TRA ‘96 [sic] for its first plan year beginning in1989 in order to remain qualified under the Code and shall be effective forsuch period if any only if the subsequent Plan amendment to comply with TRA ‘86is made on or before the last day by which the Plan may be amendedretroactively to comply with TRA ‘86 for its first plan year commencing in 1989in order to remain qualified under the Code.

In addition, thebenefit accrued by any highly compensated employee, within the meaning of section 414(q)of the Code, shall in no event exceed the benefit accrual provided during the1989 plan year with respect to such participant under the terms of the Plan assubsequently amended to comply with the terms of TRA ‘96 [sic].  However, such highly compensated employee’sbenefit shall not be less than what that participant had accrued as of the lastday of the last plan year beginning before January 1, 1989.

# **ARTICLE XIV**

# **SPECIAL PROVISIONS RELATING TO FORMERPARTICIPANTS IN THE ENGINEERING RESEARCH,INCORPORATED RETIREMENT PLAN FOR SALARIEDEMPLOYEES AND THE ENGINEERING RESEARCH, INC.HOURLY EMPLOYEES PENSION PLAN**

## Section 14.1           General.  (a) Effective January 1, 1984,Engineering Research, Incorporated (“ERI”) established the EngineeringResearch, Incorporated Retirement Plan for Salaried Employees (the “ERISalaried Plan”) to provide retirement benefits for salaried employees ofERI.  The Engineering Research, Inc.Hourly Employees Pension Plan (the “ERI Hourly Plan” and, together with the ERISalaried Plan, the “ERI Plans”) was established effective January 1, 1984to provide retirement benefits for certain hourly employees of ERI.  On February 27, 1987, substantially allof the assets of ERI were sold to Babcock and Wilcox (“B&W”).  In connection with the sale, benefit accrualsunder the ERI Plans were frozen as of February 27, 1987, and offers ofemployment were made to plan participants by B&W.  Effective December 31, 1988, the ERIPlans were merged with this Plan, and participants in the ERI Plans becameparticipants in this Plan for the limited purpose of receiving their benefitsaccrued under the ERI Plans.  Subject tothis Plan’s provisions of general applicability (including such provisions thatare legally required), former participants in the ERI Salaried Plan (“ERISalaried Participants”) and former participants in the ERI Hourly Plan (“ERIHourly Participants” and, together with ERI Salaried  Participants, “ERI Participants”) shall beentitled to benefits under this Plan only as set forth in this Article XIV,unless any such ERI Participant qualifies for participation in the Plan otherthan pursuant to this Article XIV. Except as otherwise provided in this Article XIV, the rights andobligations of each person covered by an ERI Plan who retired, or whoseemployment was otherwise terminated prior to December 31,

76

----

 

## 1988, shall be governed by the applicableprovisions of the ERI Plans as in effect on such person’s retirement ortermination date.  Effective January 1,1990, all assets allocable to the benefits of ERI Participants were transferredto the trust established under The Henley Group, Inc. RetirementPlan.  No benefits under this Plan shallduplicate benefits payable under that plan.

#### (b)           Forpurposes of this Article XIV, unless otherwise indicated, the term “Company”shall mean the Company as defined in Section 1.14, ERI, B&W and theirrespective affiliates required to be treated as under common control with suchentities pursuant to section 414(b),(c),(m) or (o) of the Code.

## Section 14.2           Participation.  A person who was a participant or formerparticipant in either ERI Plan on December 31, 1988 shall become an ERIParticipant in this Plan for purposes of receiving the benefits described inthis Article, effective December 31, 1988.

## Section 14.3           ERISalaried Participants

### Section 14.3.1        ContinuousService.

#### (a)           TheContinuous Service of an ERI Salaried Participant shall for purposes of this Article XIVbe the sum of his Pre-February 28, 1987 Service and his Post-February 27,1987 Service.

#### (b)           Pre-February 28,1987 Service.  The Pre-February 28,1987 Service of an ERI Salaried Participant shall be equal to his ContinuousService accrued under Section IX(1) of the ERI Salaried Plan as of February 27,1987.

#### (c)           Post-February 27,1987 Service.  The Post-February 27,1987 Service of an ERI Salaried Participant shall consist of such ERI SalariedParticipant’s service with the Company after February 27, 1987 until suchservice is interrupted by (i) Discharge for cause, (ii) quitting bythe employee or (iii) retirement. If an ERI Salaried Participant’s service is terminated and such Participantis subsequently rehired by the Company, the duration of service up to suchtermination will be reinstated.

Periods of absencefrom work, other than those which break continuity of service as provided inthe preceding paragraph, will be counted in determining length of continuousservice except when the total period of absence of an ERI Salaried Participantin any consecutive twelve (12) month period exceeds twelve (12) months.

### Section 14.3.2        Retirement.

#### (a)           AnERI Salaried Participant who is employed by the Company, upon attaining the ageof 65 years, or at any time thereafter, may request retirement, and will beretired.

#### (b)           AnERI Salaried Participant with 10 or more years of Continuous Service who isemployed by the Company, upon attaining the age of 60 years, or at any timethereafter, may request retirement, and will be retired.

77

----

 

#### (c)           AnERI Salaried Participant not eligible for a pension under Section 14.3.2(a),(b) or (d) hereof, whose employment is to be terminated, shall beentitled to elect to be pensioned on the first of the month following suchtermination provided:

##### (i)            theERI Salaried Participant’s age and number of years of Continuous Service, whenadded together, equal or exceed 80; or

##### (ii)           theERI Salaried Participant has completed at least 15 years of Continuous Serviceand would have been eligible for a pension under Section 14.3.2(a), (b) or(e) within the next 10 years if employment with the Company had continued.

#### (d)           Notwithstandingany other provisions of the Plan, an ERI Salaried Participant upon attainingthe age of 65 years shall, prior to actual retirement or termination ofemployment, begin receiving pension benefits under this Article XIV on thefirst of the month following attainment of such age.

#### (e)           Regardlessof age, any ERI Salaried Participant with at least 10 years of ContinuousService who shall have become permanently incapacitated through someunavoidable cause while employed by the Company will be retired.

An ERI SalariedParticipant shall be “permanently incapacitated” only if (i) theERI Salaried Participant has been totally disabled by bodily injury or diseasewhile actively employed so that the ERI Salaried Participant cannot regularlyengage in any substantial, full-time activity for compensation or profit, (ii) suchdisability shall have continued for at least three consecutive months, and (iii) inthe opinion of a licensed practicing physician, such disability will becontinuous throughout the ERI Salaried Participant’s life.

For the purposesof retirement with pension under this Plan, incapacity shall not be deemed tohave resulted from an unavoidable cause if such incapacity is occasioned byself-inflicted injury, or as a result of participating in a criminal activity.

A pension becauseof permanent incapacity under clauseof this Section 14.3.2 shall continueonly so long as the pensioner shall be permanently incapacitated, and theAdministrator may require an individual pensioned under this clause to submitto a medical examination at any reasonable time by a licensed practicingphysician.

A pensioner willbe conclusively presumed to be regularly engaged in substantial, full-timeactivity for compensation or profit, and therefore no longer permanentlyincapacitated, if the pensioner engages in any activity for compensation orprofit from which the pensioner derives income, the annual amount of which,together with the amount of any pension received from the Company, exceeds theannual compensation the ERI Salaried Participant would presently receive if theemployee were still employed on the job held at the time the employee wasdisabled.

78

----

 

### Section 14.3.3        Amountand Payment of Pension.

Subject to theprovisions of Section 14.3.2(d) regarding commencement of benefits,an ERI Salaried Participant meeting the eligibility requirements will beentitled to receive a pension each month beginning with the month followingthat in which retirement takes place and ending with the month in which the ERISalaried Participant dies.  The amount ofsuch pension will be determined as follows:

#### (a)           Ifan ERI Salaried Participant is retired under the provisions of Section 14.3.2(a) or(d), or is entitled to pension benefits under the provisions of Section 14.3.2(d),the ERI Salaried Participant’s pension shall be equal to the greater of (i) or(ii) below:

##### (i)            1.1%of the average monthly pay received during the highest paid five of the lastten calendar years of employment with ERI (ending on or before February 27,1987) multiplied by his number of years of Pre-February 28, 1987 Service;

##### (ii)           $100.00.

If it will resultin a higher pension, however, an ERI Salaried Participant whose Pre-February 27,1987 Service ceased to accrue before December 31 of any calendar yearwill, for the purpose of determining such average monthly pay, be given thebenefit of earnings in the year such service ceased in lieu of earnings duringan equivalent portion of the earliest of such highest paid five years, providedthat no amounts earned after February 27, 1987 shall be taken intoaccount.

#### (b)           Ifan ERI Salaried Participant is retired under the provisions of Section 14.3.2(b) or(c), the ERI Salaried Participant’s pension will be calculated in accordancewith the formula set forth in Section 14.3.3(a) above, and thenreduced by 5/9 of 1% for each of the first 60 months by which the pensioncommencement date precedes the calendar month following the ERI SalariedParticipant’s 65th birthday, plus 5/18 of 1% for each additional month by whichthe pension commencement date precedes the calendar month following the ERISalaried Participant’s 65th birthday.

#### (c)           Anyamount paid to or on behalf of any pensioner as reimbursement for loss ofearnings resulting from occupational injury or disease for which the Company(which term for purposes of this subsection 14.3.3(c) shall mean theCompany as defined in Section 1.14, ERI, and their respective affiliatesrequired to be treated as under common control with them pursuant to section 414(b),(c), (m) or (o) of the Code) is liable, whether pursuant to Workmen’sCompensation or occupational disease laws, or arising otherwise from thestatutory or common law (except fixed statutory payment for the permanent totalor partial loss of one or any bodily member, and except for payments formedical expenses) and any disability payment in the nature of a pension underany Federal or State law shall be deducted from or charged against the amountof any pension payable under this Section 14.3.3.  However, Social Security payments andallowances for disabilities incurred in the military service of the UnitedStates will not be so deducted or charged.

79

----

 

#### (d)           TheAdministrator shall pay in a lump sum any pension having a present value of$3,500 or less.  The lump sum payment toan ERI Salaried Participant will be the monthly pension payable at the later ofage 65 or pension commencement age multiplied by the factor from Column A forthe age of the ERI Salaried Participant when the lump sum benefit will bepaid.  The lump sum payment to an ERISalaried Participant’s surviving spouse will be the spouse’s monthly pensionmultiplied by the factor from Column B for the age of the spouse at the datethe spouse’s pension will commence, and further multiplied by the ratio of thefactor in Column A for the age of the spouse at the ERI Salaried Participant’sdeath to the factor in Column A for the age of the spouse at the date thespouse’s pension will commence (or age 65 if age 65 is earlier than suchcommencement age).

80

----

 
| **Age**            | ** ** | **Column A** | ** ** | **Column B** | ** ** | **Age**         | ** ** | **Column A** | ** ** | **Column B** | ** ** |
|--------------------|------------|-------------------|------------|-------------------|------------|-----------------|------------|-------------------|------------|-------------------|------------|
| **75  & over** |       | 77                |       | 77                |       | 54              |       | 43                |       | 134               |       |
| **74**             |       | 80                |       | 80                |       | 53              |       | 41                |       | 140               |       |
| **73**             |       | 82                |       | 82                |       | 52              |       | 38                |       | 141               |       |
| **72**             |       | 85                |       | 85                |       | 51              |       | 36                |       | 145               |       |
| **71**             |       | 87                |       | 87                |       | 50              |       | 33                |       | 145               |       |
| **70**             |       | 90                |       | 90                |       | 49              |       | 32                |       | 152               |       |
| **69**             |       | 92                |       | 92                |       | 48              |       | 31                |       | 159               |       |
| **68**             |       | 95                |       | 95                |       | 47              |       | 29                |       | 161               |       |
| **67**             |       | 97                |       | 97                |       | 46              |       | 28                |       | 167               |       |
| **66**             |       | 99                |       | 99                |       | 45              |       | 27                |       | 173               |       |
| **65**             |       | 102               |       | 102               |       | 44              |       | 26                |       | 178               |       |
| **64**             |       | 93                |       | 105               |       | 43              |       | 25                |       | 183               |       |
| **63**             |       | 85                |       | 107               |       | 42              |       | 24                |       | 188               |       |
| **62**             |       | 78                |       | 110               |       | 41              |       | 23                |       | 192               |       |
| **61**             |       | 72                |       | 113               |       | 40              |       | 22                |       | 195               |       |
| **60**             |       | 66                |       | 115               |       | 39              |       | 21                |       | 198               |       |
| **59**             |       | 61                |       | 118               |       | 38              |       | 20                |       | 200               |       |
| **58**             |       | 56                |       | 120               |       | 37              |       | 19                |       | 202               |       |
| **57**             |       | 53                |       | 125               |       | 36              |       | 19                |       | 214               |       |
| **56**             |       | 49                |       | 127               |       | 35  & under |       | 18                |       | 214               |       |
| **55**             |       | 46                |       | 131               |       |            |       |              |       |              |       |

 

Notwithstanding the foregoing, the above table willnot be used if a greater lump sum payment is derived by using the UP-1984Mortality Table, with an interest rate that is not greater than the immediateor deferred rate used by the Pension Benefit Guaranty Corporation to determinethe present value of a lump sum distribution upon plan termination. The rate(s)used shall be the rate(s) in effect on the January 1 of the year in whichthe Annuity Starting Date occurs. No distribution may be made under thisSection 14.3.3(d) after the Annuity Starting Date unless the ERI SalariedParticipant and the ERI Salaried Participant’s spouse (or where the ERI SalariedParticipant has died, the surviving spouse) consents in a notarized writing tosuch distribution.

#### (e)           Thepayment of benefits under this Section 14.3.3 shall be subject to therequirements of Section 3.16 of the Plan.

### Section 14.3.4        VestedRight to Deferred Pension.

EffectiveFebruary 27, 1987, the accrued benefit as of such date of each employeecovered by the ERI Salaried Plan became 100% vested. Any other ERI SalariedParticipant shall acquire a right to a deferred pension if such ERI SalariedParticipant’s employment is terminated, and the ERI Salaried Participant is notretired under any of the provisions of Section 14.3.2 hereof, providedsuch ERI Salaried Participant has attained age 65 or has 10 years 

81

----

 

or more of Continuous Service immediately prior tosuch termination, or has 9 years of Continuous Service and is employed by theCompany for at least 1,000 hours in the tenth year of such service immediatelyprior to such termination (provided that, in the case of an ERI SalariedParticipant with one or more Hours of Service after December 31, 1988, thenumbers 5 and 4 shall be substituted for the numbers 10 and 9 in theforegoing sentence).

For purposes of thisprovision, a year shall mean any 12-month period, commencing on an ERI SalariedParticipant’s date of hire and during which the ERI Salaried Participantcontinues to be employed by the employer and shall include for vesting andeligibility purposes only all periods of absence for up to one year, providedthe ERI Salaried Participant resumes participation under the Plan; fractionalportions of a year, whether or not consecutive, shall be aggregated; an hour ofemployment shall mean an hour for which a person was directly or indirectlypaid, or entitled to payment, by the employer for the performance of duties;and employment with any employer during or prior to the time such employer iscontrolled by the Company shall be deemed to be employment with the Company.

An ERI SalariedParticipant so entitled to a deferred pension will receive pension payments foreach month beginning with the month following that in which the ERI SalariedParticipant attains age 65 and ending with the month in which the pensionerdies. If a joint and survivor option is in effect, however, in accordance withSection 14.3.6 the payments provided for by such option will be continuedduring the life of a surviving spouse.

Subject toSection 14.3.3(c), each monthly pension payment will be an amount to bedetermined by applying the formula set forth in Section 14.3.3(a)(i) hereof,using as a basis the number of years of the ERI Salaried Participant’sContinuous Service at the earlier of the time of termination of employment andFebruary 27, 1987.

An ERI SalariedParticipant so entitled to a deferred pension may elect to have pensionpayments begin any month after the employee has attained age 55, in which casethe amount of monthly pension, determined as provided in the precedingparagraph of this Section 14.3.4, shall be reduced by 5/9 of 1% for eachof the first 60 months by which such pension commencement date precedes thecalendar month following the ERI Salaried Participant’s 65th birthday, plus5/18 of 1% for each additional month by which the pension commencement dateprecedes the calendar month following the ERI Salaried Participant’s 65thbirthday.

### Section 14.3.5        SocialSecurity Option.

Subjectto the spousal consent provisions of Section 14.3.6, an ERI SalariedParticipant retiring under the provisions of Section 14.3.2(b) or (c)hereof before the ERI Salaried Participant first becomes eligible to receiveSocial Security payments may elect to receive a retirement income providinglarger monthly payments, in lieu of the retirement income otherwise payableupon early retirement, until the date the ERI Salaried Participant firstbecomes eligible to receive Social Security payments; thereafter, the monthlypayments shall be reduced by the approximate amount of the ERI SalariedParticipant’s monthly Social Security benefit. Insofar as practical, therefore,a level total retirement income will be available for the participant. Thisoption is not available, however, if an option is elected by the ERI SalariedParticipant under the provisions of Section 14.3.6. Such larger paymentsshall equal such retirement income otherwise 

82

----

 

payable plus the following percentage of suchapproximate amount of the ERI Salaried Participant’s monthly Social Securitybenefit:
| Number of years until the  ERI Salaried Participant first becomes  eligible to receive Social Security payments | ** ** | **Level  Income  Percentage** |
|-----------------------------------------------------------------------------------------------------------------|------------|-------------------------------|
|                                                                                                            |       |                          |   |
| 0                                                                                                               |       | 100                           | % |
| 1                                                                                                               |       | 89                            | % |
| 2                                                                                                               |       | 80                            | % |
| 3                                                                                                               |       | 71                            | % |
| 4                                                                                                               |       | 64                            | % |
| 5                                                                                                               |       | 57                            | % |

 
| Number of years until the  ERI Salaried Participant first becomes  eligible to receive Social Security payments | ** ** | **Level  Income  Percentage** |
|-----------------------------------------------------------------------------------------------------------------|------------|-------------------------------|
|                                                                                                            |       |                          |   |
| 6                                                                                                               |       | 52                            | % |
| 7                                                                                                               |       | 47                            | % |
| 8                                                                                                               |       | 42                            | % |
| 9                                                                                                               |       | 38                            | % |
| 10                                                                                                              |       | 34                            | % |
| 11                                                                                                              |       | 31                            | % |
| 12                                                                                                              |       | 28                            | % |
| 13                                                                                                              |       | 26                            | % |
| 14                                                                                                              |       | 24                            | % |
| 15 or more  (interpolate for fractional years)                                                                  |       | 21                            | % |

 

If, however, such largermonthly payments, as determined above, are smaller than such approximate amountof the employee’s Social Security benefit, such larger monthly payments shallinstead equal the monthly pension otherwise payable divided by the complementof the applicable level income percentage.

### Section 14.3.6        Jointand Survivor Options.

#### (a)           Pre-retirement SurvivorAnnuity.  The provisions of thisSection shall apply to any ERI Salaried Participant who is credited withat least one Hour of Service on or after August 23, 1984, and such otherERI Salaried Participants as have elected coverage in accordance withArticle VIII(1)(e) of the ERI Salaried Plan. If an ERI SalariedParticipant dies after the date on which the ERI Salaried Participant is vestedin accordance with the first paragraph of Section 14.3.4 and beforeretiring, or a retired ERI Salaried Participant who has not elected otherwisedies prior to the commencement of benefits, the spouse of such ERI SalariedParticipant shall be entitled to pension payments in the form of aPre-retirement Survivor Annuity in accordance with the following provisions:

83

----

 

##### (i)            If the ERI SalariedParticipant dies after becoming eligible for early retirement underSection 14.3.2(b) or (c), the spouse will receive pension payments foreach month beginning with the month following the month in which the ERISalaried Participant’s death occurs. If the ERI Salaried Participant diesbefore becoming eligible for early retirement, the spouse will receive pensionpayments beginning with the first of the month coinciding with or nextfollowing the ERI Salaried Participant’s earliest retirement age, unless thespouse elects a later date.

##### (ii)           The monthly pensionpayment to the spouse shall be an amount to be determined (A) byapplying the formula set forth in Section 14.3.3(a) hereof (or apredecessor section of the ERI Salaried Plan), as in effect at the time of theERI Salaried Participant’s death or earlier termination, using as a basis thenumber of years of the ERI Salaried Participant’s Pre-February 27, 1987Service, (B) reduced by 5/9 of 1% for each of the first 60 monthsby which the commencement date of pension payments to the spouse precedes thecalendar month following the ERI Salaried Participant’s 65th birthday, plus5/18 of 1% for each additional month by which the commencement date precedesthe calendar month following the ERI Salaried Participant’s 65th birthday, (C) reducedto reflect the amount the spouse would receive as though an Option II (asdefined below) form of pension payments had been elected to take effect at thedate of commencement of pension payments to the spouse, and (D) reducedfurther by any coverage factors applicable under Section 14.3.6(v).

##### (iii)          Terminated ERI SalariedParticipants entitled to a deferred pension may waive a Pre-retirement SurvivorAnnuity in writing at any time after the date of separation. The waiver must beconsented to by the employee’s spouse, and the spouse’s consent mustacknowledge the effect of such rejection and must be witnessed by a notarypublic. A revocation of a prior waiver may be made by the ERI SalariedParticipant without the consent of the spouse at any time before thecommencement of benefits. The number of revocations shall not be limited.

##### (iv)          The Administrator shallprovide each terminated ERI Salaried Participant entitled to a deferred pensionwith a written explanation of the Pre-retirement Survivor Annuity in such termsand in such manner as would be comparable to the explanation provided formeeting the requirements applicable to Joint and Survivor Annuity specified inSection 14.3.6(b).

##### (v)           Themonthly pension payable to a terminated ERI Salaried Participant will bereduced for the Pre-retirement Survivor Annuity 

84

----

 

##### coverage bythe appropriate factor from the table below multiplied by the number of fullyears the coverage has been in effect after December 31, 1984.

|                 | **Reduction for Each Full  Year of Coverage After  Termination of Employment** |
|-----------------|--------------------------------------------------------------------------------|
|            |                                                                           |
| Prior to Age 65 | .3%                                                                            |
| After Age 65    | None                                                                           |

 

#### (b)           Jointand Survivor Option.  Subject to theconditions hereinafter set forth in Section 14.3.6(b)(ii), if an ERISalaried Participant shall be married at the beginning of the calendar month inwhich pension payments are to commence under the Plan, and unless the ERISalaried Participant otherwise elects, the amount of each such pension paymentwhich would otherwise be payable shall be reduced; and if the spouse shallsurvive the ERI Salaried Participant, a pension shall be payable under the Planto the spouse during such spouse’s remaining lifetime after the ERI SalariedParticipant’s death in an amount equal to 50% of the ERI Salaried Participant’sreduced pension payment in accordance with Option II.

##### (i)            Every ERI SalariedParticipant who is married when benefits are to commence will receive a writtenexplanation of:

###### (A)          The terms and conditionsof the Joint and Survivor Option form of benefit;

###### (B)           The ERI SalariedParticipant’s right to make, and the effect of, an election to waive the Jointand Survivor Option form of benefit;

###### (C)           The rights of an ERISalaried Participant’s spouse; and

###### (D)          The right to make, andthe effect of, a revocation of a previous election to waive the Joint andSurvivor Option.

An ERI SalariedParticipant may elect in writing, at any time during the 90-day period endingon the Annuity Starting Date, to reject the Joint and Survivor Option form ofbenefit and receive the normal form or an optional form of benefit. Suchrejection must be accompanied by written spousal consent which acknowledges theeffect of the election and is witnessed by a notary public. Any rejection ofthe Joint and Survivor Option form of benefit may be cancelled by writtenelection at any time prior to the date that benefits commence.

##### (ii)           Ifan ERI Salaried Participant wishes to have pension payments made to his spousefollowing his death in excess of that provided in the first paragraph ofSection 14.3.6(b) above, the ERI Salaried Participant may so elect priorto retirement. An ERI Salaried 

85

----

 

##### Participantwho makes such an election will receive a reduced pension during the ERISalaried Participant’s lifetime after retirement, and following the ERISalaried Participant’s death the same level of pension (Option I), or one-halfof it (Option II), or three-fourths of it (Option III), as the ERI SalariedParticipant specified when the election was made, will be continued to the ERISalaried Participant’s spouse during such spouse’s remaining life.

The pension of an ERISalaried Participant electing Option I, II or III shall be reduced 19%, 11% or15%, respectively, plus an additional reduction of 0.500%, 0.250% or 0.375%,respectively, for each full year in excess of three by which the ERI SalariedParticipant’s birthdate precedes the spouse’s birthdate, to a maximum reduction(after 20 such excess years) of 29%, 16% or 22.5%, respectively; or minus0.500%, 0.250% or 0.375%, respectively, for each full year in excess of threeby which the spouse’s birthdate precedes the ERI Salaried Participant’sbirthdate, to a minimum net reduction (after 10 such excess years) of 14%, 8.5%or 11.25%, respectively.

##### (iii)          If an ERI SalariedParticipant chooses to elect an option, written notice must be given to theAdministrator, and the employee must furnish proof of the spouse’s age.

##### (iv)          If an ERI SalariedParticipant or the ERI Salaried Participant’s spouse dies before the option hasbecome effective, the option is automatically cancelled.

##### (v)           If the ERI SalariedParticipant’s spouse dies after the option has become effective and after theERI Salaried Participant has retired, the pension payments to the ERI SalariedParticipant will remain unchanged.

##### (vi)          An option may becancelled or modified by the ERI Salaried Participant before the ERI SalariedParticipant retires, by written notice filed with the Administrator.

##### (vii)         An ERI Salaried Participantwho acquires a vested interest in a pension under the provisions ofSection 14.3.4 may elect a joint and survivor option in the same mannerand under the same terms and conditions as an ERI Salaried Participant who ispensioned immediately upon termination of employment. For this purpose, thevestee’s retirement date will be deemed to be the first date the vestee isentitled to receive deferred pension payments under Section 14.3.4.

### Section 14.3.7        Computationof Average Monthly Pay.

Incomputing an employee’s average monthly pay for the purposes ofSection 14.3.3 hereof, the total compensation the employee received duringthe applicable period (ending on or before February 27, 1987) shall bedivided by 60. However, if during the applicable period, a 

86

----

 

calendar month or more of absence shall have occurredwhich does not break the continuity of service and in respect to which absencethe employee received no compensation from the Company, the number 60 shall bereduced by the number of full calendar months of such absence.

### Section 14.3.8        Employmentof Pensioners.

An ERI SalariedParticipant receiving early retirement benefits under the Plan, who isreemployed by the Company (as defined in Section 1.14 and including forthis purpose all entities required to be treated as under common control withsuch Company under sections 414(b), (c), (m) and (o) of the Code) prior toattaining age 65 or 40 or more hours in any calendar month after commencementof such benefits and who has received the notice required by 29 Code of FederalRegulations Section 2530.203-3(b)(4), will have the pension permanentlysuspended during such reemployment. Upon termination of such reemployment, orif sooner, attainment of age 65, the ERI Salaried Participant’s monthly pensionwill be recomputed so as to give effect to the additional service and thecompensation received during such reemployment to the extent such service andcompensation are required to be taken into account for benefit accrual purposesunder Plan provisions other than this Article XIV. The pension of suchreemployed pensioner will be reduced by 0.9% of the sum of the early retirementbenefits previously received. If such recomputed pension exceeds that paidimmediately prior to such reemployment, the employee shall be entitled toreceive the monthly pension as so recomputed. Notwithstanding the two precedingsentences, in no event will the monthly pension payable upon recommencement beless than that previously paid.”

## Section 14.4           ERIHourly Participants

### Section 14.4.1        CreditedService and Eligibility Service.

#### (a)           CreditedService.  The Credited Service of anERI Hourly Participant shall for purposes of this Article XIV be equal tohis Credited Service under the ERI Hourly Plan as of February 27, 1987.

#### (b)           EligibilityService.  The Eligibility Service ofan ERI Hourly Participant shall for purposes of this Article XIV be thesum of his Pre-February 28, 1987 Eligibility Service and hisPost-February 27, 1987 Eligibility Service. If at the date of an Employee’sretirement or termination of employment with the Company, his EligibilityService is less than his Credited Service with the Company, his EligibilityService shall be deemed to equal his Credited Service.

##### (i)            Pre-February 28,1987 Eligibility Service.  ThePre-February 28, 1987 Eligibility Service of an ERI Hourly Participantshall be equal to his Eligibility Service accrued under Article VI(3) ofthe ERI Hourly Plan as of February 27, 1987.

##### (ii)           Post-February 27,1987 Eligibility Service.  ThePost-February 27, 1987 Eligibility Service of an ERI Hourly Participantshall be computed for each ERI Hourly Participant on the basis of total hourscompensated by the Company during each calendar year, with one year ofEligibility Service being recognized for each 

87

----

 

##### calendar yearin which the ERI Hourly Participant receives compensation for 1,000 hours ormore (including as compensated hours the hours referred to in subsections 2(b)through 2(f) of Article VI of the ERI Hourly Plan as in effect onDecember 31, 1988, in accordance with subsection 2(g) of suchArticle VI). No proportionate or partial credits shall be given for thepurpose of computing Eligibility Service. Hours of pay at premium rates shallbe computed as straight-time hours.

### Section 14.4.2        Requirementsfor Retirement Pensions and Deferred Vested Pensions.

#### (a)           Forpurposes of this Section 14.4, the term “Pension” shall mean a series ofuniform monthly payments payable to an ERI Hourly Participant, the first suchpayment to be made as of the beginning of the month following the last day ofemployment immediately prior to retirement, or such other date specified forthat purpose, and the last payment to be made as of the beginning of the monthin which the death of the ERI Hourly Participant occurs, or in which the Disability(as defined in Section 14.4.7) ends or, in the case of an Early RetirementPension payable pursuant to Section 14.4.3(b) in which reemployment occursprior to Normal Retirement Date.

#### (b)           AnERI Hourly Participant shall be considered as retired under the Plan and asbecoming a retired or disabled ERI Hourly Participant entitled to a Pension,upon termination of employment, provided such retirement occurs while the ERIHourly Participant is employed by the Company and:

##### (i)            after the first datehe has attained age 65 (for purposes of this Section 14.4, his NormalRetirement Date), or

##### (ii)           after age 60 but priorto age 65 and after 10 years of Eligibility Service, provided that if heretires at his option he shall be eligible for an Early Retirement Pension asprovided in Section 14.4.3(b)(i) (provided that, if an ERI HourlyParticipant is discharged for cause, he shall be deemed to have retired at hisoption), or

##### (iii)          after age 60 but priorto age 65 and after 10 years of Eligibility Service, provided that if heretires at the option of B&W and under mutually satisfactory conditions heshall be eligible for an Early Retirement Pension as provided inSection 14.4.3(b)(ii), or

##### (iv)          after 10 years ofEligibility Service in the event termination is caused by Disability and theERI Hourly Participant is so disabled prior to reaching age 65.

#### (c)           Notwithstanding anyother provisions of the Plan, an ERI Hourly Participant whose employmentterminates, and (i) who (A) became vested in his accrued benefiteffective February 27, 1987 pursuant to Article XIII of the ERIHourly Plan or (B) at the time of such termination shall have 10 ormore years of Eligibility Service (5 or more years of Eligibility Service inthe case of an ERI Hourly Participant with one or more Hours of Service after 

88

----

 

December 31, 1988), and (ii) who shall notbe eligible for or receiving any other pension under the Plan based (in wholeor in part) on Credited Service prior to the date of such termination, shall beentitled to a Deferred Vested Pension as provided in Section 14.4.3(d) ofthe Plan.

#### (d)           Notwithstandingany other provisions of the Plan, an ERI Hourly Participant or surviving spouseentitled to receive a Pension may, for personal reasons and without disclosurethereof, request the Administrator in writing to suspend for any period paymentof all or any part of such Pension otherwise payable to him hereunder. TheAdministrator, on receipt of such request, shall authorize such suspension, inwhich event the ERI Hourly Participant shall be deemed to have forfeited allrights to the amount of pension so suspended, but shall retain the right tohave the full Pension otherwise payable to him hereunder reinstated as tofuture monthly payments upon written notice to the Administrator of his desireto revoke his prior request for a suspension under this paragraph. Anysuspension requested hereunder by an ERI Hourly Participant or benefits payableto him under the Plan shall not affect benefits payable under any survivorshipelection he has made or is deemed to have made under the Plan.

#### (e)           Paymentof benefits will, unless the ERI Hourly Participant elects a later date, beginnot later than the later of (i) sixty days after the close of the Plan Year inwhich the ERI Hourly Participant attains the earlier of age 65 or the NormalRetirement Date or (ii) sixty days after the end of the Plan Year in whichthe ERI Hourly Participant’s employment terminates. The payment of benefitsshall be further subject to Section 3.16.

#### (f)            Notwithstandingany other provisions of the Plan an ERI Hourly Participant, upon attaining theage of 65, shall, prior to retirement or termination of employment, beginreceiving a Pension on the first of the month following attainment of such age.

### Section 14.4.3        Retirementand Other Benefits.

#### (a)           NormalRetirement Pension.  The amount ofthe monthly Pension payable out of the Trust to an ERI Hourly Participant uponor after reaching age 65 under the conditions of Section 14.4.2(b) of thePlan, and who shall make application therefor, or to an ERI Hourly Participantentitled to a Pension in accordance with Section 14.4.2(f), shall be alife income benefit equal to $10.00 multiplied by the number of his years ofCredited Service (the “Normal Retirement Pension”).

Subject toSection 14.4.2(f), the monthly Normal Retirement Pension payable from theTrust shall become payable to the ERI Hourly Participant, if he then shall beliving, on the first day of the first month after (i) his employment shallhave terminated, and (ii) he shall have filed an application for suchPension; and shall be payable on the first day of each month thereafter duringhis lifetime.

Uponattainment of his Normal Retirement Date, the rights of an ERI HourlyParticipant to his benefits under this Section shall be nonforfeitable.

89

----

 

#### (b)           EarlyRetirement Pension.

##### (i)            The amount of themonthly Pension payable out of the Trust to an Employee who shall retire at hisoption under the conditions of Section 14.4.2(b)(ii) of the Plan, and whoshall make application therefor, shall be one of the following as the ERIHourly Participant shall elect:

###### (A)          A deferred life incomebenefit, at age 65 determined in accordance with Section 14.4.3(a),based upon his Credited Service, or

###### (B)           An immediate lifeincome benefit commencing at Early Retirement in an amount equal to thedeferred benefit provided for in (A) above, reduced by a percentageequal to 5/9 of 1% multiplied by the number of months from the date the ERIHourly Participant’s Pension originally commenced to attainment of age 65.

##### (ii)           The amount of themonthly Pension payable out of the Trust to an ERI Hourly Participant who shallretire under the conditions of Section 14.4.2(b)(iii) of the Plan shallbe:

###### (A)          A life income benefit inan amount equal to $10.00 for each year of his Credited Service, and

###### (B)           A Temporary Benefit inan amount equal to $10.00 for each year of his Credited Service (not to exceeda total of $250.00); provided, however, that for any month after the retiredERI Hourly Participant attains age 65 or becomes Eligible For an UnreducedSocial Security Benefit, whichever occurs first, the Temporary Benefit shallnot be payable.

For the purpose ofsubsection (i) above, a retired ERI Hourly Participant shall be consideredas being Eligible For an Unreduced Social Security Benefit even though he doesnot qualify for, or loses, such payments through failure to make applicationtherefor, entering into covered employment, or other act or failure to act. AnERI Hourly Participant discharged for cause after such ERI Hourly Participanthas attained age 60 but before age 65, and who has met the requirements setforth in Section 14.4.2(c)(i) shall be entitled only to the benefitsprovided under Section 14.4.3(b)(i) of the Plan.

##### (iii)          Themonthly Early Retirement Pension shall become payable to the retired ERI HourlyParticipant, if he then shall be living, on the first day of the first monthafter (A) he shall have become eligible for such Pension and (B) heshall have filed application for such Pension; and shall be payable on thefirst day of each month 

90

----

 

##### thereafterduring his lifetime or until he shall be reemployed prior to his NormalRetirement Date by the Company (as defined in Section 14.4.3(e)).

#### (c)           DisabilityRetirement Pension.  The monthlyPension payable out of the Trust to an ERI Hourly Participant who shall retireand be eligible for a Pension under the provisions ofSection 14.4.2(b)(iv) of the Plan shall be:

##### (i)            A life income benefitin an amount equal to $10.00 for each year of his Credited Service, and

##### (ii)           A Temporary Benefit inan amount equal to $10.00 for each year of his Credited Service (not to exceeda total of $250.00); provided, however, that for any month after the retiredERI Hourly Participant attains age 65 or becomes Eligible For an Unreduced SocialSecurity Benefit, whichever occurs first, the Temporary Benefit shall not bepayable.

For the purposes of thisSection, a retired ERI Hourly Participant shall be considered as being EligibleFor an Unreduced Social Security Benefit by reason of disability even though hedoes not qualify for, or loses, such payments through failure to makeapplication therefor or other act or failure to act.

The monthly DisabilityRetirement Pension payable from the Trust shall become payable to the retiredERI Hourly Participant, if he then shall be living, on the first day of thefirst month after (A) he shall have filed an application for suchPension, and (B) his Disability Retirement shall have commenced,and (C) at least 26 weeks have elapsed since the date upon whichhis Disability commenced, and shall be payable on the first day of each monththereafter until, but not including, the month after (1) hisDisability Retirement shall end, or (2) he shall attain age 65, or(3) he shall die, whichever first shall occur.

When a retired ERI HourlyParticipant receiving a Disability Retirement Pension shall reach age 65 or thequalifying age for an unreduced insurance benefit by reason of age under theFederal Social Security Act, he thereafter, if eligible, shall receive a NormalRetirement Pension in accordance with the provisions of Section 14.4.3(a)and shall no longer be considered to be on Disability Retirement.

#### (d)           DeferredVested Pension.  The monthly Pensionpayable out of the Trust to an ERI Hourly Participant who shall terminateemployment and be eligible for a Deferred Vested Pension under the provisionsof Section 14.4.2(c) of the Plan shall be a life income benefit equal to$10.00 multiplied by the number of his years of Credited Service.

The monthly Pension shallbecome payable to such ERI Hourly Participant, if he shall then be living, onthe first day of the month after (i) his 65th birthday and (ii) heshall have filed an application for such Pension; and shall be payable on thefirst day of each month thereafter during his lifetime, provided, however, thatsuch ERI Hourly Participant may elect a monthly Pension commencing on the firstday of any month after he shall have reached his 60th birthday and before heshall have reached his 65th birthday, in which event his monthly Pension shall

91

----

 

(A) be in anamount equal to the Pension payable at age 65 reduced by a percentage equal to5/9 of 1% multiplied by the number of months from the date his Pension is tocommence to the first day of the month following his 65th birthday and (B) bepayable on the first day of each month thereafter during his lifetime or untilhe shall be reemployed prior to his Normal Retirement Date by the Company (asdefined in Section 14.4.3(e)).

#### (e)           Reemployment. If an ERI Hourly Participant receivingan Early Retirement Pension shall be reemployed prior to his Normal RetirementDate by the Company (which term, for purposes of this Section 14.4.3(e),shall mean the Company as defined in Section 1.14 and all entitiesrequired to be treated as under common control with such Company pursuant tosection 414(b)(c)(m) or (o) of the Code) for 40 or more hours in anycalendar month, and has been given the notice required by 29 Code of FederalRegulations Section 2530.203-3(b)(4), his Pension shall be cancelled. Uponhis subsequent retirement, or if sooner, attainment of age 65, his Pensionshall be based on the total of his Credited Service; provided, however, that ifan ERI Hourly Participant eligible for a Normal Retirement Pension or a Pensionin accordance with Section 14.4.2(f) shall previously have been retired onan Early Retirement Pension under the conditions of Section 14.4.2(b)(ii)and then returned to employment, his monthly Normal Retirement Pension orPension payable in accordance with Section 14.4.2(f), if applicable,payable from the Trust shall be reduced by 8/10 of 1% of the sum of the EarlyRetirement Benefit payments he shall have received but not to exceed 25% of themonthly Pension payable prior to such reduction.

If the DisabilityRetirement Pension of a retired ERI Hourly Participant shall cease without lossof seniority, and provided he shall not have subsequently incurred a break inhis seniority, he shall be credited upon subsequent Retirement, or if sooner,attainment of age 65, with the Credited Service and Eligibility Service he hadat the time his Disability Retirement commenced and shall also receive creditfor Eligibility Service accumulated during the period of reemployment.

An ERI Hourly Participantwho previously terminated employment and was eligible for a Deferred VestedPension, and who again becomes an ERI Hourly Participant, prior to hisapplication for such Pension, shall receive credit for Credited Service andEligibility Service accumulated at the time of such termination and shall alsoreceive credit for Eligibility Service accumulated during the period ofreemployment. Upon subsequent retirement, or if sooner, attainment of age 65,such ERI Hourly Participant’s eligibility for retirement and the amount ofmonthly Pension shall be determined on the basis of his total Credited Service.

#### (f)            SurvivorshipOption.

##### (i)            In lieu of theapplicable Life Income Benefit provided in subsections (a) through (d) of thisSection 14.4.3 (but not any Temporary Benefit ceasing at or before age65), an ERI Hourly Participant who retires or has attained his NormalRetirement Date, or an ERI Hourly Participant whose employment was terminatedand is entitled to a Deferred Vested Pension, shall automatically be deemed tohave elected a reduced monthly benefit during his lifetime with the provisionthat, following his death, a monthly

92

----

 

##### survivor’sbenefit shall be payable to his designated spouse during the further lifetimeof the spouse.

##### (ii)           The automatic electionshall be deemed to be made on the following date, whichever is applicable:  (A) for a person retiring onNormal Retirement Pension, Early Retirement Pension, or Disability RetirementPension, the date on which his employment with the Company terminates; or (B) foran ERI Hourly Participant who has attained his Normal Retirement Date, hisNormal Retirement Date or January 1, 1984, whichever is later; or (C) foran ERI Hourly Participant who is entitled to a Deferred Vested Pension, thefirst day of the first month after he reaches age 65 or if earlier, the firstday of the first month he receives a Deferred Vested Pension. The automaticelection provided in this subsection shall be applicable only with respect to aspouse to whom the ERI Hourly Participant is married at the date of electionand has been married for at least one year prior to that date; provided,however, that an ERI Hourly Participant married at the date of election, butfor less than one year, shall be deemed to have elected the survivorship optionto become effective on the first day of the month following the month in whichthe ERI Hourly Participant has been married one year, or if later, the firstday of the month for which his first benefit under the Plan is payable.

An ERI Hourly Participantmay prevent the automatic election provided in this subsection by specificwritten rejection accompanied by written spousal consent which has beenwitnessed by a notary public and executed in whatever form and manner may beprescribed for this purpose and before the time such election would be deemed tobe made, in which event he shall be entitled to the applicable life incomebenefit provided in Section 14.4.3(a), (b), (c) or (d) without thereduction provided in subsection 14.4.3(f) (iii) below; provided, however, thatsaid rejection may be cancelled by the ERI Hourly Participant by written actionat any time prior to the date his benefits are to commence. The notice andwaiver provisions of Section 3.7(d) and (e) shall apply to suchrejections.

##### (iii)          The amount of thereduced monthly benefit payable to a retired ERI Hourly Participant (includingfor purposes of this Section an ERI Hourly Participant entitled to aDeferred Vested Pension and an ERI Hourly Participant entitled to a Pensionpursuant to Section 14.4.2(f)) under this Section 14.4.3(f), shall bedetermined by reducing the amount of the applicable life income benefit by apercentage, determined as hereinafter provided, of the life income benefit thatwould have been payable to the retired ERI Hourly Participant if he hadrejected a survivorship option. The percentage to be used shall be ten percent(10%) if the ERI Hourly Participant’s age and his spouse’s age are the same(the age of each determined as being the age at his or her birthday nearest thedate on which the first payment of such ERI Hourly Participant’s

93

----

 

##### benefit shallbe payable). Such percentage shall be decreased by 1/2 of 1% for each year upto twenty (20) years that the spouse’s age exceeds the ERI Hourly Participant’sage and shall be increased by 1/2 of 1% for each year that the spouse’s age isless than the ERI Hourly Participant’s age.

The reductions providedin this subsectionshall be made in all monthly benefits payable to the retiredERI Hourly Participant.

##### (iv)          The amount of themonthly survivor’s benefit payable to the surviving spouse of a retired ERIHourly Participant for whom the survivorship option hereunder is effectiveshall be fifty percent (50%) of the amount of the monthly life income benefitthat was or would have been payable to the retired Employee after the reductionprovided in (iii) above.

#### (g)           SpecialPre-Retirement Survivor Option.

##### (i)            The following SpecialPre-Retirement Option shall be deemed to have been elected automatically by anEmployee who (A) has seniority on or after January 1, 1984 andhas met the vesting requirements of Section 14.4.2(c) or (B) terminatesemployment and is eligible for a Deferred Vested Pension underSection 14.4.3(d). The Special Pre-Retirement Survivor Option shall alsobe provided in respect of ERI Hourly Participants who elected such coveragepursuant to Article V, Section 7(a) of the ERI Hourly Plan.

An ERI Hourly Participantmay prevent this automatic election by a specific written rejection accompaniedby written spousal consent which has been witnessed by a notary public. Anyrejection may be revoked at any time, or a subsequent rejection made at anytime prior to commencement of benefits. Anything to the contrarynotwithstanding, no rejection may be made until the Employee has attained age35.

##### (ii)           Under this SpecialPre-Retirement Survivor Option, a reduced monthly Pension will be payable tothe ERI Hourly Participant upon his subsequent retirement under the Plan,commencement of a Deferred Vested Benefit or commencement of a Pension pursuantto Section 14.4.2(f) (and the survivor’s benefit available pursuant toSection 14.4.3(f) shall be determined by reference to such reduced monthlyPension), in return for which a survivor’s benefit shall be payable to the ERIHourly Participant’s spouse but only in the event of his death prior to hisretirement, commencement of Deferred Vested Benefits, or commencement of aPension pursuant to Section 14.4.2(f) (whichever is applicable) while theoption is in effect. The survivor’s benefit shall not commence prior to thedate the ERI Hourly Participant would have

94

----

 

##### attained age60. The amount of the spouse’s survivor’s benefit shall be equal to 50% of thelife income benefit, if any, to which the ERI Hourly Participant would havebeen entitled if he had retired under Section 14.4.3(a), (b)(i)(B)or (d) on the day preceding his death but not prior to age 60 with thesurvivorship option set forth in Section 14.4.3(f) in effect.

##### (iii)          The reduction in themonthly Pension payable to an ERI Hourly Participant will be determined bymultiplying the appropriate factor from the table below by the number of monthsthe coverage has been in effect:

| **Age of  Employee** | ** ** | **Reduction for Each Complete Month of  Coverage While in Active Service or  with Seniority Status** | ** ** | **Reduction for Each Complete Month of  Coverage While Not in Active Service Nor  with Seniority Status** | ** ** |
|---------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| ** **                | ** ** | ** **                                                                                                                                                       | ** ** | ** **                                                                                                                                                                 | ** ** |
| Under 65                  |       | .0002083  (.02083%)                                                                                                                                              |       | .00025  (.025%)                                                                                                                                                            |       |
| Over 65                   |       | None                                                                                                                                                             |       | None                                                                                                                                                                       |       |

 

#### (h)           SpecialLump Sum Payment.  An ERI HourlyParticipant or a surviving spouse who is entitled to a monthly benefit underthis Section 14.4.3 shall be paid the actuarial equivalent of said benefitas a single lump sum in lieu of such monthly benefit, provided the lump sum isless than $3,500. In the case of an ERI Hourly Participant, the benefitdescribed herein shall be the monthly pension payable at the later of age 65 orpension commencement age. For determining the actuarial equivalent, the UP-1984Mortality Table shall be used, with an interest rate that is not greater thanthe immediate or deferred rate used by the Pension Benefit Guaranty Corporationto determine the present value of a lump sum distribution upon plantermination. The rate(s) used shall be the rate(s) in effect on theJanuary 1 of the year in which the Annuity Starting Date occurs. Thesurviving spouse of an ERI Hourly Participant who, pursuant to Sections14.4.3(f) and (g), is automatically deemed to have elected survivor benefits,shall consent in a notarized writing to any such lump sum payment.

SECTION 14.4.3(h) OF THEPLAN WAS AMENDED BY AMENDMENT NO. 1,EFFECTIVE AS OF JANUARY 1, 2000, BY REPLACING THE THIRD AND FOURTHSENTENCES WITH THE FOLLOWING:

“For purposes of thissection, the actuarial equivalent shall be calculated using the ApplicableInterest Rate under Section 417(e) of the Code for the second full calendarmonth before the date of distribution, and the Applicable Mortality Table underSection 417(e) of the Code.

95

----

 

Notwithstanding the preceding sentence, the presentvalue of the accrued lump sum retirement benefit due an Employee who is entitledto a monthly benefit under this Section 14.4.3 shall not be less than thepresent value of such Participant’s vested accrued benefit as of December 31,1999 utilizing an interest rate that is not greater than the immediate ordeferred rate, in effect on January 1 of the year in which the Annuity StartingDate occurs, used by the Pension Benefit Guaranty Corporation to determine thepresent value of a lump sum distribution upon plan termination) and the UP-1984Mortality Table.”

#### (i)            OtherBenefits.  No benefits are payableunder the Plan upon the death of an ERI Hourly Participant, except pursuant tovalid election of an option pursuant to Section 14.4.3(g), or as otherwiseprovided under Section 14.4.3(f). No benefits are payable under the Planupon termination of employment of an ERI Hourly Participant who does notsatisfy any of the eligibility requirements set forth in Section 14.4.2.

SECTION 14.4.3 OFTHE PLAN WAS AMENDED BY AMENDMENT NO. 1, EFFECTIVE AS OF JANUARY 1, 1998, BY SUBSTITUTING THE NUMBER “$5,000” FOR THENUMBER “$3,500” WHEREVER THE LATTER APPEARS THEREIN.

### Section 14.4.4        Lossof Credited Service and Eligibility Service.

An ERI Hourly Participantwill lose all Credited Service and Eligibility Service for purposes of thisPlan (and if reemployed, shall be considered a new employee for the purposes ofthis Plan):

#### (a)           Ifbefore becoming entitled to a Pension benefit under the Plan, he quits, isdischarged or released, of if his seniority is broken for any other reason, and

#### (b)           Ifhe receives compensation from the Company for less than 500 hours (computed asset forth in Section 2 of Article IV of the ERI Plan as in effect onDecember 31, 1988) in the calendar year when such quit, discharge,release, or loss of seniority occurs or in the next following calendar year.Any such occurrence is hereinafter referred to as a “Break in Service.”  If an ERI Hourly Participant referred to insubparagraph (a) above is reemployed prior to incurring a “Break inService,” no loss of Credited Service or Eligibility Service will be deemed tohave occurred.

Notwithstandingthe foregoing, however:

#### (c)           AnERI Hourly Participant retired under the Plan who again becomes entitled toaccrue Eligibility Service will have his Credited Service and EligibilityService at the time of original retirement reinstated; and

96

----

 

#### (d)           Ifan ERI Hourly Participant has a Break in Service and is subsequently reemployedby the Company and earns not less than one year of Eligibility Service, theEligibility Service and Credited Service he had when the Break in Serviceoccurred shall be restored to him.

### Section 14.4.5        SocialSecurity Benefit.

In determining benefitsunder the Plan, the Social Security Benefit shall be assumed to be the amountapplicable to any month for which a benefit is payable under this Plan to anERI Hourly Participant under the Old Age and Disability Insurance provisions ofthe Federal Social Security Act, as from time to time amended, for the benefitof the ERI Hourly Participant, excluding payments for wives and dependents.

An ERI Hourly Participantshall be deemed to be eligible for a Social Security Benefit even though theERI Hourly Participant either does not apply for, or loses part or all of suchpayments through delay in applying for them, by entering into coveredemployment or otherwise.

### Section 14.4.6        IntegratedBenefits.

#### (a)           Notwithstandingany other provisions of the Plan, in determining the portion of the benefitpayable out of the Trust Fund to any ERI Hourly Participant, a deduction shallbe made unless waived by the Company (which term for purposes of this Section14.4.6 shall mean the Company as defined in Section 1.14 and any entityrequired to be treated as under common control with such Company pursuant tosections 414(b), (c), (m) or (o) of the Code), equivalent to all or any part ofany of the following benefits payable to such ERI Hourly Participant by reasonof any law of the United States, or any political subdivision thereof, whichhas been or shall be enacted, provided that such deductions shall be to theextent that such benefits have been provided by premiums, taxes, or otherpayments paid by or at the expense of the Company:

##### (i)            Workers’ Compensation(except fixed statutory payments for the loss of any bodily member).

##### (ii)           Disability benefits(other than those payable on the basis of “need,” because of military service,or under the Federal Social Security Act).

#### (b)           Notwithstandingany other provisions of the Plan, in determining the retirement benefit payableout of the Trust Fund to any ERI Hourly Participant, no benefit shall bepayable for any month for which the retired ERI Hourly Participant is receivingweekly accident or sickness benefits under any plan to which the Company shallhave contributed; for any month for which the retired ERI Hourly Participant isreceiving such accident or sickness benefits for part of the month, aproportionate amount of the monthly retirement benefit otherwise payable shallbe paid for that part of the month for which the retired ERI Hourly Participantreceives no such accident or sickness benefits.

97

----

 

#### (c)           Anylump sum payment of integrated Benefits payable to an ERI Hourly Participantshall be pro-rated on a monthly basis from the date of payment thereof and noPension shall be payable until said sum as thus pro-rated is exhausted.

### Section 14.4.7        Disability.

#### (a)           AnERI Hourly Participant shall be deemed to be totally and permanently disabledwhen, on the basis of satisfactory medical evidence, he is found to be totallyand presumably permanently prevented from engaging in gainful occupation oremployment for wage or profit as a result of a physical or mental conditioneither occupational or nonoccupational in cause.

#### (b)           Anydisabled retired ERI Hourly Participant may be required to submit to medicalexamination, at any time during retirement prior to age 65, but not more oftenthan semi-annually, to determine whether he is eligible for continuance of theDisability Retirement Pension. If on the basis of such examination, it is foundthat he is no longer disabled, or if he engages in gainful employment, exceptfor purposes of rehabilitation as determined by the Board, his DisabilityRetirement Pension will cease. In the event the disabled retired ERI HourlyParticipant refuses to submit to medical examination, his Pension will bediscontinued until he submits to examination.

# **ARTICLE XV**

# **SPECIALVESTING RULES IN CONNECTIONWITH CORPORATE OFFICE SHUTDOWNAND COMPANY STREAMLINING**

Notwithstanding any otherprovision of this Plan, (a) each Participant who was actively employedat the Henley Properties corporate office in La Jolla, California as ofMarch 30, 1990 and whose employment is terminated by Henley Properties inconnection with the shutdown of that office, and (b) eachParticipant whose employment with Signal Landmark is terminated in connectionwith the streamlining of that company’s operations, shall be fully vested inhis Accrued Benefit.

**IN WITNESS WHEREOF**,the Plan is executed this  21st  day of December, 2001.
|        | CALIFORNIA  COASTAL COMMUNITIES, INC. |
|--------|---------------------------------------|
|   |                                  |
|   |                                  |
|   | By:                                   | //s// R J Pacini |   |

 

98

----