Document:

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                                                                     EXHIBIT 4.6

                  KIMBERLY-CLARK CORPORATION SALARIED EMPLOYEES
                            INCENTIVE INVESTMENT PLAN

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                       KIMBERLY-CLARK CORPORATION SALARIED
                       EMPLOYEES INCENTIVE INVESTMENT PLAN

                     (As amended through December 31, 2000)

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                                    ARTICLE I

                    NAME, PURPOSE AND EFFECTIVE DATE OF PLAN

This Kimberly-Clark Corporation Salaried Employees Incentive Investment Plan
(the "Plan") has been adopted effective August 1, 1967. Its purpose is to
promote the interests of the Corporation and its stockholders by encouraging
Eligible Employees to arrange for personal investment programs which, depending
upon the success of the Corporation, will be augmented by Company Matching
Contributions. It provides each Eligible Employee with an opportunity to become
a stockholder of the Corporation. To comply with the applicable requirements of
the Tax Reform Act of 1986, the Plan has been restated in its entirety effective
March 31, 1993, except as otherwise provided in Section 11.12 hereof. [THE
FOLLOWING SENTENCE IS EFFECTIVE SEPTEMBER 1, 1994:] The Plan is intended to be
an employee stock ownership plan, as defined in section 4975 of the Code, and is
designed to invest primarily in qualifying employer securities, as defined in
section 409(l) of the Code.

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                                   ARTICLE II

                          DEFINITIONS AND CONSTRUCTION

2.1      Definitions. When the following words and phrases appear in this Plan,
         they shall have the respective meanings set forth below unless the
         context clearly indicates otherwise:

         (a)      Accounts: The accounts under the Plan to be maintained for
                  each Participant as provided in Section 6.2.

         (b)      Actual Contribution Percentage: A percentage which, for a
                  specified group of Eligible Employees for a Plan Year shall be
                  the average of the ratios (calculated separately for each
                  Eligible Employee in such group) of

                  (i)      the amount of After-Tax Contributions and Company
                           Matching Contributions remitted to the Trustee on
                           behalf of each Eligible Employee for such Plan Year
                           (but only to the extent that such Contributions and
                           Company Matching Contributions are not considered for
                           purposes of Section 2.1(c) hereof), together with
                           qualified nonelective contributions treated as
                           Company Matching Contributions pursuant to Code
                           section 401(m) and regulations thereunder, to

                  (ii)     the Eligible Employee's Total Compensation for such
                           Plan Year.

                  For the purposes of determining the ratio of a Highly
                  Compensated Eligible Employee, the After-Tax Contributions,
                  Company Matching Contributions, and Total Compensation of such
                  Highly Compensated Eligible Employee shall include the
                  After-Tax Contributions, Company Matching Contributions, and
                  Total Compensation of family members (as defined in Code
                  section 414(q)(6)(B)) of said Highly Compensated Eligible
                  Employee; provided, however, that this sentence shall not
                  apply for Plan Years beginning after December 31, 1996.

         (c)      Actual Deferral Percentage: A percentage which, for a
                  specified group of Eligible Employees for a Plan Year, shall
                  be the average of the ratios (calculated separately for each
                  Eligible Employee in such group) of

                  (i)      the amount of Before-Tax Contributions remitted to
                           the Trustee on behalf of each such Eligible Employee
                           for such Plan Year (and, to the extent determined
                           appropriate by the Committee, such other
                           Contributions and Company Matching Contributions as
                           may be used to determine the actual deferral
                           percentage under Code section 401(k) and regulations
                           thereunder), to

                  (ii)     the Eligible Employee's Total Compensation for such
                           Plan Year.

                  For the purposes of determining the ratio of a Highly
                  Compensated Eligible Employee, the Before-Tax Contributions
                  and Total Compensation of such Highly Compensated Eligible
                  Employee shall include the Before-Tax Contributions and Total
                  Compensation of family members (as defined in Code section
                  414(q)(6)(B))

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                  of said Highly Compensated Eligible Employee; provided,
                  however that this sentence shall not apply for Plan Years
                  beginning after December 31, 1996.

         (d)      Affiliated Employer: An Employer and any corporation which is
                  a member of a controlled group of corporations (as defined in
                  Code section 414(b)) which includes an Employer; any trade or
                  business (whether or not incorporated) which is under common
                  control (as defined in Code section 414(c)) with an Employer;
                  any organization (whether or not incorporated) which is a
                  member of an affiliated service group (as defined in Code
                  section 414(m)) which includes an Employer; and any other
                  entity required to be aggregated with an Employer pursuant to
                  Code section 414(o).

         (e)      After-Tax Contributions: Contributions made by Participants on
                  an after-tax basis, which include Basic After-Tax
                  Contributions and Unrestricted After-Tax Contributions.

         (f)      All Cash Distribution:  As defined in subsection 7.3(c).

         (g)      All Stock Distribution:  As defined in subsection 7.3(a).

         (h)      Annuity Starting Date: The first day of the first period
                  following the Valuation Date for which a Participant's
                  distribution is payable as an annuity.

         (i)      Ballard: Ballard Medical Products, a wholly-owned subsidiary
                  of the Corporation.

         (j)      Ballard Heritage Employee: An Employee of Ballard, as of
                  December 31, 1999, who has an Hour of Service on January 1,
                  2000. Except for purposes of Article III, a Ballard Heritage
                  Employee may also include a former employee of Ballard with an
                  account in the Ballard Savings Plan as of December 31, 1999
                  which is transferred to this Plan as of January 31, 2000.

         (k)      Ballard Heritage Rollover Account: An Account consisting of
                  Discretionary Contributions and Matching Contributions, as
                  defined under the Ballard Savings Plan, and earnings and
                  losses attributable thereto, transferred from the Ballard
                  Savings Plan as of January 31, 2000 with respect to Ballard
                  Heritage Employees, pursuant to the merger of the Ballard
                  Savings Plan herein, and rollovers made under a prior version
                  of this Plan, with earnings thereon.

         (l)      Ballard Savings Plan: the Ballard Medical Products 401(k)
                  Retirement Savings Plan.

         (m)      Base Salary Rate: An amount, as determined by the Employer
                  pursuant to Committee rule, which is that portion of an
                  Eligible Employee's Total Compensation from an Employer which
                  consists only of regular earnings while a Participant.
                  Effective January 1, 1997, Base Salary Rate shall include
                  sales commissions. Base Salary Rate shall be determined before
                  Before-Tax Contributions pursuant to subsection 3.2(a), and
                  any elective salary reduction contributions pursuant to Code
                  Section 125, are deducted. With respect to any Eligible
                  Employee on a foreign assignment, such Eligible Employee's
                  Base Salary Rate shall disregard any adjustment which is made
                  to such Eligible Employee's salary as a result of such foreign
                  assignment. Notwithstanding the foregoing, the amount of any
                  Eligible Employee's compensation which is taken

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                  into account for purposes of determining such Eligible
                  Employee's Base Salary Rate under the Plan shall not exceed
                  the limit set forth in Section 11.12.

         (n)      Basic After-Tax Contributions:

                  (i)      Contributions made by Participants under subsection
                           3.2(b) on an after-tax basis on account of which a
                           Company Matching Contribution is made to the Plan on
                           behalf of the Participant; or

                  (ii)     Before-Tax Contributions in excess of the limitation
                           under subsection 3.5(a)(i) or in excess of the
                           limitation under subsection 3.5(b)(i) which are
                           recharacterized under subsection 3.5(b)(iii), and any
                           other employee contributions, as defined in Code
                           Section 401(m) and the regulations thereunder, on
                           account of which a Company Matching Contribution was
                           made to this Plan on behalf of the Participant,

                  excluding any such employee contributions contributed prior to
                  April 1, 1990, or made on behalf of a Participant who was
                  employed prior to April 1, 1989.

         (o)      Beneficiary: The person or persons last designated on Timely
                  Notice by a Participant, provided the named person survives
                  the Participant. If no such person is validly designated as
                  provided under Section 7.7(a), or if the designated person
                  predeceases the Participant, the Beneficiary shall be the
                  Participant's spouse, if living, and if not, the Participant's
                  estate.

         (p)      Before-Tax Contributions: Contributions made by Employers on
                  behalf of Participants under subsection 3.2(a) on or after
                  April 1, 1993 that are considered deferred within the meaning
                  of Code section 401(k) and regulations thereunder.

         (q)      Board:  The Board of Directors of the Corporation.

         (r)      Bond Index Fund: An Investment Fund consisting of U.S.
                  government and investment grade corporate bonds, and asset
                  backed and mortgage backed securities with the objective to
                  match the performance of the Lehman Brothers Aggregate Bond
                  Index, or such other similar index as may be selected by the
                  Named Fiduciary. The Bond Index Fund shall include funds
                  transferred from the Government Fund under the prior version
                  of the Plan, and Contributions allocated to the Government
                  Fund as of October 1, 1996 under the prior version of the Plan
                  shall be allocated to the Bond Index Fund. The Bond Index Fund
                  shall also include funds transferred as of January 1, 1997
                  from, and Contributions allocated as of January 1, 1997 to,
                  the KCTC Admiral Long-Term U.S. Treasury Portfolio Fund
                  accounts of KCTC Heritage Employees under the KCTC Salaried
                  Plan. The Bond Index Fund shall also include funds transferred
                  as of January 1, 1998 from the KCTC Admiral Long-Term U.S.
                  Treasury Portfolio Fund accounts pursuant to the merger of the
                  KCTC Salaried Plan herein. The Bond Index Fund shall also
                  include funds transferred as of January 31, 2000 from the
                  Ballard Bond and Mortgage Account pursuant to the merger of
                  the Ballard Savings Plan herein. The Bond Index Fund shall
                  also include funds transferred as of January 2, 2001 from the
                  Maxim Bond Index Fund and the Maxim Loomis Sayles Corporate
                  Bond Fund pursuant to the merger of the Safeskin 401(k) Plan
                  herein.

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         (s)      Business Day: Any day on which securities are traded on the
                  New York Stock Exchange.

         (t)      Code: The Internal Revenue Code of 1986, as amended from time
                  to time.

         (u)      Commissioner: The Commissioner of the Internal Revenue
                  Service.

         (v)      Committee: The committee appointed to administer and regulate
                  the Plan as provided in Article IX.

         (w)      Company Matching Contributions: Amounts contributed under the
                  Plan by Employers as provided in Article IV.

         (x)      Contributions: Amounts deposited under the Plan by or on
                  behalf of Participants including Before-Tax Contributions and
                  After-Tax Contributions as provided in Article III.

         (y)      Corporation: Kimberly-Clark Corporation (a Delaware
                  corporation).

         (z)      Corporation Stock:  The common stock of the Corporation.

         (aa)     Current Market Value: The fair market value on any day as
                  determined by the Trustee in accordance with generally
                  accepted valuation principles applied on a consistent basis.

         (bb)     Day of Service: An Employee shall be credited with a Day of
                  Service for each calendar day commencing with the date on
                  which the Employee first performs an Hour of Service until the
                  Employee's Severance from Service Date. If an Employee quits,
                  is discharged, retires, or dies, and such Employee does not
                  incur a One-Year Period of Severance, the Employee shall be
                  credited with a Day of Service for each calendar day elapsed
                  from the Employee's Severance from Service Date to the date on
                  which the Employee again completes an Hour of Service.

         (cc)     Eligible Employee: Any person who is in the employ of an
                  Employer during such periods as he meets all of the following
                  conditions:

                  (i)      he is an Employee on the regular payroll of an
                           Employer,

                  (ii)     he has (a) at least one calendar month of continuous
                           Service or (b) has completed during a computation
                           period beginning on or after April 1, 1993, 365
                           consecutive Days of Service, or has completed during
                           a computation period ending on or prior to March 31,
                           1993, at least 1,000 Hours of Service. A computation
                           period for purposes of this subsection 2.1(y)(ii)
                           shall be a period of 12 consecutive months, beginning
                           on the Employee's date of employment by the
                           Corporation, a Subsidiary or an Equity Company or an
                           anniversary thereof; and

                  (iii)    he is in a Participating Unit.

                  For purposes of this subsection, "on the regular payroll of an
                  Employer" shall mean paid through the payroll department of
                  such Employer, and shall exclude employees classified by an
                  Employer as intermittent or temporary, persons on

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                  limited service receiving payments under the Scott Paper
                  Company Termination Pay Plan for Salaried Employees, and
                  persons classified by an Employer as independent contractors,
                  regardless of how such Employees may be classified by any
                  federal, state, or local, domestic or foreign, governmental
                  agency or instrumentality thereof, or court.

                  Any leased employee (as defined in Code section 414(n)) shall
                  not be considered an Eligible Employee under the Plan. In
                  addition, a person who formerly was an Eligible Employee shall
                  be treated as an Eligible Employee for all purposes hereunder
                  during such periods as he meets all of the following
                  conditions:

                  (i)      he is an Employee on the regular payroll of an
                           Employer, and

                  (ii)     he is on temporary assignment to provide services for
                           a corporation, hereinafter referred to as the
                           "Affiliate," which is a member of a controlled group
                           of corporations, within the meaning of Code section
                           414(b) as modified by Code section 415(h), of which
                           the Corporation is a member, and which is not an
                           Employer hereunder.

                  For purposes of the preceding sentence, a person shall be
                  considered on temporary assignment only if his period of
                  service for an Affiliate is expected to be of brief duration
                  not to exceed 2 years and if he is expected to resume services
                  for an Employer upon the expiration of the temporary
                  assignment with the Affiliate. A person shall also be
                  considered on temporary assignment at other Employers or in
                  other classifications or from another Employer or
                  classification only if his period of service in such
                  assignment is expected to be of brief duration not to exceed 2
                  years and if he is expected to resume services in his regular
                  assignment upon the expiration of such assignment.

         (dd)     Employee:  A person employed by an Employer.

         (ee)     Employee Accounts: Those Accounts which reflect that portion
                  of a Participant's interest in the Investment Funds which are
                  attributable to his Contributions, including the Ballard
                  Heritage Rollover Account, the KCTC Heritage Rollover Account,
                  and the Safeskin Transferee Rollover Account.

         (ff)     Employer: The Corporation and each Subsidiary which the
                  Committee shall from time to time designate as an Employer for
                  purposes of the Plan pursuant to Article X hereof and which
                  shall adopt the Plan and the Trust. A list of Employers is set
                  forth in Appendix A.

         (gg)     Employer Accounts: Those Accounts which reflect the portion of
                  a Participant's interest in the Investment Funds which are
                  attributable to Company Matching Contributions.

         (hh)     Entry Date:  The first day of each month.

         (ii)     Equity Company: Any corporation, which is not the Corporation
                  or a Subsidiary, 33-1/3% or more of the voting shares of which
                  are owned directly or indirectly by the Corporation.

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         (jj)     ERISA: The Employee Retirement Income Security Act of 1974, as
                  amended from time to time.

         (kk)     Growth Stock Fund: An Investment Fund consisting primarily of
                  common or preferred stocks of medium to large capitalization
                  companies identified by the fund manager as having above
                  average growth potential. The Growth Stock Fund will include
                  funds transferred as of January 1, 1997 from, and
                  Contributions allocated as of January 1, 1997 to, the KCTC
                  U.S. Growth Portfolio Fund and the KCTC Index Trust - Small
                  Cap Stock Portfolio accounts of KCTC Heritage Employees under
                  the KCTC Salaried Plan. The Growth Stock Fund shall also
                  include funds transferred as of January 1, 1998 from the KCTC
                  U.S. Growth Portfolio Fund and KCTC Index Trust-Small Cap
                  Stock Portfolio Fund accounts pursuant to the merger of the
                  KCTC Salaried Plan herein. The Growth Stock Fund shall also
                  include funds transferred as of January 31, 2000 from the
                  Ballard Large Company Growth Account and the Medium Company
                  Growth Account pursuant to the merger of the Ballard Savings
                  Plan herein. The Growth Stock Fund shall also include funds
                  transferred as of January 2, 2001 from the AIM Constellation
                  Fund, the Maxim T. Rowe Price Mid-Cap Growth Fund, the
                  Fidelity Advisor Growth Opportunities Fund, the AIM Weingarten
                  Fund, the American Century Ultra Fund, and the Maxim Growth
                  Index Fund pursuant to the merger of the Safeskin 401(k) Plan
                  herein.

         (ll)     Highly Compensated Eligible Employee: An Eligible Employee who
                  is described in Code section 414(q) and applicable regulations
                  thereunder. An Employee who is described in Code section
                  414(q) and applicable regulations thereunder generally means
                  an Employee who performed services for the Employer or an
                  Affiliated Employer during the "Determination Year" and is in
                  one or more of the following groups:

                  (i)      Employees who at any time during the "Determination
                           Year" or "Look-Back Year" were "Five Percent Owners"
                           of the Employer or an Affiliated Employer. "Five
                           Percent Owner" means any person who owns (or is
                           considered owning within the meaning of Code Section
                           318) more than five percent of the outstanding stock
                           of the Employer or stock possessing more than five
                           percent of the total combined voting power of all
                           stock of the Employer or, in the case of an
                           unincorporated business, any person who owns more
                           than five percent of the capital or profits interest
                           in the Employer. In determining percentage ownership
                           hereunder, employers that would otherwise be
                           aggregated under Code sections 414(b), (c), (m) and
                           (o) shall be treated as separate employers; or

                  (ii)     Employees who received "Compensation" during the
                           "Look-Back Year" from the Employer or an Affiliated
                           Employer in excess of $80,000, adjusted for changes
                           in the cost of living as provided in Code section
                           415(d) and, if the Employer elects, were in the "Top
                           Paid Group" of Employees for the Plan Year. "Top Paid
                           Group" means the top 20 percent of Employees,
                           excluding those Employees described in Code section
                           414(q)(8) and applicable regulations, who performed
                           services during the applicable Year, ranked according
                           to the amount of "Compensation" received from the
                           Employer during such Year.

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                  The "Determination Year" shall be the Plan Year for which
                  testing is being performed, and the "Look-Back Year" shall be
                  the immediately preceding 12 month period.

                  An Employer may make a uniform election with respect to all
                  plans of the Employer to apply a calendar year calculation, as
                  permitted by regulations under Code section 414(q).

                  For purposes of this subsection, "Compensation" shall mean
                  compensation as defined in subsection 12.1(a)(iv), including
                  elective salary reduction contributions made under this Plan
                  or another cash or deferred arrangement or pursuant to Code
                  section 125.

         (mm)     Hours of Service: Each hour for which an Employee is directly
                  or indirectly paid, or entitled to payment, by an Employer for
                  the performance of duties and for reasons other than the
                  performance of duties during the applicable computation
                  period. An Hour of Service shall also include each hour for
                  which back pay, irrespective of mitigation of damages, has
                  been either awarded or agreed to by an Employer. Hours of
                  Service shall be credited to the Employee for the computation
                  period or periods in which the duties are performed or for the
                  period to which the award or agreement pertains, whichever is
                  applicable. Credit for Hours of Service shall be given for
                  periods of absence spent in military service to the extent
                  required by law. Credit for Hours of Service may also be given
                  for such other periods of absence of whatever kind or nature
                  as shall be determined under uniform rules of the Committee.
                  Employment with a company which was not, at the time of such
                  employment, an Employer shall be considered as the performance
                  of duties for an Employer if such employment was continuous
                  until such company was acquired by, merged with, or
                  consolidated with an Employer and such employment continued
                  with an Employer following such acquisition, merger or
                  consolidation. Employment with a Subsidiary that is not an
                  Employer or with an Equity Company shall be considered as
                  performance of duties for an Employer.

                  Hours of Service shall be calculated and credited in a manner
                  consistent with U.S. Department of Labor regulation Section
                  2530.200b-2(b) and (c), and shall in no event exclude any
                  hours required to be credited under U.S. Department of Labor
                  regulation Section 2530.200b-2(a).

                  For any period or periods for which adequate records are not
                  available to accurately determine the Employee's Hours of
                  Service, the following equivalency shall be used:

                           190 Hours of Service for each month for which such
                           Employee would otherwise receive credit for at least
                           one Hour of Service.

                  Solely for purposes of determining whether an Employee has
                  incurred a one-year break-in-service, an Employee who is
                  absent from work:

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

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

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                  (iii)    by reason of a placement of a child with the Employee
                           in connection with the adoption of such child by the
                           Employee; or

                  (iv)     for purpose of caring for such child for a period
                           beginning immediately following such birth or
                           placement,

                  shall be credited with certain Hours of Service which would
                  otherwise have been credited to the Employee if not for such
                  absence. The Hours of Service credited hereunder by reason of
                  such absence shall be credited with respect to the Plan Year
                  in which such absence begins, if such credit is necessary to
                  prevent the Employee from incurring a one-year
                  break-in-service in such Plan Year, and otherwise with respect
                  to the Plan Year immediately following the Plan Year in which
                  such absence begins. In addition, the Hours of Service
                  credited with respect to such absence shall not exceed 501,
                  and shall be credited only to the extent that the Employee
                  substantiates to the satisfaction of the Committee that the
                  Employee's absence, and the length thereof, was for the
                  reasons described in paragraphs (1)-(4) above. Notwithstanding
                  the foregoing, no Hours of Service shall be credited pursuant
                  to the three immediately preceding sentences with respect to
                  any absence which commences before April 1, 1985.

         (nn)     Installment Distribution.  As defined in subsection 7.3(d).

         (oo)     International Index Fund: An Investment Fund consisting
                  primarily of stocks of established companies based in Europe,
                  Asia and the Far East, with the objective to match the
                  performance of the Morgan Stanley Capital International EAFE
                  Index or such other similar index as may be selected by the
                  Named Fiduciary. The International Index Fund shall include
                  funds transferred as of January 1, 1997 from, and
                  Contributions allocated as of January 1, 1997 to, the KCTC
                  International Growth Portfolio Fund accounts of KCTC Heritage
                  Employees under the KCTC Salaried Plan. The International
                  Index Fund shall also include funds transferred as of January
                  1, 1998 from the KCTC International Growth Portfolio Fund
                  accounts pursuant to the merger of the KCTC Salaried Plan
                  herein. The International Index Fund shall also include funds
                  transferred as of January 2, 2001 from the Fidelity Advisors
                  Overseas Fund pursuant to the merger of the Safeskin 401(k)
                  Plan herein.

         (pp)     Investment Fund: An unsegregated fund of the Plan including
                  the K-C Stock Fund and such other funds as the Named Fiduciary
                  may establish. The Named Fiduciary may, from time to time, in
                  its discretion, establish additional funds or terminate any
                  fund. An Investment Fund may be, but shall not be limited to,
                  a fund managed by the Trustee, by an insurance company, or by
                  an investment company regulated under the Investment Company
                  Act of 1940. An Investment Fund, pending investment in
                  accordance with the fund purpose, may be invested in
                  short-term securities of the United States of America or in
                  other investments of a short-term nature.

         (qq)     K-C Stock Fund: An Investment Fund consisting of Corporation
                  Stock, with a portion invested in money market securities to
                  provide liquidity for Participant transactions. The K-C Stock
                  Fund shall also include funds transferred as of January 1,
                  1997 from, and Contributions allocated as of January 1, 1997
                  to, the K-C Stock Fund accounts of KCTC Heritage Employees
                  under the KCTC Salaried Plan. The K-C Stock Fund shall also
                  include funds transferred as of

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                  January 1, 1998 from the K-C Stock Fund under the KCTC
                  Salaried Plan accounts pursuant to the merger of the KCTC
                  Salaried Plan herein.

         (rr)     KCTC: A term used to reflect certain units of the Corporation
                  which were formerly part of Kimberly-Clark Tissue Company
                  prior to its liquidation and dissolution as a wholly-owned
                  subsidiary of the Corporation.

         (ss)     KCTC Heritage Employee: An Employee of KCTC, as of December
                  31, 1996, who has an Hour of Service on January 1, 1997 and
                  who, as of January 1, 1997, is not receiving termination
                  payments under the Scott Paper Company Termination Pay Plan
                  for Salaried Employees, nor on a transition assignment and
                  expected to receive termination payments under the Scott Paper
                  Company Termination Pay Plan for Salaried Employees.

         (tt)     KCTC Heritage Rollover Account: An Account consisting of
                  Retirement Contributions and Matching Employer Contributions,
                  as defined under the KCTC Salaried Plan, and earnings and
                  losses attributable thereto, transferred from the KCTC
                  Salaried Plan as of January 1, 1997 with respect to KCTC
                  Heritage Employees, and such amounts transferred from the KCTC
                  Salaried Plan as of January 1, 1998 pursuant to the merger of
                  the KCTC Salaried Plan herein, and rollovers made under a
                  prior version of this Plan, with earnings thereon.

         (uu)     KCTC Salaried Plan: The Kimberly-Clark Tissue Company
                  Investment Plan for Salaried Employees.

         (vv)     Long-Term Managed Fund: An Investment Fund consisting
                  primarily of growth and emerging growth stocks, growth and
                  income stocks, bonds, and international stocks with a
                  long-term investment horizon. The Long-Term Managed Fund shall
                  include funds transferred as of January 1, 1997 from the KCTC
                  Asset Allocation Fund accounts of KCTC Heritage Employees
                  under the KCTC Salaried Plan. The Long-Term Managed Fund shall
                  also include funds transferred as of January 1, 1998 from the
                  KCTC Asset Allocation Fund accounts pursuant to the merger of
                  the KCTC Salaried Plan herein. The Long-Term Managed Fund
                  shall also include funds transferred as of January 2, 2001
                  from the Profile Series 1 - Aggressive Fund, the Profile
                  Series 2 - Moderately Aggressive Fund, and the Fidelity
                  Advisor Equity Income Fund pursuant to the merger of the
                  Safeskin 401(k) Plan herein.

         (ww)     Lump Sum Distribution: A single distribution of the entire
                  amount of a Participant's Accounts.

         (xx)     Medium-Term Managed Fund: An Investment Fund consisting
                  primarily of bonds, growth and income stocks, growth and
                  emerging growth stocks and money market securities with a
                  medium-term investment horizon. The Medium-Term Managed Fund
                  shall include funds transferred as of January 1, 1997 from the
                  KCTC Balanced Index Fund accounts of KCTC Heritage Employees
                  under the KCTC Salaried Plan. The Medium-Term Managed Fund
                  shall also include funds transferred as of January 1, 1998
                  from the KCTC Balanced Index Fund accounts pursuant to the
                  merger of the KCTC Salaried Plan herein. The Medium-Term
                  Managed Fund shall also include funds transferred as of
                  January 2, 2001 from the Profile Series 3 - Moderate Fund and
                  the Profile Series

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                  4 - Moderately Conservative Fund pursuant to the merger of the
                  Safeskin 401(k) Plan herein.

         (yy)     Minimum Return Joint & Survivor Annuity Distribution. As
                  defined in subsection 7.3(e).

         (zz)     Minimum Return Single-Life Annuity. As defined in subsection
                  7.3(f).

         (aaa)    Money Market Fund: An Investment Fund consisting of short-term
                  debt securities issued or fully guaranteed as to the payment
                  of principal and interest by the U.S. government or any agency
                  or instrumentality thereof. The Money Market Fund shall also
                  include funds transferred as of January 31, 2000 from the
                  Ballard Money Market Account and the Ballard Small Company
                  Value Account pursuant to the merger of the Ballard Savings
                  Plan herein. The Money Market Fund shall also include funds
                  transferred as of January 2, 2001 from the Profile Series 5 -
                  Conservative Fund, the Maxim INVESCO ADR Fund, the Putnam
                  Global Growth Fund, the Maxim Index European Fund, the Maxim
                  Index Pacific Fund, the Maxim Ariel Small-Cap Value Fund, the
                  Maxim Loomis Sayles Small-Cap Value Fund, the Lord Abbet
                  Developing Growth Fund, the Maxim Value Index Fund, the Maxim
                  U.S. Government Mortgage Securities Fund, the Maxim Short Term
                  Maturity Bond Fund, the Maxim Global Bond Fund, and the Maxim
                  Money Market Fund pursuant to the merger of the Safeskin
                  401(k) Plan herein.

         (bbb)    Months of Service: A calendar month any part of which an
                  Employee completes an Hour of Service. Except, however, an
                  Employee shall be credited with a Month of Service for each
                  month during the 12 month computation period in which he has
                  not incurred a One-Year Period of Severance. An Employee shall
                  be credited with a Month of Service for each calendar month of
                  absence during the 12 month computation period following the
                  date on which the Employee does not complete an Hour of
                  Service for any reason other than the Employee quits, is
                  discharged, retires or dies.

         (ccc)    Named Fiduciary: The Retirement Trust Committee (the members
                  of which are designated by the Chief Executive Officer of the
                  Corporation) shall be the Named Fiduciary of the Plan as
                  defined in ERISA.

         (ddd)    One-Year Period of Severance: The applicable computation
                  period of 12 consecutive months during which an Employee fails
                  to accrue a Day of Service. Years of Service and One-Year
                  Periods of Severance shall be measured on the same computation
                  period.

                  An Employee shall not be deemed to have incurred a One-Year
                  Period of Severance if he completes an Hour of Service within
                  12 months following his Severance from Service Date.

         (eee)    Partial Distribution: A distribution of a portion of a
                  Participant's Accounts.

         (fff)    Participant: An Eligible Employee who has validly elected to
                  participate under Section 3.1. He remains a Participant until
                  all of his Accounts have been distributed pursuant to the
                  Plan.

                                      xxvi
<PAGE>   14

         (ggg)    Participating Unit: A specific classification of Employees of
                  an Employer designated from time to time by the Committee
                  pursuant to Article X hereof as participating in this Plan.
                  The classifications so designated are shown in Appendix A.

         (hhh)    Period Certain and Continuous Annuity Distribution. As defined
                  in subsection 7.3(h).

         (iii)    Period Certain Annuity Distribution. As defined in subsection
                  7.3(g).

         (jjj)    Plan Year: After December 31, 1993, a twelve calendar month
                  period beginning January 1 and ending the following December
                  31. The period beginning on April 1, 1993, and ending December
                  31, 1993, shall constitute a Plan Year. For the period prior
                  to April 1, 1993, and after March 31, 1970, each twelve
                  calendar month periods beginning on April 1 of one year and
                  ending March 31 of the following year.

                  For purposes of identification, each Plan Year is designated
                  in terms of the calendar year in which it commences.

         (kkk)    Safeskin 401(k) Plan: the Safeskin Corporation 401(k) Profit
                  Sharing Plan

         (lll)    Safeskin Transferee: a Participant who, immediately prior to
                  becoming a Participant, (i) was a sales employee of Safeskin
                  Corporation, and accepted employment with the Corporation's
                  Professional Health Care sector effective in July 2000, or
                  (ii) was a salaried employee of Safeskin Corporation who
                  accepted employment with the Corporation during 2000, and
                  whose account in the Safeskin 401(k) Plan was transferred to
                  this Plan as of January 2, 2001.

         (mmm)    Safeskin Transferee Rollover Account: An Account consisting of
                  Elective Deferrals, Rollover and Transfer Contributions and
                  Matching Contributions, as defined under the Safeskin 401(k)
                  Plan, and earnings and losses attributable thereto,
                  transferred from the Safeskin 401(k) Plan as of January 2,
                  2001 with respect to Safeskin Transferees, pursuant to the
                  merger of the Safeskin 401(k) Plan herein, with earnings
                  thereon.

         (nn)     Service: Regular employment with the Corporation, a Subsidiary
                  or an Equity Company. For all purposes under the Plan, Service
                  shall include service with KCTC and Scott Paper Company prior
                  to January 1, 1997. Service for Eligible Employees at
                  Kimberly-Clark Technical Paper, Inc. shall include service
                  with CPM, Inc. prior to May 16, 1995. Service for Eligible
                  Employees at Durafab, Inc. ("Durafab") shall include service
                  with Durafab from the later of date of hire at Durafab or
                  September 29, 1989. Service for Eligible Employees at Tecnol
                  Medical Products, Inc. ("Tecnol") shall include service with
                  Tecnol prior to December 18, 1997. Service for Eligible
                  Employees at Kimberly-Clark Printing Technology, Inc.,
                  formerly Formulabs, Inc. ("Formulabs") shall include service
                  with Formulabs prior to March 31, 1998. Service for Eligible
                  Employees at Ballard shall include service with Ballard prior
                  to September 23, 1999. Service for eligible Safeskin
                  Transferees shall include services with Safeskin Corporation
                  prior to January 1, 2001.

                                     xxvii
<PAGE>   15

         (ooo)    Severance from Service Date:  The earlier of:

                  (i)      the date an Employee quits, is discharged, retires or
                           dies, or

                  (ii)     the first anniversary of the date an Employee is
                           absent from Service for any reason other than a quit,
                           discharge, retirement, or death (e.g., disability,
                           leave of absence, or layoff, etc.)

         (ppp)    Small Cap Index Fund: An Investment Fund consisting of common
                  and preferred stocks of corporations and other issues
                  convertible into such common and preferred stocks, with the
                  objective to match the performance of the Russell 2000 Index,
                  or such similar index as may be selected by the Named
                  Fiduciary. The Small Cap Index Fund shall include funds
                  transferred from the SMI Stock Fund no later than September
                  29, 2000 under the prior version of the Plan. The Small Cap
                  Index Fund shall also include funds transferred as of January
                  2, 2001 from the Orchard Index 600 Fund pursuant to the merger
                  of the Safeskin 401(k) Plan herein.

         (qqq)    SMI: Schweitzer-Mauduit International, Inc., a Delaware
                  corporation.

         (rrr)    Stable Income Fund: An Investment Fund consisting primarily of
                  investment contracts issued by insurance companies or banks
                  and in money market securities. The Stable Income Fund shall
                  include funds transferred as of October 1, 1996 from the Fixed
                  Income Fund under the prior version of the Plan, and
                  Contributions allocated to the Fixed Income Fund under the
                  prior version of the Plan shall be allocated to the Stable
                  Income Fund. The Stable Income Fund shall also include funds
                  transferred as of January 1, 1998 from the KCTC Stable Income
                  Fund under the prior version of the Plan, from the Salaried
                  Fixed Income Fund under the KCTC Salaried Plan and from the
                  Hourly Fixed Income Fund under the Kimberly-Clark Tissue
                  Company Investment Plan for Hourly Employees. The Stable
                  Income Fund shall also include funds transferred as of January
                  31, 2000 from the Ballard Guaranteed Interest Account pursuant
                  to the merger of the Ballard Savings Plan herein. The Stable
                  Income Fund shall also include funds transferred as of January
                  2, 2001 from the 36 Month GCF Fund, the 60 Month GCF Fund and
                  the 84 Month GCF Fund pursuant to the merger of the Safeskin
                  401(k) Plan herein.

         (sss)    Stock and Cash Distribution:  As defined in subsection 7.3(b).

         (ttt)    Stock Index Fund. An Investment Fund consisting of common and
                  preferred stocks of established corporations and other issues
                  convertible into such common and preferred stocks, with the
                  objective to match the performance of the Standard & Poors
                  (S&P) 500 Stock Index, or such other similar index as may be
                  selected by the Named Fiduciary. The Stock Index Fund shall
                  include funds transferred as of October 1, 1996 from the
                  Diversified Fund under the prior version of the Plan and
                  Contributions allocated to the Diversified Fund under the
                  prior version of the Plan shall be allocated to the Stock
                  Index Fund. The Stock Index Fund shall include funds
                  transferred as of January 1, 1997 from, and Contributions
                  allocated as of January 1, 1997 to, the KCTC Index Trust-Total
                  Stock Market Portfolio and KCTC Windsor Fund accounts of KCTC
                  Heritage Employees under the KCTC Salaried Plan. The Stock
                  Index Fund shall also include funds transferred as of January
                  1, 1998 from the KCTC Index Trust-Total Stock Market Portfolio
                  Fund and KCTC Windsor Fund accounts pursuant to the

                                     xxviii
<PAGE>   16

                  merger of the KCTC Salaried Plan herein. The Stock Index Fund
                  shall also include funds transferred as of January 31, 2000
                  from the Ballard Stock Index 500 Account and the Ballard U.S.
                  Stock Account pursuant to the merger of the Ballard Savings
                  Plan herein. The Stock Index Fund shall also include funds
                  transferred as of January 2, 2001 from the Putnam Fund for
                  Growth & Income, the AIM Charter Fund, the Maxim Founders
                  Growth & Income, and the Orchard Index 500 Fund pursuant to
                  the merger of the Safeskin 401(k) Plan herein.

         (uuu)    Subsidiary: Any corporation, 50% or more of the voting shares
                  of which are owned directly or indirectly by the Corporation,
                  which is incorporated under the laws of one of the States of
                  the United States.

         (vvv)    Terminated Participant: A Participant who has terminated his
                  employment with an Employer prior to January 1, 1998 (i) with
                  the aggregate value of the Participant's Accounts exceeding
                  $3,500, or (ii) a Participant who has terminated employment
                  with his Employer on or after January 1, 1998 with the
                  aggregate value of the Participant's Accounts exceeding
                  $5,000, and who has not elected to receive a distribution
                  under the Plan. A Terminated Participant shall also include a
                  former employee of KCTC whose account balance under the KCTC
                  Salaried Plan is transferred to the Plan as of January 1,
                  1998.

         (www)    Timely Notice: A notice in writing on forms, or by electronic
                  medium, or through a voice response system, prescribed by the
                  Committee and filed at such places and at such times as shall
                  be established by Committee rules.

         (xx)     Total Compensation: An Eligible Employee's total compensation
                  as that term is defined in Code section 414(s). Total
                  Compensation of any Eligible Employee shall not exceed the
                  limit set forth in Section 11.12.

         (yyy)    Trust: The Kimberly-Clark Corporation Defined Contribution
                  Plans Trust pursuant to the trust agreement provided for in
                  Article V.

         (zzz)    Trustee:  The trustee under the Trust.

         (aaaa)   Unrestricted After-Tax Contributions:

                  (i)      Contributions made by Participants under subsection
                           3.2(b) on an after-tax basis on account of which no
                           Company Matching Contribution is made to the Plan on
                           behalf of the Participant; or

                  (ii)     Employee contributions, as defined in Code Section
                           401(m) and the regulations thereunder, contributed
                           prior to April 1, 1990 on account of which a Company
                           Matching Contribution was made under this Plan on
                           behalf of a Participant who was employed prior to
                           April 1, 1989; or

                  (iii)    Before-Tax Contributions in excess of the limitation
                           under subsection 3.5(a)(i) or in excess of the
                           limitation under 3.5(b)(i) and which are
                           recharacterized under subsection 3.5(b)(ii) and any
                           other Employee contribution as defined under Code
                           Section 401(m) and the regulations thereunder, on
                           account of which no Company Matching Contribution was
                           made to this Plan on behalf of the Participant.

                                      xxix
<PAGE>   17

         (bbbb)   Valuation Date: Each Business Day for which the Current Market
                  Value of a Participant's Accounts is determined for purposes
                  of this Plan.

         (cccc)   Year of Service: An Employee shall accrue a Year of Service
                  for each 365 Days of Service. If the total of an Employee's
                  Service exceeds his whole Years of Service, then such Employee
                  shall be credited with an additional fraction of a Year of
                  Service, the numerator of which shall be the total number of
                  his Days of Service represented by such excess and the
                  denominator of which shall be 365. If the total of an
                  Employee's Service is less than one Year of Service, then such
                  Employee shall be credited with a fraction of a Year of
                  Service, the numerator of which shall be the total number of
                  his Days of Service and the denominator of which shall be 365.

2.2      Construction. Where appearing in the Plan, the masculine shall include
         the feminine and the plural shall include the singular, unless the
         context clearly indicates otherwise. The words "hereof," "herein,"
         "hereunder" and other similar compounds of the word "here" shall mean
         and refer to the entire Plan and not to any particular Section or
         subsection.

                                      xxx
<PAGE>   18

                                   ARTICLE III

                  PARTICIPATION, CONTRIBUTIONS, AND ALLOCATIONS

3.1      Election to Participate. An Eligible Employee's election to participate
         in the Plan shall, if given on Timely Notice,

         (a)      be effective as of the first Entry Date following his
                  election, or as soon as administratively possible thereafter,
                  and

         (b)      remain in effect as a valid election to participate for each
                  successive Plan Year.

         An election to participate by an Eligible Employee who, immediately
         prior to becoming an Eligible Employee, was a participant under the
         Kimberly-Clark Corporation Hourly Employees Incentive Investment Plan
         shall be effective as soon as administratively possible upon exercising
         his election, and his accounts thereunder shall be transferred to this
         Plan in a manner determined by the Committee.

         Notwithstanding the foregoing, a KCTC Heritage Employee who was a
         participant in the KCTC Salaried Plan as of January 1, 1997 shall
         become a Participant in the Plan on January 1, 1997, and such KCTC
         Heritage Employee's elections in effect under the KCTC Salaried Plan as
         of December 31, 1996 shall remain in effect as provided under this
         Plan; provided that a KCTC Heritage Employee who is not actively
         employed on January 1, 1997 shall become a Participant in the Plan upon
         his return to active employment, and his elections in effect under the
         KCTC Salaried Plan shall remain in effect as provided under this Plan,
         and his accounts under the KCTC Salaried Plan shall be transferred to
         this Plan in a manner determined by the Committee.

         Notwithstanding the foregoing, a Ballard Heritage Employee who was a
         participant in the Ballard Savings Plan as of December 31, 1999 shall
         be eligible to become a Participant in the Plan as of January 1, 2000,
         provided such Ballard Heritage Employee makes an election to
         participate in this Plan in accordance with the terms of this Plan. A
         Ballard Heritage Employee who does not make an election to participate
         in this Plan on January 1, 2000 shall become a Participant in this Plan
         coincident with the transfer of his or her account from the Ballard
         Savings Plan to this Plan on January 31, 2000.

         Notwithstanding the foregoing, a Safeskin Transferee shall be eligible
         to become a Participant in the Plan as of his or her transfer date. The
         employee contribution amount elected by the Safeskin Transferee under
         the Safeskin Corporation 401(k) Profit Sharing Plan (the "Safeskin
         Plan") immediately prior to his becoming a Participant shall remain in
         effect for purposes of Section 3.2 of the Plan until otherwise changed
         by the Participant.

3.2      Amount of Contributions by and on behalf of Participants.

         (a)      Before-Tax Contributions. During each Plan Year, Before-Tax
                  Contributions shall be made on behalf of a Participant by his
                  Employer for deposit to his Account as follows:

                  (i)      Subject to the provisions of Section 3.5, a
                           Participant may elect on Timely Notice to make
                           Before-Tax Contributions to his Account in any whole

                                      xxxi
<PAGE>   19

                           percentage equal to an amount which is not less than
                           1% of his Base Salary Rate and not more than 15% of
                           his Base Salary Rate.

                  (ii)     Before-Tax Contributions shall be deducted from a
                           Participant's Total Compensation. An election under
                           this subsection shall remain in effect for so long as
                           a Participant is eligible to make Before-Tax
                           Contributions or, if earlier, until changed by a
                           Participant. A Participant may change his election on
                           Timely Notice effective as of the Participant's first
                           payroll check on or after first day of the following
                           month, or as soon as administratively possible
                           thereafter.

         (b)      After-Tax Contributions.

                  (i)      A Participant may elect on Timely Notice to make
                           After-Tax Contributions to his Account in any whole
                           percentage equal to an amount which is not less than
                           1% of his Base Salary Rate and not more than 15% of
                           his Base Salary Rate.

                  (ii)     An election to make After-Tax Contributions by
                           regular payroll deduction shall remain in effect for
                           so long as a Participant is eligible to make
                           After-Tax Contributions or, if earlier, until changed
                           by a Participant. A Participant may change such
                           election on Timely Notice effective as of the
                           Participant's first payroll check on or after the
                           first day of the following month, or as soon as
                           administratively possible thereafter.

                  (iii)    After-Tax Contributions equal to the difference
                           between 5% of a Participant's Base Salary Rate and
                           the Participant's Before-Tax Contributions, but not
                           less than zero (0), shall be classified as Basic
                           After-Tax Contributions and shall be taken into
                           account in determining the Company Matching
                           Contributions made on behalf of the Participant.

                  (iv)     After-Tax Contributions which are not Basic After-Tax
                           Contributions shall be classified as Unrestricted
                           After-Tax Contributions and shall not be taken into
                           account in determining the amount of Company Matching
                           Contributions made on behalf of Participants.

3.3      General Limitation.

         (a)      Notwithstanding any other provision of this Article III, no
                  Contribution shall be made to the Plan which would cause the
                  Plan to fail to meet the requirements for exemption from tax
                  or to violate any provisions of the Code.

         (b)      Notwithstanding any other provision of this Article III, the
                  Contributions made by and on behalf of a Participant shall not
                  exceed 20% of his Base Salary Rate; provided, however, that
                  effective January 1, 1997, the Contributions made by and on
                  behalf of a Participant shall not exceed 15% of his Base
                  Salary Rate.

3.4      Investment of Contributions by and on behalf of Participants.

         (a)      Before-Tax Contributions and After-Tax Contributions. On
                  Timely Notice, a Participant shall elect to allocate in whole
                  multiples of 1% all of the Before-Tax

                                     xxxii
<PAGE>   20

                  Contributions and After-Tax Contributions to be made on his
                  behalf during a Plan Year to one or more of

                  (i)                        the Money Market Fund
                  (ii)                       the Stable Income Fund
                  (iii)                      the Bond Index Fund
                  (iv)                       the Medium-Term Managed Fund
                  (v)                        the Long-Term Managed Fund
                  (vi)                       the Stock Index Fund
                  (vii)                      the Growth Stock Fund
                  (viii)                     the International Index Fund
                  (ix)                       the Small Cap Index Fund, or
                  (x)                        the K-C Stock Fund

                  An election under this subsection shall remain in effect until
                  changed by a Participant. A Participant may change his
                  election and such election shall be effective as of the date
                  of the Participant's next Contribution following Timely Notice
                  of the change, or as soon as administratively possible
                  thereafter.

3.5      Limitations on Before-Tax Contributions.

         (a)      Overall Limitation.

                  (i)      Notwithstanding any provision of the Plan to the
                           contrary, Before-Tax Contributions made on behalf of
                           a Participant by his Employer for deposit to his
                           Account shall not exceed $7,000 (or such greater
                           amount as permitted under applicable regulations to
                           reflect cost-of-living increases) in any taxable year
                           of the Participant.

                  (ii)     If a Participant so elects, Before-Tax Contributions
                           made in excess of the amount permitted in (a)(i) of
                           this Section (or, if less, their Current Market Value
                           on the date of the deposit thereof pursuant to this
                           subsection) shall be deposited to the Participant's
                           Account as a Basic After-Tax Contribution or
                           Unrestricted After-Tax Contribution, as applicable,
                           by such Participant.

                  (iii)    If a Participant does not elect to deposit his
                           Before-Tax Contributions in excess of the amount
                           permitted in Section 3.5(a)(i), the percentage of his
                           Before-Tax Contributions shall be reduced in order to
                           meet the limitations of Section 3.5(a)(i).

                  (iv)     Basic After-Tax Contributions or Unrestricted
                           After-Tax Contributions, as applicable, deposited to
                           a Participant's Account pursuant to (ii) above will
                           be allocated to the Plan funds in the same manner as
                           Before-Tax Contributions made on behalf of the
                           Participant.

         (b)      Limitations on Actual Deferral Percentage.

                  (i)      In any Plan Year in which the Actual Deferral
                           Percentage for the group of Highly Compensated
                           Eligible Employees would be more than the greater of

                                     xxxiii
<PAGE>   21

                           (A)      the Actual Deferral Percentage of all other
                                    Eligible Employees multiplied by 1.25, or

                           (B)      the lesser of (1) 2 percent plus the Actual
                                    Deferral Percentage of all other Eligible
                                    Employees or (2) the Actual Deferral
                                    Percentage of all other Eligible Employees
                                    multiplied by 2.0,

                           the deferral rate under subsection 3.2(a) of those
                           Highly Compensated Eligible Employees shall be
                           reduced (in whole or less than whole percentages) in
                           descending order by rate of deferral elected until
                           the Actual Deferral Percentage for the group of
                           Highly Compensated Eligible Employees is not more
                           than the greater of (A) or (B); provided, however,
                           that for Plan Years beginning after December 31,
                           1996, the deferral rate under subsection 3.2(a) of
                           those Highly Compensated Eligible Employees shall be
                           reduced (in whole or less than whole percentages) in
                           descending order beginning with the Highly
                           Compensated Eligible Employee with the highest
                           deferral rate until the Actual Deferral Percentage
                           for the group of Highly Compensated Eligible
                           Employees is not more than the greater of (A) or (B).

                           For purposes of this subsection, a person shall not
                           be considered to be an Eligible Employee until such
                           time as he or she could first have in effect a valid
                           election to participate in the Plan.

                  (ii)     In order to prevent the multiple use of the
                           alternative limitations described in subsections
                           3.5(b)(i)(B) and 4.4(a)(i)(B), the following
                           provisions shall apply. If the Actual Deferral
                           Percentage test in subsection 3.5(b)(i) is satisfied
                           using subsection 3.5(b)(i)(B), the Actual
                           Contribution Percentage test in subsection 4.4(a)(i)
                           is satisfied using subsection 4.4(a)(i)(B), and the
                           combined Actual Deferral Percentage and Actual
                           Contribution Percentage exceeds the greater of:

                           (A)      the sum of: (I) the greater of the Actual
                                    Deferral Percentage or the Actual
                                    Contribution Percentage for Eligible
                                    Employees other than Highly Compensated
                                    Eligible Employees multiplied by 1.25, and
                                    (II) 2 percent plus the lesser of the Actual
                                    Deferral Percentage or the Actual
                                    Contribution Percentage for Eligible
                                    Employees other than Highly Compensated
                                    Eligible Employees (but not more than the
                                    lesser of the Actual Deferral Percentage or
                                    Actual Contribution Percentage for Eligible
                                    Employees other than Highly Compensated
                                    Eligible Employees multiplied by 2.0), or

                           (B)      the sum of: (I) the lesser of the Actual
                                    Deferral Percentage or the Actual
                                    Contribution Percentage for Eligible
                                    Employees other than Highly Compensated
                                    Eligible Employees multiplied by 1.25, and
                                    (II) 2 percent plus the greater of the
                                    Actual Deferral Percentage or the Actual
                                    Contribution Percentage for Eligible
                                    Employees other than Highly Compensated
                                    Eligible Employees (but not more than the
                                    greater of the Actual Deferral Percentage or
                                    Actual Contribution Percentage for Eligible
                                    Employees other than Highly Compensated
                                    Eligible Employees multiplied by 2.0),

                                     xxxiv
<PAGE>   22

                           then the deferral rate under subsection 3.2(a) of
                           those Highly Compensated Eligible Employees shall be
                           reduced in accordance with subsection 3.5(b)(i) or
                           the contribution rate of those Highly Compensated
                           Eligible Employees shall be reduced in accordance
                           with subsection 4.4(a)(i), or both as determined by
                           the Committee, so that there is no multiple use of
                           the alternative limitation, as described in
                           regulations under Code section 401(m).

                           In lieu of the reduction described in this subsection
                           3.5(b)(ii) and in 3.5(b)(i) above, the Employer may
                           make qualified nonelective contributions (pursuant to
                           the regulations under Code sections 401(k) and
                           401(m)) to be allocated only to the Accounts of
                           Participants who are not Highly Compensated Eligible
                           Employees.

                           Qualified nonelective contributions treated as
                           elective contributions, whether taken into account to
                           satisfy the limit set forth in this subsection
                           3.5(b)(ii) or in 3.5(b)(i) above, shall be fully
                           vested when made and shall not be distributed before
                           one of the events described in subsection
                           4.4(a)(iii).

                           Any excess contribution resulting from the required
                           reduction described above shall be corrected in
                           accordance with subsection 3.5(b)(iii). Any such
                           excess aggregate contribution resulting from required
                           reduction shall be corrected in accordance with
                           subsection 4.4(a)(iii).

                  (iii)    Before-Tax Contributions actually made in excess of
                           the amount permitted under subsections 3.5(b)(i) and
                           3.5(b)(ii) shall be recharacterized as Basic
                           After-Tax Contributions or Unrestricted After-Tax
                           Contributions, as applicable, by the close of the
                           Plan Year following the Plan Year for which such
                           Before-Tax Contributions were made. If such excess
                           Before-Tax Contributions are not recharacterized as
                           Basic After-Tax Contributions or Unrestricted
                           After-Tax Contributions within 2 1/2 months after the
                           close of the Plan Year for which they were made, a 10
                           percent excise tax on the amount of such excess
                           Before-Tax Contributions may apply. Recharacterized
                           excess Before-Tax Contributions shall be fully vested
                           when made and shall not be distributed before one of
                           the events described in subsection 4.4(a)(iii). Such
                           Contributions (or, if less, their Current Market
                           Value on the date of the deposit thereof pursuant to
                           this subsection) shall be deposited to the
                           Participant's Account as a Basic After-Tax
                           Contribution or Unrestricted After-Tax Contribution,
                           as applicable.

                  (iv)     Before-Tax Contributions will be taken into account
                           for purposes of determining the Actual Deferral
                           Percentage for a Plan Year only if they relate to
                           Total Compensation that would have been received by
                           the Participant during the Plan Year (but for the
                           election to make Before-Tax Contributions hereunder),
                           or Total Compensation that is attributable to
                           services performed by the Participant during the Plan
                           Year and would have been received by the Participant
                           within 2 1/2 months after the close of the Plan Year
                           (but for the election to make Before-Tax
                           Contributions hereunder).

                                      xxxv
<PAGE>   23

         (c)      Additional Limitation. Notwithstanding any provision of the
                  Plan to the contrary, the Committee may limit or adjust the
                  amount of Before-Tax Contributions in a manner that prevents
                  contributions in excess of the limit set forth in subsection
                  3.5(b) above; provided that a Participant may elect to
                  preserve his total Contributions election under the Plan so
                  that his Before-Tax Contributions which are limited under
                  Section 3.5 are automatically made as Basic After-Tax
                  Contributions or Unrestricted After-Tax Contributions, as
                  applicable, subject to Section 3.3 above during such period as
                  his Before-Tax Contributions are so limited.

3.6      Suspension of All Contributions. On Timely Notice and notwithstanding
         the provisions of Section 3.2, a Participant may elect to suspend all
         of his Contributions, effective as of the Participant's first payroll
         check on or after the first day of the following month, or as soon as
         administratively possible thereafter. On Timely Notice a Participant
         may elect to resume Contributions as of the Participant's first payroll
         check on or after the first day of the following month, or as soon as
         administratively possible thereafter.

         A Participant's Contributions shall be suspended commencing with and
         continuing throughout any period during which he fails to qualify as an
         Eligible Employee. On Timely Notice upon requalifying as an Eligible
         Employee a Participant may elect to make Contributions to his Accounts
         and such election shall be effective as soon as administratively
         possible.

3.7      Payment of Contributions to Trustee. The Employers shall contribute or
         remit to the Trustee no later than 15 days after the end of each month
         the amounts deducted or withheld from the Participants' compensation as
         Contributions under the Plan.

3.8      Reallocation of Participant's Accounts.

         (a)      A Participant may, as of any Business Day, elect to (i)
                  reallocate all or any whole percentage portion, or (ii) effect
                  a fund transfer of all or any whole percentage portion or
                  dollar amount, of any of his Employee Accounts or Employer
                  Accounts among the Investment Funds listed in Section 3.4;
                  provided, however, that:

                  (i)      Company Matching Contributions contributed to a
                           Participant's Employer Account in the K-C Stock Fund
                           on or after October 1, 1996, excluding amounts in the
                           KCTC Heritage Rollover Account, the Ballard Heritage
                           Rollover Account, the Safeskin Transferee Rollover
                           Account, and earnings and losses thereon, shall not
                           be reallocated to any other Employer Account until a
                           Participant attains age 50, and

                  (ii)     effective January 1, 1998, amounts in a Participant's
                           Employee Accounts or Employer Accounts in the Stable
                           Income Fund (A) may only be reallocated or
                           transferred to one or more of the Investment Funds
                           listed in subsections 3.4(a)(iii) through 3.4(a)(ix);
                           and (B) once reallocated or transferred, cannot be
                           transferred to the Money Market Fund for a period of
                           not less than 90 days.

3.9      Redeposits and Restored Amounts.

         (a)      Notwithstanding any provision in this Plan to the contrary, on
                  Timely Notice, an Employee who has forfeited all or a portion
                  of his Employer Accounts may

                                     xxxvi
<PAGE>   24

                  redeposit such distribution or withdrawal before the earlier
                  of (i) the date on which the Employee has been reemployed for
                  five years or (ii) the date on which the Employee incurs five
                  consecutive One-Year Periods of Severance following the year
                  of the distribution or withdrawal. Upon such redeposit, the
                  amount of the forfeiture associated with the redeposit shall
                  be restored to the Employee's Account in the K-C Stock Fund
                  from which it was forfeited. Redeposits shall be allocated to
                  the Plan funds in the same manner as Before-Tax Contributions
                  made on behalf of the Participant. The amount redeposited
                  shall be equal to the total amount distributed or withdrawn
                  which caused the forfeiture.

         (b)      No redeposit of such a withdrawal or distribution shall be
                  permitted if, coincident with or subsequent to the forfeiture
                  associated with that withdrawal or distribution, an Employee
                  incurs 5 consecutive One-Year Periods of Severance. For Plan
                  Years prior to April 1, 1989, and for purposes of this Section
                  3.9 only, an Employee incurs a One-Year Period of Severance if
                  he is not an Employee on the last day of a Plan Year.

         (c)      A Participant who is entitled to no portion of his Employer
                  Account upon termination of employment shall be deemed to have
                  received a distribution of zero dollars ($0) from such
                  account.

         (d)      Any forfeiture from the Before-Tax Contributions or Basic
                  After-Tax Contribution Section of his Employer Accounts shall
                  be restored in accordance with the provisions of this Section
                  3.9 if the Terminated Participant returns to his employment
                  with an Employer prior to incurring five consecutive One-Year
                  Periods of Severance and, effective with forfeitures on or
                  after October 1, 1996, the Terminated Participant has either
                  (i) not received a distribution or withdrawal from the
                  Before-Tax Contributions or Basic After-Tax Contribution
                  Section of his Employee Accounts, or (ii) has redeposited such
                  distribution or withdrawal as provided in subsection (a)
                  above.

3.10     Source of and Interest in Before-Tax Contributions. Anything in this
         Plan to the contrary notwithstanding, Before-Tax Contributions shall be
         made by the Employers out of current or accumulated earnings and
         profits, and the Employers shall have no beneficial interest of any
         nature whatsoever in any such Contributions after the same have been
         received by the Trustee.

3.11     Contributions During Qualified Military Leave. Notwithstanding any
         provision of this Plan to the contrary, Contributions and Company
         Matching Contributions may be made for periods of qualified military
         service in accordance with Section 414(u) of the Code.

                                     xxxvii
<PAGE>   25

                                   ARTICLE IV

                             EMPLOYER CONTRIBUTIONS

4.1      Contribution Percentage. Subject to Section 4.3, Company Matching
         Contributions for each Plan Year shall be 75% of a Participant's
         Before-Tax Contributions or Basic After-Tax Contributions on the first
         2% of such Participant's Base Salary Rate per pay period, and 50% of a
         Participant's Before-Tax Contributions or Basic After-Tax Contributions
         on the next 3% of such Participant's Base Salary Rate per pay period.

         No Company Matching Contributions shall be made with respect to a
         Participant's Unrestricted After-Tax Contributions.

4.2      Allocation and Payment of Company Matching Contributions. Company
         Matching Contributions shall be

         (a)      made out of current or accumulated earnings and profits,

         (b)      allocated exclusively to the K-C Stock Fund,

         (c)      made to the Trustee as soon as practicable after the end of
                  the month in which the related Contributions are deducted or
                  withheld for payment to the Trustee, and

         (d)      made in cash, or at the sole option of the Employer, in shares
                  of Corporation Stock held in the treasury, or both (but not in
                  authorized but unissued shares) in which event the amount of
                  any Company Matching Contribution made in Corporation Stock
                  shall be the Current Market Value thereof on the date of
                  delivery to the Trustee which, for the purposes of the Plan,
                  shall be considered as the Trustee's cost of such shares
                  except where Treasury Regulations sections
                  1.402(a)-1(b)(2)(ii) and 54.4975-11(d)(1) require shares of
                  Corporation Stock acquired while the Plan is an employee stock
                  ownership plan to have a different cost in order to satisfy
                  their requirements.

         Any forfeiture under the Plan may be applied to reduce Company Matching
         Contributions, or if determined by the Committee in its discretion, to
         offset administrative expenses of the Plan. A forfeiture shall be
         valued at Current Market Value as of the Valuation Date on which the
         forfeiture occurred.

4.3      Temporary Suspension of Company Matching Contributions. The Board may
         order the suspension of all Company Matching Contributions if, in its
         opinion, the Corporation's consolidated net income after taxes for the
         last fiscal year is substantially below the Corporation's consolidated
         net income after taxes for the immediately preceding fiscal year. Any
         such determination by the Board shall be communicated to all Eligible
         Employees and to all Participants reasonably in advance of the first
         date for which such temporary suspension is ordered.

                                    xxxviii
<PAGE>   26

         Except when caused, as determined by the Board, by a change in the
         capital structure of the Corporation which has the effect that the
         regular cash dividend rate is not in fairness comparable between
         successive quarters, any reduction of the regular cash dividend rate
         payable on Corporation Stock for any quarter as compared with the
         immediately preceding quarter shall automatically result in the
         suspension of all Company Matching Contributions for the first Plan
         Year commencing after the quarter in which such reduction occurs.

4.4      Limitations on Company Matching Contributions, Unrestricted After-Tax
         Contributions and Basic After-Tax Contributions.

         (a)      Limitations on Actual Contribution Percentage.

                  (i)      In any Plan Year in which the Actual Contribution
                           Percentage for the group of Highly Compensated
                           Eligible Employees would be more than the greater of

                           (A)      the Actual Contribution Percentage of all
                                    other Eligible Employees multiplied by 1.25,
                                    or

                           (B)      the lesser of (I) 2 percent plus the Actual
                                    Contribution Percentage of all other
                                    Eligible Employees or (II) the Actual
                                    Contribution Percentage of all other
                                    Eligible Employees multiplied by 2.0,

                           the contribution rate under subsection 3.2(b) and
                           Section 4.1 of those Highly Compensated Eligible
                           Employees shall be reduced (in whole or less than
                           whole percentages) in descending order until the
                           Actual Contribution Percentage for the group of
                           Highly Compensated Eligible Employees is not more
                           than the greater of (A) or (B); provided, however
                           that for Plan Years beginning after December 31, 1996
                           the contribution rate under Section 3.2 and 4.1 of
                           those Highly Compensated Eligible Employees shall be
                           reduced (in whole or less than whole percentages) in
                           descending order beginning with the Highly
                           Compensated Eligible Employee with the highest
                           contribution rate until the Actual Contribution
                           Percentage for the group of Highly Compensated
                           Eligible Employees is not more than the greater of
                           (A) or (B).

                           For purposes of this subsection, a person shall not
                           be considered to be an Eligible Employee until such
                           time as he or she could first have in effect a valid
                           election to participate in the Plan.

                  (ii)     In order to prevent the multiple use of the
                           alternative limitations described in subsections
                           3.5(b)(i)(B) and 4.4(a)(i)(B), the provisions of
                           subsection 3.5(b)(ii) shall apply.

                  (iii)    After-Tax Contributions and Company Matching
                           Contributions for the Plan Year (if any) in excess of
                           the amount permitted under subsection 4.4(a)(i) and
                           4.4(a)(ii), together with the income or loss
                           allocable thereto, shall be

                                     xxxix
<PAGE>   27

                           distributed to the Participant after the close of the
                           Plan Year and within 12 months after the close of
                           that Plan Year (and, if practicable, no later than
                           2 1/2 months after the close of the Plan Year in
                           order to avoid any excise tax imposed on the Employer
                           for excess aggregate contributions); provided,
                           however, that an Employer may make qualified
                           nonelective contributions (as provided under Code
                           section 401(m) and the regulations thereunder) to be
                           allocated only to the Accounts of Participants who
                           are not Highly Compensated Eligible Employees that,
                           in combination with After-Tax Contributions and
                           Company Matching Contributions, satisfy the limit set
                           forth in 4.4(a)(i) and 4.4(a)(ii) above. Such
                           qualified nonelective contributions (as provided
                           under Code section 401(m) and the regulations
                           thereunder), whether taken into account to satisfy
                           the limit set forth in 4.4(a)(i) and 4.4(a)(ii)
                           above, shall be fully vested when made, shall be
                           allocated as of a date within the Plan Year, and
                           shall not be distributed before one of the following
                           events:

                           (A)      the Eligible Employee's retirement, death,
                                    disability, or separation from service, as
                                    provided under Code section 401(k) and
                                    applicable regulations;

                           (B)      the Eligible Employee's attainment of age
                                    59 1/2 or the Eligible Employee's hardship,
                                    as provided under Code section 401(k) and
                                    applicable regulations;

                           (C)      the termination of the Plan without the
                                    establishment or maintenance of a successor
                                    plan, as provided under Code section 401(k)
                                    and applicable regulations;

                           (D)      the date of the sale or other disposition by
                                    an Employer of substantially all the assets
                                    used in a trade or business to an unrelated
                                    corporation, but only with respect to an
                                    Eligible Employee who continues employment
                                    with the acquiring corporation, provided
                                    that the Employer continues to maintain the
                                    plan after the sale or disposition and the
                                    acquiring corporation does not maintain the
                                    plan after the sale or disposition, in
                                    accordance with Code section 401(k) and
                                    applicable regulations; or

                           (E)      the date of the sale or other disposition by
                                    an Employer of its interest in a subsidiary
                                    to an unrelated entity or individual, but
                                    only with respect to an Eligible Employee
                                    who continues employment with the acquiring
                                    corporation, provided that the Employer
                                    continues to maintain the plan after the
                                    sale or disposition and the acquiring
                                    corporation does not maintain the plan after
                                    the sale or disposition, in accordance with
                                    Code section 401(k) and applicable
                                    regulations.

                                       xl
<PAGE>   28

                           The income or loss allocable to an excess aggregate
                           contribution under subsection 4.4(a)(i) shall be
                           determined in the manner set forth in subsection
                           4.4(a)(iii).

                  (iv)     The income or loss allocable to an excess aggregate
                           contribution shall be determined by multiplying the
                           income or loss allocable to a Participant's After-Tax
                           Contributions and Company Matching Contributions for
                           the Plan Year by a fraction, the numerator of which
                           is the After-Tax Contributions and Company Matching
                           Contributions made in excess of the amount permitted
                           in (a)(i) of this Section and the denominator of
                           which is the balance of the After-Tax Contributions
                           and Company Matching Contributions Sections of the
                           Participant's Account on the last day of the Plan
                           Year, together with any After-Tax Contributions and
                           Company Matching Contributions for the gap period
                           described below, but reduced by the income allocable
                           to such Sections for the Plan Year and increased by
                           the loss allocable to such Sections for the Plan
                           Year. The income or loss allocable to an excess
                           aggregate contribution shall include the income or
                           loss allocable for the period between the end of the
                           Plan Year and the date of distribution (the "gap
                           period"). The income or loss allocable to an excess
                           aggregate contribution for the gap period shall equal
                           10% of the income or loss allocable to such
                           contribution as determined above, multiplied by the
                           number of months that have elapsed since the end of
                           the Plan Year. For this purpose, a distribution on or
                           before the 15th of the month shall be treated as made
                           on the last day of the preceding month, and a
                           distribution made after the 15th of the month shall
                           be treated as made on the first day of the next
                           month.

         (b)      Additional Limitation. Notwithstanding any provision of the
                  Plan to the contrary, the Committee may limit or adjust the
                  amount of After-Tax Contributions and Company Matching
                  Contributions in a manner that prevents contributions in
                  excess of the limit set forth in subsection 4.4(a)(i) above.

                                      xli
<PAGE>   29

                                    ARTICLE V

                           TRUSTEE AND TRUST AGREEMENT

5.1      The Corporation shall enter into a trust agreement with a person or
         corporation selected by the Chief Executive Officer of the Corporation
         to act as Trustee of Contributions and Company Matching Contributions.
         The Trustee shall receive all Contributions and all Company Matching
         Contributions and shall hold, manage, administer, and invest the same,
         reinvest any income, and, in accordance with instructions and
         directions of the Committee subject to the Plan, make distributions.

         The trust agreement shall be in such form and contain such provisions
         as the Chief Executive Officer of the Corporation may deem necessary
         and appropriate to effectuate the purposes of the Plan and to qualify
         the Plan and the Trust under the Code. Upon the written request of an
         Eligible Employee, a copy of the trust agreement shall be made
         available for his inspection.

         The Chief Executive Officer of the Corporation may, from time to time,
         remove the Trustee or any successor Trustee at any time and any such
         Trustee or any successor Trustee may resign. The Chief Executive
         Officer of the Corporation shall, upon removal or resignation of a
         Trustee, appoint a successor Trustee.

         The Trustee's accounts, books, and records relating to the Trust may be
         audited annually by auditors selected by the Chief Executive Officer of
         the Corporation.

         The Trustee's fee shall be paid by the Trustee out of the funds of the
         Trust, unless paid by the Corporation in its discretion. Brokerage
         fees, asset management fees, investment management fees and other
         direct costs of investment, taxes (including interest and penalties),
         and administrative expenses of the Plan shall be paid by the Trustee
         out of the funds of the Trust to which such costs are attributable,
         unless paid by the Corporation in its discretion.

                                      xlii
<PAGE>   30

                                   ARTICLE VI

             INVESTMENT, PARTICIPANT'S ACCOUNTS, AND VOTING OF STOCK

6.1      Investment of Contributions.

         (a)      A Participant's Contributions during each Plan Year shall be
                  invested in the Investment Funds in accordance with the
                  Participant's allocations under Section 3.4; provided, however
                  that a Participant's allocations (i) under the prior version
                  of the Plan (ii) under the KCTC Salaried Plan or (iii) under
                  the Safeskin 401(k) Plan shall be carried forward as set forth
                  in this Plan. A Participant's interest arising from his
                  reallocation for prior Plan Years shall be invested in the
                  Investment Funds in accordance with the Participant's
                  directions under Section 3.8. Company Matching Contributions
                  during each Plan Year shall be invested in the K-C Stock Fund.
                  All such investments and gains or losses related thereto shall
                  be allocated to each Participant's Accounts pursuant to the
                  provisions of Section 6.2.

                  Notwithstanding the foregoing, the Trustee shall invest
                  Contributions by a Safeskin Transferee who became a
                  Participant in the Plan during July 2000 in the Money Market
                  Fund, unless or until such time as the Participant elects the
                  manner in which his or her Contributions are to be invested.

         (b)      The Committee shall designate Participant's Contributions and
                  Company Matching Contributions for payment to the Trustee for
                  investment, and Employee Accounts and Employer Accounts for
                  reallocation in accordance with subsection 6.1(a), and shall
                  advise the Trustee of such designation.

6.2      Participant's Accounts.

         (a)      Establishment of Accounts. Each Participant shall have
                  established and maintained for him separate Accounts which,
                  depending upon the allocation and reallocation options he has
                  selected, shall consist of Employee Accounts and Employer
                  Accounts in one or more of the Money Market Fund, the Stable
                  Income Fund, the Bond Index Fund, the Medium-Term Managed
                  Fund, the Long-Term Managed Fund, the Stock Index Fund, the
                  Growth Stock Fund, the International Index Fund, the K-C Stock
                  Fund and the Small Cap Index Fund. Each such Employee Account
                  shall be subdivided into a Basic After-Tax Contributions
                  Section, a Before-Tax Contributions Section, and an
                  Unrestricted After-Tax Contribution Section. Each such
                  Employer Account shall be subdivided into subsections
                  corresponding to the Sections of Employee Accounts, other than
                  the Unrestricted After-Tax Contribution Section.

                  As soon as practicable following the end of each calendar
                  quarter, the Committee will cause an annual statement to be
                  prepared for each Participant which will reflect the status of
                  the Participant's Accounts in such form as shall be prescribed
                  by the Committee.

                                     xliii
<PAGE>   31

         (b)      Crediting of Accounts. As of the close of business on each
                  Valuation Date the designated Accounts of each Participant
                  shall be appropriately credited with the amounts of his
                  Contributions and Contributions made on his behalf on that
                  Valuation Date, or the reallocation or transfer of his other
                  Accounts, if any, effective on that Valuation Date and his
                  Employer Account in the K-C Stock Fund shall be credited with
                  the amount of any Company Matching Contributions made with
                  respect to him on that Valuation Date.

         (c)      Valuation of Accounts. Each Participant's Accounts shall be
                  valued and adjusted each Business Day to preserve for each
                  Participant his proportionate interest in the related funds
                  and reflect the effect of income, collected and accrued,
                  realized and unrealized profits and losses, expenses,
                  valuation adjustments, and all other transactions with respect
                  to the related fund as follows:

                  (i)      The Current Market Value of the assets held in each
                           of the funds shall be determined by the Trustee, and

                  (ii)     The separate balances provided for in subsection
                           6.2(b) of each Participant's Account under each of
                           the related funds shall be adjusted by multiplying by
                           the ratio that the Current Market Value of such fund
                           as determined under subsection 6.2(c)(i) bears to the
                           aggregate of the Account balances under such fund.

6.3      Stock Rights, Stock Splits and Stock Dividends. A Participant shall
         have no right of request, direction or demand upon the Committee or the
         Trustee to exercise in his behalf rights to purchase shares of
         Corporation Stock or other securities of the Corporation. The Trustee,
         at the direction of the Committee, shall exercise or sell any rights to
         purchase shares of Corporation Stock appertaining to shares of such
         stock held by the Trustee and shall sell at the direction of the
         Committee any rights to purchase other securities of the Corporation
         appertaining to shares of Corporation Stock held by the Trustee. The
         Accounts of Participants shall be appropriately credited. Shares of
         Corporation Stock received by the Trustee by reason of a stock split or
         a stock dividend shall be appropriately allocated to the Accounts of
         the Participants.

6.4      Voting of Corporation Stock. A Participant (or in the event of his
         death, his Beneficiary) may direct the voting at each annual meeting
         and at each special meeting of the stockholders of the Corporation of
         that number of whole shares of Corporation Stock held by the Trustee
         and attributable to the balances in his K-C Stock Fund Account as of
         the Valuation Date coincident with the record date for such meeting.
         Each such Participant (or Beneficiary) will be provided with copies of
         pertinent proxy solicitation material together with a request for his
         instructions as to how such shares are to be voted. The Committee shall
         direct the Trustee to vote such shares in accordance with such
         instructions and shall also direct the Trustee how to vote any shares
         of Corporation Stock at any meeting for which it has not received, or
         is not subject to receiving, such voting instructions. Notwithstanding
         the foregoing, a Participant's (or Beneficiary's) voting instructions
         shall apply to the balances in the K-C Stock Fund Accounts for all
         plans maintained by an Employer in which he participates.

                                      xliv
<PAGE>   32

6.5      Tender Offers. A Participant (or in the event of his death, his
         Beneficiary) may direct the Trustee in writing how to respond to a
         tender or exchange offer for any or all whole shares of Corporation
         Stock held by the Trustee and attributable to the balances in his K-C
         Stock Fund Account as of the Valuation Date coincident with such offer.
         The Committee shall notify each Participant (or Beneficiary) and exert
         its best efforts to timely distribute or cause to be distributed to him
         such information as will be distributed to stockholders of the
         Corporation in connection with any such tender or exchange offer. Upon
         receipt of such instructions, the Trustee shall tender such shares of
         Corporation Stock as and to the extent so instructed. If the Trustee
         shall not receive instructions from a Participant (or Beneficiary)
         regarding any such tender or exchange offer for such shares of
         Corporation Stock (or shall receive instructions not to tender or
         exchange such shares), the Trustee shall have no discretion in such
         matter and shall take no action with respect thereto. With respect to
         shares of Corporation Stock in the K-C Stock Fund for which the Trustee
         is not subject to receiving such instructions, however, the Trustee
         shall tender such shares in the same ratio as the number of shares for
         which it receives instructions to tender bears to the total number of
         shares for which it is subject to receiving instructions, and shall
         have no discretion in such matter and shall take no action with respect
         thereto other than as specifically provided in this sentence.
         Notwithstanding the foregoing, a Participant's (or Beneficiary's)
         voting instructions shall apply to the balances in the K-C Stock Fund
         Accounts for all plans maintained by an Employer in which he
         participates.

                                      xlv
<PAGE>   33

                                   ARTICLE VII

                            DISTRIBUTION OF ACCOUNTS

7.1      Accounts to be Distributed.

         (a)      Termination On or After Attainment of Age 55. If a
                  Participant's employment with an Employer is terminated on or
                  after his attainment of age 55, he shall be fully vested in
                  his Accounts and shall be entitled to receive a distribution
                  of the entire amount then in his Accounts in accordance with
                  Section 7.7. Notwithstanding the foregoing, if a Participant
                  is determined by the Committee to be Totally and Permanently
                  Disabled on or before October 31, 1996 under the prior version
                  of the Plan and has less than 5 Years of Service, such
                  Participant shall be fully vested in his Accounts.

         (b)      Termination Upon Death. In the event that the termination of
                  employment of a Participant is caused by his death, or a
                  Terminated Participant dies prior to the first day on which
                  such Terminated Participant's Accounts are payable, the entire
                  amount then in his Accounts shall be paid to his Beneficiary
                  in accordance with Section 7.7 after receipt by the Committee
                  of acceptable proof of death.

         (c)      Termination As a Result of Group Termination. In the event
                  that the termination of employment of a Participant is caused
                  by reason of his status as a member of a group involved in a
                  group termination, he shall be entitled to receive a
                  distribution of the entire amount then in his Accounts in
                  accordance with Section 7.7, unless action is taken pursuant
                  to the Plan to segregate the Accounts of all the Participants
                  in such group from the Trust and arrange for a transfer to or
                  a merger with a qualified successor plan or trust with respect
                  thereto. Notwithstanding the foregoing, this subsection 7.1(c)
                  shall not apply after October 31, 1996.

         (d)      Termination for Other Reasons. If a Participant's employment
                  with an Employer is terminated for any other reason, the
                  Participant shall be entitled to the entire amount in his
                  Employee Accounts and a portion of his Employer Accounts as
                  determined in accordance with the following schedule:

<TABLE>
<CAPTION>
                                                                 Vested                      Forfeited
                  Years of Service                             Percentage                   Percentage
                  ----------------                             ----------                   ----------
<S>                                                            <C>                          <C>
                  Less than 5                                       0%                         100%
                  5 or more                                       100%                           0%
</TABLE>

                  Notwithstanding any other provision of this Section 7.1, a
                  KCTC Heritage Employee shall be fully vested in his Accounts
                  upon becoming a Participant as of January 1, 1997, and shall
                  be entitled to receive a distribution of the entire amount in
                  his Accounts in accordance with Section 7.7.

                  Notwithstanding any other provision of this Section 7.1, a
                  Ballard Heritage Employee shall be fully vested in his
                  Accounts upon transfer of his or her account from the Ballard
                  Savings Plan to this Plan as of January 31, 2000, and shall be
                  entitled to receive a distribution of the entire amount in his
                  Accounts in accordance with Section 7.7.

                                      xlvi
<PAGE>   34

                  Notwithstanding any other provision of this Section 7.1, a
                  Safeskin Transferee shall be fully vested in his Accounts upon
                  transfer of his or her account from the Safeskin 401(k) Plan
                  to this Plan as of January 2, 2001, and shall be entitled to
                  receive a distribution of the entire amount in his Accounts in
                  accordance with Section 7.7.

                  In the event that the termination of employment of a
                  Participant is caused by any reason other than the Employee
                  quits, is discharged, retires or dies, the Participant will be
                  deemed to have a 12 month period of absence following the date
                  of such termination of employment, for purposes of determining
                  the portion of his Employer Accounts which such Participant
                  shall be entitled to receive in a distribution in accordance
                  with this subsection.

                  In the event that the Plan is amended to change the vesting
                  provisions set forth in this subsection 7.1(d), a Participant
                  with 3 or more years of Service may elect to have the vested
                  percentage of the Participant's Employer Accounts determined
                  pursuant to the vesting provisions in effect prior to the
                  amendment.

         (e)      Deferred Distributions. Notwithstanding anything in this
                  Article VII to the contrary, if the aggregate value of the
                  Accounts of any Participant exceeds $5,000 as provided under
                  Code section 411(a)(11), an immediate distribution shall not
                  be made without the consent of the Participant. A Participant
                  who fails to consent to a distribution under this subsection
                  7.1(e) shall continue to participate as a Terminated
                  Participant and shall be entitled to a distribution of his
                  Employee Accounts and the vested percentage of his Employer
                  Accounts. Upon Timely Notice of request for payment, the
                  Terminated Participant's Employee Accounts and the vested
                  percentage of his Employer Accounts shall be distributed in
                  accordance with the provisions of Section 7.7.

7.2      Timing of Distributions. A Participant's election to receive a
         distribution of his Accounts shall be effective as soon as practicable
         following Timely Notice and the amount of the distribution shall be
         determined by the value of the Participant's interest in any Investment
         Fund as of the Valuation Date of the distribution. Any forfeiture with
         respect to the Accounts of the Participant or Terminated Participant
         shall be determined as of the Valuation Date coincident with such
         Participant's or Terminated Participant's termination of employment.
         Distribution of a Participant's Accounts shall be made to him or to his
         Beneficiary after the termination of his employment and as soon as
         practicable following his request for a distribution.

7.3      Certain Definitions Relating to Distributions and Withdrawals. The
         following are forms of distribution under the Plan:

         (a)      All Stock Distribution. An All Stock Distribution of a
                  Participant's Accounts shall mean a single distribution as of
                  the Valuation Date consisting of full shares of Corporation
                  Stock attributable to the Participant's Employee Accounts and
                  to the vested percentage of his Employer Accounts, together
                  with the cash equivalent of the Current Market Value on the
                  Valuation Date of fractional shares of such stock attributable
                  to such Accounts.

         (b)      Stock and Cash Distribution. A Stock and Cash Distribution of
                  a Participant's Accounts shall mean a single distribution
                  consisting of:

                                     xlvii
<PAGE>   35

                  (i)      the cash equivalent of the Current Market Value on
                           the Valuation Date of the Participant's Employee
                           Accounts, except his Employee Account in the K-C
                           Stock Fund, and the vested percentage of his Employer
                           Accounts, except his Employer Account in the K-C
                           Stock Fund, and

                  (ii)     full shares of Corporation Stock on the Valuation
                           Date, attributable to the Participant's Employee
                           Account in the K-C Stock Fund and to the vested
                           percentage of his Employer Account in the K-C Stock
                           Fund, together with the cash equivalent of the
                           Current Market Value on the Valuation Date of
                           fractional shares of such stock attributable to such
                           Accounts, and

                  (iii)    the cash equivalent of any other interest
                           attributable to the Participant's Accounts, except
                           the forfeited percentage of his Employer Accounts, on
                           the Valuation Date.

         (c)      All Cash Distribution. An All Cash Distribution of a
                  Participant's Accounts shall mean the same as a Stock and Cash
                  Distribution, as defined in subsection 7.3(b), except that
                  clause (ii) in said subsection shall be replaced by the
                  following clause:

                  (ii)     the cash equivalent of the Current Market Value as of
                           the Valuation Date of all the shares and fractional
                           shares of Corporation Stock attributable to the
                           Participant's Employee Account in the K-C Stock Fund
                           and to the vested percentage of his Employer Account
                           in the K-C Stock Fund.

         (d)      Installment Distribution. An Installment Distribution shall
                  mean the cash equivalent of the Current Market Value of the
                  Participant's vested percentage of his Accounts on the
                  Valuation Date, paid monthly in cash for a period elected by
                  the Participant. For all Participants other than Ballard
                  Heritage Employees, the elected period shall not exceed the
                  lesser of 20 years or the Participant's life expectancy at the
                  time such Installment Distribution is to commence. For
                  Participants who are Ballard Heritage Employees, the elected
                  period shall not exceed the Participant's life expectancy and,
                  if the Participant is married, his spouse's life expectancy,
                  at the time such Installment Distribution is to commence. The
                  value of each payment shall be determined on a declining
                  balance method. Notwithstanding the foregoing provisions of
                  Section 7.3(d), a KCTC Heritage Employee may elect to receive
                  an Installment Distribution on the same basis as a Stock and
                  Cash Distribution or All Cash Distribution and to be paid
                  monthly or annually.

                  Prior to the distribution of the final payment of an
                  Installment Distribution, a Participant may elect:

                  (i)      to receive the remaining balance in his Accounts as a
                           Lump Sum Distribution;

                  (ii)     to change the elected period of the Installment
                           Distribution; or

                  (iii)    to receive a Partial Distribution from the remaining
                           balance in his Accounts.

                                     xlviii
<PAGE>   36

                  Notwithstanding the foregoing, a Safeskin Transferee may not
                  elect an Installment Distribution after January 31, 2001.

         (e)      Minimum Return Joint & Survivor Annuity Distribution. A
                  Participant who elects a Minimum Return Joint & Survivor
                  Annuity Distribution shall have an annuity purchased for him
                  from an insurance company, the value of which shall be
                  determined by the Current Market Value of the Participant's
                  Employee Accounts and the vested percentage of his Employer
                  Accounts on the Valuation Date. The following types of Minimum
                  Return Joint and Survivor Annuity Distribution may be elected:

                  (i)      100% Joint & Survivor Annuity Distribution. A 100%
                           Joint & Survivor Annuity Distribution shall mean a
                           reduced monthly distribution payable for the
                           Participant's life, provided however, that the same
                           amount of such reduced distribution is payable to the
                           Participant's Beneficiary for the Beneficiary's life,
                           after the death of the Participant.

                  (ii)     50% Joint & Survivor Annuity Distribution. A 50%
                           Joint & Survivor Annuity Distribution shall mean a
                           reduced monthly distribution payable for the
                           Participant's life, provided however, that one-half
                           of the amount of such reduced distribution is payable
                           to the Participant's Beneficiary for the
                           Beneficiary's life, after the death of the
                           Participant.

                  For purposes of subsections 7.3(e)(i) and 7.3(e)(ii), upon the
                  death of the designated Beneficiary, the remainder, if any, of
                  the total amount in the Participant's Accounts on the
                  Valuation Date which exceeds the aggregate of all payments
                  made to the Participant and Beneficiary shall be paid to the
                  estate of the Beneficiary as a Lump Sum Distribution in the
                  form of an All Cash Distribution.

         (f)      Minimum Return Single-Life Annuity Distribution. A Participant
                  who elects a Minimum Return Single-Life Annuity Distribution
                  shall have an annuity purchased for him from an insurance
                  company, the value of which shall be determined by the Current
                  Market Value of the Participant's Employee Accounts and the
                  vested percentage of his Employer Accounts on the Valuation
                  Date. A Minimum Return Single-Life Annuity Distribution shall
                  mean a monthly distribution payable for the Participant's
                  life, provided however, that upon the death of the
                  Participant, the remainder, if any, of the total amount in the
                  Participant's Accounts on the Valuation Date which exceeds the
                  aggregate of all payments made to the Participant shall be
                  paid to the Participant's Beneficiary as a Lump Sum
                  Distribution in the form of an All Cash Distribution.

         (g)      Period Certain Annuity Distribution. A Participant who elects
                  a Period Certain Annuity Distribution shall have an annuity
                  purchased for him from an insurance company, the value of
                  which shall be determined by the Current Market Value of the
                  Participant's Employee Accounts and the vested percentage of
                  his Employer Accounts on the Valuation Date. A Period Certain
                  Annuity Distribution shall mean a monthly distribution payable
                  for a period certain elected by the Participant, which elected
                  period shall not exceed the lesser of (i) 240 months or (ii)
                  the Participant's life expectancy at the time such payments
                  are to commence; provided however, that such monthly payments
                  are payable to the Participant's

                                      xlix
<PAGE>   37

                  Beneficiary for the remainder of the elected period, if any,
                  upon the death of the Participant.

         (h)      Period Certain and Continuous Annuity Distribution. A
                  Participant who elects a Period Certain and Continuous Annuity
                  Distribution shall have an annuity purchased for him from an
                  insurance company, the value of which shall be determined by
                  the Current Market Value of the Participant's Employee
                  Accounts and the vested percentage of his Employer Accounts on
                  the Valuation Date. A Period Certain and Continuous Annuity
                  Distribution shall mean a monthly distribution payable for the
                  Participant's life; provided however, that such monthly
                  payments are payable to the Participant's Beneficiary for the
                  remainder of the elected period, if any, upon the death of the
                  Participant. The elected period shall not exceed the lesser of
                  240 months or the Participant's life expectancy at the time
                  such payments are to commence.

7.4      Lump Sum and Partial Distributions. A Lump Sum Distribution or a
         Partial Distribution may be elected by any Participant, Beneficiary, or
         alternate payee under a Qualified Domestic Relations Order, in the form
         of an All Cash Distribution, a Stock and Cash Distribution or an All
         Stock Distribution.

7.5      Installment Distributions. An Installment Distribution may be elected
         by any Participant who has reached age 55. All Ballard Heritage
         Employees, and eligible KCTC Heritage Employees who are determined to
         be Totally and Permanently Disabled on or before January 1, 1997 under
         the terms of the KCTC Salaried Plan, may elect an Installment
         Distribution regardless of age. The Beneficiary or former spouse or
         child who is designated as an alternate payee under a Qualified
         Domestic Relations Order of a Participant who is eligible to elect an
         Installment Distribution may elect to receive an Installment
         Distribution.

7.6      Annuity Forms of Distribution. A Minimum Return Joint & Survivor
         Annuity Distribution, Minimum Return Single-Life Annuity Distribution,
         Period Certain Annuity Distribution, or Period Certain and Continuous
         Annuity Distribution may be elected only by

                  (a)      a KCTC Heritage Employee who was employed by Scott
                           Paper Company on or before July 1, 1993, or

                  (b)      a Ballard Heritage Employee whose account is
                           transferred from the Ballard Savings Plan to this
                           Plan.

         The Beneficiary or alternate payee under a Qualified Domestic Relations
         Order of an eligible KCTC Heritage Employee or Ballard Heritage
         Employee may elect any Annuity Form Of Distribution other than a
         Minimum Return Joint & Survivor Annuity Distribution.

         If a Ballard Heritage Employee who is married as of the Annuity
         Starting Date elects a form of distribution under this Article VII
         other than a Minimum Return Joint & Survivor Annuity Distribution (50%)
         with his or her spouse as the survivor, or if such Ballard Heritage
         Employee designates a survivor other than his or her spouse, such
         election shall not be valid unless:

         (i)      the spouse of such Ballard Heritage Employee consents in
                  writing to such election or designation and acknowledges its
                  effect, and

                                       l
<PAGE>   38

         (ii)     such consent is witnessed by a notary public.

         No spousal consent described in the immediately preceding sentence need
         be furnished, however, with respect to any election or designation if
         the Committee is satisfied that there is no spouse, that the spouse
         cannot be located, or that such consent is unobtainable for any other
         reason provided under regulations of the Internal Revenue Service.

         The Committee shall furnish a Ballard Heritage Employee at least 30,
         but no more than 90, days prior to the Annuity Starting Date a written
         explanation of the terms and conditions of an Annuity Form of
         Distribution, and such Ballard Heritage Employee's election shall be
         effective no earlier than 30 days after such written explanation is
         provided hereunder; provided, however, that if the Ballard Heritage
         Employee affirmatively elects and has obtained appropriate spousal
         consent described above, the Ballard Heritage Employee may commence
         payment before the expiration of the 30 days, but not earlier than 7
         days, after such written explanation is provided. A Ballard Heritage
         Employee may revoke an election hereunder at any time on or before the
         Annuity Starting Date or, if later, the 7-day period after the written
         explanation is provided. Spousal consent described above shall remain
         valid for the 90-day period described herein.

7.7      Methods of Distribution.

         (a)      Distribution by Reason of Death. The Beneficiary of a
                  Participant to which subsection 7.1(b) applies shall be
                  entitled to receive a distribution of such Participant's
                  Accounts in the form elected by the Participant in the
                  appointment of his Beneficiary prior to October 1, 1996. If no
                  such election was made, or for a designation made on or after
                  October 1, 1996, such distribution shall be in any form
                  available pursuant to the terms of the Plan as elected by the
                  Beneficiary. If a Participant designates a Beneficiary other
                  than his spouse at the time of such designation, such
                  designation shall not be valid unless:

                  (i)      the spouse of such Participant consents in writing to
                           each such election or designation and acknowledges
                           its effect, and

                  (ii)     such consent is witnessed by a notary public.

                  No spousal consent described in the immediately preceding
                  sentence need be furnished, however, with respect to any
                  election or designation if the Committee is satisfied that
                  there is no spouse, that the spouse cannot be located, or that
                  such consent is unobtainable for any other reason provided
                  under regulations of the Internal Revenue Service.

         (b)      Distribution Upon Termination of Employment for Reasons Other
                  than Death. A Participant who is entitled to receive a
                  distribution of his Accounts due to the termination of his
                  employment for any reason specified in Section 7.1, except
                  death, may on Timely Notice elect to receive such distribution
                  in the form of an All Stock Distribution, a Stock and Cash
                  Distribution, an All Cash Distribution, an Installment
                  Distribution if eligible under Section 7.5, or an Annuity Form
                  of Distribution if eligible under Section 7.6, at any time.

                                       li
<PAGE>   39

         (c)      Small Distributions. Notwithstanding any provision of this
                  Section 7.7 to the contrary, if the aggregate value of a
                  Participant's Accounts does not exceed $5,000 as provided
                  under Code section 411(a)(11), the Committee shall direct the
                  distribution of the Accounts of any Participant as an All
                  Stock Distribution, a Stock and Cash Distribution or an All
                  Cash Distribution as elected by the Participant or his
                  Beneficiary. If no earlier election is made, Timely Notice of
                  a request for payment shall be deemed to have been given as of
                  the Valuation Date which is three months following notice of
                  the Participant's entitlement to a distribution under Section
                  7.1, and such distribution shall be in the form of an All Cash
                  Distribution.

         (d)      Additional Requirements for Annuity Forms of Distribution
                  Applicable to Certain KCTC Heritage Employees. Notwithstanding
                  any provision of this Section 7.7 to the contrary, none of the
                  forms of distribution described in Section 7.6 may be elected
                  if such form of distribution would result in the present value
                  of all benefits to be distributed to the Participant being
                  less than 50 percent of the present value of all benefits to
                  be distributed, (i) unless the designated Beneficiary is the
                  Participant's spouse, and (ii) if the Participant designates a
                  Beneficiary to receive survivor benefits in the event of the
                  Participant's death under any of the foregoing forms, such
                  designation must be made in accordance with the provisions of
                  subsection 7.7(a).

                  Notwithstanding any provision of the Plan to the contrary, if
                  a Participant elects an annuity form of distribution under
                  subsections 7.3(e), 7.3(f), 7.3(g) or 7.3(h), the Plan
                  Administrator shall furnish to the Participant, no less than
                  30 days and no more than 90 days prior to his Annuity Starting
                  Date (and consistent with such regulation as may be issued
                  under Code section 417(a)(3)(A)), a written explanation of the
                  terms and conditions of electing a Minimum Return Joint &
                  Survivor Annuity Distribution, Minimum Return Single-Life
                  Annuity Distribution, Period Certain Annuity Distribution or
                  Period Certain and Continuous Annuity Distribution with his
                  then spouse as the contingent annuitant, and the attempted
                  election by a married Participant of an annuity form of
                  distribution other than a 50% Minimum Return Joint and
                  Survivor Annuity Distribution ("Qualified Joint and Survivor
                  Benefit") with this then spouse as the sole contingent
                  annuitant, shall not be effective unless the consent of his
                  spouse is obtained in the same manner and to the same extent
                  as would be required under subsection 7.7(a). If the
                  Participant affirmatively elects to receive a distribution and
                  has obtained appropriate spousal consent pursuant to this
                  Section, the Participant's distribution may commence earlier
                  than 30 days after providing the Participant with such written
                  explanation. An election not to take a Qualified Joint and
                  Survivor Benefit, or a change in or revocation of any such
                  election, may be made at any time during an election period
                  beginning 90 days before the Participant's (i) Annuity
                  Starting Date or (ii) the end of the 7-day period after the
                  Participant is provided with such written explanation. The
                  Annuity Starting Date may be prior to the expiration of the
                  7-day period described above, but not earlier than the date
                  the Participant is provided with the written explanation.
                  Notwithstanding the foregoing, payment of the distribution may
                  commence as of the Annuity Starting Date, but shall not
                  actually be paid prior to the expiration of the 7-day period
                  described herein.

7.8      Miscellaneous.

                                      lii
<PAGE>   40

         (a)      For the purpose of the Plan, no termination of employment will
                  be deemed to have occurred in any instance where the person
                  involved remains in Service or is re-employed by an Employer
                  prior to receiving a distribution of his Accounts.

         (b)      In the event of the death, prior to his receipt of a
                  distribution, of a Participant who at the time of his death
                  was entitled to receive distribution under subsection 7.7(b)
                  and elected to receive such distribution in the form of an All
                  Stock Distribution, a Stock and Cash Distribution, an All Cash
                  Distribution, an Installment Distribution if eligible under
                  Section 7.5, an Annuity Form of Distribution if eligible under
                  Section 7.6, or was entitled to receive a distribution under
                  subsection 7.7(c), and if the Committee has notice of the
                  Participant's death prior to such distribution, then such
                  distribution shall be made to the Participant's Beneficiary by
                  the same method as it would have been made to the Participant
                  but for his death; provided that, if such Participant elected
                  to receive an Annuity Form of Distribution (other than a
                  Period Certain) with the spouse as the survivor, such spouse
                  shall receive a Single Life annuity, unless such spouse elects
                  the method elected by the Participant.

         (c)      Notwithstanding anything in this Article VII to the contrary,
                  the distribution provisions of this Article VII shall not
                  apply for Terminated Participants or Participants whose
                  qualified domestic relations order is pending approval by the
                  Plan Administrator.

7.9      Required Distributions.

         (a)      Notwithstanding any provision of the Plan to the contrary, a
                  Participant's or Terminated Participant's Accounts shall be
                  distributed commencing no later than the earlier of:

                           (i) With respect to a Participant or Terminated
                           Participant who attains age 70-1/2 on or after
                           January 1, 1999, other than a Participant or
                           Terminated Participant who is a five percent owner as
                           defined in Code Section 401(a)(9), April 1 of the
                           calendar year following the later of

                           (A)      the calendar year in which the Terminated
                                    Participant attains age 70-1/2, or

                           (B)      the calendar year in which the Participant
                                    retires, as defined under Code Section
                                    401(a)(9), or terminates employment.

                           With respect to a Participant or Terminated
                           Participant who attains age 70-1/2 prior to January
                           1, 1999, and with respect to a Participant or
                           Terminated Participant who is a five percent owner as
                           defined in Code Section 401(a)(9), April 1 of the
                           calendar year following the year in which the
                           Participant or Terminated Participant attains age
                           70-1/2, except to the extent that Section 1121(d)(4)
                           of the Tax Reform Act of 1986 provides otherwise;
                           provided that a Participant who is not a five percent
                           owner as defined in Code Section 401(a)(9), who is
                           still employed with an Employer on January 1, 1999,
                           and who is receiving or would commence receiving
                           distributions hereunder, shall have a one-time
                           opportunity to elect to cease or defer distributions
                           hereunder until not later than April 1 of the
                           calendar year in which the Participant retires, as
                           defined under Code

                                      liii
<PAGE>   41

                           Section 401(a)(9), or terminates employment. Failure
                           to elect shall be deemed to be an election to receive
                           distributions hereunder.

                  (ii)     unless the Participant elects a later date (which can
                           be no later than the date specified in (i) above),
                           the 60th day after the latest of:

                           (A)      the close of the Plan Year in which the
                                    Participant attains age 65,

                           (B)      the close of the Plan Year which includes
                                    the date 10 years after the date the
                                    Participant first commenced participating in
                                    the Plan, or

                           (C)      the close of the Plan Year in which the
                                    Participant terminated employment with his
                                    Employer.

          (b)     The Accounts of a Participant or Terminated Participant shall
                  be distributed to a Beneficiary who is the surviving spouse,
                  commencing on or before the later of the date on which the
                  Participant or Terminated Participant would have attained age
                  70-1/2 or one year after the date of the Participant's or
                  Terminated Participant's death, or (ii) to a Beneficiary who
                  is not the surviving spouse, within five years of the
                  Participant's or Terminated Participant's death, or, in each
                  case, such other period specified under the requirements of
                  Code section 401(a)(9) and the regulations thereunder.

         (c)      All distributions from the Plan shall be made in accordance
                  with the requirements of Code section 401(a)(9) and the
                  regulations thereunder, including the minimum distribution
                  incidental benefit requirements.

         (d)      The Committee may, in its discretion, establish procedures for
                  making such required distributions consistent with the
                  provisions hereof.

7.10     Unclaimed Benefits. During the time when a benefit hereunder is payable
         to any Terminated Participant or, if deceased, his Beneficiary, the
         Committee shall mail by registered or certified mail to such
         Participant or Beneficiary, at his last known address, a written demand
         for his then address, or for satisfactory evidence of his continued
         life, or both. If such information is not furnished to the Committee
         within 12 months from the mailing of such demand, then the Committee
         may, under rules established by the Committee, in its sole discretion,
         declare such benefit, or any unpaid portion thereof, suspended, with
         the result that such unclaimed benefit shall be treated as a forfeiture
         for the Plan Year within which such 12-month period ends, but shall be
         subject to restoration through an Employer Contribution if the lost
         Participant or such Beneficiary later files a claim for such benefit.

7.11     Brown-Bridge Benefit. Notwithstanding any other provision of the Plan,
         if a Participant's employment with an Employer is terminated, he shall
         be fully vested in his Accounts and shall be entitled to receive a
         distribution of the entire amount then in his Accounts in accordance
         with Section 7.7. if such Participant meets all of the following
         conditions:

         (a)      immediately prior to his termination of employment he must
                  have been an Employee of the Brown-Bridge Mill; and

                                      liv
<PAGE>   42

         (b)      such termination of employment must be involuntary on the part
                  of the Participant, be caused solely by the elimination of his
                  job function with the Corporation due to the sale of assets of
                  the Brown-Bridge Mill under the Assets Purchase Agreement
                  entered into between the Corporation and Brown-Bridge
                  Acquisition Corp. dated June 15, 1994, and such termination of
                  employment must occur on the Closing Date of such Assets
                  Purchase Agreement.

7.12     Karolton Envelope Benefit. Notwithstanding any other provision of the
         Plan, if a Participant's employment with an Employer is terminated, he
         shall be fully vested in his Accounts and shall be entitled to receive
         a distribution of the entire amount then in his Accounts in accordance
         with Section 7.7. if such Participant meets all of the following
         conditions:

         (a)      immediately prior to his termination of employment he must
                  have been an Employee of Karolton Envelope; and

         (b)      such termination of employment must be involuntary on the part
                  of the Participant, be caused solely by the elimination of his
                  job function with the Corporation due to the sale of assets of
                  Karolton Envelope under the Assets Purchase Agreement entered
                  into between the Corporation and KECA Corporation dated
                  October 29, 1993, and such termination of employment must
                  occur on the Closing Date of such Assets Purchase Agreement.

7.13     Spenco Medical Corporation Benefit. Notwithstanding any other provision
         of the Plan, a Participant shall be fully vested in his Accounts and
         shall be entitled to receive a distribution of the entire amount then
         in his Accounts in accordance with Section 7.7. if such Participant is
         employed by Spenco Medical Corporation on the Closing Date of the sale
         of Spenco Medical Corporation under the Agreement and Plan of Merger
         entered into between the Corporation and Spenco Medical Corporation,
         SBS Enterprises, Inc., Spenco Acquisition Corporation and Steven B.
         Smith, dated March 4, 1994. For purposes of this Section, a Participant
         described in the preceding sentence shall be treated under Section 7.7
         as if he terminated employment with an Employer for a reason other than
         death on the Closing Date; provided, however, that a distribution
         pursuant to this Section shall be delayed to the extent required by the
         Internal Revenue Service under section 401(k)(2)(B)(i)(I) of the Code.

7.14     Form of ESOP Benefit. Notwithstanding anything in the Plan to the
         contrary but subject to the provisions of Sections 7.7 (c) and 7.9, the
         form of benefit payment available to a Participant, unless the
         Participant elects otherwise, shall be substantially equal periodic
         payments (not less frequently than annually) over a period not longer
         than the greater of (i) five (5) years, or (ii) in the case of a
         Participant whose vested portion of his Accounts exceeds $500,000 (as
         adjusted by legislation or for cost-of-living increases), five (5)
         years plus one (1) additional year (not exceeding five (5) additional
         years) for each $100,000 (or fraction of $100,000) (as adjusted by
         legislation or for cost-of-living increases) by which the vested
         portion of his Accounts exceeds $500,000 (as adjusted by legislation or
         for cost-of-living increases).

7.15     ESOP Dividend Distributions. Dividends paid to the Trust that had
         dividend record dates during a Plan Year on Corporation Stock allocated
         to a Participant's Accounts shall be paid to that Participant, or if
         applicable, to his Beneficiary, in the first quarter of the Plan Year
         following the Plan Year in which the dividends' record dates occurred;
         provided, however that the amount of such dividend payment shall not be
         less than the minimum

                                       lv
<PAGE>   43

         amount established by the Committee in its sole discretion.
         Notwithstanding the preceding sentence, in the last quarter of each
         Plan Year, a Participant who is employed by an Employer or an affiliate
         of an Employer on the last day of that Plan Year may elect to have 25%,
         50%, 75%, or all of such dividend payments remain in the Trust in lieu
         of a distribution under this Section; provided, however, that in the
         last quarter of 1996, a Participant who, at the time of election under
         this Section, had terminated employment as described in Section 7.23
         but who is employed by American Tissue Mills of Neenah, L.L.C. on the
         last day of the Plan Year, may make a one-time election to have 25%,
         50%, 75%, or all of such dividend payments allocated to the
         Participant's Accounts in 1996 remain in the Trust in lieu of
         distribution under this Section. Dividends retained in the Trust under
         this Section shall be invested as directed by the Participant under
         Section 3.8. Notwithstanding both the dollar amount (if any) of any
         election under this Section and the preceding provisions of this
         Section, the amount actually paid under this Section shall not exceed
         the lesser of (i) the electing Participant's share of the dividends
         subject to such election and (ii) his balance in his Accounts at the
         time of payment. A dividend payment shall not be made to a Terminated
         Participant or Participant whose qualified domestic relations order is
         pending approval by the Plan Administrator.

7.16     Memphis Mill Benefit. Notwithstanding any other provision of the Plan,
         if a Participant's employment with an Employer is terminated, he shall
         be fully vested in his Accounts and shall be entitled to receive a
         distribution of the entire amount then in his Accounts in accordance
         with Section 7.7. if such Participant meets all of the following
         conditions:

         (a)      immediately prior to his termination of employment he must
                  have been an Employee of the Memphis Mill; and

         (b)      such termination of employment must be involuntary on the part
                  of the Participant and be caused solely by the elimination of
                  his job function with the Corporation due to the sale of
                  assets of the Memphis Mill under the Assets Purchase Agreement
                  entered into between the Corporation and Shepherd Tissue,
                  Inc., and such termination of employment must occur on or
                  after the Closing Date of such Assets Purchase Agreement.

7.17     Kimberly-Clark Integrated Services Corporation Benefit. Notwithstanding
         any other provision of the Plan, if a Participant's employment with an
         Employer is terminated, he shall be fully vested in his Accounts and
         shall be entitled to receive a distribution of the entire amount then
         in his Accounts in accordance with Section 7.7. if such Participant
         meets all of the following conditions:

         (a)      immediately prior to his termination of employment he must
                  have been an Employee of Kimberly-Clark Integrated Services
                  Corporation; and

         (b)      such termination of employment must be involuntary on the part
                  of the Participant, be caused solely by the elimination of his
                  job function with Kimberly-Clark Integrated Services
                  Corporation due to the cessation of operations of
                  Kimberly-Clark Integrated Services Corporation on or about
                  June 30, 1995, and such termination of employment must occur
                  on or after the date of such cessation of operations.

7.18     Direct Rollovers. This Section applies to distributions and withdrawals
         made under Articles VII and VIII on or after January 1, 1993.
         Notwithstanding any provision of the Plan to the contrary that would
         otherwise limit a distributee's election under this Section,

                                      lvi
<PAGE>   44

         a distributee may elect, at the time and in the manner prescribed by
         the Committee, to have any portion of an eligible rollover distribution
         paid directly to a single eligible retirement plan specified by the
         distributee in a direct rollover.

         For purposes of this Section, the following definitions shall apply:

         (a)      An "eligible rollover distribution" is any distribution of all
                  or any portion of the balance to the credit of the
                  distributee, except that an eligible rollover distribution
                  does not include: any distribution that is one of a series of
                  substantially equal periodic payments (not less frequently
                  than annually) made for the life (or life expectancy) of the
                  distributee and the distributee's designated beneficiary, or
                  for a specified period of ten years of more; any distribution
                  to the extent that such distribution is required under Code
                  section 401(a)(9); the portion of any distribution that is not
                  includable in gross income (determined without regard to the
                  exclusion for net unrealized appreciation with respect to
                  employer securities); and any hardship distribution described
                  in Section 401(k)(2)(B)(i)(IV) of the Code.

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

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

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

         This Section shall not be construed to alter any of the requirements
         for distributions or withdrawals under the remaining provisions of this
         Article VII and the provisions of Article VIII.

7.19     Specialty Products Benefit. Notwithstanding any other provision of the
         Plan, if a Participant's employment with an Employer is terminated, he
         shall be fully vested in his Accounts and shall be entitled to receive
         a distribution of the entire amount then in his Accounts in accordance
         with Section 7.7 if such Participant meets all of the following
         conditions:

         (a)      immediately prior to his termination of employment, he must
                  have been an Employee whose employment duties are principally
                  related to the Specialty Products business of the Corporation;

         (b)      such termination of employment must be involuntary on the part
                  of the Participant, be caused solely by the elimination of his
                  job function with the Corporation due to the spinoff of SMI on
                  or about the fourth quarter of 1995, and such termination of
                  employment must occur on or after the SMI Distribution Date;
                  and

                                      lvii
<PAGE>   45

         (c)      immediately following his termination of employment, he must
                  have become employed by SMI.

7.20     Midwest Express Airlines Benefit. Notwithstanding any other provision
         of the Plan, a Participant shall be fully vested in his Accounts as of
         the date on which he ceases to be an Eligible Employee under the Plan,
         if such Participant meets all of the following conditions:

         (a)      immediately prior to the date of the closing (the "Closing
                  Date") of the sale of a majority of the stock of Midwest
                  Express Airlines, Inc. by the Corporation through K-C Nevada,
                  Inc. in an initial public offering (the "Midwest Express
                  Sale"), he must have been an Employee employed by an Employer;
                  and

         (b)      on or after the Closing Date but prior to December 31, 1995,
                  he must (i) have ceased to be an Eligible Employee solely on
                  account of the Midwest Express Sale and (ii) be employed by
                  Midwest Express Airlines, Inc. immediately after he ceases to
                  be an Eligible Employee hereunder.

         A Participant who ceases to be an Eligible Employee under this Section
         shall not be considered to have terminated employment for purposes of
         the Plan; provided further that Sections 3.2 and 3.4 of the Plan shall
         not apply to such Participant effective as of the date on which the
         Participant ceases to be an Eligible Employee under this Section.

         Unless distributed or withdrawn prior to July 31, 1996, the Accounts of
         Participants who cease to be Eligible Employees under this Section
         shall be transferred by the Trustee, for the benefit of such
         Participants, to the trustee of the Midwest Express Airlines Savings
         and Investment Plan. Such Accounts as of July 31, 1996 shall be valued
         as of the date of transfer and delivered as soon as administratively
         feasible thereafter, except that those Accounts invested in the K-C
         Stock Fund and the SMI Stock Fund as of July 31, 1996 shall be
         transferred in kind. Such transfer shall be made in accordance with
         Article XIII of the Plan.

7.21     K-C Aviation/JPI Benefit. Notwithstanding any other provision of the
         Plan, if a Participant's employment with an Employer is terminated, he
         shall be fully vested in his Accounts and shall be entitled to receive
         a distribution of the entire amount then in his Accounts in accordance
         with Section 7.7. if such Participant meets all of the following
         conditions:

         (a)      immediately prior to his termination of employment he must
                  have been an Employee of K-C Aviation Inc. or Jet
                  Professionals, Inc.; and

         (b)      such termination of employment must be involuntary on the part
                  of the Participant, be caused solely by the elimination of his
                  job function with K-C Aviation Inc. or Jet Professionals, Inc.
                  due to the sale of assets of the aircraft chartering and
                  personnel placement businesses under the Assets Sale Agreement
                  entered into between K-C Aviation Inc. and Jet Aviation
                  Business Jets, Inc. dated July 18, 1996, and such termination
                  of employment must occur on the Closing Date of such Assets
                  Sale Agreement.

7.22     Limitations on Distribution of Before-Tax Contributions.
         Notwithstanding any other provision of the Plan to the contrary,
         Before-Tax Contributions and earnings thereon

                                     lviii
<PAGE>   46

         (except for the withdrawal of earnings provided under subsection
         8.3(b)) shall not be distributed before one of the following events:

         (a)      the Eligible Employee's retirement, death, disability, or
                  separation from service, as provided under Code section 401(k)
                  and applicable regulations;

         (b)      the Eligible Employee's attainment of age 59 1/2 or the
                  Eligible Employee's hardship, as provided under Code section
                  401(k) and applicable regulations;

         (c)      the termination of the Plan without the establishment or
                  maintenance of a successor plan, as provided under Code
                  section 401(k) and applicable regulations;

         (d)      the date of the sale or other disposition by an Employer of
                  substantially all the assets used in a trade or business to an
                  unrelated corporation, but only with respect to an Eligible
                  Employee who continues employment with the acquiring
                  corporation, provided that the Employer continues to maintain
                  the plan after the sale or disposition and the acquiring
                  corporation does not maintain the plan after the sale or
                  disposition, in accordance with Code section 401(k) and
                  applicable regulations; or

         (e)      the date of the sale or other disposition by an Employer of
                  its interest in a subsidiary to an unrelated entity or
                  individual, but only with respect to an Eligible Employee who
                  continues employment with the acquiring corporation, provided
                  that the Employer continues to maintain the plan after the
                  sale or disposition and the acquiring corporation does not
                  maintain the plan after the sale or disposition, in accordance
                  with Code section 401(k) and applicable regulations.

7.23     Lakeview Benefit. Notwithstanding any other provision of the Plan, if a
         Participant's employment with an Employer is terminated, he shall be
         fully vested in his Accounts and shall be entitled to receive a
         distribution of the entire amount then in his Accounts in accordance
         with Section 7.7 if such Participant meets all of the following
         conditions:

         (a)      immediately prior to his termination of employment he must
                  have been an Employee at the Lakeview Mill, Lakeview Diaper
                  Plant, Lakeview Feminine Care Plant, Lakeview Distribution
                  Center, or Badger-Globe Mill; and

         (b)      such termination of employment must be involuntary on the part
                  of the Participant and be caused solely by the elimination of
                  his job function with the Corporation due to the sale of the
                  assets of the tissue manufacturing facilities of the Lakeview
                  Mill under the Assets Purchase Agreement entered into between
                  the Corporation and American Tissue Mills of Neenah L.L.C.
                  dated as of August 8, 1996, and such termination of employment
                  must occur on or within 30 days after the Closing Date of such
                  Assets Purchase Agreement.

7.24     Coosa Benefit. Notwithstanding any other provision of the Plan, if a
         Participant's employment with an Employer is terminated, he shall be
         fully vested in his Accounts and shall be entitled to receive a
         distribution of the entire amount then in his Accounts in accordance
         with Section 7.7 if such Participant meets all of the following
         conditions:

                                      lix
<PAGE>   47

         (a)      immediately prior to his termination of employment he must
                  have been (i) an Employee of Coosa Pines Golf Club Inc., or
                  (ii) an Employee of an Employer located at Coosa Pines,
                  Alabama; and

         (b)      such termination of employment must be involuntary on the part
                  of the Participant and be caused solely by the elimination of
                  his job function from his Employer due to the sale of the
                  assets of the Coosa pulp and newsprint mill facility and
                  woodlands under the Assets Purchase Agreement entered into
                  between the Corporation and Alliance Forest Products, Inc.
                  dated as of February 14, 1997, and such termination of
                  employment must occur on or within 30 days after the Closing
                  Date of such Assets Purchase Agreement.

7.25     KIMPAK(R) Benefit. Notwithstanding any other provision of the Plan, if
         a Participant's employment with an Employer is terminated, he shall be
         fully vested in his Accounts and shall be entitled to receive a
         distribution of the entire amount then in his Accounts in accordance
         with Section 7.7 if such Participant meets all of the following
         conditions:

         (a)      immediately prior to his termination of employment he must
                  have been an Employee at the Badger-Globe Mill; and

         (b)      such termination of employment must be involuntary on the part
                  of the Participant and be caused solely by the elimination of
                  his job function with the Corporation due to the sale of
                  assets of the KIMPAK(R) product line under the Assets Purchase
                  Agreement entered into between the Corporation and National
                  Packaging Services Corporation dated as of September 30, 1996
                  and such termination of employment must occur on or within one
                  year after the Closing Date of such Assets Purchase Agreement.

7.26     K-C Aviation Benefit. Notwithstanding any other provision of the Plan,
         a Participant shall be fully vested in his Accounts as of the date on
         which he ceases to be an Eligible Employee under the Plan, if such
         Participant meets all of the following conditions:

         (a)      immediately prior to the Closing Date, as defined in the
                  Agreement of Purchase and Sale dated as of July 23, 1998 by
                  and between the Corporation and Gulfstream Aerospace
                  Corporation (the "Agreement"), he must have been an Employee
                  employed by the Corporation or K-C Aviation Inc.; and

         (b)      as of the Closing Date, as defined in the Agreement, he must
                  have ceased to be an Eligible Employee solely on account of
                  the sale of the stock of K-C Aviation Inc. pursuant to the
                  Agreement, and he must either (i) be employed by the Buyer, as
                  defined in the Agreement, immediately after he ceases to be an
                  Eligible Employee hereunder, or (ii) have been on a long-term
                  disability leave of absence from K-C Aviation Inc. as of the
                  Closing Date, as defined in the Agreement.

7.27     Southeast Timberlands Benefit. Notwithstanding any other provision of
         the Plan, if a Participant's employment with an Employer is terminated,
         he shall be fully vested in his Accounts and shall be entitled to
         receive a distribution of the entire amount then in his Accounts in
         accordance with Section 7.7 if such Participant meets all of the
         following conditions:

         (a)      immediately prior to his termination of employment he must
                  have been (i) an Employee employed with respect to the
                  Southeast Timberlands Operations; and

                                       lx
<PAGE>   48

         (b)      such termination of employment must be involuntary on the part
                  of the Participant and be caused solely by the elimination of
                  his job function from his Employer due to the closure or sale
                  of all or a portion of the assets of the Southeast Timberlands
                  Operations, and such termination of employment must occur on
                  or after May 1, 1999.

7.28     Mobile Pulp Mill Benefit. Notwithstanding any other provision of the
         Plan, if a Participant's employment with an Employer is terminated, he
         shall be fully vested in his Accounts and shall be entitled to receive
         a distribution of the entire amount then in his Accounts in accordance
         with Section 7.7 if such Participant meets all of the following
         conditions:

         (a)      immediately prior to his termination of employment he must
                  have been (i) an Employee employed at the Mobile Pulp Mill;
                  and

         (b)      such termination of employment must be involuntary on the part
                  of the Participant and be caused solely by the elimination of
                  his job function from his Employer due to the shutdown of the
                  Mobile Pulp Mill, and such termination of employment must
                  occur during August or September 1999.

7.29     Tecnol ESOP Benefit. The vested account balance ("Tecnol Account") of
         the remaining participant (the "Tecnol Participant") in the Tecnol
         Medical Products, Inc. Employee Stock Ownership Plan (the "Tecnol
         ESOP") shall be transferred to this Plan and held in a rollover account
         like the KCTC Heritage Rollover Account. Such Tecnol Account shall be
         invested in the K-C Stock Fund upon transfer, subject to reallocation
         by the Tecnol Participant pursuant to Section 3.8 hereof. The Tecnol
         Participant shall participate in the Plan hereunder only to the extent
         of his Tecnol Account, and shall not be eligible to make Before-Tax
         Contributions or After-Tax Contributions under Article III or to
         receive Company Matching Contributions under Article IV by reason
         thereof. The Tecnol Participant may request a distribution of his
         Tecnol Account in the Plan at any time in accordance with the
         applicable provisions of this Article VII.

7.30     Durafab-Cleburne Benefit. Notwithstanding any other provision of the
         Plan, if a Participant's employment with an Employer is terminated, he
         shall be fully vested in his Accounts and shall be entitled to receive
         a distribution of the entire amount then in his Accounts in accordance
         with Section 7.7 if such Participant meets all of the following
         conditions:

         (a)      immediately prior to his termination of employment he must
                  have been (i) an Employee employed at the K-C Apparel Plant of
                  Durafab, Inc. in Cleburne, Texas; and

         (b)      such termination of employment must be involuntary on the part
                  of the Participant and be caused solely by the elimination of
                  his job function from his Employer due to the closure of the
                  K-C Apparel Plant of Durafab, Inc. in Cleburne, Texas, and
                  such termination of employment must occur on or after February
                  1, 2000.

7.31     Tecnol 401(k) Plan Benefit. The vested account balance ("Tecnol
         Account") of each remaining participant (the "Tecnol Participant") in
         the Tecnol Medical Products, Inc. Employee 401(k) Capital Accumulation
         Plan (the "Tecnol 401(k) Plan") shall be transferred to this Plan. Such
         amount representing pre-tax 401(k) contributions shall be

                                      lxi
<PAGE>   49

         transferred to and held in the Before-Tax Contribution Section of the
         Employee Account, and all other amounts shall be transferred to and
         held in a rollover account like the KCTC Heritage Rollover Account.

         Such Tecnol Account shall be invested according to the Tecnol
         Participant's existing elections under the Tecnol 401(k) Plan in the
         Money Market Fund (for amounts transferred from the Fidelity Retirement
         Government Money Market Portfolio in the Tecnol 401(k) Plan), the
         Medium-Term Managed Fund (for amounts transferred from the Fidelity
         Asset Manager Portfolio and Fidelity Puritan Fund in the Tecnol 401(k)
         Plan), the Stock Index Fund (for amounts transferred from the Fidelity
         Contrafund in the Tecnol 401(k) Plan), and the International Index Fund
         (for amounts transferred from the Fidelity Overseas Fund in the Tecnol
         401(k) Plan), subject to reallocation by the Tecnol Participant
         pursuant to Section 3.8 hereof.

         The Tecnol Participant who is not otherwise eligible under the Plan
         shall participate in the Plan hereunder only to the extent of his
         Tecnol Account, and shall not be eligible to make Before-Tax
         Contributions or After-Tax Contributions under Article III or to
         receive Company Matching Contributions under Article IV by reason of
         such transfer. The Tecnol Participant may request a distribution of his
         Tecnol Account in the Plan in accordance with the applicable provisions
         of this Article VII and Article VIII, subject to the same consent
         requirements applicable to a Ballard Heritage Employee.

7.32     Tecnol ESOP Benefit. The vested account balance ("Tecnol Account") of
         the remaining two participants (the "Tecnol Participant") in the Tecnol
         Medical Products, Inc. Employee Stock Ownership Plan (the "Tecnol
         ESOP") shall be transferred to this Plan and held in a rollover
         account. Such Tecnol Accounts shall be invested in the Money Market
         Fund upon transfer, subject to reallocation by the Tecnol Participant
         pursuant to Section 3.8 hereof. The Tecnol Participants shall
         participate in the Plan hereunder only to the extent of their
         respective Tecnol Accounts, and shall not be eligible to make
         Before-Tax Contributions or After-Tax Contributions under Article III
         or to receive Company Matching Contributions under Article IV by reason
         thereof. The Tecnol Participants may request a distribution of their
         Tecnol Accounts in the Plan at any time in accordance with the
         applicable provisions of this Article VII.

                                      lxii
<PAGE>   50

                                  ARTICLE VIII

                              WITHDRAWALS AND LOANS

8.1      Regular Withdrawals. A Participant, subject to the conditions stated
         below, may make the following Regular Withdrawals:

         (a)      Such amounts as the Participant may elect from the
                  Unrestricted After-Tax Contribution Section of his Accounts;

         (b)      Such amounts as the Participant may elect from the Basic
                  After-Tax Contribution Section of his Accounts;

         (c)      Such amounts as a Participant may elect from his Employer
                  Accounts, provided such amounts are vested and such amounts
                  (disregarding earnings and losses) have been in the Plan for
                  at least 24 months; and

         (d)      Such amounts as a KCTC Heritage Employee who has at least 5
                  Years of Service may elect from his KCTC Heritage Rollover
                  Account. Notwithstanding the foregoing, a KCTC Heritage
                  Employee who has less than 5 Years of Service may withdraw
                  Matching Employer Contributions (as such term is defined in
                  the KCTC Salaried Plan) from his KCTC Heritage Rollover
                  Account provided such amounts are vested and such amounts
                  (disregarding earnings and losses) have been in the Plan
                  (including periods under the KCTC Salaried Plan) for at least
                  24 months. A KCTC Heritage Employee who has less than 5 Years
                  of Service may withdraw Retirement Contributions (as such term
                  is defined in the KCTC Salaried Plan) provided such amounts
                  (disregarding earnings and losses) have been in the Plan
                  (excluding periods under the KCTC Salaried Plan) for at least
                  24 months. A KCTC Heritage Employee who has attained age
                  59 1/2 may withdraw any funds from his KCTC Heritage Rollover
                  Account provided such amounts are vested.

         (e)      Such amounts as a Ballard Heritage Employee who has at least 5
                  Years of Service may elect from his Ballard Heritage Rollover
                  Account. Notwithstanding the foregoing, a Ballard Heritage
                  Employee who has less than 5 Years of Service may withdraw
                  Matching Contributions (as such term is defined in the Ballard
                  Savings Plan) from his Ballard Heritage Rollover Account
                  provided such amounts are vested and such amounts
                  (disregarding earnings and losses) have been in the Plan
                  (excluding periods under the Ballard Savings Plan) for at
                  least 24 months. A Ballard Heritage Employee who has less than
                  5 Years of Service may withdraw Discretionary Contributions
                  (as such term is defined in the Ballard Savings Plan) provided
                  such amounts (disregarding earnings and losses) have been in
                  the Plan (including periods under the Ballard Savings Plan)
                  for at least 24 months. A Ballard Heritage Employee who has
                  attained age 59 1/2 may withdraw any funds from his Ballard
                  Heritage Rollover Account provided such amounts are vested.

         (f)      Such amounts as a Safeskin Transferee who has at least 5 Years
                  of Service may elect from his Safeskin Transferee Rollover
                  Account. Notwithstanding the foregoing, a Safeskin Transferee
                  who has less than 5 Years of Service may withdraw Matching
                  Contributions (as such term is defined in the Ballard Savings

                                     lxiii
<PAGE>   51

                  Plan) from his Safeskin Transferee Rollover Account provided
                  such amounts are vested and such amounts (disregarding
                  earnings and losses) have been in the Plan (excluding periods
                  under the Safeskin 401(k) Plan) for at least 24 months. A
                  Safeskin Transferee who has less than 5 Years of Service may
                  withdraw Elective Deferrals (as such term is defined in the
                  Ballard Savings Plan) provided such amounts (disregarding
                  earnings and losses) have been in the Plan (including periods
                  under the Safeskin 401(k) Plan) for at least 24 months.
                  Rollover and Transfer Contributions (as such term is defined
                  in the Safeskin 401(k) Plan) are not subject to the
                  restrictions set forth herein. A Safeskin Transferee who has
                  attained age 59 1/2 may withdraw any funds from his Safeskin
                  Transferee Rollover Account provided such amounts are vested.

         Any Participant not otherwise described above shall not be eligible to
         make withdrawals from his Employer Accounts.

         In the event of a Regular Withdrawal from the Basic After-Tax
         Contribution section of a Participant's Accounts pursuant to subsection
         8.1(b), such Participant's Contributions under the Plan shall be
         suspended for a period of 12 months following such withdrawal.

         The spousal consent requirements applicable to Ballard Heritage
         Employees under Section 7.6 shall apply to withdrawals under this
         Section.

8.2      Over Age 59 1/2 Withdrawals. A Participant who has attained age 59 1/2
         may withdraw such amounts as he may elect from the Before-Tax
         Contributions Sections of his Accounts.

         The spousal consent requirements applicable to Ballard Heritage
         Employees under Section 7.6 shall apply to withdrawals under this
         Section.

8.3      Hardship Withdrawals.

         (a)      Upon the application of any Participant who has not attained
                  age 59 1/2, the Committee, in accordance with its uniform
                  nondiscriminatory rules, may permit such Participant to
                  withdraw all or a portion (subject to subsection (b) below) of
                  the amount in the Before-Tax Contributions Section of his
                  Accounts if the Participant is able to demonstrate financial
                  hardship and provided, however, that all amounts available as
                  Regular Withdrawals described in Section 8.1 shall first be
                  withdrawn. A Participant shall be considered to have
                  demonstrated financial hardship only if the Participant
                  demonstrates that the purpose of the withdrawal is to meet his
                  immediate and heavy financial needs, the amount of the
                  withdrawal does not exceed such financial needs, and the
                  amount of the withdrawal is not reasonably available from
                  other resources. A Participant making application under this
                  Section 8.3 shall have the burden of demonstrating a financial
                  hardship to the Committee, and the Committee shall not permit
                  withdrawal under this subsection without first receiving such
                  proof.

                  The Participant will be deemed to have demonstrated that the
                  purpose of the withdrawal is to meet his immediate and heavy
                  financial needs only if he represents that the distribution is
                  on account of:

                                      lxiv
<PAGE>   52

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

                  (ii)     the purchase (excluding mortgage payments) of a
                           principal residence for the Participant;

                  (iii)    the payment of tuition, related educational fees, and
                           room and board expenses for the next 12 months of
                           post-secondary education for the Participant, his
                           spouse, children, or dependents;

                  (iv)     payments necessary to prevent eviction from or
                           foreclosure on the Participant's principal residence
                           or the mortgage on that residence; or

                  (v)      any other condition determined by the Committee
                           pursuant to its uniform Committee Rules to represent
                           a financial hardship.

                  Moreover, the Participant will be deemed to have demonstrated
                  that the amount of the withdrawal is unavailable from his
                  other resources and in an amount not in excess of that
                  necessary to satisfy his immediate and heavy financial needs
                  only if each of the following requirements is satisfied:

                  (i)      the Participant represents that the distribution is
                           not in excess of the amount of his immediate and
                           heavy financial needs, except that the withdrawal may
                           include any amounts necessary to pay any federal,
                           state, or local income taxes or penalties reasonably
                           anticipated to result from the withdrawal; and

                  (ii)     the Participant has obtained all distributions, other
                           than hardship distributions, and all nontaxable loans
                           currently available to him under all other qualified
                           and nonqualified deferred compensation plans
                           currently maintained by an Employer.

                  In the event of any withdrawal by a Participant pursuant to
                  this Section 8.3, (i) such Participant's Contributions under
                  this Plan and his contributions under all other qualified and
                  nonqualified deferred compensation plans maintained by an
                  Employer shall be suspended for a period of 12 months
                  following such withdrawal, and (ii) for the calendar year
                  following the calendar year in which such withdrawal occurred,
                  the amount of the Participant's Before-Tax Contributions may
                  not exceed the limitation on the amount of Before-Tax
                  Contributions which may be contributed, as set forth in
                  subsection 3.5(a), less the amount of any Before-Tax
                  Contributions made by said Participant during the calendar
                  year of the withdrawal.

         (b)      No hardship withdrawal shall exceed the balance then credited
                  to the Participant's Before-Tax Contributions Section of his
                  Accounts (or, if less, the Current Market Value thereof) nor
                  shall any withdrawal include earnings on such Contributions
                  after December 31, 1988.

         The spousal consent requirements applicable to Ballard Heritage
         Employees under Section 7.6 shall apply to withdrawals under this
         Section.

                                      lxv
<PAGE>   53

8.4      Distribution of Withdrawals.

         (a)      Regular Withdrawals and Over Age 59-1/2 Withdrawals. Regular
                  Withdrawals and Over Age 59-1/2 Withdrawals shall be permitted
                  as of any Valuation Date following Timely Notice. A
                  distribution of a withdrawal shall be made as soon as
                  practicable after the withdrawal request or such other time as
                  specified by Committee rule. A Participant who is entitled to
                  receive a Regular Withdrawal or an Over Age 59-1/2 Withdrawal
                  may on Timely Notice elect to receive such distribution in the
                  form of an All Stock Distribution, a Stock and Cash
                  Distribution or an All Cash Distribution.

         (b)      Hardship Withdrawals. If a Participant's application for a
                  hardship withdrawal is approved, the effective date for such
                  withdrawal shall be the Valuation Date coincident with or
                  immediately following such approval. If the Participant's
                  application for a hardship withdrawal is denied and, on
                  appeal, subsequently approved, the effective date for such
                  withdrawal shall be the Valuation Date coincident with or
                  immediately following the date of the Committee's decision on
                  the appeal. Hardship withdrawals will be made only in the form
                  of an All Cash Distribution.

8.5      Miscellaneous.

         (a)      Notwithstanding anything in this Article VIII to the contrary,
                  the withdrawal and loan provisions of this Article VIII shall
                  not apply for Terminated Participants or Participants whose
                  qualified domestic relations order is pending approval by the
                  Plan Administrator.

         (b)      In the event of the death of a Participant on or after the
                  Valuation Date with respect to which the Participant has
                  elected to make a withdrawal, but prior to the actual
                  distribution thereof, and if the Committee has notice of the
                  Participant's death prior to such distribution, then such
                  distribution shall be made to the Participant's Beneficiary by
                  the same method as it would have been made to the Participant
                  but for his death.

8.6      Waiver of Right to Withdraw. A Participant who is on an assignment
         outside of the United States may waive his right to make a withdrawal
         pursuant to this Article VIII. Any such waiver shall be in writing, in
         a form acceptable to the Committee and signed by the Participant, and
         shall be irrevocable. The duration of a waiver hereunder may be for a
         stated period or until the occurrence of a specified event, at the
         election of the Participant, but in absence of such an election the
         waiver shall expire upon termination or completion of the Participant's
         assignment outside the United States.

8.7      Participant Loans. For purposes of this Section 8.7, "Participant"
         shall mean a Participant who is a "party in interest" as defined in
         ERISA section 3(14). Loans shall be available to Participants on a
         reasonably equivalent basis on the following conditions:

         (a)      A Participant may, on Timely Notice, request a loan from the
                  Plan under the following terms and conditions, provided that
                  such Participant may not request a loan from the Plan if the
                  Participant has an outstanding loan (whether such outstanding
                  loan has become a deemed distribution under Section 72(p) of
                  the Code) from the Plan at the time of such request.

                                      lxvi
<PAGE>   54

         (b)      Loan amounts shall be at least $1,000 and shall not exceed the
                  lesser of (i) 50% of Before-Tax Contributions Section of the
                  Participant's Account as of the date of the loan request, less
                  any amounts payable for pending withdrawal or (ii) $50,000
                  (reduced by the highest outstanding loan balance under the
                  Plan during the one-year period ending on the day before the
                  date on which the loan is made). Loans under any other
                  qualified plan sponsored by the Employer or an Affiliated
                  Employer shall be aggregated with loans under the Plan in
                  determining whether or not the limitation stated herein has
                  been exceeded. Loan amounts shall be taken from the Before-Tax
                  Contributions Section of the Participant's Accounts.

         (c)      Loans shall be classified as either a General Purpose Loan or
                  a Primary Residence Loan.

                  (i)      A General Purpose Loan may be requested on Timely
                           Notice for any purpose other than for the purchase of
                           a primary residence for the Participant. General
                           Purchase Loans shall be for a term not to exceed 4
                           years from the date of the loan.

                  (ii)     A Primary Residence Loan may be requested on Timely
                           Notice for the purchase (excluding mortgage payments)
                           or construction of a Participant's primary residence
                           and may be made only upon receipt of proper
                           documentation from the Participant. Primary Residence
                           Loans shall be for a term not to exceed 10 years from
                           the date of the loan.

         (d)      Loans shall be nonrenewable and nonextendable. Loans shall be
                  repaid, through payroll deduction or, in the case of a
                  Participant who is on an unpaid leave of absence and who does
                  not elect to suspend his loan payments hereunder, by manual
                  repayments.

         (e)      Loans shall be repaid in periodic payments (not less
                  frequently than quarterly) with substantially level
                  amortization required over the term of the loan; provided,
                  however, that a Participant with an outstanding loan who is on
                  an unpaid leave of absence, or qualified military service
                  pursuant to Section 414(u)(4) of the Code, may elect, at the
                  commencement of such leave of absence, to suspend his loan
                  repayments for the lesser of (i) the period of the leave of
                  absence or (ii) 12 months. Notwithstanding the foregoing, a
                  Participant whose Contributions are suspended pursuant to
                  Section 3.6 may not elect to suspend his loan repayments.

         (f)      Loans may be prepaid in full at any time without penalty;
                  provided however, that a Participant who provides notification
                  of his intention to prepay a loan and fails to do so may not
                  resubmit notification for such period as determined by the
                  Committee. Partial prepayments shall be not be permitted.

         (g)      Each Participant receiving a loan hereunder shall receive a
                  statement reflecting the charges involved in each transaction,
                  including the dollar amount and annual interest rate of the
                  finance charges.

         (h)      All loans hereunder shall be considered investments of a
                  segregated account of the Trust directed by the borrower. All
                  loans shall be secured by up to 50% of the vested portion of
                  the

                                     lxvii
<PAGE>   55

                  Participant's Accounts, less any portion of the Participant's
                  Account which has been assigned to an alternate payee under a
                  qualified domestic relations order, to the extent necessary to
                  secure the outstanding loan amount and applied first to the
                  Before-Tax Contributions section of the Participant's
                  Accounts. No additional security shall be permitted.

         (i)      Interest shall be charged at a rate determined by the
                  Committee and shall be determined with regard to interest
                  rates currently being charged on similar commercial loans by
                  persons in the business of lending money.

         (j)      Any loan made to a Participant hereunder shall be evidenced by
                  a promissory note which shall be executed by the Participant
                  in such manner and form as the Committee shall determine. Such
                  promissory note shall contain the irrevocable consent of the
                  Participant to payroll deductions.

         (k)      Fees chargeable in connection with a Participant's loan may be
                  charged, in accordance with a uniform and nondiscriminatory
                  policy established by the Committee, against the Participant's
                  Account to whom the loan is granted.

         (l)      All loans shall be made from the Before-Tax Contributions
                  section of the Participant's Accounts and pro rata from the
                  Investment Fund in which the Before-Tax Contributions section
                  of such Participant's Account are then invested.

         (m)      Loan repayments to the Plan by the Participant shall be made
                  on an after-tax basis and shall be allocated to the Before-Tax
                  Contributions section of the Participant's Account in the
                  Investment Funds in the proportion that Before-Tax
                  Contributions section such Account is represented and shall be
                  invested in the Investment Funds on the basis of the
                  Participant's investment election under Section 3.4 in effect
                  at the time of such loan repayment.

         (n)      In the event that the Participant fails to make any required
                  loan repayment before a loan is repaid in full, the unpaid
                  balance of the loan, with interest due thereon, shall become
                  immediately due and payable, unless the Committee determines
                  otherwise. In the event that a loan becomes immediately due an
                  payable (in "default") pursuant to this Section 8.7, the
                  Participant (or his Beneficiary, if the Beneficiary is the
                  surviving spouse, in the event of the Participant's death) may
                  satisfy the loan by paying the outstanding balance in full
                  within such time as may be specified by the Committee in a
                  uniform and nondiscriminatory manner. Otherwise, any such
                  outstanding loan shall be deducted from the portion of the
                  Participant's vested Accounts (first from the Before-Tax
                  Contributions section of his Accounts) before any benefit
                  which is or becomes payable to the Participant or his
                  Beneficiary is distributed. In the case of a benefit which
                  becomes payable to the Participant or his Beneficiary pursuant
                  to Article 7 (or would be payable to the Participant or
                  Beneficiary but for such individual's election to defer the
                  receipt of benefits), the deduction described in the preceding
                  sentence shall occur on the earliest date following such
                  default on which the Participant or Beneficiary could receive
                  payment of such benefit, had the proper application been filed
                  or election been made, regardless of whether or not payment is
                  actually made to the Participant or Beneficiary on such date.
                  In the case of a benefit which becomes payable under any other
                  provision, the deduction shall occur on the date such benefit
                  is paid. The Committee shall also be entitled to take any and
                  all other actions necessary and appropriate to enforce
                  collection of the outstanding

                                     lxviii
<PAGE>   56

                  balance of the loan. Failure of the Committee to strictly
                  enforce Plan rights with respect to a default on a Plan loan
                  shall not constitute a waiver of such rights.

         (o)      The outstanding loan balance or balances of a KCTC Heritage
                  Employee under the KCTC Salaried Plan shall be transferred to,
                  and repayment made to, this Plan effective as of January 1,
                  1997, and shall be subject to the terms of this Plan to the
                  extent not inconsistent with the terms of the outstanding
                  loan; provided, however, that a KCTC Heritage Employee whose
                  loan is transferred to this Plan with past due loan payments
                  shall have an extended grace period, as determined by the
                  Committee, in which to avoid default under this Section 8.7,
                  provided the total grace period under this Plan and the KCTC
                  Salaried Plan does not exceed the time period as provided
                  under the rules of the Internal Revenue Service. Such
                  outstanding loan balance shall be taken into account for all
                  purposes under this Section 8.7.

         The spousal consent requirement applicable to Ballard Heritage
         Employees under Section 7.6 shall apply to participant loans under this
         Section.

                                      lxix
<PAGE>   57

                                   ARTICLE IX

                       INCENTIVE INVESTMENT PLAN COMMITTEE

9.1      Membership. The Committee shall consist of at least three persons who
         shall be officers or directors of the Corporation or Eligible
         Employees. Members of the Committee shall be appointed from time to
         time by, and shall serve at the pleasure of, the Chief Executive
         Officer of the Corporation. The Committee shall elect one of its
         members as chairman. The Committee shall not receive compensation for
         its services. Committee expenses shall be paid by the Corporation.

9.2      Powers. The Committee shall have all such powers as may be necessary to
         discharge its duties hereunder, including, but not by way of
         limitation, the power to construe or interpret the Plan, to determine
         all questions of eligibility hereunder, to determine the method of
         payment of any Accounts hereunder, to adopt rules relating to the
         giving of Timely Notice, and to perform such other duties as may from
         time to time be delegated to it by the Chief Executive Officer of the
         Corporation. The Committee may prescribe such forms and systems and
         adopt such rules and actuarial methods and tables as it deems
         advisable. It may employ such agents, attorneys, accountants,
         actuaries, medical advisors, or clerical assistants (none of whom need
         be members of the Committee) as it deems necessary for the effective
         exercise of its duties, and may delegate to such agents any power and
         duties, both ministerial and discretionary, as it may deem necessary
         and appropriate.

9.3      Procedures. A majority of the Committee members shall constitute a
         quorum. The Committee may take any action upon a majority vote at any
         meeting at which a quorum is present, and may take any action without a
         meeting upon the unanimous written consent of all members. All action
         by the Committee shall be evidenced by a certificate signed by the
         chairman or by the secretary to the Committee. The Committee shall
         appoint a secretary to the Committee who need not be a member of the
         Committee,and all acts and determinations of the Committee shall be
         recorded by the secretary, or under his supervision. All such records,
         together with such other documents as may be necessary for the
         administration of the Plan, shall be preserved in the custody of the
         secretary.

9.4      Rules and Decisions. All rules and decisions of the Committee shall be
         uniformly and consistently applied to all Eligible Employees and
         Participants under this Plan in similar circumstances and shall be
         conclusive and binding upon all persons affected by them. The Committee
         shall have absolute discretion in carrying out its duties under the
         Plan.

9.5      Authorization of Payments. Subject to the provisions hereof, it shall
         be the duty of the Committee to furnish the Trustee with all facts and
         directions necessary or pertinent to the proper disbursement of the
         Trust funds.

9.6      Books and Records. The records of the Employers shall be conclusive
         evidence as to all information contained therein with respect to the
         basis for participation in the Plan and for the calculation of
         Contributions and Company Matching Contributions.

9.7      Perpetuation of the Committee. In the event that the Corporation shall
         for any reason cease to exist, then, unless the Plan is adopted and
         continued by a successor, the members of the Committee at that time
         shall remain in office until the final termination of

                                      lxx
<PAGE>   58

         the Trust, and any vacancies in the membership of the Committee caused
         by death, resignation, disability or other cause, shall be filled by
         the remaining member or members of the Committee.

9.8      Claim Procedure. The Committee shall establish a procedure for handling
         all claims by all persons. In the event any claim is denied, the
         Committee shall provide a written explanation to the person stating the
         reasons for denial.

9.9      Allocation or Reallocation of Fiduciary Responsibilities. The Named
         Fiduciary may allocate powers and responsibilities not specifically
         allocated by the Plan, or reallocate powers and responsibilities
         specifically allocated by the Plan, to designated persons, partnerships
         or corporations other than the Committee, and the members of the
         Committee may allocate their responsibilities under the Plan among
         themselves. Any such allocation, reallocation, or designation shall be
         in writing and shall be filed with and retained by the secretary of the
         Committee with the records of the Committee. Notwithstanding the
         foregoing, no reallocation of the responsibilities provided in the
         Trust to manage or control the Trust assets shall be made other than by
         an amendment to the Trust.

9.10     Plan Administrator. The Corporation shall be the Plan Administrator as
         described in ERISA.

9.11     Service of Process. The Corporation shall be the designated recipient
         of service of process with respect to legal actions regarding the Plan.

                                      lxxi
<PAGE>   59

                                    ARTICLE X

                            AMENDMENT AND TERMINATION

10.1     Amendment and Termination. While it is intended that the Plan shall
         continue in effect indefinitely, the Board may from time to time
         modify, alter or amend the Plan or the Trust, and may at any time order
         the temporary suspension or complete discontinuance of Company Matching
         Contributions or may terminate the Plan, provided, however, that

                  (i)      no such action shall make it possible for any part of
                           the Trust assets (except such part as is used for the
                           payment of expenses) to be used for or diverted to
                           any purpose other than for the exclusive benefit of
                           Participants or their Beneficiaries;

                  (ii)     no such action shall adversely affect the rights or
                           interests of Participants theretofore vested under
                           the Plan; and

                  (iii)    in the event of termination of the Plan or complete
                           discontinuance of Company Matching Contributions
                           hereunder, all rights and interests of Participants
                           not theretofore vested shall become vested as of the
                           date of such termination or complete discontinuance.

         Any action permitted to be taken by the Board under the foregoing
         provision regarding the modification, alteration or amendment of the
         Plan or the Trust may be taken by the Committee, using its prescribed
         procedures, if such action

                           (1) is required by law,

                           (2) is estimated not to increase the annual cost of
                               the Plan by more than $1,000,000, or

                           (3) is estimated not to increase the annual cost of
                               the Plan by more than $25,000,000, provided such
                               action is approved and duly executed by the Chief
                               Executive Officer of the Corporation.

         Any action taken by the Board or Committee shall be made by or pursuant
         to a resolution duly adopted by the Board or Committee and shall be
         evidenced by such resolution or by a written instrument executed by
         such persons as the Board or Committee shall authorize for such
         purpose.

         The Committee shall report to the Chief Executive Officer of the
         Corporation before January 31 of each year all action taken by it
         hereunder during the preceding calendar year.

         However, nothing herein shall be construed to prevent any modification,
         alteration or amendment of the Plan or of the Trust which is required
         in order to comply with any law relating to the establishment or
         maintenance of the Plan and Trust, including but not

                                     lxxii
<PAGE>   60

         limited to the establishment and maintenance of the Plan or Trust as a
         qualified employee plan or trust under the Code, even though such
         modification, alteration, or amendment is made retroactively or
         adversely affects the rights or interests of a Participant under the
         Plan.

                                     lxxiii
<PAGE>   61

                                   ARTICLE XI

                                  MISCELLANEOUS

11.1     Non-Guarantee of Employment. Nothing contained in this Plan shall be
         construed as a contract of employment between an Employer and a
         Participant, or as a right of any Participant to be continued in the
         employment of his Employer, or as a limitation of the right of an
         Employer to discharge any Participant with or without cause.

11.2     Rights to Trust Assets. No Participant or any other person shall have
         any right to, or interest in, any part of the Trust assets upon
         termination of his employment or otherwise, except as provided from
         time to time under this Plan, and then only to the extent of the
         amounts due and payable to such person out of the assets of the Trust.
         All payments as provided for in this Plan shall be made solely out of
         the assets of the Trust and neither the Employers, the Trustee, nor any
         member of the Committee shall be liable therefor in any manner.

         The Employers shall have no beneficial interest of any nature
         whatsoever in any Employer Contributions after the same have been
         received by the Trustee, or in the assets, income or profits of the
         Trust, or any part thereof, except to the extent that forfeitures as
         provided in the Plan shall be applied to reduce the Employer
         Contributions.

11.3     Disclaimer of Liability. Neither the Trustee, the Employers, nor any
         member of the Committee shall be held or deemed in any manner to
         guarantee the funds of the Trust against loss or depreciation.

11.4     Non-Recommendation of Investment. The availability of any security
         hereunder shall not be construed as a recommendation to invest in such
         security. The decision as to the choice of investment of Contributions
         must be made solely by each Participant, and no officer or employee of
         the Corporation or the Trustee is authorized to make any recommendation
         to any Participant concerning the allocation of Contributions
         hereunder.

11.5     Indemnification of Committee. The Employers shall indemnify the
         Committee and each of its members and hold them harmless from the
         consequences of their acts or conduct in their official capacity,
         including payment for all reasonable legal expenses and court costs,
         except to the extent that such consequences are the result of their own
         willful misconduct or breach of good faith.

11.6     Selection of Investments. The Trustee shall have the sole discretion to
         select investments for the various funds provided for herein even
         though the same may not be legal investments for trustees under the
         laws applicable thereto.

11.7     Non-Alienation. Except as otherwise provided herein, no right or
         interest of any Participant or Beneficiary in the Plan and the Trust
         shall be subject in any manner to anticipation, alienation, sale,
         transfer, assignment, pledge, encumbrance, charge, attachment,
         garnishment, execution, levy, bankruptcy, or any other disposition of
         any kind, either voluntary or involuntary, prior to actual receipt of
         payment by the person

                                     lxxiv
<PAGE>   62

         entitled to such right or interest under the provisions hereof, and any
         such disposition or attempted disposition shall be void.

11.8     Facility of Payment. If the Committee has notice that a Participant
         entitled to a distribution hereunder, or his Beneficiary, is incapable
         of caring for his own affairs, because of illness or otherwise, the
         Committee may direct that any distribution from such Participant's
         Accounts may be made, in such shares as the Committee shall determine,
         to the spouse, child, parent or other blood relative of such
         Participant, or his Beneficiary, or any of them, or to such other
         person or persons as the Committee may determine, until such date as
         the Committee shall determine that such incapacity no longer exists.
         The Committee shall be under no obligation to see to the proper
         application of the distributions so made to such person or persons, and
         any such distribution shall be a complete discharge of any liability
         under the Plan to such Participant, or his Beneficiary, to the extent
         of such distribution.

11.9     Allocation in the Event of Advance Contributions. In the event that the
         Employer's tax deduction with respect to amounts contributed to the
         Plan pursuant to Articles III and IV for the months in the final
         quarter of a Plan Year results in such amounts being deemed advanced
         contributions of the Employer with respect to the taxable year of the
         Employer ending within such Plan Year, such amounts shall be considered
         allocated pursuant to Articles III and IV, as applicable, as of the
         last day of such taxable year.

11.10    Action by a Committee of the Board. Any action which is required or
         permitted to be taken by the Board under the Plan may be taken by the
         Compensation Committee of the Board or any other duly authorized
         committee of the Board designated under the By-Laws of the Corporation.

11.11    Qualified Domestic Relations Orders. Anything in this Plan to the
         contrary notwithstanding:

         (a)      Alternate Payee's Accounts. An alternate payee under a
                  domestic relations order determined by the Corporation to be a
                  qualified domestic relations order (as defined in Code section
                  414(p)) shall have established and maintained for him separate
                  Accounts similar to the Accounts of the Participant specified
                  in the qualified domestic relations order. The alternate
                  payee's Accounts shall be credited with his interest in such
                  Participant's Accounts, as determined under the qualified
                  domestic relations order. Except to the extent specifically
                  provided by the qualified domestic relations order, no amount
                  of the non-vested portion, if any, of the Participant's
                  Employer Accounts shall be credited to the alternate payee's
                  Accounts. Subsection 6.2(c) and Sections 6.3, 6.4, and 6.5
                  shall apply to the alternate payee's Accounts as if the
                  alternate payee were a Participant.

         (b)      Investment of Alternate Payee's Accounts. An alternate payee
                  may on Timely Notice elect to reallocate or transfer all or
                  any percentage portion of any of his Employee Accounts or
                  Employer Accounts or both, consistent with subsection 6.1(a).
                  An alternate payee's interest arising from this reallocation
                  shall be invested in the various funds in accordance with the
                  alternate payee's directions.

                                      lxxv
<PAGE>   63

                  For purposes of subsection 6.1(b), any such reallocation shall
                  be treated as a reallocation in accordance with subsection
                  6.1(a).

         (c)      Alternate Payee's Beneficiary. Except to the extent otherwise
                  provided by the qualified domestic relations order relating to
                  an alternate payee:

                  (i)      the alternate payee may designate on Timely Notice a
                           beneficiary,

                  (ii)     if no such person is validly designated or if the
                           designated person predeceases the alternate payee,
                           the beneficiary of the alternate payee shall be his
                           estate, and

                  (iii)    the beneficiary of the alternate payee shall be
                           accorded under the Plan all the rights and privileges
                           of the Beneficiary of a Participant.

         (d)      Distribution to Alternate Payee. An alternate payee shall be
                  entitled to receive a distribution from the Plan in accordance
                  with the qualified domestic relations order relating to the
                  alternate payee. Such distribution may be made only in a
                  method provided in Section 7.7 and shall include only such
                  amounts as have become vested; provided, however, that if a
                  qualified domestic relations order so provides, a Lump Sum
                  Distribution or Partial Distribution of the total vested
                  amount credited to the alternate payee's Accounts may be made
                  to the alternate payee before the date that the Participant
                  specified in the qualified domestic relations order attains
                  his earliest retirement age (as defined in Code section
                  414(p)(4)(B)). A qualified domestic relations order may
                  provide that until a distribution is made to the alternate
                  payee, the alternate payee may make withdrawals in accordance
                  with Article VIII as if the alternate payee were an employed
                  Participant; provided, however, that (i) hardship withdrawals
                  from the portion of the alternate payee's Accounts
                  attributable to the Before-Tax Contributions Section of the
                  Accounts of the Participant specified in the qualified
                  domestic relations order shall not be available to an
                  alternate payee and (ii) no withdrawal suspension penalties
                  shall be imposed on account of a withdrawal by an alternate
                  payee.

         (e)      Vesting of Alternate Payee's Accounts. In the event that the
                  qualified domestic relations order provides for all or part of
                  the non-vested portion of the Participant's Employer Accounts
                  to be credited to the Accounts of the alternate payee, such
                  amounts shall vest and/or be forfeited at the same time and in
                  the same manner as the Accounts of the Participant specified
                  in the qualified domestic relations order; provided, however,
                  that no forfeiture shall result to the Accounts of the
                  alternate payee due to any distribution to or withdrawal by
                  the Participant from his Accounts or any distribution to or
                  withdrawal by the alternate payee from the vested portion of
                  the Accounts of the alternate payee.

11.12    Compensation Limit. In addition to other applicable limitations which
         may be set forth in the Plan and notwithstanding any other contrary
         provision of the Plan, compensation taken into account under the Plan
         for Plan Years beginning on January 1, 1989 and ending prior to January
         1, 1994, shall not exceed $200,000, adjusted for changes in the

                                     lxxvi
<PAGE>   64

         cost of living as provided in Code section 415(d), and compensation
         taken into account under the Plan for Plan Years beginning on or after
         January 1, 1994, shall not exceed $150,000, adjusted for changes in the
         cost of living as provided in Code sections 401(a)(17)(B) and 415(d).

         In applying the above limitation, the Family Members of a Highly
         Compensated Eligible Employee who is subject to the Family Member
         aggregation rules of Code section 414(q)(6) because such Highly
         Compensated Eligible Employee is either a "Five Percent Owner" (as
         defined within Subsection 2.1(hh) of the Employer or an Affiliated
         Employer or one of the ten Highly Compensated Eligible Employees paid
         the greatest "Compensation" (as defined within Subsection 2.1(hh)
         during the Year and such Highly Compensated Eligible Employee, shall be
         treated as a single Participant, except that for this purpose "Family
         Members" shall include only the affected Highly Compensated Eligible
         Employee's spouse and any lineal descendants who have not attained age
         19 before the close of the Year. If, as a result of the application of
         such rules, the adjusted limitation is exceeded, then the limitation
         shall be prorated among the Highly Compensated Eligible Employee and
         Family Members in proportion to each one's Total Compensation prior to
         the application of this limitation, or adjusted in accordance with any
         other method permitted by applicable regulations. Notwithstanding the
         foregoing, this paragraph shall not apply for Plan Years beginning
         after December 31, 1996.

                                     lxxvii
<PAGE>   65

                                   ARTICLE XII

                             LIMITATIONS ON BENEFITS

12.1     Definitions and Rules.

         (a)      Definitions. For purposes of Article XII, the following
                  definitions and rules of interpretation shall apply.

                  (i)      "Annual Additions" to a Participant's Accounts under
                           this Plan is the sum, credited to a Participant's
                           Accounts for any Limitation Year, of:

                           (A)             Company contributions,

                           (B)             forfeitures, if any, and

                           (C)             Participant Contributions.

                  (ii)     "Annual Benefit" -

                           (A)      A benefit which is payable annually in the
                                    form of a straight life annuity under a
                                    defined benefit plan maintained by the
                                    Company which is subject to the limitations
                                    of Code section 415. In the case of such a
                                    benefit which is not payable in the form of
                                    a straight life annuity, the benefit will be
                                    adjusted in accordance with subsection
                                    12.1(a)(ii)(C) below.

                           (B)      When there is a transfer of assets or
                                    liabilities from one qualified plan to
                                    another, the Annual Benefit attributable to
                                    the assets transferred shall not be taken
                                    into account by the transferee plan in
                                    applying the limitations of Code section
                                    415. The Annual Benefit payable on account
                                    of the transfer for any individual that is
                                    attributable to the assets transferred will
                                    be equal to the annual benefit transferred
                                    on behalf of such individual multiplied by a
                                    fraction, the numerator of which is the
                                    value of the total assets transferred and
                                    the denominator of which is the value of the
                                    total liabilities transferred.

                           (C)      In the case of a retirement benefit under a
                                    defined benefit plan subject to the
                                    limitations of Code section 415(b) which is
                                    in any form other than a straight life
                                    annuity, such benefit will be adjusted to a
                                    straight life annuity beginning at the same
                                    age which is the actuarial equivalent of
                                    such benefit in accordance with applicable
                                    regulations and rules determined by the
                                    Commissioner, but without taking into
                                    account:

                                    lxxviii
<PAGE>   66

                                    (1)     the value of a qualified joint and
                                            survivor annuity (as defined in Code
                                            section 401(a)(11)(G)(iii) and the
                                            regulations thereunder) provided by
                                            a defined benefit plan to the extent
                                            that such value exceeds the sum of
                                            (a) the value of a straight life
                                            annuity beginning on the same date
                                            and (b) the value of any
                                            post-retirement death benefits which
                                            would be payable even if the annuity
                                            were not in the form of a joint and
                                            survivor annuity,

                                    (2)     the value of benefits that are not
                                            directly related to retirement
                                            benefits (such as, but not limited
                                            to, pre-retirement disability and
                                            death benefits), and

                                    (3)     the value of benefits provided by a
                                            defined benefit plan which reflect
                                            post-retirement cost-of-living
                                            increases to the extent that such
                                            increases are in accordance with
                                            Code section 415(d) and the
                                            regulations thereunder.

                           (D)      In the case of a retirement benefit
                                    beginning before the Social Security
                                    Retirement Age under a defined benefit plan
                                    subject to the limitations of Code section
                                    415(b), such benefit will be adjusted to the
                                    actuarial equivalent of a benefit beginning
                                    at the Social Security Retirement Age in
                                    accordance with applicable regulations and
                                    rules determined by the Commissioner, but
                                    this adjustment is only for purposes of
                                    applying the dollar limitation described in
                                    Code section 415(b)(1)(A) to the Annual
                                    Benefit of the Participant.

                           (E)      If a Participant has less than 10 Years of
                                    Vesting Service with the Company at the time
                                    the Participant begins to receive retirement
                                    benefits under a defined benefit plan, the
                                    benefit limitations described in Code
                                    section 415(b)(1) and (4) are to be reduced
                                    by multiplying the otherwise applicable
                                    limitation by a fraction, the numerator of
                                    which is the number of Years of Vesting
                                    Service with the Company as of, and
                                    including, the current Limitation Year, and
                                    the denominator of which is 10. For purposes
                                    of this paragraph (E), Years of Vesting
                                    Service shall be determined in accordance
                                    with such defined benefit plan.

                           (F)      In the case of a retirement benefit
                                    beginning after the Social Security
                                    Retirement Age under a defined benefit plan
                                    subject to the limitations of Code section
                                    415(b), such benefit will be adjusted to the
                                    actuarial equivalent of a benefit beginning
                                    at the Social Security Retirement Age in
                                    accordance with applicable regulations and
                                    rules determined by the Commissioner, but
                                    this adjustment is only for purposes of
                                    applying the dollar limitation described in
                                    Code section 415(b)(1)(A) to the Annual
                                    Benefit of the Participant.

                                     lxxix
<PAGE>   67

                           (G)      For purposes of this Section, the "Social
                                    Security Retirement Age" shall mean the age
                                    used as the retirement age under section
                                    216(l) of the Social Security Act, applied
                                    without regard to the age increase factor
                                    and as if the early retirement age under
                                    section 216(l)(2) of the Social Security Act
                                    were 62.

                  (iii)    "Company" - any corporation which is a member of a
                           controlled group of corporations (as defined in Code
                           section 414(b) and modified by Code section 415(h))
                           or an affiliated service group (as defined in section
                           414(m) of the Code) which includes an Employer; any
                           trades or businesses (whether or not incorporated)
                           which are under common control (as defined in Code
                           section 414(c) and modified by Code section 415(h))
                           with an Employer; or any other entity required to be
                           aggregated with an Employer pursuant to Code section
                           414(o).

                  (iv)     "Compensation" with respect to a Limitation Year -

                           (A)      Compensation includes amounts actually paid
                                    or made available to a Participant
                                    (regardless of whether he was such during
                                    the entire Limitation Year);

                                    (1)     as wages, salaries, fees for
                                            professional service, and other
                                            amounts received for personal
                                            services actually rendered in the
                                            course of employment with the
                                            Company including but not limited to
                                            commissions, compensation for
                                            services on the basis of a
                                            percentage of profits and bonuses;

                                    (2)     for purposes of (i) above, earned
                                            income from sources outside the
                                            United States (as defined in Code
                                            section 911(b)); whether or not
                                            excludable from gross income under
                                            Code section 911 or deductible under
                                            Code section 913;

                                    (3)     amounts described in Code sections
                                            104(a)(3), 105(a) and 105(h) but
                                            only to the extent that these
                                            amounts are includable in the gross
                                            income of the Participant;

                                    (4)     amounts paid or reimbursed by the
                                            Company for moving expenses incurred
                                            by the Participant, but only to the
                                            extent that these amounts are not
                                            deductible by the Participant under
                                            Code section 217;

                                    (5)     value of a nonqualified stock option
                                            granted to the Participant, but only
                                            to the extent that the value of the
                                            option is includable in the gross
                                            income of the Participant in the
                                            taxable year in which granted;

                                      lxxx
<PAGE>   68

                                    (6)     the amount includable in the gross
                                            income of a Participant upon making
                                            the election described in Code
                                            section 83(b).

                           (B)      excludes -

                                    (1)     amounts contributed to this Plan by
                                            Employers on behalf of Participants
                                            as Before-Tax Contributions (and not
                                            considered Basic After-Tax
                                            Contributions under Section
                                            3.5(a)(ii) nor recharacterized as
                                            Basic After-Tax Contributions under
                                            Section 3.5(b)(iii)) and any amount
                                            which is contributed or deferred by
                                            the Employer at the election of the
                                            Employee under Section 125 of the
                                            Code; provided, however that for
                                            Limitation Years beginning after
                                            December 31, 1997, such amounts
                                            shall be included as "Compensation"
                                            with respect to such Limitation
                                            Year.

                                    (2)     contributions made by the Company to
                                            a plan of deferred compensation to
                                            the extent that, before the
                                            application of the Code section 415
                                            limitations to that plan, the
                                            contributions are not includable in
                                            the gross income of the Participant
                                            for the taxable year in which
                                            contributed and any distributions
                                            from a plan of deferred
                                            compensation, regardless of whether
                                            such amounts are includable in the
                                            gross income of the Participant when
                                            distributed; provided however, any
                                            amounts received by a Participant
                                            pursuant to an unfunded nonqualified
                                            plan shall be considered as
                                            Compensation in the year such
                                            amounts are includable in the gross
                                            income of the Participant;

                                    (3)     amounts realized from the exercise
                                            of a nonqualified stock option, or
                                            recognized when restricted stock (or
                                            property) held by a Participant
                                            either becomes freely transferable
                                            or is no longer subject to a
                                            substantial risk of forfeiture
                                            pursuant to Code section 83 and the
                                            regulations thereunder;

                                    (4)      amounts realized from the sale,
                                             exchange or other disposition of
                                             stock acquired under a qualified
                                             stock option;

                                    (5)     other amounts which receive special
                                            tax benefits such as premiums for
                                            group term life insurance (but only
                                            to the extent that the premiums are
                                            not includable in the gross income
                                            of the Participant); and

                                    (6)      Compensation in excess of the limit
                                             set forth in Section 11.12.

                                     lxxxi
<PAGE>   69

                           In lieu of the above definition of "Compensation,"
                           effective for Plan Years beginning after December 31,
                           1991, the following alternative definitions of
                           "Compensation" in (A) or (B) below may be applied
                           with respect to a Limitation Year, as determined by
                           the Committee in its discretion:

                           (A)      Wages within the meaning of Section 3401(a)
                                    of the Code and all other payments of
                                    compensation to an Employee by his Employer
                                    (in the course of the Employer's trade or
                                    business) for which the Employer is required
                                    to furnish the Employee a written statement
                                    under Section 6041(d), 6051(a)(3), and 6052
                                    of the Code, but excluding amounts paid or
                                    reimbursed by the Employer for moving
                                    expenses incurred by an Employee, but only
                                    to the extent that at the time of the
                                    payment it is reasonable to believe that
                                    these amounts are deductible by the Employee
                                    under Section 217 of the Code, and
                                    determined without regard to any rules under
                                    Section 3401(a) of the Code that limit the
                                    remuneration included in wages based on the
                                    nature or location of the employment or the
                                    services performed.

                           (B)      Wages within the meaning of Section 3401(a)
                                    of the Code (for purposes of income tax
                                    withholding at the source) of the
                                    Participant but determined without regard to
                                    any rules that limit the remuneration
                                    included in wages based on the nature or
                                    location of the employment or the services
                                    performed.

                           For Limitation Years beginning after December 31,
                           1997, "Compensation" hereunder includes amounts
                           contributed or deferred by the Employer on behalf of
                           the Employee under sections 125 or 401(k) of the
                           Code.

                  (v)      "Limitation Year" - a calendar year;

                  (vi)     "Maximum Permissible Amount" -

                           (A)      for a Limitation Year, with respect to any
                                    Participant, subject to the rule in
                                    paragraph (B), the lesser of

                                    (1)      $30,000 (or, if greater, 1/4 of the
                                             dollar limitation in effect under
                                             Code section 415(b)(1)(A)), or

                                    (2)      25% of the Participant's
                                             Compensation for the Limitation
                                             Year.

                           (B)      As of January 1 of each calendar year, the
                                    dollar limitation set forth in subparagraph
                                    (A)(1) above shall be adjusted automatically
                                    for cost-of-living increases to equal the
                                    dollar limitation as determined by the
                                    Commissioner for that calendar year under
                                    Code section 415(d)(1)(B). This adjusted
                                    dollar limitation applies for the Limitation
                                    Year ending with that calendar year.

                                     lxxxii
<PAGE>   70

                  (vii)    "Projected Annual Benefit" - the Annual Benefit to
                           which a Participant would be entitled under a defined
                           benefit plan maintained by the Company on the
                           assumptions that he or she continues employment until
                           the normal retirement age (or current age, if that is
                           later) thereunder, that his or her Compensation
                           continues at the same rate as in effect for the
                           Limitation Year under consideration until such age,
                           and that all other relevant factors used to determine
                           benefits under the Plan remain constant as of the
                           current Limitation Year for all future Limitation
                           Years;

         (b)      Other Rule. For purposes of applying the limitations of Code
                  section 415(b), (c) and (e) applicable to a Participant for a
                  particular Limitation Year, all qualified defined contribution
                  plans (without regard to whether a plan has been terminated)
                  ever maintained by the Company will be treated as part of this
                  Plan and all qualified defined benefit plans (without regard
                  to whether a plan has been terminated) ever maintained by the
                  Company will be treated as one defined benefit plan.

12.2     Limits.

         (a)      Annual Addition Limit. The amount of the Annual Addition which
                  may be credited under this Plan to any Participant's Accounts
                  as of any allocation date shall not exceed the Maximum
                  Permissible Amount (based upon his Compensation up to such
                  allocation date) reduced by the sum of any Annual Additions
                  made to the Participant's Accounts under this Plan as of any
                  preceding allocation date within the Limitation Year. If an
                  allocation date of this Plan coincides with an allocation date
                  of any other qualified defined contribution plan maintained by
                  the Company, the amount of the Annual Additions which may be
                  credited under this Plan to any Participant's Accounts as of
                  such date shall be an amount equal to the product of the
                  amount to be credited under this Plan without regard to this
                  Section 12.2 multiplied by the lesser of 1.0 or a fraction,
                  the numerator of which is the amount described in this
                  subsection (a) of Section 12.2 during the Limitation Year and
                  the denominator of which is the amount that would otherwise be
                  credited on this allocation date under all plans without
                  regard to this Section 12.2. If contributions to this Plan by
                  or on behalf of a Participant are to be reduced as a result of
                  this Section 12.2, such reduction shall be effected by first
                  reducing the Participant's Retirement Contributions under the
                  Kimberly-Clark Corporation Retirement Contribution Plan, as
                  provided under that plan; then, under this Plan, (i) any
                  Unrestricted After-Tax Contributions, (ii) if and to the
                  extent necessary, by proportionately reducing any Basic
                  After-Tax Contributions and corresponding Company Matching
                  Contributions and (iii), if and to the extent necessary, by
                  proportionately reducing any Before-Tax Contributions and
                  corresponding Company Matching Contributions. If as a result
                  of a reasonable error in estimating a Participant's
                  Compensation, or under the limited facts and circumstances
                  which the Commissioner finds justify the availability of the
                  rules set forth in this Section 12.2, the allocation of Annual
                  Additions under the terms of the Plan for a particular
                  Participant would cause the limitations of Code section 415
                  applicable to that Participant for the Limitation Year to be
                  exceeded, the

                                    lxxxiii
<PAGE>   71

                  excess amounts shall not be deemed to be Annual Additions in
                  that Limitation Year if they are treated as follows:

                  (i)      The excess amounts in the Participant's Account
                           consisting of Participant Contributions and
                           Contributions made on his behalf and any increment
                           attributable thereto shall be paid to the Participant
                           as soon as administratively feasible.

                  (ii)     The excess amounts in the Participant's Account
                           consisting of Company Matching Contributions shall be
                           used to reduce Company Matching Contributions for the
                           next Limitation Year (and succeeding Limitation
                           Years, as necessary) for all Participants in the
                           Plan.

         (b)      Overall Limit. For any Participant of this Plan who at any
                  time participated in a defined benefit plan maintained by the
                  Company, the rate of benefit accrual by such Participant in
                  each defined benefit plan in which the Participant
                  participates during the Limitation Year will be reduced to the
                  extent necessary to prevent the sum of the following
                  fractions, computed as of the close of the Limitation Year,
                  from exceeding 1.0:

                  (i)      The Projected Annual Benefit of the Participant under
                           the defined benefit plan

                                    over

                           The lesser of (1) the product of 1.25 multiplied by
                           the dollar limitation in effect under Code section
                           415(b)(1)(A) for such Limitation Year or (2) the
                           product of 1.4 multiplied by the amount which may be
                           taken into account under Code section 415(b)(1)(B)
                           with respect to such Participant for such Limitation
                           Year,

                                    plus

                  (ii)     The sum of Annual Additions to such Participant's
                           Accounts under this Plan in such Limitation Year and
                           for all prior Limitation Years

                                    over

                           The sum of the lesser of the following amounts
                           determined for such year and for each prior year of
                           service with the Company: (1) the product of 1.25
                           multiplied by the dollar limitation in effect under
                           Code section 415(c)(1)(A) for such Limitation Year or
                           (2) the product of 1.4 multiplied by 25% of the
                           Participant's Compensation for such Limitation Year.

         (c)      Special Rules Applicable to Computation of Overall Limit.

                                     lxxxiv
<PAGE>   72

                  (i)      For purposes of applying the defined contribution
                           plan fraction in Section 12.2(b), for any Limitation
                           Year beginning after December 31, 1975, the following
                           rules shall apply with respect to Limitation Years
                           before January 1, 1976:

                           (A)      The aggregate amount taken into account in
                                    determining the numerator of such fraction
                                    is deemed not to exceed the aggregate amount
                                    taken into account in determining the
                                    denominator of the fraction.

                           (B)      The amount taken into account for purposes
                                    of subsection 12.1(a)(i)(C)(1) is an amount
                                    equal to the excess of the aggregate amount
                                    of the Participant's contributions for such
                                    years during which he was an active
                                    participant in the Plan over 10% of the
                                    Participant's aggregate Compensation for all
                                    such years, multiplied by a fraction, the
                                    numerator of which is 1.0 and the
                                    denominator of which is the number of years
                                    beginning before January 1, 1976, during
                                    which the Participant participated in the
                                    Plan. Participant contributions made on or
                                    after October 2, 1973, shall be taken into
                                    account for purposes of the preceding
                                    sentence only to the extent that the amount
                                    of such contributions was permissible under
                                    a plan as in effect on that date.

                  (ii)     In any case where the sum of the fractions in Section
                           12.2(b) is greater than 1.0 calculated as of the
                           close of the last Limitation Year beginning before
                           January 1, 1983 for a Participant in accordance with
                           regulations prescribed by the Commissioner pursuant
                           to Section 235(g)(3) of the Tax Equity and Fiscal
                           Responsibility Act of 1982, an amount shall be
                           subtracted from the numerator of the defined
                           contribution plan fraction so that the sum of such
                           fractions does not exceed 1.0 for such Limitation
                           Year.

         (d)      Repeal of Overall Limit. For Limitation Years beginning after
                  December 31, 1999, the overall limit described in subsection
                  12.2(b) and (c) shall no longer apply under the Plan.

                                     lxxxv
<PAGE>   73

                                  ARTICLE XIII

                                     MERGER

No merger or consolidation with or transfer of any assets or liabilities to any
other plan after September 2, 1974, shall be made unless, upon completion
thereof, the value of each Participant's Account shall immediately after said
merger, consolidation, or transfer be equal to or greater than the value of the
Participant's Account immediately before the merger, consolidation, or transfer
(if the Plan had then terminated).

                                     lxxxvi
<PAGE>   74

                                   ARTICLE XIV

                             TOP-HEAVY REQUIREMENTS

14.1     Top-Heavy Requirements. Notwithstanding any other provisions of this
         Plan, the following rules shall apply for any Plan Year if as of the
         last day of the preceding Plan Year, based on valuations as of such
         date, the sum of the present value of accrued benefits and Accounts of
         "key employees" (within the meaning of Code section 416) exceeds 60% of
         a similar sum for all employees under each plan of the Employer or any
         Affiliated Employer in which a "key employee" participates and each
         other plan of the Employer or any Affiliated Employer which enables any
         such plan to meet the requirements of Code section 401(a)(4) or 410. A
         Plan Year during which such rules apply shall be known as a "Top-Heavy
         Plan Year."

                  (a) Vesting. A Participant who is credited with an Hour of
                  Service during the Top-Heavy Plan Year, or in any Plan Year
                  after the Top-Heavy Plan Year, and who has completed at least
                  three years of Service shall have a nonforfeitable right to
                  100% of his Employer Accounts and no such amount may become
                  forfeitable if the Plan later ceases to be Top-Heavy nor may
                  such amount be forfeited under the provisions of Code sections
                  411(a)(3)(B) (relating to suspension of benefits upon
                  reemployment) or 411(a)(3)(D) (relating to forfeitures upon
                  withdrawal of mandatory contributions). If the Plan become
                  Top-Heavy and later ceases to be Top-Heavy, this vesting
                  schedule shall no longer apply and benefits which have not at
                  such time vested under this schedule shall vest only in
                  accordance with other provisions of this Plan, provided that
                  any Participant with at least 3 years of Service shall be
                  entitled to continue to utilize this schedule for vesting
                  purposes by making an election at the time and in the manner
                  specified by the Committee.

                  (b) Required Contributions. Each Employer shall contribute on
                  behalf of each employee eligible to participate in the Plan,
                  the lesser of:

                                    (i) 3% of such employee's compensation
                           (within the meaning of Code section 415); or

                                    (ii) the percentage of such employee's
                           compensation (within the meaning of Code section 415)
                           which is equal to the percentage at which
                           contributions were made for that Plan Year on behalf
                           of the "key employee" for whom such percentage is the
                           greatest for such Plan Year, as prescribed by Code
                           section 416(c)(2)(B) and regulations thereunder;

                           provided, however, that any contributions for any
                  employee required of any Employer by the above provisions of
                  this subsection 14.1(b) shall be reduced by the amount of any
                  Company Matching Contribution made with respect to such Plan
                  Year for such employee under Article IV of this Plan. Any
                  contribution made pursuant to this subsection 14.1(b) shall be
                  allocated to the Employer K-C Stock Account on behalf of the
                  employee for whom such contribution is made.

                                    lxxxvii
<PAGE>   75

                  (c) Additional Limitations. No allocations may be made to the
                  Account of a Participant the sum of whose defined benefit plan
                  fraction and defined contribution plan fraction, as defined in
                  Code section 415(e), exceeds 1.0 when the dollar amounts, as
                  defined in Section 12.2(b) hereof, are multiplied by 1.0
                  rather than 1.25.

                           The provisions of this Section 14.1 shall be
                  interpreted in accordance with the provisions of Code section
                  416 and any regulations thereunder, which are hereby expressly
                  incorporated by reference.

                  (d) Coordination. In the event a top heavy minimum
                  contribution or benefit is required under this Plan or a
                  defined benefit plan of an Employer that covers a Participant,
                  the top heavy minimum contribution or benefit, as appropriate,
                  shall be provided in this Plan. In the event a top heavy
                  minimum contribution is required under this Plan or another
                  defined contribution plan of an Employer that covers a
                  Participant, the top heavy minimum contribution shall be
                  provided in the other plan.

                                    lxxxviii
<PAGE>   76

                                   APPENDIX A

         LIST OF EMPLOYERS, PARTICIPATING UNITS AND APPLICABLE SCHEDULES

Employers and Participating Units
Avent, Inc.

         All salaried employees of this Employer, including those on temporary
         assignment at other Employers or in other classifications, but
         excluding employees on temporary assignment from another Employer or
         classification.

Ballard Medical Products

         All salaried employees of this Employer, including those formerly
         employed by Wiltek Medical, Inc. in North Carolina or TriMed
         Specialties, Inc. in Virginia on the date of the acquisition by
         Ballard, and including those on temporary assignment at other Employers
         or in other classifications, but excluding employees on temporary
         assignment from another Employer or classification.

Durafab, Inc.

         All salaried employees of this Employer, including those on temporary
         assignment at other Employers or in other classifications, but
         excluding employees on temporary assignment from another Employer or
         classification.

Kimberly-Clark Corporation

         (a)      All salaried employees of this Employer, including those on
                  temporary assignment at other Employers or in other
                  classifications, but excluding (i) employees on temporary
                  assignment from another unit, Employer or classification and
                  (ii) nonexempt salaried employees at the LaGrange Mill,
                  Lexington Mill, Maumelle Facility and Paris Plant.

         (b)      All nonexempt salaried employees at the Conway Mill, including
                  those on temporary assignment at other Employers or in other
                  classifications, but excluding employees on temporary
                  assignment from another Employer or classification; provided
                  that such employees shall be eligible to make Before-Tax
                  Contributions under Article III effective November 1, 1996.

         (c)      All nonexempt salaried employees at the Corinth Mill and
                  Corinth Away From Home Plant, including those on temporary
                  assignment at other Employers or in other classifications, but
                  excluding employees on temporary assignment from another
                  Employer or classification; provided that such employees shall
                  be eligible to make Before-Tax Contributions under Article III
                  effective November 1, 1996.

Kimberly-Clark Financial Services, Inc.

         All salaried employees of this Employer, including those on temporary
         assignment at other Employers or in other classifications, but
         excluding employees on temporary assignment from another Employer or
         classification.

Kimberly-Clark International Services Corporation

         All salaried employees of this Employer except those who transfer to a
         less than 80% owned foreign subsidiary.

                                     lxxxix
<PAGE>   77

Kimberly-Clark Printing Technology, Inc.

         Effective July 1, 1998, all salaried employees of this Employer,
         including those on temporary assignment at other Employers or in other
         classifications, but excluding employees on temporary assignment from
         another Employer or classification.

Kimberly-Clark Technical Paper, Inc.

         All salaried employees of this Employer, including those on temporary
         assignment at other Employers or in other classifications, but
         excluding employees on temporary assignment from another Employer or
         classification.

Kimberly-Clark Worldwide, Inc.

         All salaried employees of this Employer, including those on temporary
         assignment at other Employers or in other classifications, but
         excluding (i) employees on temporary assignment from another Employer
         or classification and (ii) nonexempt salaried employees at the Ogden
         Plant.

Tecnol, Inc.

         Effective March 1, 1998, all salaried employees of this Employer,
         including those on temporary assignment at other Employers or in other
         classifications, but excluding employees on temporary assignment from
         another Employer or classification.

                                       xc<PAGE>   1
                                                                     EXHIBIT 4.7

                   KIMBERLY-CLARK CORPORATION HOURLY EMPLOYEES
                            INCENTIVE INVESTMENT PLAN

                                      xci
<PAGE>   2

                        KIMBERLY-CLARK CORPORATION HOURLY
                       EMPLOYEES INCENTIVE INVESTMENT PLAN

                     (As amended through December 31, 2000)

                                      xcii
<PAGE>   3

                                    ARTICLE I

                    NAME, PURPOSE AND EFFECTIVE DATE OF PLAN

This Kimberly-Clark Corporation Hourly Employees Incentive Investment Plan (the
"Plan") has been adopted effective August 1, 1967. Its purpose is to promote the
interests of the Corporation and its stockholders by encouraging Eligible
Employees to arrange for personal investment programs which, depending upon the
success of the Corporation, will be augmented by Company Matching Contributions.
It provides each Eligible Employee with an opportunity to become a stockholder
of the Corporation. To comply with the applicable requirements of the Tax Reform
Act of 1986, the Plan has been restated in its entirety effective March 31,
1993, except as otherwise provided in Section 11.12 hereof. [THE FOLLOWING
SENTENCE IS EFFECTIVE SEPTEMBER 1, 1994:] The Plan is intended to be an employee
stock ownership plan, as defined in section 4975 of the Code, and is designed to
invest primarily in qualifying employer securities, as defined in section 409(l)
of the Code.

                                     xciii
<PAGE>   4

                                   ARTICLE II

                          DEFINITIONS AND CONSTRUCTION

2.1      Definitions. When the following words and phrases appear in this Plan,
         they shall have the respective meanings set forth below unless the
         context clearly indicates otherwise:

         (a)      Accounts: The accounts under the Plan to be maintained for
                  each Participant as provided in Section 6.2.

         (b)      Actual Contribution Percentage: A percentage which, for a
                  specified group of Eligible Employees for a Plan Year shall be
                  the average of the ratios (calculated separately for each
                  Eligible Employee in such group) of

                  (i)      the amount of After-Tax Contributions and Company
                           Matching Contributions remitted to the Trustee on
                           behalf of each Eligible Employee for such Plan Year
                           (but only to the extent that such Contributions and
                           Company Matching Contributions are not considered for
                           purposes of Section 2.1(c) hereof), together with
                           qualified nonelective contributions treated as
                           Company Matching Contributions pursuant to Code
                           section 401(m) and regulations thereunder, to

                  (ii)     the Eligible Employee's Total Compensation for such
                           Plan Year.

                  For the purposes of determining the ratio of a Highly
                  Compensated Eligible Employee, the After-Tax Contributions,
                  Company Matching Contributions, and Total Compensation of such
                  Highly Compensated Eligible Employee shall include the
                  After-Tax Contributions, Company Matching Contributions, and
                  Total Compensation of family members (as defined in Code
                  section 414(q)(6)(B)) of said Highly Compensated Eligible
                  Employee; provided, however, that this sentence shall not
                  apply for Plan Years beginning after December 31, 1996.

         (c)      Actual Deferral Percentage: A percentage which, for a
                  specified group of Eligible Employees for a Plan Year, shall
                  be the average of the ratios (calculated separately for each
                  Eligible Employee in such group) of

                  (i)      the amount of Before-Tax Contributions remitted to
                           the Trustee on behalf of each such Eligible Employee
                           for such Plan Year (and, to the extent determined
                           appropriate by the Committee, such other
                           Contributions and Company Matching Contributions as
                           may be used to determine the actual deferral
                           percentage under Code section 401(k) and regulations
                           thereunder), to

                  (ii)     the Eligible Employee's Total Compensation for such
                           Plan Year.

                  For the purposes of determining the ratio of a Highly
                  Compensated Eligible Employee, the Before-Tax Contributions
                  and Total Compensation of such Highly Compensated Eligible
                  Employee shall include the Before-Tax Contributions and Total
                  Compensation of family members (as defined in Code section
                  414(q)(6)(B))

                                      xciv
<PAGE>   5

                  of said Highly Compensated Eligible Employee; provided,
                  however that this sentence shall not apply for Plan Years
                  beginning after December 31, 1996.

         (d)      Affiliated Employer: An Employer and any corporation which is
                  a member of a controlled group of corporations (as defined in
                  Code section 414(b)) which includes an Employer; any trade or
                  business (whether or not incorporated) which is under common
                  control (as defined in Code section 414(c)) with an Employer;
                  any organization (whether or not incorporated) which is a
                  member of an affiliated service group (as defined in Code
                  section 414(m)) which includes an Employer; and any other
                  entity required to be aggregated with an Employer pursuant to
                  Code section 414(o).

         (e)      After-Tax Contributions: Contributions made by Participants on
                  an after-tax basis, which include Basic After-Tax
                  Contributions and Unrestricted After-Tax Contributions.

         (f)      All Cash Distribution: As defined in subsection 7.3(c).

         (g)      All Stock Distribution: As defined in subsection 7.3(a).

         (h)      Annuity Starting Date: The first day of the first period
                  following the Valuation Date for which a Participant's
                  distribution is payable as an annuity.

         (i)      Ballard: Ballard Medical Product, a wholly-owned subsidiary of
                  the Corporation.

         (j)      Ballard Heritage Employee: An Employee of Ballard, as of
                  December 31, 1999, who has an Hour of Service on January 1,
                  2000. Except for purposes of Article III, a Ballard Heritage
                  Employee may also include a former employee of Ballard with an
                  account in the Ballard Savings Plan as of December 31, 1999
                  which is transferred to this Plan as of January 31, 2000.

         (k)      Ballard Heritage Rollover Account: An Account consisting of
                  Discretionary Contributions and Matching Contributions, as
                  defined under the Ballard Savings Plan, and earnings and
                  losses attributable thereto, transferred from the Ballard
                  Savings Plan as of January 31, 2000 with respect to the
                  Ballard Heritage Employees, pursuant to the merger of the
                  Ballard Savings Plan herein, and rollovers made under a prior
                  version of this Plan, with earnings thereon.

         (l)      Ballard Savings Plan: the Ballard Medical Products 401(k)
                  Retirement Savings Plan.

         (m)      Base Hourly Wages: An amount, as determined by the Employer
                  pursuant to Committee rule, which is that portion of an
                  Eligible Employee's Total Compensation from an Employer which
                  consists only of regular earnings while a Participant. Base
                  Hourly Wages shall be determined before Before-Tax
                  Contributions pursuant to subsection 3.2(a), and any elective
                  wage reduction contributions pursuant to Code Section 125, are
                  deducted. Notwithstanding the foregoing, the amount of any
                  Eligible Employee's compensation which is taken into account
                  for purposes of determining such Eligible Employee's Base
                  Hourly Wages under the Plan shall not exceed the limit set
                  forth in Section 11.12.

                                      xcv
<PAGE>   6

         (n)      Basic After-Tax Contributions:

                  (i)      Contributions made by Participants under subsection
                           3.2(b) on an after-tax basis on account of which a
                           Company Matching Contribution is made to the Plan on
                           behalf of the Participant; or

                  (ii)     Before-Tax Contributions in excess of the limitation
                           under subsection 3.5(a)(i) or in excess of the
                           limitation under subsection 3.5(b)(i) which are
                           recharacterized under subsection 3.5(b)(iii), and any
                           other employee contributions, as defined in Code
                           Section 401(m) and the regulations thereunder, on
                           account of which a Company Matching Contribution was
                           made to this Plan on behalf of the Participant,

                  excluding any such employee contributions contributed prior to
                  April 1, 1990, or made on behalf of a Participant who was
                  employed prior to April 1, 1989.

         (o)      Beneficiary: The person or persons last designated on Timely
                  Notice by a Participant, provided the named person survives
                  the Participant. If no such person is validly designated as
                  provided under Section 7.7(a), or if the designated person
                  predeceases the Participant, the Beneficiary shall be the
                  Participant's spouse, if living, and if not, the Participant's
                  estate.

         (p)      Before-Tax Contributions: Contributions made by Employers on
                  behalf of Participants under subsection 3.2(a) on or after
                  April 1, 1993 that are considered deferred within the meaning
                  of Code section 401(k) and regulations thereunder.

         (q)      Board: The Board of Directors of the Corporation.

         (r)      Bond Index Fund: An Investment Fund consisting of U.S.
                  government and investment grade corporate bonds, and asset
                  backed and mortgage backed securities with the objective to
                  match the performance of the Lehman Brothers Aggregate Bond
                  Index, or such other similar index as may be selected by the
                  Named Fiduciary. The Bond Index Fund shall include funds
                  transferred from the Government Fund as of October 1, 1996
                  under the prior version of the Plan, and Contributions
                  allocated to the Government Fund under the prior version of
                  the Plan shall be allocated to the Bond Index Fund. The Bond
                  Index Fund shall also include funds transferred as of January
                  1, 1998 from, and Contributions allocated as of January 1,
                  1998 to, the KCTC Admiral Long-Term U.S. Treasury Portfolio
                  Fund accounts of KCTC Heritage Employees under the KCTC Hourly
                  Plan. The Bond Index Fund shall also include funds transferred
                  as of January 1, 1998 from the KCTC Admiral Long-Term U.S.
                  Treasury Portfolio Fund accounts pursuant to the merger of the
                  KCTC Salaried Plan herein. The Bond Index Fund shall also
                  include funds transferred as of January 31, 2000 from the
                  Ballard Bond and Mortgage Account pursuant to the merger of
                  the Ballard Savings Plan herein.

         (s)      Business Day: Any day on which securities are traded on the
                  New York Stock Exchange.

         (t)      Code: The Internal Revenue Code of 1986, as amended from time
                  to time.

         (u)      Commissioner: The Commissioner of the Internal Revenue
                  Service.

                                      xcvi
<PAGE>   7

         (v)      Committee: The committee appointed to administer and regulate
                  the Plan as provided in Article IX.

         (w)      Company Matching Contributions: Amounts contributed under the
                  Plan by Employers as provided in Article IV.

         (x)      Contributions: Amounts deposited under the Plan by or on
                  behalf of Participants including Before-Tax Contributions, and
                  After-Tax Contributions as provided in Article III.

         (y)      Corporation: Kimberly-Clark Corporation (a Delaware
                  corporation).

         (z)      Corporation Stock: The common stock of the Corporation.

         (aa)     Current Market Value: The fair market value on any day as
                  determined by the Trustee in accordance with generally
                  accepted valuation principles applied on a consistent basis.

         (bb)     Day of Service: An Employee shall be credited with a Day of
                  Service for each calendar day commencing with the date on
                  which the Employee first performs an Hour of Service until the
                  Employee's Severance from Service Date. If an Employee quits,
                  is discharged, retires, or dies, and such Employee does not
                  incur a One-Year Period of Severance, the Employee shall be
                  credited with a Day of Service for each calendar day elapsed
                  from the Employee's Severance from Service Date to the date on
                  which the Employee again completes an Hour of Service.

         (cc)     Eligible Employee: Any person who is in the employ of an
                  Employer during such periods as he meets all of the following
                  conditions:

                  (i)      he is an Employee on the regular payroll of an
                           Employer,

                  (ii)     he has (a) at least one calendar month of continuous
                           Service or (b) has completed during a computation
                           period beginning on or after April 1, 1993, 365
                           consecutive Days of Service, or has completed during
                           a computation period ending on or prior to March 31,
                           1993, at least 1,000 Hours of Service. A computation
                           period for purposes of this subsection 2.1(u)(ii)
                           shall be a period of 12 consecutive months, beginning
                           on the Employee's date of employment by the
                           Corporation, a Subsidiary or an Equity Company or an
                           anniversary thereof; and

                  (iii)    he is in a Participating Unit.

                  For purposes of the preceding sentence, "on the regular
                  payroll of an Employer" shall mean paid through the payroll
                  department of such Employer, and shall exclude employees
                  classified by an Employer as intermittent or temporary
                  employees, and persons classified by an Employer as
                  independent contractors, regardless of how such Employee may
                  be classified by any federal, state, or local, domestic or
                  foreign, governmental agency or instrumentality thereof, or
                  court.

                  Any leased employee (as defined in Code section 414(n)) shall
                  not be considered an Eligible Employee under the Plan. In
                  addition, a person who

                                     xcvii
<PAGE>   8

                  formerly was an Eligible Employee shall be treated as an
                  Eligible Employee for all purposes hereunder during such
                  periods as he meets all of the following conditions:

                  (i)      he is an Employee on the regular payroll of an
                           Employer; and

                  (ii)     he is on temporary assignment to provide services for
                           a corporation, hereinafter referred to as the
                           "Affiliate," which is a member of a controlled group
                           of corporations, within the meaning of Code section
                           414(b) as modified by Code section 415(h), of which
                           the Corporation is a member, and which is not an
                           Employer hereunder.

                  For purposes of the preceding sentence, a person shall be
                  considered on temporary assignment only if his period of
                  service for an Affiliate is expected to be of brief duration
                  not to exceed 2 years and if he is expected to resume services
                  for an Employer upon the expiration of the temporary
                  assignment with the Affiliate. A person shall also be
                  considered on temporary assignment at other Employers or in
                  other classifications or from another Employer or
                  classification only if his period of service in such
                  assignment is expected to be of brief duration not to exceed 2
                  years and if he is expected to resume services in his regular
                  assignment upon the expiration of such assignment.

         (dd)     Employee:  A person employed by an Employer.

         (ee)     Employee Accounts: Those Accounts which reflect that portion
                  of a Participant's interest in the Investment Funds which are
                  attributable to his Contributions, including the Ballard
                  Heritage Rollover Account and the KCTC Heritage Rollover
                  Account.

         (ff)     Employer: The Corporation and each Subsidiary which the
                  Committee shall from time to time designate as an Employer for
                  purposes of the Plan pursuant to Article X hereof, and which
                  shall adopt the Plan and the Trust. A list of Employers is set
                  forth in Appendix A.

         (gg)     Employer Accounts: Those Accounts which reflect the portion of
                  a Participant's interest in the Investment Funds which are
                  attributable to Company Matching Contributions.

         (hh)     Entry Date: The first day of each month.

         (ii)     Equity Company: Any corporation, which is not the Corporation
                  or a Subsidiary, 33-1/3% or more of the voting shares of which
                  are owned directly or indirectly by the Corporation.

         (jj)     ERISA: The Employee Retirement Income Security Act of 1974, as
                  amended from time to time.

         (kk)     Growth Stock Fund: An Investment Fund consisting primarily of
                  common or preferred stocks of medium to large capitalization
                  companies identified by the fund manager as having above
                  average growth potential. The Growth Stock Fund will include
                  funds transferred as of January 1, 1998 from, and
                  Contributions allocated as of January 1, 1998 to, the KCTC
                  U.S. Growth Portfolio Fund and the KCTC Index Trust - Small
                  Cap Stock Portfolio accounts of KCTC Heritage

                                     xcviii
<PAGE>   9

                  Employees under the KCTC Hourly Plan. The Growth Stock Fund
                  shall also include funds transferred as of January 31, 2000
                  from the Ballard Large Company Growth Account and the Medium
                  Company Growth Account pursuant to the merger of the Ballard
                  Savings Plan herein.

         (ll)     Highly Compensated Eligible Employee: An Eligible Employee who
                  is described in Code section 414(q) and applicable regulations
                  thereunder. An Employee who is described in Code section
                  414(q) and applicable regulations thereunder generally means
                  an Employee who performed services for the Employer or an
                  Affiliated Employer during the "Determination Year" and is in
                  one or more of the following groups:

                  (i)      Employees who at any time during the "Determination
                           Year" or "Look-Back Year" were "Five Percent Owners"
                           of the Employer or an Affiliated Employer. "Five
                           Percent Owner" means any person who owns (or is
                           considered owning within the meaning of Code Section
                           318) more than five percent of the outstanding stock
                           of the Employer or stock possessing more than five
                           percent of the total combined voting power of all
                           stock of the Employer or, in the case of an
                           unincorporated business, any person who owns more
                           than five percent of the capital or profits interest
                           in the Employer. In determining percentage ownership
                           hereunder, employers that would otherwise be
                           aggregated under Code sections 414(b), (c), (m) and
                           (o) shall be treated as separate employers; or

                  (ii)     Employees who received "Compensation" during the
                           "Look-Back Year" from the Employer or an Affiliated
                           Employer in excess of $80,000, adjusted for changes
                           in the cost of living as provided in Code section
                           415(d) and, if the Employer elects, were in the "Top
                           Paid Group" of Employees for the Plan Year. "Top Paid
                           Group" means the top 20 percent of Employees,
                           excluding those Employees described in Code section
                           414(q)(8) and applicable regulations, who performed
                           services during the applicable Year, ranked according
                           to the amount of "Compensation" received from the
                           Employer during such Year.

                  The "Determination Year" shall be the Plan Year for which
                  testing is being performed, and the "Look-Back Year" shall be
                  the immediately preceding 12 month period.

                  An Employer may make a uniform election with respect to all
                  plans of the Employer to apply a calendar year calculation, as
                  permitted by regulations under Code section 414(q).

                  For purposes of this subsection, "Compensation" shall mean
                  compensation as defined in subsection 12.1(a)(iv) including
                  elective salary reduction contributions made under this Plan
                  or another cash or deferred arrangement or pursuant to Code
                  Section 125.

         (mm)     Hours of Service: Each hour for which an Employee is directly
                  or indirectly paid, or entitled to payment, by an Employer for
                  the performance of duties and for reasons other than the
                  performance of duties during the applicable computation
                  period. An Hour of Service shall also include each hour for
                  which back pay,

                                      xcix
<PAGE>   10

                  irrespective of mitigation of damages, has been either awarded
                  or agreed to by an Employer. Hours of Service shall be
                  credited to the Employee for the computation period or periods
                  in which the duties are performed or for the period to which
                  the award or agreement pertains, whichever is applicable.
                  Credit for Hours of Service shall be given for periods of
                  absence spent in military service to the extent required by
                  law. Credit for Hours of Service may also be given for such
                  other periods of absence of whatever kind or nature as shall
                  be determined under uniform rules of the Committee. Employment
                  with a company which was not, at the time of such employment,
                  an Employer shall be considered as the performance of duties
                  for an Employer if such employment was continuous until such
                  company was acquired by, merged with, or consolidated with an
                  Employer and such employment continued with an Employer
                  following such acquisition, merger or consolidation.
                  Employment with a Subsidiary that is not an Employer or with
                  an Equity Company shall be considered as performance of duties
                  for an Employer.

                  Hours of Service shall be calculated and credited in a manner
                  consistent with U.S. Department of Labor regulation Section
                  2530.200b-2(b) and (c), and shall in no event exclude any
                  hours required to be credited under U.S. Department of Labor
                  regulation Section 2530.200b-2(a).

                  For any period or periods for which adequate records are not
                  available to accurately determine the Employee's Hours of
                  Service, the following equivalency shall be used:

                           190 Hours of Service for each month for which such
                           Employee would otherwise receive credit for at least
                           one Hour of Service.

                  Solely for purposes of determining whether an Employee has
                  incurred a one-year break-in-service, an Employee who is
                  absent from work:

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

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

                  (iii)    by reason of a placement of a child with the Employee
                           in connection with the adoption of such child by the
                           Employee; or

                  (iv)     for purpose of caring for such child for a period
                           beginning immediately following such birth or
                           placement,

                  shall be credited with certain Hours of Service which would
                  otherwise have been credited to the Employee if not for such
                  absence. The Hours of Service credited hereunder by reason of
                  such absence shall be credited with respect to the Plan Year
                  in which such absence begins, if such credit is necessary to
                  prevent the Employee from incurring a one-year
                  break-in-service in such Plan Year, and otherwise with respect
                  to the Plan Year immediately following the Plan Year in which
                  such absence begins. In addition, the Hours of Service
                  credited with respect to such absence shall not exceed 501,
                  and shall be credited only to the extent that the Employee
                  substantiates to the satisfaction of the Committee that the
                  Employee's absence, and the length thereof, was for the
                  reasons described in paragraphs (1)-(4) above. Notwithstanding
                  the foregoing, no Hours of Service

                                       c
<PAGE>   11

                  shall be credited pursuant to the three immediately preceding
                  sentences with respect to any absence which commences before
                  April 1, 1985.

         (nn)     Installment Distribution.  As defined in subsection 7.3(d).

         (oo)     International Index Fund: An Investment Fund consisting
                  primarily of stocks of established companies based in Europe,
                  Asia and the Far East, with the objective to match the
                  performance of the Morgan Stanley Capital International EAFE
                  Index, or such other similar index as may be selected by the
                  Named Fiduciary. The International Index Fund shall include
                  funds transferred as of January 1, 1998 from, and
                  Contributions allocated as of January 1, 1998 to, the KCTC
                  International Growth Portfolio Fund accounts of KCTC Heritage
                  Employees under the KCTC Hourly Plan.

         (pp)     Investment Fund: An unsegregated fund of the Plan including
                  the K-C Stock Fund and such other funds as the Named Fiduciary
                  may establish. The Named Fiduciary may, from time to time, in
                  its discretion, establish additional funds or terminate any
                  fund. An Investment Fund may be, but shall not be limited to,
                  a fund managed by the Trustee, by an insurance company, or by
                  an investment company regulated under the Investment Company
                  Act of 1940. An Investment Fund, pending investment in
                  accordance with the fund purpose, may be invested in
                  short-term securities of the United States of America or in
                  other investments of a short-term nature.

         (qq)     K-C Stock Fund: An Investment Fund consisting of Corporation
                  Stock, with a portion invested in money market securities to
                  provide liquidity for Participant transactions. The K-C Stock
                  Fund shall also include funds transferred as of January 1,
                  1998 from, and Contributions allocated as of January 1, 1998
                  to, the K-C Stock Fund accounts of KCTC Heritage Employees
                  under the KCTC Hourly Plan.

         (rr)     KCTC: A term used to reflect certain units of the Corporation
                  which were formerly part of Kimberly-Clark Tissue Company
                  prior to its liquidation and dissolution as a wholly-owned
                  subsidiary of the Corporation.

         (ss)     KCTC Heritage Employee: An Employee of KCTC, as of December
                  31, 1997, who has an Hour of Service on January 1, 1998.

         (tt)     KCTC Heritage Rollover Account: An Account consisting of
                  Matching Employer Contributions, as defined under the KCTC
                  Hourly Plan, and earnings and losses attributable thereto,
                  transferred from the KCTC Hourly Plan as of January 1, 1998,
                  and rollovers made under a prior version of this Plan, with
                  earnings thereon.

         (uu)     KCTC Hourly Plan: The Kimberly-Clark Tissue Company Investment
                  Plan for Hourly Employees.

         (vv)     Long-Term Managed Fund: An Investment Fund consisting
                  primarily of growth and emerging growth stocks, growth and
                  income stocks, bonds, and international stocks with a
                  long-term investment horizon. The Long-Term Managed Fund shall
                  include funds transferred as of January 1, 1998 from the KCTC
                  Asset Allocation Fund accounts of KCTC Heritage Employees
                  under the KCTC Hourly Plan.

                                       ci
<PAGE>   12

         (ww)     Lump Sum Distribution: A single distribution of the entire
                  amount of a Participant's Accounts.

         (xx)     Medium-Term Managed Fund: An Investment Fund consisting
                  primarily of bonds, growth and income stocks, growth and
                  emerging growth stocks and money market securities with a
                  medium-term investment horizon. The Medium-Term Managed Fund
                  shall include funds transferred as of January 1, 1998 from the
                  KCTC Balanced Index Fund accounts of KCTC Heritage Employees
                  under the KCTC Hourly Plan.

         (yy)     Minimum Return Joint & Survivor Annuity Distribution. As
                  defined in subsection 7.3(e).

         (zz)     Minimum Return Single-Life Annuity. As defined in subsection
                  7.3(f).

         (aaa)    Money Market Fund: An Investment Fund consisting of short-term
                  debt securities issued or fully guaranteed as to the payment
                  of principal and interest by the U.S. government or any agency
                  or instrumentality thereof. The Money Market Fund shall also
                  include funds transferred as of January 31, 2000 from the
                  Ballard Money Market Account and the Ballard Small Company
                  Value Account pursuant to the merger of the Ballard Savings
                  Plan herein.

         (bbb)    Months of Service: A calendar month any part of which an
                  Employee completes an Hour of Service. Except, however, an
                  Employee shall be credited with a Month of Service for each
                  month during the 12 month computation period in which he has
                  not incurred a One-Year Period of Severance. An Employee shall
                  be credited with a Month of Service for each calendar month of
                  absence during the 12 month computation period following the
                  date on which the Employee does not complete an Hour of
                  Service for any reason other than the Employee quits, is
                  discharged, retires or dies.

         (ccc)    Named Fiduciary: The Retirement Trust Committee (the members
                  of which are designated by the Chief Executive Officer of the
                  Corporation) shall be the Named Fiduciary of the Plan as
                  defined in ERISA.

         (ddd)    One-Year Period of Severance: The applicable computation
                  period of 12 consecutive months during which an Employee fails
                  to accrue a Day of Service. Years of Service and One-Year
                  Periods of Severance shall be measured on the same computation
                  period.

                  An Employee shall not be deemed to have incurred a One-Year
                  Period of Severance if he completes an Hour of Service within
                  12 months following his Severance from Service Date.

         (eee)    Partial Distribution: A distribution of a portion of a
                  Participant's Accounts.

         (fff)    Participant: An Eligible Employee who has validly elected to
                  participate under Section 3.1. He remains a Participant until
                  all of his Accounts have been distributed pursuant to the
                  Plan.

                                      cii
<PAGE>   13

         (ggg)    Participating Unit: A specific classification of Employees of
                  an Employer designated from time to time by the Committee
                  pursuant to Article X hereof as participating in this Plan.
                  The classifications so designated are shown in Appendix A.

         (hhh)    Period Certain and Continuous Annuity Distribution. As defined
                  in subsection 7.3(h).

         (iii)    Period Certain Annuity Distribution. As defined in subsection
                  7.3(g).

         (jjj)    Plan Year: After December 31, 1993, a twelve calendar month
                  period beginning January 1 and ending the following December
                  31. The period beginning on April 1, 1993, and ending December
                  31, 1993, shall constitute a Plan Year. For the period prior
                  to April 1, 1993, and after March 31, 1970, each twelve
                  calendar month periods beginning on April 1 of one year and
                  ending March 31 of the following year.

                  For purposes of identification, each Plan Year is designated
                  in terms of the calendar year in which it commences.

         (kkk)    Service: Regular employment with the Corporation, a Subsidiary
                  or an Equity Company. For all purposes under the Plan, Service
                  shall include service with KCTC and Scott Paper Company prior
                  to January 1, 1998. Service for Eligible Employees at
                  Kimberly-Clark Technical Paper, Inc. shall include service
                  with CPM, Inc. prior to May 16, 1995. Service for Eligible
                  Employees at Tecnol Medical Products, Inc. ("Tecnol") shall
                  include service with Tecnol prior to December 18, 1997.
                  Service for Eligible Employees at Kimberly-Clark Printing
                  Technology, Inc., formerly Formulabs, Inc. ("Formulabs") shall
                  include service with Formulabs prior to March 31, 1998.
                  Service for Eligible Employees at Ballard shall include
                  service with Ballard prior to September 23, 1999.

         (lll)    Severance from Service Date:  The earlier of:

                  (i)      the date an Employee quits, is discharged, retires or
                           dies, or

                  (ii)     the first anniversary of the date an Employee is
                           absent from Service for any reason other than a quit,
                           discharge, retirement, or death (e.g., disability,
                           leave of absence, or layoff, etc.)

         (mmm)    Small Cap Index Fund: An Investment Fund consisting of common
                  and preferred stocks of corporations and other issues
                  convertible into such common and preferred stocks, with the
                  objective to match the performance of the Russell 2000 Index,
                  or such similar index as may be selected by the Named
                  Fiduciary. The Small Cap Index Fund shall include funds
                  transferred from the SMI Stock Fund no later than September
                  29, 2000 under the prior version of the Plan.

         (nnn)    SMI: Schweitzer-Mauduit International, Inc., a Delaware
                  corporation.

         (ooo)    Stable Income Fund: An Investment Fund consisting primarily of
                  investment contracts issued by insurance companies or banks
                  and in money market securities. The Stable Income Fund shall
                  include funds transferred as of October 1, 1996 from the Fixed
                  Income Fund under the prior version of the Plan,

                                      ciii
<PAGE>   14

                  and Contributions allocated to the Fixed Income Fund under the
                  prior version of the Plan shall be allocated to the Stable
                  Income Fund. The Stable Income Fund shall include funds
                  transferred as of January 1, 1998 from, and Contributions
                  allocated as of January 1, 1998 to, the KCTC Fixed Income Fund
                  accounts of KCTC Heritage Employees under the KCTC Hourly
                  Plan. The Stable Income Fund shall also include funds
                  transferred as of January 1, 1998 from the Salaried Fixed
                  Income Fund under the Kimberly-Clark Tissue Company Investment
                  Plan for Salaried Employees and from the KCTC Stable Income
                  Fund under the Kimberly-Clark Corporation Employees Incentive
                  Investment Plan. The Stable Income Fund shall also include
                  funds transferred as of January 31, 2000 from the Ballard
                  Guaranteed Interest Account pursuant to the merger of the
                  Ballard Savings Plan herein.

         (ppp)    Stock and Cash Distribution:  As defined in subsection 7.3(b).

         (qqq)    Stock Index Fund. An Investment Fund consisting of common and
                  preferred stocks of established corporations and other issues
                  convertible into such common and preferred stocks, with the
                  objective to match the performance of the Standard & Poors
                  (S&P) 500 Stock Index, or such other similar index as may be
                  selected by the Named Fiduciary. The Stock Index Fund shall
                  include funds transferred as of October 1, 1996 from the
                  Diversified Fund under the prior version of the Plan and
                  Contributions allocated to the Diversified Fund under the
                  prior version of the Plan shall be allocated to the Stock
                  Index Fund. The Stock Index Fund shall include funds
                  transferred as of January 1, 1998 from, and Contributions
                  allocated as of January 1, 1998 to, the KCTC Index Trust-Total
                  Stock Market Portfolio and KCTC Windsor Fund accounts of KCTC
                  Heritage Employees under the KCTC Hourly Plan. The Stock Index
                  Fund shall also include funds transferred as of January 31,
                  2000 from the Ballard Stock Index 500 Account and the Ballard
                  U.S. Stock Account pursuant to the merger of the Ballard
                  Savings Plan herein.

         (rrr)    Subsidiary: Any corporation, 50% or more of the voting shares
                  of which are owned directly or indirectly by the Corporation,
                  which is incorporated under the laws of one of the States of
                  the United States.

         (sss)    Terminated Participant: A Participant who has terminated his
                  employment with an Employer prior to January 1, 1998 (i) with
                  the aggregate value of the Participant's Accounts exceeding
                  $3,500 or (ii) a Participant who has terminated his employment
                  with an Employer on or after January 1, 1998 with the
                  aggregate value of the Participant's Accounts exceeding
                  $5,000, and who has not elected to receive a distribution
                  under the Plan. A Terminated Participant shall also include a
                  former employee of KCTC whose account balance under the KCTC
                  Hourly Plan is transferred to the Plan as of January 1, 1998.

         (ttt)    Timely Notice: A notice in writing on forms, or by electronic
                  medium, or through a voice response system, prescribed by the
                  Committee and filed at such places and at such times as shall
                  be established by Committee rules.

         (uuu)    Total Compensation: An Eligible Employee's total compensation
                  as that term is defined in Code section 414(s). Total
                  Compensation of any Eligible Employee shall not exceed the
                  limit set forth in Section 11.12.

                                      civ
<PAGE>   15

         (vvv)    Trust: The Kimberly-Clark Corporation Defined Contribution
                  Plans Trust pursuant to the trust agreement provided for in
                  Article V.

         (www)    Trustee: The trustee under the Trust.

         (xxx)    Unrestricted After-Tax Contributions:

                  (i)      Contributions made by Participants under subsection
                           3.2(b) on an after-tax basis on account of which no
                           Company Matching Contribution is made to the Plan on
                           behalf of the Participant; or

                  (ii)     Employee contributions, as defined in Code Section
                           401(m) and the regulations thereunder, contributed
                           prior to April 1, 1990 on account of which a Company
                           Matching Contribution was made under this Plan on
                           behalf of a Participant who was employed prior to
                           April 1, 1989; or

                  (iii)    Before-Tax Contributions in excess of the limitation
                           under subsection 3.5(a)(i) or in excess of the
                           limitation under subsection 3.5(b)(i) and which are
                           recharacterized under subsection 3.5(b)(ii) and any
                           other Employee contribution as defined under Code
                           Section 401(m) and the regulations thereunder, on
                           account of which no Company Matching Contribution was
                           made to this Plan on behalf of the Participant.

         (yyy)    Valuation Date: Each Business Day for which the Current Market
                  Value of a Participant's Accounts is determined for purposes
                  of this Plan.

         (zzz)    Year of Service: An Employee shall accrue a Year of Service
                  for each 365 Days of Service. If the total of an Employee's
                  Service exceeds his whole Years of Service, then such Employee
                  shall be credited with an additional fraction of a Year of
                  Service, the numerator of which shall be the total number of
                  his Days of Service represented by such excess and the
                  denominator of which shall be 365. If the total of an
                  Employee's Service is less than one Year of Service, then such
                  Employee shall be credited with a fraction of a Year of
                  Service, the numerator of which shall be the total number of
                  his Days of Service and the denominator of which shall be 365.

2.2      Construction. Where appearing in the Plan, the masculine shall include
         the feminine and the plural shall include the singular, unless the
         context clearly indicates otherwise. The words "hereof," "herein,"
         "hereunder" and other similar compounds of the word "here" shall mean
         and refer to the entire Plan and not to any particular Section or
         subsection.

                                       cv
<PAGE>   16

                                   ARTICLE III

                  PARTICIPATION, CONTRIBUTIONS, AND ALLOCATIONS

3.1      Election to Participate. An Eligible Employee's election to participate
         in the Plan shall, if given on Timely Notice,

         (a)      be effective as of the first Entry Date following his
                  election, or as soon as administratively possible thereafter,
                  and

         (b)      remain in effect as a valid election to participate for each
                  successive Plan Year.

         An election to participate by an Eligible Employee who, immediately
         prior to becoming an Eligible Employee, was a participant under the
         Kimberly-Clark Corporation Salaried Employees Incentive Investment Plan
         shall be effective as soon as administratively possible upon exercising
         his election and his accounts thereunder shall be transferred to this
         Plan in a manner determined by the Committee.

         Notwithstanding the foregoing, each person actively employed on an
         hourly basis by the Sani-Fresh International, Inc. division of
         Kimberly-Clark Tissue Company at its facility in San Antonio, Texas,
         other than a person classified as an "office hourly employee," shall
         become a Participant in the Plan on January 1, 1997, and such person's
         accounts and investment elections under the Kimberly-Clark Tissue
         Company Investment Plan for Hourly Employees (the "KCTC Hourly Plan")
         shall be transferred from the K-C Stock Fund in the KCTC Hourly Plan to
         the K-C Stock Fund in this Plan on January 1, 1997; provided that such
         person who is not actively employed on January 1, 1997 shall become a
         Participant in the Plan upon his return to active employment, and his
         accounts under the Kimberly-Clark Tissue Company Investment Plan for
         Hourly Employees shall be transferred to this Plan in a manner
         determined by the Committee.

         Notwithstanding the foregoing, a KCTC Heritage Employee in a
         Participating Unit who was a participant in the KCTC Hourly Plan as of
         January 1, 1998 shall become a Participant in the Plan on January 1,
         1998, and such KCTC Heritage Employee's elections in effect under the
         KCTC Hourly Plan as of December 31, 1997 shall remain in effect as
         provided under this Plan; provided that a KCTC Heritage Employee who is
         not actively employed on January 1, 1998 shall become a Participant in
         the Plan upon his return to active employment, and his elections in
         effect under the KCTC Hourly Plan shall remain in effect as provide
         under this Plan, and his accounts under the KCTC Hourly Plan shall be
         transferred to this Plan in a manner determined by the Committee.

         Notwithstanding the foregoing, a Ballard Heritage Employee who was a
         participant in the Ballard Savings Plan as of December 31, 1999 shall
         become a Participant in this Plan coincident with the transfer of his
         or her account from the Ballard Savings Plan to this Plan on January
         31, 2000, but such Ballard Heritage Employee shall not be eligible to
         make a election to participate hereunder.

3.2      Amount of Contributions by and on behalf of Participants.

         (a)      Before-Tax Contributions. During each Plan Year, Before-Tax
                  Contributions shall be made on behalf of a Participant by his
                  Employer for deposit to his Account as follows:

                                      cvi
<PAGE>   17

                  (i)      Subject to the provisions of Section 3.5, a
                           Participant may elect on Timely Notice to make
                           Before-Tax Contributions to his Account in any whole
                           percentage equal to an amount which is not less than
                           1% of his Base Hourly Wages and not more than 15% of
                           his Base Hourly Wages.

                  (ii)     Before-Tax Contributions shall be deducted from a
                           Participant's Total Compensation. An election under
                           this subsection shall remain in effect for so long as
                           a Participant is eligible to make Before-Tax
                           Contributions or, if earlier, until changed by a
                           Participant. A Participant may change his election on
                           Timely Notice effective as of the Participant's first
                           payroll check on or after the first day of the
                           following month, or as soon as administratively
                           possible thereafter.

         (b)      After-Tax Contributions.

                  (i)      A Participant may elect on Timely Notice to make
                           After-Tax Contributions to his Account in any whole
                           percentage equal to an amount which is not less than
                           1% of his Base Hourly Wages and not more than 15% of
                           his Base Hourly Wages.

                  (ii)     An election to make After-Tax Contributions by
                           regular payroll deduction shall remain in effect for
                           so long as a Participant is eligible to make
                           After-Tax Contributions or, if earlier, until changed
                           by a Participant. A Participant may change such
                           election on Timely Notice effective as of the first
                           payroll check on or after the first day of the
                           following month, or as soon as administratively
                           possible thereafter.

                  (iii)    After-Tax Contributions equal to the difference
                           between 5% of a Participant's Base Hourly Wages and
                           the Participant's Before-Tax Contributions, but not
                           less than zero (0), shall be classified as Basic
                           After-Tax Contributions and shall be taken into
                           account in determining the Company Matching
                           Contributions made on behalf of the Participant.

                  (iv)     After-Tax Contributions which are not Basic After-Tax
                           Contributions shall be classified as Unrestricted
                           After-Tax Contributions and shall not be taken into
                           account in determining the amount of Company Matching
                           Contributions made on behalf of Participants.

         (c)      Notwithstanding any other provision of this Section 3.2, no
                  Ballard Heritage Employee and no Ballard Employee shall make
                  Contributions under this Plan.

3.3      General Limitation.

         (a)      Notwithstanding any other provision of this Article III, no
                  Contribution shall be made to the Plan which would cause the
                  Plan to fail to meet the requirements for exemption from tax
                  or to violate any provisions of the Code.

         (b)      Notwithstanding any other provision of this Article III, the
                  Contributions made by and on behalf of a Participant shall not
                  exceed 20% of his Base Hourly Wages; provided, however, that
                  effective January 1, 1997, the Contributions made by and on
                  behalf of a Participant shall not exceed 15% of his Base
                  Hourly Wages.

                                      cvii
<PAGE>   18

3.4      Investment of Contributions by and on behalf of Participants.

         Before-Tax Contributions and After-Tax Contributions. On Timely Notice,
         a Participant shall elect to allocate in whole multiples of 1% all of
         the Before-Tax Contributions and After-Tax Contributions to be made on
         his behalf during a Plan Year to one or more of

         (i)                             the Money Market Fund
         (ii)                            the Stable Income Fund
         (iii)                           the Bond Index Fund
         (iv)                            the Medium-Term Managed Fund
         (v)                             the Long-Term Managed Fund
         (vi)                            the Stock Index Fund
         (vii)                           the Growth Stock Fund
         (viii)                          the International Index Fund
         (ix)                            the Small Cap Index Fund, or
         (x)                             the K-C Stock Fund

         An election under this subsection shall remain in effect until changed
         by a Participant. A Participant may change his election and such
         election shall be effective as of the date of the Participant's next
         Contribution following Timely Notice of the change, or as soon as
         administratively possible thereafter.

3.5      Limitations on Before-Tax Contributions.

         (a)      Overall Limitation.

                  (i)      Notwithstanding any provision of the Plan to the
                           contrary, Before-Tax Contributions made on behalf of
                           a Participant by his Employer for deposit to his
                           Account shall not exceed $7,000 (or such greater
                           amount as permitted under applicable regulations to
                           reflect cost-of-living increases) in any taxable year
                           of the Participant.

                  (ii)     If a Participant so elects, Before-Tax Contributions
                           made in excess of the amount permitted in (a)(i) of
                           this Section (or, if less, their Current Market Value
                           on the date of the deposit thereof pursuant to this
                           subsection) shall be deposited to the Participant's
                           Account as a Basic After-Tax Contribution or
                           Unrestricted After-Tax Contributions, as applicable,
                           by such Participant.

                  (iii)    If a Participant does not elect to deposit his
                           Before-Tax Contributions in excess of the amount
                           permitted in Section 3.5(a)(i), the percentage of his
                           Before-Tax Contributions shall be reduced in order to
                           meet the limitations of Section 3.5(a)(i).

                  (iv)     Basic After-Tax Contributions or Unrestricted
                           After-Tax Contributions, as applicable, deposited to
                           a Participant's Account pursuant to (ii) above will
                           be allocated to the Plan funds in the same manner as
                           Before-Tax Contributions made on behalf of the
                           Participant.

         (b)      Limitations on Actual Deferral Percentage.

                                     cviii
<PAGE>   19

                  (i)      In any Plan Year in which the Actual Deferral
                           Percentage for the group of Highly Compensated
                           Eligible Employees would be more than the greater of

                           (A)      the Actual Deferral Percentage of all other
                                    Eligible Employees multiplied by 1.25, or

                           (B)      the lesser of (1) 2 percent plus the Actual
                                    Deferral Percentage of all other Eligible
                                    Employees or (2) the Actual Deferral
                                    Percentage of all other Eligible Employees
                                    multiplied by 2.0,

                           the deferral rate under subsection 3.2(a) of those
                           Highly Compensated Eligible Employees shall be
                           reduced (in whole or less than whole percentages) in
                           descending order by rate of deferral elected until
                           the Actual Deferral Percentage for the group of
                           Highly Compensated Eligible Employees is not more
                           than the greater of (A) or (B); provided, however,
                           that for Plan Years beginning after December 31,
                           1996, the deferral rate under subsection 3.2(a) of
                           those Highly Compensated Eligible Employees shall be
                           reduced (in whole or less than whole percentages) in
                           descending order beginning with the Highly
                           Compensated Eligible Employee with the highest
                           deferral rate until the Actual Deferral Percentage
                           for the group of Highly Compensated Eligible
                           Employees is not more than the greater of (A) or (B).

                           For purposes of this subsection, a person shall not
                           be considered to be an Eligible Employee until such
                           time as he or she could first have in effect a valid
                           election to participate in the Plan.

                  (ii)     In order to prevent the multiple use of the
                           alternative limitations described in subsections
                           3.5(b)(i)(B) and 4.4(a)(i)(B), the following
                           provisions shall apply. If the Actual Deferral
                           Percentage test in subsection 3.5(b)(i) is satisfied
                           using subsection 3.5(b)(i)(B), the Actual
                           Contribution Percentage test in subsection 4.4(a)(i)
                           is satisfied using subsection 4.4(a)(i)(B), and the
                           combined Actual Deferral Percentage and Actual
                           Contribution Percentage exceeds the greater of:

                           (A)      the sum of: (I) the greater of the Actual
                                    Deferral Percentage or the Actual
                                    Contribution Percentage for Eligible
                                    Employees other than Highly Compensated
                                    Eligible Employees multiplied by 1.25, and
                                    (II) 2 percent plus the lesser of the Actual
                                    Deferral Percentage or the Actual
                                    Contribution Percentage for Eligible
                                    Employees other than Highly Compensated
                                    Eligible Employees (but not more than the
                                    lesser of the Actual Deferral Percentage or
                                    Actual Contribution Percentage for Eligible
                                    Employees other than Highly Compensated
                                    Eligible Employees multiplied by 2.0), or

                           (B)      the sum of: (I) the lesser of the Actual
                                    Deferral Percentage or the Actual
                                    Contribution Percentage for Eligible
                                    Employees other than Highly Compensated
                                    Eligible Employees multiplied by 1.25, and
                                    (II) 2 percent plus the greater of the
                                    Actual Deferral Percentage or the Actual
                                    Contribution Percentage for Eligible
                                    Employees other than Highly Compensated
                                    Eligible Employees (but not more than

                                      cix
<PAGE>   20

                                    the greater of the Actual Deferral
                                    Percentage or Actual Contribution Percentage
                                    for Eligible Employees other than Highly
                                    Compensated Eligible Employees multiplied by
                                    2.0),

                           then the deferral rate under subsection 3.2(a) of
                           those Highly Compensated Eligible Employees shall be
                           reduced in accordance with subsection 3.5(b)(i) or
                           the contribution rate of those Highly Compensated
                           Eligible Employees shall be reduced in accordance
                           with subsection 4.4(a)(i), or both as determined by
                           the Committee, so that there is no multiple use of
                           the alternative limitation, as described in
                           regulations under Code section 401(m).

                           In lieu of the reduction described in this subsection
                           3.5(b)(ii) and in 3.5(b)(i) above, the Employer may
                           make qualified nonelective contributions (pursuant to
                           the regulations under Code sections 401(k) and
                           401(m)) to be allocated only to the Accounts of
                           Participants who are not Highly Compensated Eligible
                           Employees.

                           Qualified nonelective contributions treated as
                           elective contributions, whether taken into account to
                           satisfy the limit set forth in this subsection
                           3.5(b)(ii) or in 3.5(b)(i) above, shall be fully
                           vested when made and shall not be distributed before
                           one of the events described in subsection
                           4.4(a)(iii).

                           Any excess contribution resulting from the required
                           reduction described above shall be corrected in
                           accordance with subsection 3.5(b)(iii). Any such
                           excess aggregate contribution resulting from required
                           reduction shall be corrected in accordance with
                           subsection 4.4(a)(iii).

                  (iii)    Before-Tax Contributions actually made in excess of
                           the amount permitted under subsections 3.5(b)(i) and
                           3.5(b)(ii) shall be recharacterized as Basic
                           After-Tax Contributions or Unrestricted After-Tax
                           Contributions, as applicable, by the close of the
                           Plan Year following the Plan Year for which such
                           Before-Tax Contributions were made. If such excess
                           Before-Tax Contributions are not recharacterized as
                           Basic After-Tax Contributions or Unrestricted
                           After-Tax Contributions within 2 1/2 months after the
                           close of the Plan Year for which they were made, a 10
                           percent excise tax on the amount of such excess
                           Before-Tax Contributions may apply. Recharacterized
                           excess Before-Tax Contributions shall be fully vested
                           when made and shall not be distributed before one of
                           the events described in subsection 4.4(a)(iii). Such
                           Contributions (or, if less, their Current Market
                           Value on the date of the deposit thereof pursuant to
                           this subsection) shall be deposited to the
                           Participant's Account as a Basic After-Tax
                           Contribution or Unrestricted After-Tax Contribution,
                           as applicable.

                  (iv)     Before-Tax Contributions will be taken into account
                           for purposes of determining the Actual Deferral
                           Percentage for a Plan Year only if they relate to
                           Total Compensation that would have been received by
                           the Participant during the Plan Year (but for the
                           election to make Before-Tax Contributions hereunder),
                           or Total Compensation that is attributable to
                           services performed by the Participant during the Plan
                           Year and would

                                       cx
<PAGE>   21

                           have been received by the Participant within 2 1/2
                           months after the close of the Plan Year (but for the
                           election to make Before-Tax Contributions hereunder).

         (c)      Additional Limitation. Notwithstanding any provision of the
                  Plan to the contrary, the Committee may limit or adjust the
                  amount of Before-Tax Contributions in a manner that prevents
                  contributions in excess of the limit set forth in subsection
                  3.5(b) above; provided that a Participant may elect to
                  preserve his total Contributions election under the Plan so
                  that his Before-Tax Contributions which are limited under
                  Section 3.5 are automatically made as Basic After-Tax
                  Contributions or Unrestricted After-Tax Contributions, as
                  applicable, subject to Section 3.3 above during such period as
                  his Before-Tax Contributions are so limited.

3.6      Suspension of All Contributions. On Timely Notice and notwithstanding
         the provisions of Section 3.2, a Participant may elect to suspend all
         of his Contributions, effective as of the Participant's first payroll
         check on or after the first day of the following month, or as soon as
         administratively possible thereafter. On Timely Notice a Participant
         may elect to resume Contributions as of the Participant's first payroll
         check on or after the first day of the following month, or as soon as
         administratively possible thereafter.

         A Participant's Contributions shall be suspended commencing with and
         continuing throughout any period during which he fails to qualify as an
         Eligible Employee. On Timely Notice upon requalifying as an Eligible
         Employee a Participant may elect to make Contributions to his Accounts
         and such election shall be effective as soon as administratively
         possible.

3.7      Payment of Contributions to Trustee. The Employers shall contribute or
         remit to the Trustee no later than 15 days after the end of each month
         the amounts deducted or withheld from the Participants' compensation
         during the month as Contributions under the Plan.

3.8      Reallocation of Participant's Accounts.

         (a)      A Participant may, as of any Business Day, elect to (i)
                  reallocate all or any whole percentage portion, or (ii) effect
                  a fund transfer of all or any whole percentage portion or
                  dollar amount, of any of his Employee Accounts or Employer
                  Accounts among the Investment Funds listed in Section 3.4;
                  provided, however, that

                  (i)      Company Matching Contributions contributed to a
                           Participant's Employer Account in the K-C Stock Fund
                           on or after October 1, 1996 (excluding amounts in the
                           KCTC Heritage Rollover Account) and earnings and
                           losses thereon, shall not be reallocated to any other
                           Employer Account until a Participant attains age 50,
                           and

                  (ii)     effective January 1, 1998, amounts in a Participant's
                           Employee Accounts or Employer Accounts in the Stable
                           Income Fund (A) may only be reallocated or
                           transferred to one or more of the Investment Funds
                           listed in subsections 3.4(a)(iii) through 3.4(a)(ix);
                           and (B) once reallocated or transferred, cannot be
                           transferred to the Money Market Fund for a period of
                           not less than 90 days.

                                      cxi

<PAGE>   22

         (b)      A Participant's election to reallocate or effect a fund
                  transfer shall be effective as soon as administratively
                  possible following Timely Notice, and the amount of such
                  reallocation shall be determined by the value of the
                  Participant's interest in any Investment Fund on the Valuation
                  Date on which such reallocation takes effect.

3.9      Redeposits and Restored Amounts.

         (a)      Notwithstanding any provision in this Plan to the contrary, on
                  Timely Notice, an Employee who has forfeited all or a portion
                  of his Employer Accounts may redeposit such distribution or
                  withdrawal before the earlier of (i) the date on which the
                  Employee has been reemployed for five years or (ii) the date
                  on which the Employee incurs five consecutive One-Year Periods
                  of Severance following the year of the distribution or
                  withdrawal. Upon such redeposit, the amount of the forfeiture
                  associated with the redeposit shall be restored to the
                  Employee's Account in the K-C Stock Fund from which it was
                  forfeited. Redeposits shall be allocated to the Plan funds in
                  the same manner as Before-Tax Contributions made on behalf of
                  the Participant. The amount redeposited shall be equal to the
                  total amount distributed or withdrawn which caused the
                  forfeiture.

         (b)      No redeposit of such a withdrawal or distribution shall be
                  permitted if, coincident with or subsequent to the forfeiture
                  associated with that withdrawal or distribution, an Employee
                  incurs 5 consecutive One-Year Periods of Severance. For Plan
                  Years prior to April 1, 1989, and for purposes of this Section
                  3.9 only, an Employee incurs a One-Year Period of Severance if
                  he is not an Employee on the last day of a Plan Year.

         (c)      A Participant who is entitled to no portion of his Employer
                  Account upon termination of employment shall be deemed to have
                  received a distribution of zero dollars ($0) from such
                  account.

         (d)      Any forfeiture from the Before-Tax Contributions or Basic
                  After-Tax Contribution Section of his Employer Accounts shall
                  be restored in accordance with the provisions of this Section
                  3.9 if the Terminated Participant returns to his employment
                  with an Employer prior to incurring five consecutive One-Year
                  Periods of Severance and, effective with forfeitures on or
                  after October 1, 1996, the Terminated Participant has either
                  (i) not received a distribution or withdrawal from the
                  Before-Tax Contributions or Basic After-Tax Contribution
                  Section of his Employee Accounts or (ii) has redeposited such
                  distribution or withdrawal as provided in subsection (a)
                  above.

3.10     Source of and Interest in Before-Tax Contributions. Anything in this
         Plan to the contrary notwithstanding, Before-Tax Contributions shall be
         made by the Employers out of current or accumulated earnings and
         profits, and the Employers shall have no beneficial interest of any
         nature whatsoever in any such Contributions after the same have been
         received by the Trustee.

3.11     Contributions During Qualified Military Leave. Notwithstanding any
         provision of this Plan to the contrary, Contributions and Company
         Matching Contributions may be made for periods of qualified military
         service in accordance with Section 414(u) of the Code.

                                      cxii
<PAGE>   23

                                   ARTICLE IV

                             EMPLOYER CONTRIBUTIONS

4.1      Contribution Percentage. Subject to Section 4.3, Company Matching
         Contributions for each Plan Year shall be 75% of a Participant's
         Before-Tax Contributions or Basic After-Tax Contributions on the first
         2% of such Participant's Base Hourly Wages per pay period, and 50% of a
         Participant's Before-Tax Contributions or Basic After-Tax Contributions
         on the next 3% of such Participant's Base Hourly Wages per pay period.

         No Company Matching Contributions shall be made with respect to a
         Participant's Unrestricted After-Tax Contributions.

4.2      Allocation and Payment of Company Matching Contributions. Company
         Matching Contributions shall be

         (a)      made out of current or accumulated earnings and profits,

         (b)      allocated exclusively to the K-C Stock Fund,

         (c)      made to the Trustee as soon as practicable after the end of
                  the month in which the related Contributions are deducted or
                  withheld for payment to the Trustee, and

         (d)      made in cash, or at the sole option of the Employer, in shares
                  of Corporation Stock held in the treasury, or both (but not in
                  authorized but unissued shares) in which event the amount of
                  any Company Matching Contribution made in Corporation Stock
                  shall be the Current Market Value thereof on the date of
                  delivery to the Trustee which, for the purposes of the Plan,
                  shall be considered as the Trustee's cost of such shares
                  except where Treasury Regulations sections
                  1.402(a)-1(b)(2)(ii) and 54.4975-11(d)(1) require shares of
                  Corporation Stock acquired while the Plan is an employee stock
                  ownership plan to have a different cost in order to satisfy
                  their requirements.

         Any forfeiture under the Plan may be applied to reduce Company Matching
         Contributions, or if determined by the Committee in its discretion, to
         offset administrative expenses of the Plan. A forfeiture shall be
         valued at Current Market Value as of the Valuation Date on which the
         forfeiture occurred.

4.3      Temporary Suspension of Company Matching Contributions. The Board may
         order the suspension of all Company Matching Contributions if, in its
         opinion, the Corporation's consolidated net income after taxes for the
         last fiscal year is substantially below the Corporation's consolidated
         net income after taxes for the immediately preceding fiscal year. Any
         such determination by the Board shall be communicated to all Eligible
         Employees and to all Participants reasonably in advance of the first
         date for which such temporary suspension is ordered.

         Except when caused, as determined by the Board, by a change in the
         capital structure of the Corporation which has the effect that the
         regular cash dividend rate is not in fairness comparable between
         successive quarters, any reduction of the regular cash dividend

                                     cxiii
<PAGE>   24

         rate payable on Corporation Stock for any quarter as compared with the
         immediately preceding quarter shall automatically result in the
         suspension of all Company Matching Contributions for the first Plan
         Year commencing after the quarter in which such reduction occurs.

4.4      Limitations on Company Matching Contributions, Unrestricted After-Tax
         Contributions and Basic After-Tax Contributions.

         (a)      Limitations on Actual Contribution Percentage.

                  (i)      In any Plan Year in which the Actual Contribution
                           Percentage for the group of Highly Compensated
                           Eligible Employees would be more than the greater of

                           (A)      the Actual Contribution Percentage of all
                                    other Eligible Employees multiplied by 1.25,
                                    or

                           (B)      the lesser of (I) 2 percent plus the Actual
                                    Contribution Percentage of all other
                                    Eligible Employees or (II) the Actual
                                    Contribution Percentage of all other
                                    Eligible Employees multiplied by 2.0,

                           the contribution rate under subsection 3.2(b) and
                           Section 4.1 of those Highly Compensated Eligible
                           Employees shall be reduced (in whole or less than
                           whole percentages) in descending order until the
                           Actual Contribution Percentage for the group of
                           Highly Compensated Eligible Employees is not more
                           than the greater of (A) or (B); provided, however
                           that for Plan Years beginning after December 31, 1996
                           the contribution rate under Section 3.2 and 4.1 of
                           those Highly Compensated Eligible Employees shall be
                           reduced (in whole or less than whole percentages) in
                           descending order beginning with the Highly
                           Compensated Eligible Employee with the highest
                           contribution rate until the Actual Contribution
                           Percentage for the group of Highly Compensated
                           Eligible Employees is not more than the greater of
                           (A) or (B).

                           For purposes of this subsection, a person shall not
                           be considered to be an Eligible Employee until such
                           time as he or she could first have in effect a valid
                           election to participate in the Plan.

                  (ii)     In order to prevent the multiple use of the
                           alternative limitations described in subsections
                           3.5(b)(i)(B) and 4.4(a)(i)(B), the provisions of
                           subsection 3.5(b)(ii) shall apply.

                  (iii)    After-Tax Contributions and Company Matching
                           Contributions for the Plan Year (if any) in excess of
                           the amount permitted under subsection 4.4(a)(i) and
                           4.4(a)(ii), together with the income or loss
                           allocable thereto, shall be distributed to the
                           Participant after the close of the Plan Year and
                           within 12 months after the close of that Plan Year
                           (and, if practicable, no later than 2 1/2 months
                           after the close of the Plan Year in order to avoid
                           any excise

                                      cxiv
<PAGE>   25

                           tax imposed on the Employer for excess aggregate
                           contributions); provided, however, that an Employer
                           may make qualified nonelective contributions (as
                           provided under Code section 401(m) and the
                           regulations thereunder) to be allocated only to the
                           Accounts of Participants who are not Highly
                           Compensated Eligible Employees that, in combination
                           with After-Tax Contributions and Company Matching
                           Contributions, satisfy the limit set forth in
                           4.4(a)(i) and 4.4(a)(ii) above. Such qualified
                           nonelective contributions (as provided under Code
                           section 401(m) and the regulations thereunder),
                           whether taken into account to satisfy the limit set
                           forth in 4.4(a)(i) and 4.4(a)(ii) above, shall be
                           fully vested when made, shall be allocated as of a
                           date within the Plan Year, and shall not be
                           distributed before one of the following events:

                           (A)      the Eligible Employee's retirement, death,
                                    disability, or separation from service, as
                                    provided under Code section 401(k) and
                                    applicable regulations;

                           (B)      the Eligible Employee's attainment of age
                                    59 1/2 or the Eligible Employee's hardship,
                                    as provided under Code section 401(k) and
                                    applicable regulations;

                           (C)      the termination of the Plan without the
                                    establishment or maintenance of a successor
                                    plan, as provided under Code section 401(k)
                                    and applicable regulations;

                           (D)      the date of the sale or other disposition by
                                    an Employer of substantially all the assets
                                    used in a trade or business to an unrelated
                                    corporation, but only with respect to an
                                    Eligible Employee who continues employment
                                    with the acquiring corporation, provided
                                    that the Employer continues to maintain the
                                    plan after the sale or disposition and the
                                    acquiring corporation does not maintain the
                                    plan after the sale or disposition, in
                                    accordance with Code section 401(k) and
                                    applicable regulations; or

                           (E)      the date of the sale or other disposition by
                                    an Employer of its interest in a subsidiary
                                    to an unrelated entity or individual, but
                                    only with respect to an Eligible Employee
                                    who continues employment with the acquiring
                                    corporation, provided that the Employer
                                    continues to maintain the plan after the
                                    sale or disposition and the acquiring
                                    corporation does not maintain the plan after
                                    the sale or disposition, in accordance with
                                    Code section 401(k) and applicable
                                    regulations.

                           The income or loss allocable to an excess aggregate
                           contribution under subsection 4.4(a)(i) shall be
                           determined in the manner set forth in subsection
                           4.4(a)(iii).

                                      cxv
<PAGE>   26

                  (iv)     The income or loss allocable to an excess aggregate
                           contribution shall be determined by multiplying the
                           income or loss allocable to a Participant's After-Tax
                           Contributions and Company Matching Contributions for
                           the Plan Year by a fraction, the numerator of which
                           is the After-Tax Contributions and Company Matching
                           Contributions made in excess of the amount permitted
                           in (a)(i) of this Section and the denominator of
                           which is the balance of the After-Tax Contributions
                           and Company Matching Contributions Sections of the
                           Participant's Account on the last day of the Plan
                           Year, together with any After-Tax Contributions and
                           Company Matching Contributions for the gap period
                           described below, but reduced by the income allocable
                           to such Sections for the Plan Year and increased by
                           the loss allocable to such Sections for the Plan
                           Year. The income or loss allocable to an excess
                           aggregate contribution shall include the income or
                           loss allocable for the period between the end of the
                           Plan Year and the date of distribution (the "gap
                           period"). The income or loss allocable to an excess
                           aggregate contribution for the gap period shall equal
                           10% of the income or loss allocable to such
                           contribution as determined above, multiplied by the
                           number of months that have elapsed since the end of
                           the Plan Year. For this purpose, a distribution on or
                           before the 15th of the month shall be treated as made
                           on the last day of the preceding month, and a
                           distribution made after the 15th of the month shall
                           be treated as made on the first day of the next
                           month.

         (b)      Additional Limitation. Notwithstanding any provision of the
                  Plan to the contrary, the Committee may limit or adjust the
                  amount of After-Tax Contributions and Company Matching
                  Contributions in a manner that prevents contributions in
                  excess of the limit set forth in subsection 4.4(a)(i) above.

                                      cxvi
<PAGE>   27

                                    ARTICLE V

                           TRUSTEE AND TRUST AGREEMENT

5.1      The Corporation shall enter into a trust agreement with a person or
         corporation selected by the Chief Executive Officer of the Corporation
         to act as Trustee of Contributions and Company Matching Contributions.
         The Trustee shall receive all Contributions and all Company Matching
         Contributions and shall hold, manage, administer, and invest the same,
         reinvest any income, and, in accordance with instructions and
         directions of the Committee subject to the Plan, make distributions.

         The trust agreement shall be in such form and contain such provisions
         as the Chief Executive Officer of the Corporation may deem necessary
         and appropriate to effectuate the purposes of the Plan and to qualify
         the Plan and the Trust under the Code. Upon the written request of an
         Eligible Employee, a copy of the trust agreement shall be made
         available for his inspection.

         The Chief Executive Officer of the Corporation may, from time to time,
         remove the Trustee or any successor Trustee at any time and any such
         Trustee or any successor Trustee may resign. The Chief Executive
         Officer of the Corporation shall, upon removal or resignation of a
         Trustee, appoint a successor Trustee.

         The Trustee's accounts, books, and records relating to the Trust may be
         audited annually by auditors selected by the Chief Executive Officer of
         the Corporation.

         The Trustee's fee shall be paid by the Trustee out of the funds of the
         Trust, unless paid by the Corporation in its discretion. Brokerage
         fees, asset management fees, investment management fees and other
         direct costs of investment, taxes (including interest and penalties),
         and administrative expenses of the Plan shall be paid by the Trustee
         out of the funds of the Trust to which such costs are attributable,
         unless paid by the Corporation in its discretion.

                                     cxvii
<PAGE>   28

                                   ARTICLE VI

             INVESTMENT, PARTICIPANT'S ACCOUNTS, AND VOTING OF STOCK

6.1      Investment of Contributions.

         (a)      A Participant's Contributions during each Plan Year shall be
                  invested in the Investment Funds in accordance with the
                  Participant's allocations under Section 3.4. A Participant's
                  interest arising from his reallocation for prior Plan Years
                  shall be invested in the Investment Funds in accordance with
                  the Participant's directions under Section 3.8. Company
                  Matching Contributions during each Plan Year shall be invested
                  in the K-C Stock Fund. All such investments and gains or
                  losses related thereto shall be allocated to each
                  Participant's Accounts pursuant to the provisions of Section
                  6.2.

         (b)      The Committee shall designate Participant's Contributions and
                  Company Matching Contributions for payment to the Trustee for
                  investment, and Employee Accounts and Employer Accounts for
                  reallocation in accordance with subsection 6.1(a), and shall
                  advise the Trustee of such designation.

6.2      Participant's Accounts.

         (a)      Establishment of Accounts. Each Participant shall have
                  established and maintained for him separate Accounts which,
                  depending upon the allocation and reallocation options he has
                  selected, shall consist of Employee Accounts and Employer
                  Accounts in one or more of the Money Market Fund, the Stable
                  Income Fund, the Bond Index Fund, the Medium-Term Managed
                  Fund, the Long-Term Managed Fund, the Stock Index Fund, the
                  Growth Stock Fund, the International Index Fund, the K-C Stock
                  Fund and the Small Cap Index Fund. Each such Employee Account
                  shall be subdivided into a Basic After-Tax Contributions
                  Section, a Before-Tax Contributions Section, and an
                  Unrestricted After-Tax Contribution Section. Each such
                  Employer Account shall be subdivided into subsections
                  corresponding to the Sections of Employee Accounts, other than
                  the Unrestricted After-Tax Contribution Section.

                  As soon as practicable following the end of each calendar
                  quarter, the Committee will cause an annual statement to be
                  prepared for each Participant which will reflect the status of
                  the Participant's Accounts in such form as shall be prescribed
                  by the Committee.

         (b)      Crediting of Accounts. As of the close of business on each
                  Valuation Date the designated Accounts of each Participant
                  shall be appropriately credited with the amounts of his
                  Contributions and Contributions made on his behalf on that
                  Valuation Date, or the reallocation or transfer of his other
                  Accounts, if any, effective on that Valuation Date and his
                  Employer Account in the K-C Stock Fund shall be credited with
                  the amount of any Company Matching Contributions made with
                  respect to him on that Valuation Date.

                                     cxviii
<PAGE>   29

         (c)      Valuation of Accounts. Each Participant's Accounts shall be
                  valued and adjusted each Business Day to preserve for each
                  Participant his proportionate interest in the related funds
                  and reflect the effect of income, collected and accrued,
                  realized and unrealized profits and losses, expenses,
                  valuation adjustments, and all other transactions with respect
                  to the related fund as follows:

                  (i)      The Current Market Value of the assets held in each
                           of the funds shall be determined by the Trustee, and

                  (ii)     The separate balances provided for in subsection
                           6.2(b) of each Participant's Account under each of
                           the related funds shall be adjusted by multiplying by
                           the ratio that the Current Market Value of such fund
                           as determined under subsection 6.2(c)(i) bears to the
                           aggregate of the Account balances under such fund.

6.3      Stock Rights, Stock Splits and Stock Dividends. A Participant shall
         have no right of request, direction or demand upon the Committee or the
         Trustee to exercise in his behalf rights to purchase shares of
         Corporation Stock or other securities of the Corporation. The Trustee,
         at the direction of the Committee, shall exercise or sell any rights to
         purchase shares of Corporation Stock appertaining to shares of such
         stock held by the Trustee and shall sell at the direction of the
         Committee any rights to purchase other securities of the Corporation
         appertaining to shares of Corporation Stock held by the Trustee. The
         Accounts of Participants shall be appropriately credited. Shares of
         Corporation Stock received by the Trustee by reason of a stock split or
         a stock dividend shall be appropriately allocated to the Accounts of
         the Participants.

6.4      Voting of Corporation Stock. A Participant (or in the event of his
         death, his Beneficiary) may direct the voting at each annual meeting
         and at each special meeting of the stockholders of the Corporation of
         that number of whole shares of Corporation Stock held by the Trustee
         and attributable to the balances in his K-C Stock Fund Account as of
         the Valuation Date coincident with the record date for such meeting.
         Each such Participant (or Beneficiary) will be provided with copies of
         pertinent proxy solicitation material together with a request for his
         instructions as to how such shares are to be voted. The Committee shall
         direct the Trustee to vote such shares in accordance with such
         instructions and shall also direct the Trustee how to vote any shares
         of Corporation Stock at any meeting for which it has not received, or
         is not subject to receiving, such voting instructions. Notwithstanding
         the foregoing, a Participant's (or Beneficiary's) voting instructions
         shall apply to the balances in the K-C Stock Fund Accounts for all
         plans maintained by an Employer in which he participates.

6.5      Tender Offers. A Participant (or in the event of his death, his
         Beneficiary) may direct the Trustee in writing how to respond to a
         tender or exchange offer for any or all whole shares of Corporation
         Stock held by the Trustee and attributable to the balances in his K-C
         Stock Fund Account as of the Valuation Date coincident with such offer.
         The Committee shall notify each Participant (or Beneficiary) and exert
         its best efforts to timely distribute or cause to be distributed to him
         such information as will be distributed to stockholders of the
         Corporation in connection with any such tender or exchange offer.

                                      cxix
<PAGE>   30

         Upon receipt of such instructions, the Trustee shall tender such shares
         of Corporation Stock as and to the extent so instructed. If the Trustee
         shall not receive instructions from a Participant (or Beneficiary)
         regarding any such tender or exchange offer for such shares of
         Corporation Stock (or shall receive instructions not to tender or
         exchange such shares), the Trustee shall have no discretion in such
         matter and shall take no action with respect thereto. With respect to
         shares of Corporation Stock in the K-C Stock Fund for which the Trustee
         is not subject to receiving such instructions, however, the Trustee
         shall tender such shares in the same ratio as the number of shares for
         which it receives instructions to tender bears to the total number of
         shares for which it is subject to receiving instructions, and shall
         have no discretion in such matter and shall take no action with respect
         thereto other than as specifically provided in this sentence.
         Notwithstanding the foregoing, a Participant's (or Beneficiary's)
         voting instructions shall apply to the balances in the K-C Stock Fund
         Accounts for all plans maintained by an Employer in which he
         participates.

                                      cxx
<PAGE>   31

                                   ARTICLE VII

                            DISTRIBUTION OF ACCOUNTS

7.1      Accounts to be Distributed.

         (a)      Termination On or After Attainment of Age 55. If a
                  Participant's employment with an Employer is terminated on or
                  after his attainment of age 55, he shall be fully vested in
                  his Accounts and shall be entitled to receive a distribution
                  of the entire amount then in his Accounts in accordance with
                  Section 7.6. Notwithstanding the foregoing, if a Participant
                  is determined by the Committee to be Totally and Permanently
                  Disabled on or before October 31, 1996 under the prior version
                  of the Plan and has less than 5 Years of Service, such
                  Participant shall be fully vested in his Accounts.

         (b)      Termination Upon Death. In the event that the termination of
                  employment of a Participant is caused by his death, or a
                  Terminated Participant dies prior to the first day on which
                  such Terminated Participant's Accounts are payable, the entire
                  amount then in his Accounts shall be paid to his Beneficiary
                  in accordance with Section 7.6 after receipt by the Committee
                  of acceptable proof of death.

         (c)      Termination As a Result of Group Termination. In the event
                  that the termination of employment of a Participant is caused
                  by reason of his status as a member of a group involved in a
                  group termination, he shall be entitled to receive a
                  distribution of the entire amount then in his Accounts in
                  accordance with Section 7.4, unless action is taken pursuant
                  to the Plan to segregate the Accounts of all the Participants
                  in such group from the Trust and arrange for a transfer to or
                  a merger with a qualified successor plan or trust with respect
                  thereto. Notwithstanding the foregoing, this subsection 7.1(c)
                  shall not apply after October 31, 1996.

         (d)      Termination for Other Reasons. If a Participant's employment
                  with an Employer is terminated for any other reason, the
                  Participant shall be entitled to the entire amount in his
                  Employee Accounts and a portion of his Employer Accounts as
                  determined in accordance with the following schedule:

<TABLE>
<CAPTION>
                                                                 Vested                      Forfeited
                  Years of Service                             Percentage                   Percentage
                  ----------------                             ----------                   ----------
<S>                                                            <C>                          <C>
                  Less than 5                                       0%                         100%
                  5 or more                                       100%                           0%
</TABLE>

                  Notwithstanding any other provision of this Section 7.1, a
                  KCTC Heritage Employee shall be fully vested in his Accounts
                  upon becoming a Participant as of January 1, 1998, and shall
                  be entitled to receive a distribution of the entire amount in
                  his Accounts in accordance with Section 7.7.

                  Notwithstanding any other provision of this Section 7.1, a
                  Ballard Heritage Employee shall be fully vested in his
                  Accounts upon transfer of his or her account from the Ballard
                  Savings Plan to this Plan as of January 31, 2000, and shall be
                  entitled to receive a distribution of the entire amount in his
                  Accounts in accordance with Section 7.7.

                                      cxxi
<PAGE>   32

                  In the event that the termination of employment of a
                  Participant is caused by any reason other than the Employee
                  quits, is discharged, retires or dies, the Participant will be
                  deemed to have a 12 month period of absence following the date
                  of such termination of employment, for purposes of determining
                  the portion of his Employer Accounts which such Participant
                  shall be entitled to receive in a distribution in accordance
                  with this subsection.

                  In the event that the Plan is amended to change the vesting
                  provisions set forth in this subsection 7.1(d), a Participant
                  with 3 or more years of Service may elect to have the vested
                  percentage of the Participant's Employer Accounts determined
                  pursuant to the vesting provisions in effect prior to the
                  amendment.

         (e)      Deferred Distributions. Notwithstanding anything in this
                  Article VII to the contrary, if the aggregate value of the
                  Accounts of any Participant exceeds $5,000 as provided under
                  Code section 411(a)(11), an immediate distribution shall not
                  be made without the consent of the Participant. A Participant
                  who fails to consent to a distribution under this subsection
                  7.1(e) shall continue to participate as a Terminated
                  Participant and shall be entitled to a distribution of his
                  Employee Accounts and the vested percentage of his Employer
                  Accounts. Upon Timely Notice of request for payment, the
                  Terminated Participant's Employee Accounts and the vested
                  percentage of his Employer Accounts shall be distributed in
                  accordance with the provisions of Section 7.6.

7.2      Timing of Distributions. A Participant's election to receive a
         distribution of his Accounts shall be effective as soon as practicable
         following Timely Notice and the amount of the distribution shall be
         determined by the value of the Participant's interest in any Investment
         Fund as of the Valuation Date of the distribution. Any forfeiture with
         respect to the Accounts of the Participant or Terminated Participant
         shall be determined as of the Valuation Date coincident with such
         Participant's or Terminated Participant's termination of employment.
         Distribution of a Participant's Accounts shall be made to him or to his
         Beneficiary after the termination of his employment and as soon as
         practicable following his request for a distribution.

7.3      Certain Definitions Relating to Distributions and Withdrawals. The
         following are forms of distribution under the Plan:

         (a)      All Stock Distribution. An All Stock Distribution of a
                  Participant's Accounts shall mean a single distribution as of
                  the Valuation Date consisting of full shares of Corporation
                  Stock attributable to the Participant's Employee Accounts and
                  to the vested percentage of his Employer Accounts, together
                  with the cash equivalent of the Current Market Value on the
                  Valuation Date of fractional shares of such stock attributable
                  to such Accounts.

         (b)      Stock and Cash Distribution. A Stock and Cash Distribution of
                  a Participant's Accounts shall mean a single distribution
                  consisting of:

                  (i)      the cash equivalent of the Current Market Value on
                           the Valuation Date of the Participant's Employee
                           Accounts, except his Employee Account in the K-C
                           Stock Fund, and the vested percentage of his Employer
                           Accounts, except his Employer Account in the K-C
                           Stock Fund, and

                                     cxxii
<PAGE>   33

                  (ii)     full shares of Corporation Stock on the Valuation
                           Date, attributable to the Participant's Employee
                           Account in the K-C Stock Fund and to the vested
                           percentage of his Employer Account in the K-C Stock
                           Fund, together with the cash equivalent of the
                           Current Market Value on the Valuation Date of
                           fractional shares of such stock attributable to such
                           Accounts, and

                  (iii)    the cash equivalent of any other interest
                           attributable to the Participant's Accounts, except
                           the forfeited percentage of his Employer Accounts, on
                           the Valuation Date.

         (c)      All Cash Distribution. An All Cash Distribution of a
                  Participant's Accounts shall mean the same as a Stock and Cash
                  Distribution, as defined in subsection 7.3(b), except that
                  clause (ii) in said subsection shall be replaced by the
                  following clause:

                  (ii)     the cash equivalent of the Current Market Value as of
                           the Valuation Date of all the shares and fractional
                           shares of Corporation Stock attributable to the
                           Participant's Employee Account in the K-C Stock Fund
                           and to the vested percentage of his Employer Account
                           in the K-C Stock Fund.

         (d)      Installment Distribution. An Installment Distribution shall
                  mean the cash equivalent of the Current Market Value of the
                  Participant's vested percentage of his Accounts on the
                  Valuation Date, paid monthly in cash for a period elected by
                  the Participant. For all Participants other than Ballard
                  Heritage Employees, the elected period shall not exceed the
                  lesser of 20 years or the Participant's life expectancy at the
                  time such Installment Distribution is to commence. For
                  Participants who are Ballard Heritage Employees, the elected
                  period shall not exceed the Participant's life expectancy and,
                  if the Participant is married, his spouse's life expectancy,
                  at the time such Installment Distribution is to commence. The
                  value of each payment shall be determined on a declining
                  balance method. Notwithstanding the forgoing provisions of
                  subsection 7.3(d), a KCTC Heritage Employee may elect to
                  receive an Installment Distribution on the same basis as a
                  Stock and Cash Distribution or All Cash Distribution and to be
                  paid monthly or annually.

                  Prior to the distribution of the final payment of an
                  Installment Distribution, a Participant may elect:

                  (i)      to receive the remaining balance in his Accounts as a
                           Lump Sum Distribution;

                  (ii)     to change the elected period of the Installment
                           Distribution; or

                  (iii)    to receive a Partial Distribution from the remaining
                           balance in his Accounts.

         (e)      Minimum Return Joint & Survivor Annuity Distribution. A
                  Participant who elects a Minimum Return Joint & Survivor
                  Annuity Distribution shall have an annuity purchased for him
                  from an insurance company, the value of which shall be
                  determined by the Current Market Value of the Participant's
                  Employee Accounts and the vested percentage of his Employer
                  Accounts on the Valuation Date. The

                                     cxxiii
<PAGE>   34

                  following types of Minimum Return Joint and Survivor Annuity
                  Distribution may be elected:

                  (i)      100% Joint & Survivor Annuity Distribution. A 100%
                           Joint & Survivor Annuity Distribution shall mean a
                           reduced monthly distribution payable for the
                           Participant's life, provided however, that the same
                           amount of such reduced distribution is payable to the
                           Participant's Beneficiary for the Beneficiary's life,
                           after the death of the Participant.

                  (ii)     50% Joint & Survivor Annuity Distribution. A 50%
                           Joint & Survivor Annuity Distribution shall mean a
                           reduced monthly distribution payable for the
                           Participant's life, provided however, that one-half
                           of the amount of such reduced distribution is payable
                           to the Participant's Beneficiary for the
                           Beneficiary's life, after the death of the
                           Participant.

                  For purposes of subsections 7.3(e)(i) and 7.3(e)(ii), upon the
                  death of the designated Beneficiary, the remainder, if any, of
                  the total amount in the Participant's Accounts on the
                  Valuation Date which exceeds the aggregate of all payments
                  made to the Participant and Beneficiary shall be paid to the
                  estate of the Beneficiary as a Lump Sum Distribution in the
                  form of an All Cash Distribution.

         (f)      Minimum Return Single-Life Annuity Distribution. A Participant
                  who elects a Minimum Return Single-Life Annuity Distribution
                  shall have an annuity purchased for him from an insurance
                  company, the value of which shall be determined by the Current
                  Market Value of the Participant's Employee Accounts and the
                  vested percentage of his Employer Accounts on the Valuation
                  Date. A Minimum Return Single-Life Annuity Distribution shall
                  mean a monthly distribution payable for the Participant's
                  life, provided however, that upon the death of the
                  Participant, the remainder, if any, of the total amount in the
                  Participant's Accounts on the Valuation Date which exceeds the
                  aggregate of all payments made to the Participant shall be
                  paid to the Participant's Beneficiary as a Lump Sum
                  Distribution in the form of an All Cash Distribution.

         (g)      Period Certain Annuity Distribution. A Participant who elects
                  a Period Certain Annuity Distribution shall have an annuity
                  purchased for him from an insurance company, the value of
                  which shall be determined by the Current Market Value of the
                  Participant's Employee Accounts and the vested percentage of
                  his Employer Accounts on the Valuation Date. A Period Certain
                  Annuity Distribution shall mean a monthly distribution payable
                  for a period certain elected by the Participant, which elected
                  period shall not exceed the lesser of (i) 240 months or (ii)
                  the Participant's life expectancy at the time such payments
                  are to commence; provided however, that such monthly payments
                  are payable to the Participant's Beneficiary for the remainder
                  of the elected period, if any, upon the death of the
                  Participant.

         (h)      Period Certain and Continuous Annuity Distribution. A
                  Participant who elects a Period Certain and Continuous Annuity
                  Distribution shall have an annuity purchased for him from an
                  insurance company, the value of which shall be determined by
                  the Current Market Value of the Participant's Employee
                  Accounts and the vested percentage of his Employer Accounts on
                  the Valuation Date. A Period Certain and Continuous Annuity
                  Distribution shall mean a monthly

                                     cxxiv
<PAGE>   35

                  distribution payable for the Participant's life; provided
                  however, that such monthly payments are payable to the
                  Participant's Beneficiary for the remainder of the elected
                  period, if any, upon the death of the Participant. The elected
                  period shall not exceed the lesser of 240 months or the
                  Participant's life expectancy at the time such payments are to
                  commence.

7.4      Lump Sum and Partial Distributions. A Lump Sum Distribution or a
         Partial Distribution may be elected by any Participant, Beneficiary, or
         alternate payee under a Qualified Domestic Relations Order, in the form
         of an All Cash Distribution, a Stock and Cash Distribution or an All
         Stock Distribution.

7.5      Installment Distributions. An Installment Distribution may be elected
         by any Participant who has reached age 55. All Ballard Heritage
         Employees, and eligible KCTC Heritage Employees who are determined to
         be Totally and Permanently Disabled on or before January 1, 1998 under
         the terms of the KCTC Hourly Plan, may elect an Installment
         Distribution regardless of age. The Beneficiary or former spouse or
         child who is designated as an alternate payee under a Qualified
         Domestic Relations Order of a Participant who is eligible to elect an
         Installment Distribution may elect to receive an Installment
         Distribution.

7.6      Annuity Forms of Distribution. A Minimum Return Joint & Survivor
         Annuity Distribution, Minimum Return Single-Life Annuity Distribution,
         Period Certain Annuity Distribution, or Period Certain and Continuous
         Annuity Distribution may be elected only by a Ballard Heritage Employee
         whose account is transferred from the Ballard Savings Plan to this
         Plan. The Beneficiary or alternate payee under a Qualified Domestic
         Relations Order of an eligible Ballard Heritage Employee may elect any
         Annuity Form Of Distribution other than a Minimum Return Joint &
         Survivor Annuity Distribution.

         If a Ballard Heritage Employee who is married as of the Annuity
         Starting Date elects a form of distribution under this Article VII
         other than a Minimum Return Joint & Survivor Annuity Distribution (50%)
         with his or her spouse as the survivor, or if such Ballard Heritage
         Employee designates a survivor other than his or her spouse, such
         election shall not be valid unless:

         (i)      the spouse of such Ballard Heritage Employee consents in
                  writing to such election or designation and acknowledges its
                  effect, and

         (ii)     such consent is witnessed by a notary public.

         No spousal consent described in the immediately preceding sentence need
         be furnished, however, with respect to any election or designation if
         the Committee is satisfied that there is no spouse, that the spouse
         cannot be located, or that such consent is unobtainable for any other
         reason provided under regulations of the Internal Revenue Service.

         The Committee shall furnish a Ballard Heritage Employee at least 30,
         but no more than 90, days prior to the Annuity Starting Date a written
         explanation of the terms and conditions of an Annuity Form of
         Distribution, and such Ballard Heritage Employee's election shall be
         effective no earlier than 30 days after such written explanation is
         provided hereunder; provided, however, that if the Ballard Heritage
         Employee affirmatively elects and has obtained appropriate spousal
         consent described above, the Ballard Heritage Employee may commence
         payment before the expiration of the 30

                                      cxxv
<PAGE>   36

         days, but not earlier than 7 days, after such written explanation is
         provided. A Ballard Heritage Employee may revoke an election hereunder
         at any time on or before the Annuity Starting Date or, if later, the
         7-day period after the written explanation is provided. Spousal consent
         described above shall remain valid for the 90-day period described
         herein.

7.7      Methods of Distribution.

         (a)      Distribution by Reason of Death. The Beneficiary of a
                  Participant to which subsection 7.1(b) applies shall be
                  entitled to receive a distribution of such Participant's
                  Accounts in the form elected by the Participant in the
                  appointment of his Beneficiary prior to October 1, 1996. If no
                  such election was made, or for a designation made on or after
                  October 1, 1996, such distribution shall be in any form
                  available pursuant to the terms of the Plan as elected by the
                  Beneficiary. If a Participant designates a Beneficiary other
                  than his spouse at the time of such designation, such
                  designation shall not be valid unless:

                  (i)      the spouse of such Participant consents in writing to
                           each such election or designation and acknowledges
                           its effect, and

                  (ii)     such consent is witnessed by a notary public.

                  No spousal consent described in the immediately preceding
                  sentence need be furnished, however, with respect to any
                  election or designation if the Committee is satisfied that
                  there is no spouse, that the spouse cannot be located, or that
                  such consent is unobtainable for any other reason provided
                  under regulations of the Internal Revenue Service.

         (b)      Distribution Upon Termination of Employment for Reasons Other
                  than Death. A Participant who is entitled to receive a
                  distribution of his Accounts due to the termination of his
                  employment for any reason specified in Section 7.1, except
                  death, may on Timely Notice elect to receive such distribution
                  in the form of an All Stock Distribution, a Stock and Cash
                  Distribution or an All Cash Distribution or, if eligible under
                  Section 7.5, an Installment Distribution, at any time.

         (c)      Small Distributions. Notwithstanding any provision of this
                  Section 7.6 to the contrary, if the aggregate value of a
                  Participant's Accounts does not exceed $5,000 as provided
                  under Code section 411(a)(11), the Committee shall direct the
                  distribution of the Accounts of any Participant as an All
                  Stock Distribution, a Stock and Cash Distribution or an All
                  Cash Distribution as elected by the Participant or his
                  Beneficiary. If no earlier election is made, Timely Notice of
                  a request for payment shall be deemed to have been given as of
                  the Valuation Date which is three months following notice of
                  the Participant's entitlement to a distribution under Section
                  7.1, and such distribution shall be in the form of an All Cash
                  Distribution. Such notice shall be provided to a KCTC
                  Terminated Participant whose account balance was subject to
                  cashout under the KCTC Hourly Plan but which is transferred
                  prior to cashout from the KCTC Hourly Plan as of January 1,
                  1998, and distribution shall be made pursuant to this
                  provision.

                                     cxxvi
<PAGE>   37

7.8      Miscellaneous.

         (a)      For the purpose of the Plan, no termination of employment will
                  be deemed to have occurred in any instance where the person
                  involved remains in Service or is re-employed by an Employer
                  prior to receiving a distribution of his Accounts.

         (b)      In the event of the death, prior to his receipt of a
                  distribution, of a Participant who at the time of his death
                  was entitled to receive distribution under subsection 7.6(b)
                  and elected to receive such distribution in the form of an All
                  Stock Distribution, a Stock and Cash Distribution, an All Cash
                  Distribution, or an Installment Distribution, if eligible
                  under Section 7.5, or was entitled to receive a distribution
                  under subsection 7.6(c), and if the Committee has notice of
                  the Participant's death prior to such distribution, then such
                  distribution shall be made to the Participant's Beneficiary by
                  the same method as it would have been made to the Participant
                  but for his death.

         (c)      Notwithstanding anything in this Article VII to the contrary,
                  the distribution provisions of this Article VII shall not
                  apply for Terminated Participants or Participants whose
                  Qualified Domestic Relations Order is pending approval by the
                  Plan Administrator.

7.9      (a) Notwithstanding any provision of the Plan to the contrary, a
         Participant's or Terminated Participant's Accounts shall be distributed
         commencing no later than the earlier of:

                           (i) With respect to a Participant or Terminated
                           Participant who attains age 70-1/2 on or after
                           January 1, 1999, other than a Participant or
                           Terminated Participant who is a five percent owner as
                           defined in Code Section 401(a)(9), April 1 of the
                           calendar year following the later of

                           (A)      the calendar year in which the Terminated
                                    Participant attains age 70-1/2, or

                           (B)      the calendar year in which the Participant
                                    retires, as defined under Code Section
                                    401(a)(9), or terminates employment.

                           With respect to a Participant or Terminated
                           Participant who attains age 70-1/2 prior to January
                           1, 1999, and with respect to a Participant or
                           Terminated Participant who is a five percent owner as
                           defined in Code Section 401(a)(9), April 1 of the
                           calendar year following the year in which the
                           Participant or Terminated Participant attains age
                           70-1/2, except to the extent that Section 1121(d)(4)
                           of the Tax Reform Act of 1986 provides otherwise;
                           provided that a Participant who is not a five percent
                           owner as defined in Code Section 401(a)(9), who is
                           still employed with an Employer on January 1, 1999,
                           and who is receiving or would commence receiving
                           distributions hereunder, shall have a one-time
                           opportunity to elect to cease or defer distributions
                           hereunder until not later than April 1 of the
                           calendar year in which the Participant retires, as
                           defined under Code Section 401(a)(9), or terminates
                           employment. Failure to elect shall be deemed to be an
                           election to receive distributions hereunder.

                  (ii)     unless the Participant elects a later date (which can
                           be no later than the date specified in (i) above),
                           the 60th day after the latest of:

                                     cxxvii
<PAGE>   38

                           (A)      the close of the Plan Year in which the
                                    Participant attains age 65,

                           (B)      the close of the Plan Year which includes
                                    the date 10 years after the date the
                                    Participant first commenced participating in
                                    the Plan, or

                           (C)      the close of the Plan Year in which the
                                    Participant terminated employment with his
                                    Employer.

          (b)     The Accounts of a Participant or Terminated Participant shall
                  be distributed to a Beneficiary who is the surviving spouse,
                  commencing on or before the later of the date on which the
                  Participant or Terminated Participant would have attained age
                  70-1/2 or one year after the date of the Participant's or
                  Terminated Participant's death, or (ii) to a Beneficiary who
                  is not the surviving spouse, within five years of the
                  Participant's or Terminated Participant's death, or, in each
                  case, such other period specified under the requirements of
                  Code section 401(a)(9) and the regulations thereunder.

         (c)      All distributions from the Plan shall be made in accordance
                  with the requirements of Code section 401(a)(9) and the
                  regulations thereunder, including the minimum distribution
                  incidental benefit requirements.

         (d)      The Committee may, in its discretion, establish procedures for
                  making such required distributions consistent with the
                  provisions hereof.

7.10     Unclaimed Benefits. During the time when a benefit hereunder is payable
         to any Terminated Participant or, if deceased, his Beneficiary, the
         Committee shall mail by registered or certified mail to such
         Participant or Beneficiary, at his last known address, a written demand
         for his then address, or for satisfactory evidence of his continued
         life, or both. If such information is not furnished to the Committee
         within 12 months from the mailing of such demand, then the Committee
         may, under rules established by the Committee, in its sole discretion,
         declare such benefit, or any unpaid portion thereof, suspended, with
         the result that such unclaimed benefit shall be treated as a forfeiture
         for the Plan Year within which such 12-month period ends, but shall be
         subject to restoration through an Employer Contribution if the lost
         Participant or such Beneficiary later files a claim for such benefit.

7.11     Brown-Bridge Benefit. Notwithstanding any other provision of the Plan,
         if a Participant's employment with an Employer is terminated, he shall
         be fully vested in his Accounts and shall be entitled to receive a
         distribution of the entire amount then in his Accounts in accordance
         with Section 7.6. if such Participant meets all of the following
         conditions:

         (a)      immediately prior to his termination of employment he must
                  have been an Employee of the Brown-Bridge Mill; and

         (b)      such termination of employment must be involuntary on the part
                  of the Participant, be caused solely by the elimination of his
                  job function with the Corporation due to the sale of assets of
                  the Brown-Bridge Mill under the Assets Purchase Agreement
                  entered into between the Corporation and Brown-Bridge
                  Acquisition Corp. dated June 15, 1994, and such termination of
                  employment must occur on the Closing Date of such Assets
                  Purchase Agreement.

                                    cxxviii
<PAGE>   39

7.12     Karolton Envelope Benefit. Notwithstanding any other provision of the
         Plan, if a Participant's employment with an Employer is terminated, he
         shall be fully vested in his Accounts and shall be entitled to receive
         a distribution of the entire amount then in his Accounts in accordance
         with Section 7.6. if such Participant meets all of the following
         conditions:

         (a)      immediately prior to his termination of employment he must
                  have been an Employee of Karolton Envelope; and

         (b)      such termination of employment must be involuntary on the part
                  of the Participant, be caused solely by the elimination of his
                  job function with the Corporation due to the sale of assets of
                  Karolton Envelope under the Assets Purchase Agreement entered
                  into between the Corporation and KECA Corporation dated
                  October 29, 1993, and such termination of employment must
                  occur on the Closing Date of such Assets Purchase Agreement.

7.13     Spenco Medical Corporation Benefit. Notwithstanding any other provision
         of the Plan, a Participant shall be fully vested in his Accounts and
         shall be entitled to receive a distribution of the entire amount then
         in his Accounts in accordance with Section 7.6. if such Participant is
         employed by Spenco Medical Corporation on the Closing Date of the sale
         of Spenco Medical Corporation under the Agreement and Plan of Merger
         entered into between the Corporation and Spenco Medical Corporation,
         SBS Enterprises, Inc., Spenco Acquisition Corporation and Steven B.
         Smith, dated March 4, 1994. For purposes of this Section, a Participant
         described in the preceding sentence shall be treated under Section 7.6
         as if he terminated employment with an Employer for a reason other than
         death on the Closing Date; provided, however, that a distribution
         pursuant to this Section shall be delayed to the extent required by the
         Internal Revenue Service under section 401(k)(2)(B)(i)(I) of the Code.

7.14     Form of ESOP Benefit. Notwithstanding anything in the Plan to the
         contrary but subject to the provisions of Sections 7.6 (c) and 7.10,
         the form of benefit payment available to a Participant, unless the
         Participant elects otherwise, shall be substantially equal periodic
         payments (not less frequently than annually) over a period not longer
         than the greater of (i) five (5) years, or (ii) in the case of a
         Participant whose vested portion of his Accounts exceeds $500,000 (as
         adjusted by legislation or for cost-of-living increases), five (5)
         years plus one (1) additional year (not exceeding five (5) additional
         years) for each $100,000 (or fraction of $100,000) (as adjusted by
         legislation or for cost-of-living increases) by which the vested
         portion of his Accounts exceeds $500,000 (as adjusted by legislation or
         for cost-of-living increases).

7.15     ESOP Dividend Distributions. Dividends paid to the Trust that had
         dividend record dates during a Plan Year on Corporation Stock allocated
         to a Participant's Accounts shall be paid to that Participant, or if
         applicable, to his Beneficiary, in the first quarter of the Plan Year
         following the Plan Year in which the dividends' record dates occurred;
         provided, however that the amount of such dividend payment shall not be
         less than the minimum amount established by the Committee in its sole
         discretion. Notwithstanding the preceding sentence, in the last quarter
         of each Plan Year, a Participant who is employed by an Employer or an
         affiliate of an Employer on the last day of that Plan Year may elect to
         have 25%, 50%, 75%, or all of such dividend payments remain in the
         Trust in lieu of a distribution under this Section. Dividends retained
         in the Trust under this Section shall be invested as directed by the
         Participant under Section 3.8. Notwithstanding both the dollar amount
         (if any) of any election under this Section and the preceding
         provisions of

                                     cxxix
<PAGE>   40

         this Section, the amount actually paid under this Section shall not
         exceed the lesser of (i) the electing Participant's share of the
         dividends subject to such election and (ii) his balance in his Accounts
         at the time of payment. A dividend payment shall not be made to a
         Terminated Participant or Participant whose qualified domestic
         relations order is pending approval by the Plan Administrator.

7.16     Kimberly-Clark Integrated Services Corporation Benefit. Notwithstanding
         any other provision of the Plan, if a Participant's employment with an
         Employer is terminated, he shall be fully vested in his Accounts and
         shall be entitled to receive a distribution of the entire amount then
         in his Accounts in accordance with Section 7.6. if such Participant
         meets all of the following conditions:

         (a)      immediately prior to his termination of employment he must
                  have been an Employee of Kimberly-Clark Integrated Services
                  Corporation; and

         (b)      such termination of employment must be involuntary on the part
                  of the Participant, be caused solely by the elimination of his
                  job function with Kimberly-Clark Integrated Services
                  Corporation due to the cessation of operations of
                  Kimberly-Clark Integrated Services Corporation on or about
                  June 30, 1995, and such termination of employment must occur
                  on or after the date of such cessation of operations.

7.17     Direct Rollovers. This Section applies to distributions and withdrawals
         made under Articles VII and VIII on or after January 1, 1993.
         Notwithstanding any provision of the Plan to the contrary that would
         otherwise limit a distributee's election under this Section, a
         distributee may elect, at the time and in the manner prescribed by the
         Committee, to have any portion of an eligible rollover distribution
         paid directly to a single eligible retirement plan specified by the
         distributee in a direct rollover.

         For purposes of this Section, the following definitions shall apply:

         (a)      An "eligible rollover distribution" is any distribution of all
                  or any portion of the balance to the credit of the
                  distributee, except that an eligible rollover distribution
                  does not include: any distribution that is one of a series of
                  substantially equal periodic payments (not less frequently
                  than annually) made for the life (or life expectancy) of the
                  distributee and the distributee's designated beneficiary, or
                  for a specified period of ten years of more; any distribution
                  to the extent that such distribution is required under Code
                  section 401(a)(9); the portion of any distribution that is not
                  includable in gross income (determined without regard to the
                  exclusion for net unrealized appreciation with respect to
                  employer securities); and any hardship distribution described
                  in Section 401(k)(2)(B)(i)(IV) of the Code.

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

         (c)      A "distributee" includes a Participant. In addition, the
                  Participant's surviving spouse and the Participant's spouse or
                  former spouse who is the alternate payee

                                      cxxx
<PAGE>   41

                  under a qualified domestic relations order, as defined in Code
                  section 414(p), are distributees with regard to the interest
                  of the spouse or former spouse.

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

         This Section shall not be construed to alter any of the requirements
         for distributions or withdrawals under the remaining provisions of this
         Article VII and the provisions of Article VIII.

7.18     Specialty Products Benefit. Notwithstanding any other provision of the
         Plan, if a Participant's employment with an Employer is terminated, he
         shall be fully vested in his Accounts and shall be entitled to receive
         a distribution of the entire amount then in his Accounts in accordance
         with Section 7.6 if such Participant meets all of the following
         conditions:

         (a)      immediately prior to his termination of employment, he must
                  have been an Employee whose employment duties are principally
                  related to the Specialty Products business of the Corporation;

         (b)      such termination of employment must be involuntary on the part
                  of the Participant, be caused solely by the elimination of his
                  job function with the Corporation due to the spinoff of SMI on
                  or about the fourth quarter of 1995, and such termination of
                  employment must occur on or after the SMI Distribution Date;
                  and

         (c)      immediately following his termination of employment, he must
                  have become employed by SMI.

7.19     Limitations on Distribution of Before-Tax Contributions.
         Notwithstanding any other provision of the Plan to the contrary,
         Before-Tax Contributions and earnings thereon (except for the
         withdrawal of earnings provided under subsection 8.3(b)) shall not be
         distributed before one of the following events:

         (a)      the Eligible Employee's retirement, death, disability, or
                  separation from service, as provided under Code section 401(k)
                  and applicable regulations;

         (b)      the Eligible Employee's attainment of age 59 1/2 or the
                  Eligible Employee's hardship, as provided under Code section
                  401(k) and applicable regulations;

         (c)      the termination of the Plan without the establishment or
                  maintenance of a successor plan, as provided under Code
                  section 401(k) and applicable regulations;

         (d)      the date of the sale or other disposition by an Employer of
                  substantially all the assets used in a trade or business to an
                  unrelated corporation, but only with respect to an Eligible
                  Employee who continues employment with the acquiring
                  corporation, provided that the Employer continues to maintain
                  the plan after the sale or disposition and the acquiring
                  corporation does not maintain the plan after the sale or
                  disposition, in accordance with Code section 401(k) and
                  applicable regulations; or

                                      cxxxi
<PAGE>   42

         (e)      the date of the sale or other disposition by an Employer of
                  its interest in a subsidiary to an unrelated entity or
                  individual, but only with respect to an Eligible Employee who
                  continues employment with the acquiring corporation, provided
                  that the Employer continues to maintain the plan after the
                  sale or disposition and the acquiring corporation does not
                  maintain the plan after the sale or disposition, in accordance
                  with Code section 401(k) and applicable regulations.

7.20     Lakeview Benefit. Notwithstanding any other provision of the Plan, if a
         Participant's employment with an Employer is terminated, he shall be
         fully vested in his Accounts and shall be entitled to receive a
         distribution of the entire amount then in his Accounts in accordance
         with Section 7.6 if such Participant meets all of the following
         conditions:

         (a)      immediately prior to his termination of employment he must
                  have been an Employee at the Lakeview Mill, Lakeview Diaper
                  Plant, Lakeview Feminine Care Plant, Lakeview Distribution
                  Center, or Badger-Globe Mill; and

         (b)      such termination of employment must be involuntary on the part
                  of the Participant and be caused solely by the elimination of
                  his job function with the Corporation due to the sale of
                  assets of the tissue manufacturing facilities of the Lakeview
                  Mill under the Assets Purchase Agreement entered into between
                  the Corporation and American Tissue Mills of Neenah L.L.C.
                  dated as of August 8, 1996, and such termination of employment
                  must occur on or within 30 days after the Closing Date of such
                  Assets Purchase Agreement.

7.21     Coosa Benefit. Notwithstanding any other provision of the Plan, if a
         Participant's employment with an Employer is terminated, he shall be
         fully vested in his Accounts and shall be entitled to receive a
         distribution of the entire amount then in his Accounts in accordance
         with Section 7.7 if such Participant meets all of the following
         conditions:

         (a)      immediately prior to his termination of employment he must
                  have been (i) an Employee of Coosa Pines Golf Club Inc., or
                  (ii) an Employee of an Employer located at Coosa Pines,
                  Alabama; and

         (b)      such termination of employment must be involuntary on the part
                  of the Participant and be caused solely by the elimination of
                  his job function from his Employer due to the sale of the
                  assets of the Coosa pulp and newsprint mill facility and
                  woodlands under the Assets Purchase Agreement entered into
                  between the Corporation and Alliance Forest Products, Inc.
                  dated as of February 14, 1997, and such termination of
                  employment must occur on or within 30 days after the Closing
                  Date of such Assets Purchase Agreement.

7.22     KIMPAK(R) Benefit. Notwithstanding any other provision of the Plan, if
         a Participant's employment with an Employer is terminated, he shall be
         fully vested in his Accounts and shall be entitled to receive a
         distribution of the entire amount then in his Accounts in accordance
         with Section 7.7 if such Participant meets all of the following
         conditions:

         (a)      immediately prior to his termination of employment he must
                  have been an Employee at the Badger-Globe Mill; and

         (b)      such termination of employment must be involuntary on the part
                  of the Participant and be caused solely by the elimination of
                  his job function with the Corporation due to the sale of
                  assets of the KIMPAK(R) product line under the Assets

                                     cxxxii
<PAGE>   43

                  Purchase Agreement entered into between the Corporation and
                  National Packaging Services Corporation dated as of September
                  30 1996, and such termination of employment must occur on or
                  within one year after the Closing Date of such Assets Purchase
                  Agreement.

7.23     Tecnol 401(k) Plan Benefit. The vested account balance ("Tecnol
         Account") of each remaining participant (the "Tecnol Participant") in
         the Tecnol Medical Products, Inc. Employee 401(k) Capital Accumulation
         Plan (the "Tecnol 401(k) Plan") shall be transferred to this Plan. Such
         amount representing pre-tax 401(k) contributions shall be transferred
         to and held in the Before-Tax Contribution Section of the Employee
         Account, and all other amounts shall be transferred to and held in a
         rollover account like the KCTC Heritage Rollover Account.

         Such Tecnol Account shall be invested according to the Tecnol
         Participant's existing elections under the Tecnol 401(k) Plan in the
         Money Market Fund (for amounts transferred from the Fidelity Retirement
         Government Money Market Portfolio in the Tecnol 401(k) Plan), the
         Medium-Term Managed Fund (for amounts transferred from the Fidelity
         Asset Manager Portfolio and Fidelity Puritan Fund in the Tecnol 401(k)
         Plan), the Stock Index Fund (for amounts transferred from the Fidelity
         Contrafund in the Tecnol 401(k) Plan), and the International Index Fund
         (for amounts transferred from the Fidelity Overseas Fund in the Tecnol
         401(k) Plan), subject to reallocation by the Tecnol Participant
         pursuant to Section 3.8 hereof.

         The Tecnol Participant who is not otherwise eligible under the Plan
         shall participate in the Plan hereunder only to the extent of his
         Tecnol Account, and shall not be eligible to make Before-Tax
         Contributions or After-Tax Contributions under Article III or to
         receive Company Matching Contributions under Article IV by reason of
         such transfer. The Tecnol Participant may request a distribution of his
         Tecnol Account in the Plan in accordance with the applicable provisions
         of this Article VII and Article VIII, subject to the same consent
         requirements applicable to a Ballard Heritage Employee.

7.24     Tecnol ESOP Benefit. The vested account balance ("Tecnol Account") of
         the remaining two participants (the "Tecnol Participant") in the Tecnol
         Medical Products, Inc. Employee Stock Ownership Plan (the "Tecnol
         ESOP") shall be transferred to this Plan and held in a rollover
         account. Such Tecnol Accounts shall be invested in the Money Market
         Fund upon transfer, subject to reallocation by the Tecnol Participant
         pursuant to Section 3.8 hereof. The Tecnol Participants shall
         participate in the Plan hereunder only to the extent of their
         respective Tecnol Accounts, and shall not be eligible to make
         Before-Tax Contributions or After-Tax Contributions under Article III
         or to receive Company Matching Contributions under Article IV by reason
         thereof. The Tecnol Participants may request a distribution of their
         Tecnol Accounts in the Plan at any time in accordance with the
         applicable provisions of this Article VII.

                                    cxxxiii
<PAGE>   44

                                  ARTICLE VIII

                              WITHDRAWALS AND LOANS

8.1      Regular Withdrawals. A Participant, subject to the conditions stated
         below, may make the following Regular Withdrawals:

         (a)      Such amounts as the Participant may elect from the
                  Unrestricted After-Tax Contribution Section of his Accounts;

         (b)      Such amounts as the Participant may elect from the Basic
                  After-Tax Contribution Section of his Accounts;

         (c)      Such amounts as a Participant may elect from his Employer
                  Accounts, provided such amounts are vested and such amounts
                  (disregarding earnings and losses) have been in the Plan for
                  at least 24 months; and

         (d)      Such amounts as a KCTC Heritage Employee who has at least 5
                  Years of Service may elect from his KCTC Heritage Rollover
                  Account. Notwithstanding the foregoing, a KCTC Heritage
                  Employee who has less than 5 Years of Service may withdraw
                  Matching Employer Contributions (as such term is defined in
                  the KCTC Hourly Plan), from his KCTC Heritage Rollover Account
                  provided such amounts are vested and such amounts
                  (disregarding earnings and losses) have been in the Plan
                  (including periods under the KCTC Hourly Plan) for at least 24
                  months. A KCTC Heritage Employee who has less than 5 Years of
                  Service may withdraw Retirement Contributions, if applicable
                  (as such term is defined in the Kimberly-Clark Tissue Company
                  Investment plan for Salaried Employees) provided such amounts
                  (disregarding earnings and losses) have been in the Plan
                  (excluding periods under the KCTC Hourly Plan) for at least 24
                  months. A KCTC Heritage Employee who has attained age 59 1/2
                  may withdraw any funds from his KCTC Heritage Rollover Account
                  provided such amounts are vested.

         (e)      Such amounts as a Ballard Heritage Employee who has at least 5
                  Years of Service may elect from his Ballard Heritage Rollover
                  Account. Notwithstanding the foregoing, a Ballard Heritage
                  Employee who has less than 5 Years of Service may withdraw
                  Matching Contributions (as such term is defined in the Ballard
                  Savings Plan) from his Ballard Heritage Rollover Account
                  provided such amounts are vested and such amounts
                  (disregarding earnings and losses) have been in the Plan
                  (excluding periods under the Ballard Savings Plan) for at
                  least 24 months. A Ballard Heritage Employee who has less than
                  5 Years of Service may withdraw Discretionary Contributions
                  (as such term is defined in the Ballard Savings Plan) provided
                  such amounts (disregarding earnings and losses) have been in
                  the Plan (including periods under the Ballard Savings Plan)
                  for at least 24 months. A Ballard Heritage Employee who has
                  attained age 59 1/2 may withdraw any funds from his Ballard
                  Heritage Rollover Account provided such amounts are vested.

         Any Participant not otherwise described above shall not be eligible to
         make withdrawals from his Employer Accounts.

                                     cxxxiv
<PAGE>   45

         In the event of a Regular Withdrawal from the Basic After-Tax
         Contribution section of a Participant's Accounts pursuant to subsection
         8.1(b), such Participant's Contributions under the Plan shall be
         suspended for a period of 12 months following such withdrawal.

8.2      Over Age 59 1/2 Withdrawals. A Participant who has attained age 59 1/2
         may withdraw such amounts as he may elect from the Before-Tax
         Contributions Sections of his Accounts.

8.3      Hardship Withdrawals.

         (a)      Upon the application of any Participant who has not attained
                  age 59 1/2, the Committee, in accordance with its uniform
                  nondiscriminatory rules, may permit such Participant to
                  withdraw all or a portion (subject to subsection (b) below) of
                  the amount in the Before-Tax Contributions Section of his
                  Accounts if the Participant is able to demonstrate financial
                  hardship and provided, however, that all amounts available as
                  Regular Withdrawals described in Section 8.1 shall first be
                  withdrawn. A Participant shall be considered to have
                  demonstrated financial hardship only if the Participant
                  demonstrates that the purpose of the withdrawal is to meet his
                  immediate and heavy financial needs, the amount of the
                  withdrawal does not exceed such financial needs, and the
                  amount of the withdrawal is not reasonably available from
                  other resources. A Participant making application under this
                  Section 8.3 shall have the burden of demonstrating a financial
                  hardship to the Committee, and the Committee shall not permit
                  withdrawal under this subsection without first receiving such
                  proof.

                  The Participant will be deemed to have demonstrated that the
                  purpose of the withdrawal is to meet his immediate and heavy
                  financial needs only if he represents that the distribution is
                  on account of:

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

                  (ii)     the purchase (excluding mortgage payments) of a
                           principal residence for the Participant;

                  (iii)    the payment of tuition, related educational fees, and
                           room and board expenses for the next 12 months of
                           post-secondary education for the Participant, his
                           spouse, children, or dependents;

                  (iv)     payments necessary to prevent eviction from or
                           foreclosure on the Participant's principal residence
                           or the mortgage on that residence; or

                  (v)      any other condition determined by the Committee
                           pursuant to its uniform Committee Rules to represent
                           a financial hardship.

                  Moreover, the Participant will be deemed to have demonstrated
                  that the amount of the withdrawal is unavailable from his
                  other resources and in an amount not in excess of that
                  necessary to satisfy his immediate and heavy financial needs
                  only if each of the following requirements is satisfied:

                  (i)      the Participant represents that the distribution is
                           not in excess of the amount of his immediate and
                           heavy financial needs, except that the

                                     cxxxv
<PAGE>   46

                           withdrawal may include any amounts necessary to pay
                           any federal, state, or local income taxes or
                           penalties reasonably anticipated to result from the
                           withdrawal; and

                  (ii)     the Participant has obtained all distributions, other
                           than hardship distributions, and all nontaxable loans
                           currently available to him under all other qualified
                           and nonqualified deferred compensation plans
                           currently maintained by an Employer.

                  In the event of any withdrawal by a Participant pursuant to
                  this Section 8.3, (i) such Participant's Contributions under
                  this Plan and his contributions under all other qualified and
                  nonqualified deferred compensation plans maintained by an
                  Employer shall be suspended for a period of 12 months
                  following such withdrawal, and (ii) for the calendar year
                  following the calendar year in which such withdrawal occurred,
                  the amount of the Participant's Before-Tax Contributions may
                  not exceed the limitation on the amount of Before-Tax
                  Contributions which may be contributed, as set forth in
                  subsection 3.5(a), less the amount of any Before-Tax
                  Contributions made by said Participant during the calendar
                  year of the withdrawal.

         (b)      No hardship withdrawal shall exceed the balance then credited
                  to the Participant's Before-Tax Contributions Section of his
                  Accounts (or, if less, the Current Market Value thereof) nor
                  shall any withdrawal include earnings on such Contributions
                  after December 31, 1988.

8.4      Distribution of Withdrawals.

         (a)      Regular Withdrawals and Over Age 59-1/2 Withdrawals. Regular
                  Withdrawals and Over Age 59-1/2 Withdrawals shall be permitted
                  as of any Valuation Date following Timely Notice. A
                  distribution of a withdrawal shall be made as soon as
                  practicable after the withdrawal request or such other time as
                  specified by Committee rule. A Participant who is entitled to
                  receive a Regular Withdrawal or an Over Age 59-1/2 Withdrawal
                  may on Timely Notice elect to receive such distribution in the
                  form of an All Stock Distribution, a Stock and Cash
                  Distribution or an All Cash Distribution.

         (b)      Hardship Withdrawals. If a Participant's application for a
                  hardship withdrawal is approved, the effective date for such
                  withdrawal shall be the Valuation Date coincident with or
                  immediately following such approval. If the Participant's
                  application for a hardship withdrawal is denied and, on
                  appeal, subsequently approved, the effective date for such
                  withdrawal shall be the Valuation Date coincident with or
                  immediately following the date of the Committee's decision on
                  the appeal. Hardship withdrawals will be made only in the form
                  of an All Cash Distribution.

8.5      Miscellaneous.

         (a)      Notwithstanding anything in this Article VIII to the contrary,
                  the withdrawal and loan provisions of this Article VIII shall
                  not apply for Terminated Participants or Participants whose
                  qualified domestic relations order is pending approval by the
                  Plan Administrator.

                                     cxxxvi
<PAGE>   47

         (b)      In the event of the death of a Participant on or after the
                  Valuation Date with respect to which the Participant has
                  elected to make a withdrawal, but prior to the actual
                  distribution thereof, and if the Committee has notice of the
                  Participant's death prior to such distribution, then such
                  distribution shall be made to the Participant's Beneficiary by
                  the same method as it would have been made to the Participant
                  but for his death.

8.6      Waiver of Right to Withdraw. A Participant who is on an assignment
         outside of the United States may waive his right to make a withdrawal
         pursuant to this Article VIII. Any such waiver shall be in writing, in
         a form acceptable to the Committee and signed by the Participant, and
         shall be irrevocable. The duration of a waiver hereunder may be for a
         stated period or until the occurrence of a specified event, at the
         election of the Participant, but in absence of such an election the
         waiver shall expire upon termination or completion of the Participant's
         assignment outside the United States.

8.7      Participant Loans. For purposes of this Section 8.7, "Participant"
         shall mean a Participant who is a "party in interest" as defined in
         ERISA section 3(14). Loans shall be available to Participants on a
         reasonably equivalent basis on the following conditions:

         (a)      A Participant may, on Timely Notice, request a loan from the
                  Plan under the following terms and conditions, provided that
                  such Participant may not request a loan from the Plan if the
                  Participant has an outstanding loan (whether such outstanding
                  loan has become a deemed distribution under Section 72(p) of
                  the Code) from the Plan at the time of such request.

         (b)      Loan amounts shall be at least $1,000 and shall not exceed the
                  lesser of (i) 50% of Before-Tax Contributions Section of the
                  Participant's Account as of the date of the loan request, less
                  any amounts payable for pending withdrawal or (ii) $50,000
                  (reduced by the highest outstanding loan balance under the
                  Plan during the one-year period ending on the day before the
                  date on which the loan is made). Loans under any other
                  qualified plan sponsored by the Employer or an Affiliated
                  Employer shall be aggregated with loans under the Plan in
                  determining whether or not the limitation stated herein has
                  been exceeded. Loan amounts shall be taken from the Before-Tax
                  Contributions Section of the Participant's Accounts.

         (c)      Loans shall be classified as either a General Purpose Loan or
                  a Primary Residence Loan.

                  (i)      A General Purpose Loan may be requested on Timely
                           Notice for any purpose other than for the purchase of
                           a primary residence for the Participant. General
                           Purchase Loans shall be for a term not to exceed 4
                           years from the date of the loan.

                  (ii)     A Primary Residence Loan may be requested on Timely
                           Notice for the purchase (excluding mortgage payments)
                           or construction of a Participant's primary residence
                           and may be made only upon receipt of proper
                           documentation from the Participant. Primary Residence
                           Loans shall be for a term not to exceed 10 years from
                           the date of the loan.

         (d)      Loans shall be nonrenewable and nonextendable. Loans shall be
                  repaid, through payroll deduction or, in the case of a
                  Participant who is on an unpaid

                                    cxxxvii
<PAGE>   48

                  leave of absence and who does not elect to suspend his loan
                  payments hereunder, by manual repayments.

         (e)      Loans shall be repaid in periodic payments (not less
                  frequently than quarterly) with substantially level
                  amortization required over the term of the loan; provided,
                  however, that a Participant with an outstanding loan who is on
                  an unpaid leave of absence, or qualified military service
                  pursuant to Section 414(u)(4) of the Code, may elect, at the
                  commencement of such leave of absence, to suspend his loan
                  repayments for the lesser of (i) the period of the leave of
                  absence or (ii) 12 months. Notwithstanding the foregoing, a
                  Participant whose Contributions are suspended pursuant to
                  Section 3.6 may not elect to suspend his loan repayments.

         (f)      Loans may be prepaid in full at any time without penalty;
                  provided however, that a Participant who provides notification
                  of his intention to prepay a loan and fails to do so may not
                  resubmit notification for such period as determined by the
                  Committee. Partial prepayments shall be not be permitted.

         (g)      Each Participant receiving a loan hereunder shall receive a
                  statement reflecting the charges involved in each transaction,
                  including the dollar amount and annual interest rate of the
                  finance charges.

         (h)      All loans hereunder shall be considered investments of a
                  segregated account of the Trust directed by the borrower. All
                  loans shall be secured by up to 50% of the vested portion of
                  the Participant's Accounts, less any portion of the
                  Participant's Account which has been assigned to an alternate
                  payee under a qualified domestic relations order, to the
                  extent necessary to secure the outstanding loan amount and
                  applied first to the Before-Tax Contributions section of the
                  Participant's Accounts. No additional security shall be
                  permitted.

         (i)      Interest shall be charged at a rate determined by the
                  Committee and shall be determined with regard to interest
                  rates currently being charged on similar commercial loans by
                  persons in the business of lending money.

         (j)      Any loan made to a Participant hereunder shall be evidenced by
                  a promissory note which shall be executed by the Participant
                  in such manner and form as the Committee shall determine. Such
                  promissory note shall contain the irrevocable consent of the
                  Participant to payroll deductions.

         (k)      Fees chargeable in connection with a Participant's loan may be
                  charged, in accordance with a uniform and nondiscriminatory
                  policy established by the Committee, against the Participant's
                  Account to whom the loan is granted.

         (l)      All loans shall be made from the Before-Tax Contributions
                  section of the Participant's Accounts and pro rata from the
                  Investment Fund in which the Before-Tax Contributions section
                  of such Participant's Account are then invested.

         (m)      Loan repayments to the Plan by the Participant shall be made
                  on an after-tax basis and shall be allocated to the Before-Tax
                  Contributions section of the Participant's Account in the
                  Investment Funds in the proportion that Before-Tax
                  Contributions section such Account is represented and shall be
                  invested in the

                                    cxxxviii
<PAGE>   49

                  Investment Funds on the basis of the Participant's investment
                  election under Section 3.4 in effect at the time of such loan
                  repayment.

         (n)      In the event that the Participant fails to make any required
                  loan repayment before a loan is repaid in full, the unpaid
                  balance of the loan, with interest due thereon, shall become
                  immediately due and payable, unless the Committee determines
                  otherwise. In the event that a loan becomes immediately due an
                  payable (in "default") pursuant to this Section 8.7, the
                  Participant (or his Beneficiary, if the Beneficiary is the
                  surviving spouse, in the event of the Participant's death) may
                  satisfy the loan by paying the outstanding balance in full
                  within such time as may be specified by the Committee in a
                  uniform and nondiscriminatory manner. Otherwise, any such
                  outstanding loan shall be deducted from the portion of the
                  Participant's vested Accounts (first from the Before-Tax
                  Contributions section of his Accounts) before any benefit
                  which is or becomes payable to the Participant or his
                  Beneficiary is distributed. In the case of a benefit which
                  becomes payable to the Participant or his Beneficiary pursuant
                  to Article 7 (or would be payable to the Participant or
                  Beneficiary but for such individual's election to defer the
                  receipt of benefits), the deduction described in the preceding
                  sentence shall occur on the earliest date following such
                  default on which the Participant or Beneficiary could receive
                  payment of such benefit, had the proper application been filed
                  or election been made, regardless of whether or not payment is
                  actually made to the Participant or Beneficiary on such date.
                  In the case of a benefit which becomes payable under any other
                  provision, the deduction shall occur on the date such benefit
                  is paid. The Committee shall also be entitled to take any and
                  all other actions necessary and appropriate to enforce
                  collection of the outstanding balance of the loan. Failure of
                  the Committee to strictly enforce Plan rights with respect to
                  a default on a Plan loan shall not constitute a waiver of such
                  rights.

         (o)      The outstanding loan balance or balances of a KCTC Heritage
                  Employee under the KCTC Hourly Plan shall be transferred to,
                  and repayment made to, this Plan effective as of January 1,
                  1998, and shall be subject to the terms of this Plan to the
                  extent not inconsistent with the terms of the outstanding
                  loan; provided, however, that a KCTC Heritage Employee whose
                  loan is transferred to this Plan with past due loan payments
                  shall have an extended grace period, as determined by the
                  Committee, in which to avoid default under this Section 8.7,
                  provided the total grace period under this Plan and the KCTC
                  Hourly Plan does not exceed the time period as provided under
                  the rules of the Internal Revenue Service. Such outstanding
                  loan balance shall be taken into account for all purposes
                  under this Section 8.7.

                                     cxxxix
<PAGE>   50

                                   ARTICLE IX

                       INCENTIVE INVESTMENT PLAN COMMITTEE

9.1      Membership. The Committee shall consist of at least three persons who
         shall be officers or directors of the Corporation or Eligible
         Employees. Members of the Committee shall be appointed from time to
         time by, and shall serve at the pleasure of, the Chief Executive
         Officer of the Corporation. The Committee shall elect one of its
         members as chairman. The Committee shall not receive compensation for
         its services. Committee expenses shall be paid by the Corporation.

9.2      Powers. The Committee shall have all such powers as may be necessary to
         discharge its duties hereunder, including, but not by way of
         limitation, the power to construe or interpret the Plan, to determine
         all questions of eligibility hereunder, to determine the method of
         payment of any Accounts hereunder, to adopt rules relating to the
         giving of Timely Notice, and to perform such other duties as may from
         time to time be delegated to it by the Chief Executive Officer of the
         Corporation. The Committee may prescribe such forms and systems and
         adopt such rules and actuarial methods and tables as it deems
         advisable. It may employ such agents, attorneys, accountants,
         actuaries, medical advisors, or clerical assistants (none of whom need
         be members of the Committee) as it deems necessary for the effective
         exercise of its duties, and may delegate to such agents any power and
         duties, both ministerial and discretionary, as it may deem necessary
         and appropriate.

9.3      Procedures. A majority of the Committee members shall constitute a
         quorum. The Committee may take any action upon a majority vote at any
         meeting at which a quorum is present, and may take any action without a
         meeting upon the unanimous written consent of all members. All action
         by the Committee shall be evidenced by a certificate signed by the
         chairman or by the secretary to the Committee. The Committee shall
         appoint a secretary to the Committee who need not be a member of the
         Committee,and all acts and determinations of the Committee shall be
         recorded by the secretary, or under his supervision. All such records,
         together with such other documents as may be necessary for the
         administration of the Plan, shall be preserved in the custody of the
         secretary.

9.4      Rules and Decisions. All rules and decisions of the Committee shall be
         uniformly and consistently applied to all Eligible Employees and
         Participants under this Plan in similar circumstances and shall be
         conclusive and binding upon all persons affected by them. The Committee
         shall have absolute discretion in carrying out its duties under the
         Plan.

9.5      Authorization of Payments. Subject to the provisions hereof, it shall
         be the duty of the Committee to furnish the Trustee with all facts and
         directions necessary or pertinent to the proper disbursement of the
         Trust funds.

9.6      Books and Records. The records of the Employers shall be conclusive
         evidence as to all information contained therein with respect to the
         basis for participation in the Plan and for the calculation of
         Contributions and Company Matching Contributions.

                                      cxl
<PAGE>   51

9.7      Perpetuation of the Committee. In the event that the Corporation shall
         for any reason cease to exist, then, unless the Plan is adopted and
         continued by a successor, the members of the Committee at that time
         shall remain in office until the final termination of the Trust, and
         any vacancies in the membership of the Committee caused by death,
         resignation, disability or other cause, shall be filled by the
         remaining member or members of the Committee.

9.8      Claim Procedure. The Committee shall establish a procedure for handling
         all claims by all persons. In the event any claim is denied, the
         Committee shall provide a written explanation to the person stating the
         reasons for denial.

9.9      Allocation or Reallocation of Fiduciary Responsibilities. The Named
         Fiduciary may allocate powers and responsibilities not specifically
         allocated by the Plan, or reallocate powers and responsibilities
         specifically allocated by the Plan, to designated persons, partnerships
         or corporations other than the Committee, and the members of the
         Committee may allocate their responsibilities under the Plan among
         themselves. Any such allocation, reallocation, or designation shall be
         in writing and shall be filed with and retained by the secretary of the
         Committee with the records of the Committee. Notwithstanding the
         foregoing, no reallocation of the responsibilities provided in the
         Trust to manage or control the Trust assets shall be made other than by
         an amendment to the Trust.

9.10     Plan Administrator. The Corporation shall be the Plan Administrator as
         described in ERISA.

9.11     Service of Process. The Corporation shall be the designated recipient
         of service of process with respect to legal actions regarding the Plan.

                                      cxli
<PAGE>   52

                                    ARTICLE X

                            AMENDMENT AND TERMINATION

10.1     Amendment and Termination. While it is intended that the Plan shall
         continue in effect indefinitely, the Board may from time to time
         modify, alter or amend the Plan or the Trust, and may at any time order
         the temporary suspension or complete discontinuance of Company Matching
         Contributions or may terminate the Plan, provided, however, that

         (i)      no such action shall make it possible for any part of the
                  Trust assets (except such part as is used for the payment of
                  expenses) to be used for or diverted to any purpose other than
                  for the exclusive benefit of Participants or their
                  Beneficiaries;

         (ii)     no such action shall adversely affect the rights or interests
                  of Participants theretofore vested under the Plan; and

         (iii)    in the event of termination of the Plan or complete
                  discontinuance of Company Matching Contributions hereunder,
                  all rights and interests of Participants not theretofore
                  vested shall become vested as of the date of such termination
                  or complete discontinuance.

         Any action permitted to be taken by the Board under the foregoing
         provision regarding the modification, alteration or amendment of the
         Plan or the Trust may be taken by the Committee, using its prescribed
         procedures, if such action

         (1)      is required by law, or

         (2)      is required by collective bargaining, or

         (3)      is estimated not to increase the annual cost of the Plan by
                  more than $1,000,000, or

         (4)      is estimated not to increase the annual cost of the Plan by
                  more than $25,000,000, provided such action is approved and
                  duly executed by the Chief Executive Officer of the
                  Corporation.

         Any action taken by the Board or Committee shall be made by or pursuant
         to a resolution duly adopted by the Board or Committee and shall be
         evidenced by such resolution or by a written instrument executed by
         such persons as the Board or Committee shall authorize for such
         purpose.

         The Committee shall report to the Chief Executive Officer of the
         Corporation before January 31 of each year all action taken by it
         hereunder during the preceding calendar year.

                                     cxlii
<PAGE>   53

         However, nothing herein shall be construed to prevent any modification,
         alteration or amendment of the Plan or of the Trust which is required
         in order to comply with any law relating to the establishment or
         maintenance of the Plan and Trust, including but not limited to the
         establishment and maintenance of the Plan or Trust as a qualified
         employee plan or trust under the Code, even though such modification,
         alteration, or amendment is made retroactively or adversely affects the
         rights or interests of a Participant under the Plan.

                                     cxliii
<PAGE>   54

                                   ARTICLE XI

                                  MISCELLANEOUS

11.1     Non-Guarantee of Employment. Nothing contained in this Plan shall be
         construed as a contract of employment between an Employer and a
         Participant, or as a right of any Participant to be continued in the
         employment of his Employer, or as a limitation of the right of an
         Employer to discharge any Participant with or without cause.

11.2     Rights to Trust Assets. No Participant or any other person shall have
         any right to, or interest in, any part of the Trust assets upon
         termination of his employment or otherwise, except as provided from
         time to time under this Plan, and then only to the extent of the
         amounts due and payable to such person out of the assets of the Trust.
         All payments as provided for in this Plan shall be made solely out of
         the assets of the Trust and neither the Employers, the Trustee, nor any
         member of the Committee shall be liable therefor in any manner.

         The Employers shall have no beneficial interest of any nature
         whatsoever in any Employer Contributions after the same have been
         received by the Trustee, or in the assets, income or profits of the
         Trust, or any part thereof, except to the extent that forfeitures as
         provided in the Plan shall be applied to reduce the Employer
         Contributions.

11.3     Disclaimer of Liability. Neither the Trustee, the Employers, nor any
         member of the Committee shall be held or deemed in any manner to
         guarantee the funds of the Trust against loss or depreciation.

11.4     Non-Recommendation of Investment. The availability of any security
         hereunder shall not be construed as a recommendation to invest in such
         security. The decision as to the choice of investment of Contributions
         must be made solely by each Participant, and no officer or employee of
         the Corporation or the Trustee is authorized to make any recommendation
         to any Participant concerning the allocation of Contributions
         hereunder.

11.5     Indemnification of Committee. The Employers shall indemnify the
         Committee and each of its members and hold them harmless from the
         consequences of their acts or conduct in their official capacity,
         including payment for all reasonable legal expenses and court costs,
         except to the extent that such consequences are the result of their own
         willful misconduct or breach of good faith.

11.6     Selection of Investments. The Trustee shall have the sole discretion to
         select investments for the various funds provided for herein even
         though the same may not be legal investments for trustees under the
         laws applicable thereto.

11.7     Non-Alienation. Except as otherwise provided herein, no right or
         interest of any Participant or Beneficiary in the Plan and the Trust
         shall be subject in any manner to anticipation, alienation, sale,
         transfer, assignment, pledge, encumbrance, charge, attachment,
         garnishment, execution, levy, bankruptcy, or any other disposition of
         any kind, either voluntary or involuntary, prior to actual receipt of
         payment by the person

                                     cxliv
<PAGE>   55

         entitled to such right or interest under the provisions hereof, and any
         such disposition or attempted disposition shall be void.

11.8     Facility of Payment. If the Committee has notice that a Participant
         entitled to a distribution hereunder, or his Beneficiary, is incapable
         of caring for his own affairs, because of illness or otherwise, the
         Committee may direct that any distribution from such Participant's
         Accounts may be made, in such shares as the Committee shall determine,
         to the spouse, child, parent or other blood relative of such
         Participant, or his Beneficiary, or any of them, or to such other
         person or persons as the Committee may determine, until such date as
         the Committee shall determine that such incapacity no longer exists.
         The Committee shall be under no obligation to see to the proper
         application of the distributions so made to such person or persons, and
         any such distribution shall be a complete discharge of any liability
         under the Plan to such Participant, or his Beneficiary, to the extent
         of such distribution.

11.9     Allocation in the Event of Advance Contributions. In the event that the
         Employer's tax deduction with respect to amounts contributed to the
         Plan pursuant to Articles III and IV for the months in the final
         quarter of a Plan Year results in such amounts being deemed advanced
         contributions of the Employer with respect to the taxable year of the
         Employer ending within such Plan Year, such amounts shall be considered
         allocated pursuant to Articles III and IV, as applicable, as of the
         last day of such taxable year.

11.10    Action by a Committee of the Board. Any action which is required or
         permitted to be taken by the Board under the Plan may be taken by the
         Compensation Committee of the Board or any other duly authorized
         committee of the Board designated under the By-Laws of the Corporation.

11.11    Qualified Domestic Relations Orders. Anything in this Plan to the
         contrary notwithstanding:

         (a)      Alternate Payee's Accounts. An alternate payee under a
                  domestic relations order determined by the Corporation to be a
                  qualified domestic relations order (as defined in Code section
                  414(p)) shall have established and maintained for him separate
                  Accounts similar to the Accounts of the Participant specified
                  in the qualified domestic relations order. The alternate
                  payee's Accounts shall be credited with his interest in such
                  Participant's Accounts, as determined under the qualified
                  domestic relations order. Except to the extent specifically
                  provided by the qualified domestic relations order, no amount
                  of the non-vested portion, if any, of the Participant's
                  Employer Accounts shall be credited to the alternate payee's
                  Accounts. Subsection 6.2(c) and Sections 6.3, 6.4 and 6.5
                  shall apply to the alternate payee's Accounts as if the
                  alternate payee were a Participant.

         (b)      Investment of Alternate Payee's Accounts. An alternate payee
                  may on Timely Notice elect to reallocate or transfer all or
                  any percentage portion of any of his Employee Accounts or
                  Employer Accounts or both, consistent with subsection 6.1(a).
                  An alternate payee's interest arising from this reallocation
                  shall be invested in the various funds in accordance with the
                  alternate payee's directions.

                                      cxlv
<PAGE>   56

                  For purposes of subsection 6.1(b), any such reallocation shall
                  be treated as a reallocation in accordance with subsection
                  6.1(a).

         (c)      Alternate Payee's Beneficiary. Except to the extent otherwise
                  provided by the qualified domestic relations order relating to
                  an alternate payee:

                  (i)      the alternate payee may designate on Timely Notice a
                           beneficiary,

                  (ii)     if no such person is validly designated or if the
                           designated person predeceases the alternate payee,
                           the beneficiary of the alternate payee shall be his
                           estate, and

                  (iii)    the beneficiary of the alternate payee shall be
                           accorded under the Plan all the rights and privileges
                           of the Beneficiary of a Participant.

         (d)      Distribution to Alternate Payee. An alternate payee shall be
                  entitled to receive a distribution from the Plan in accordance
                  with the qualified domestic relations order relating to the
                  alternate payee. Such distribution may be made only in a
                  method provided in Section 7.7 and shall include only such
                  amounts as have become vested; provided, however, that if a
                  qualified domestic relations order so provides, a Lump Sum
                  Distribution or Partial Distribution of the total vested
                  amount credited to the alternate payee's Accounts may be made
                  to the alternate payee before the date that the Participant
                  specified in the qualified domestic relations order attains
                  his earliest retirement age (as defined in Code section
                  414(p)(4)(B)). A qualified domestic relations order may
                  provide that until a distribution is made to the alternate
                  payee, the alternate payee may make withdrawals in accordance
                  with Article VIII as if the alternate payee were an employed
                  Participant; provided, however, that (i) hardship withdrawals
                  from the portion of the alternate payee's Accounts
                  attributable to the Before-Tax Contributions Section of the
                  Accounts of the Participant specified in the qualified
                  domestic relations order shall not be available to an
                  alternate payee and (ii) no withdrawal suspension penalties
                  shall be imposed on account of a withdrawal by an alternate
                  payee.

         (e)      Vesting of Alternate Payee's Accounts. In the event that the
                  qualified domestic relations order provides for all or part of
                  the non-vested portion of the Participant's Employer Accounts
                  to be credited to the Accounts of the alternate payee, such
                  amounts shall vest and/or be forfeited at the same time and in
                  the same manner as the Accounts of the Participant specified
                  in the qualified domestic relations order; provided, however,
                  that no forfeiture shall result to the Accounts of the
                  alternate payee due to any distribution to or withdrawal by
                  the Participant from his Accounts or any distribution to or
                  withdrawal by the alternate payee from the vested portion of
                  the Accounts of the alternate payee.

11.12    Compensation Limit. In addition to other applicable limitations which
         may be set forth in the Plan and notwithstanding any other contrary
         provision of the Plan, compensation taken into account under the Plan
         for Plan Years beginning on January 1, 1989 and ending prior to January
         1, 1994, shall not exceed $200,000, adjusted for changes in the

                                     cxlvi
<PAGE>   57

         cost of living as provided in Code section 415(d), and compensation
         taken into account under the Plan for Plan Years beginning on or after
         January 1, 1994, shall not exceed $150,000, adjusted for changes in the
         cost of living as provided in Code sections 401(a)(17)(B) and 415(d).

         In applying the above limitation, the Family Members of a Highly
         Compensated Eligible Employee who is subject to the Family Member
         aggregation rules of Code section 414(q)(6) because such Highly
         Compensated Eligible Employee is either a "Five Percent Owner" (as
         defined within Subsection 2.1(hh) of the Employer or an Affiliated
         Employer or one of the ten Highly Compensated Eligible Employees paid
         the greatest "Compensation" (as defined within Subsection 2.1(hh)
         during the Year and such Highly Compensated Eligible Employee, shall be
         treated as a single Participant, except that for this purpose "Family
         Members" shall include only the affected Highly Compensated Eligible
         Employee's spouse and any lineal descendants who have not attained age
         19 before the close of the Year. If, as a result of the application of
         such rules, the adjusted limitation is exceeded, then the limitation
         shall be prorated among the Highly Compensated Eligible Employee and
         Family Members in proportion to each one's Total Compensation prior to
         the application of this limitation, or adjusted in accordance with any
         other method permitted by applicable regulations. Notwithstanding the
         foregoing, this paragraph shall not apply for Plan Years beginning
         after December 31, 1996.

                                     cxlvii
<PAGE>   58

                                   ARTICLE XII

                             LIMITATIONS ON BENEFITS

12.1     Definitions and Rules.

                  (a) Definitions. For purposes of Article XII, the following
                  definitions and rules of interpretation shall apply.

                                    (i) "Annual Additions" to a Participant's
                           Accounts under this Plan is the sum, credited to a
                           Participant's Accounts for any Limitation Year, of:

                                           (A)      Company contributions,

                                           (B)      forfeitures, if any, and

                                           (C)      Participant Contributions.

                                    (ii) "Annual Benefit" -

                                           (A) A benefit which is payable
                                    annually in the form of a straight life
                                    annuity under a defined benefit plan
                                    maintained by the Company which is subject
                                    to the limitations of Code section 415. In
                                    the case of such a benefit which is not
                                    payable in the form of a straight life
                                    annuity, the benefit will be adjusted in
                                    accordance with subsection 12.1(a)(ii)(C)
                                    below.

                                           (B) When there is a transfer of
                                    assets or liabilities from one qualified
                                    plan to another, the Annual Benefit
                                    attributable to the assets transferred shall
                                    not be taken into account by the transferee
                                    plan in applying the limitations of Code
                                    section 415. The Annual Benefit payable on
                                    account of the transfer for any individual
                                    that is attributable to the assets
                                    transferred will be equal to the annual
                                    benefit transferred on behalf of such
                                    individual multiplied by a fraction, the
                                    numerator of which is the value of the total
                                    assets transferred and the denominator of
                                    which is the value of the total liabilities
                                    transferred.

                                           (C) In the case of a retirement
                                    benefit under a defined benefit plan subject
                                    to the limitations of Code section 415(b)
                                    which is in any form other than a straight
                                    life annuity, such benefit will be adjusted
                                    to a straight life annuity beginning at the
                                    same age which is the actuarial equivalent
                                    of such benefit in accordance with
                                    applicable regulations and rules determined
                                    by the Commissioner, but without taking into
                                    account:

                                    cxlviii
<PAGE>   59

                                                   (1) the value of a qualified
                                        joint and survivor annuity (as defined
                                        in Code section 401(a)(11)(G)(iii) and
                                        the regulations thereunder) provided by
                                        a defined benefit plan to the extent
                                        that such value exceeds the sum of (a)
                                        the value of a straight life annuity
                                        beginning on the same date and (b) the
                                        value of any post-retirement death
                                        benefits which would be payable even if
                                        the annuity were not in the form of a
                                        joint and survivor annuity,

                                                   (2) the value of benefits
                                        that are not directly related to
                                        retirement benefits (such as, but not
                                        limited to, pre-retirement disability
                                        and death benefits), and

                                                   (3) the value of benefits
                                        provided by a defined benefit plan which
                                        reflect post-retirement cost-of-living
                                        increases to the extent that such
                                        increases are in accordance with Code
                                        section 415(d) and the regulations
                                        thereunder.

                                           (D) In the case of a retirement
                                    benefit beginning before the Social Security
                                    Retirement Age under a defined benefit plan
                                    subject to the limitations of Code section
                                    415(b), such benefit will be adjusted to the
                                    actuarial equivalent of a benefit beginning
                                    at the Social Security Retirement Age in
                                    accordance with applicable regulations and
                                    rules determined by the Commissioner, but
                                    this adjustment is only for purposes of
                                    applying the dollar limitation described in
                                    Code section 415(b)(1)(A) to the Annual
                                    Benefit of the Participant.

                                           (E) If a Participant has less than 10
                                    Years of Vesting Service with the Company at
                                    the time the Participant begins to receive
                                    retirement benefits under a defined benefit
                                    plan, the benefit limitations described in
                                    Code section 415(b)(1) and (4) are to be
                                    reduced by multiplying the otherwise
                                    applicable limitation by a fraction, the
                                    numerator of which is the number of Years of
                                    Vesting Service with the Company as of, and
                                    including, the current Limitation Year, and
                                    the denominator of which is 10. For purposes
                                    of this paragraph (E), Years of Vesting
                                    Service shall be determined in accordance
                                    with such defined benefit plan.

                                           (F) In the case of a retirement
                                    benefit beginning after the Social Security
                                    Retirement Age under a defined benefit plan
                                    subject to the limitations of Code section
                                    415(b), such benefit will be adjusted to the
                                    actuarial equivalent of a benefit beginning
                                    at the Social Security Retirement Age in
                                    accordance with applicable regulations and
                                    rules determined by the Commissioner, but
                                    this adjustment is only for purposes of
                                    applying the dollar

                                     cxlix
<PAGE>   60

                                    limitation described in Code section
                                    415(b)(1)(A) to the Annual Benefit of the
                                    Participant.

                                           (G) For purposes of this Section, the
                                    "Social Security Retirement Age" shall mean
                                    the age used as the retirement age under
                                    section 216(l) of the Social Security Act,
                                    applied without regard to the age increase
                                    factor and as if the early retirement age
                                    under section 216(l)(2) of the Social
                                    Security Act were 62.

                                    (iii) "Company" - any corporation which is a
                            member of a controlled group of corporations (as
                            defined in Code section 414(b) and modified by Code
                            section 415(h)) or an affiliated service group (as
                            defined in section 414(m) of the Code) which
                            includes an Employer; any trades or businesses
                            (whether or not incorporated) which are under common
                            control (as defined in Code section 414(c) and
                            modified by Code section 415(h)) with an Employer;
                            or any other entity required to be aggregated with
                            an Employer pursuant to Code section 414(o).

                                    (iv) "Compensation" with respect to a
                            Limitation Year -

                                           (A) includes amounts actually paid or
                                    made available to a Participant (regardless
                                    of whether he was such during the entire
                                    Limitation Year);

                                                   (1) as wages, fees for
                                            professional service, and other
                                            amounts received for personal
                                            services actually rendered in the
                                            course of employment with the
                                            Company including but not limited to
                                            commissions, compensation for
                                            services on the basis of a
                                            percentage of profits and bonuses;

                                                   (2) for purposes of (i)
                                            above, earned income from sources
                                            outside the United States (as
                                            defined in Code section 911(b));
                                            whether or not excludable from gross
                                            income under Code section 911 or
                                            deductible under Code section 913;

                                                   (3) amounts described in Code
                                            sections 104(a)(3), 105(a) and
                                            105(h) but only to the extent that
                                            these amounts are includable in the
                                            gross income of the Participant;

                                                   (4) amounts paid or
                                            reimbursed by the Company for moving
                                            expenses incurred by the
                                            Participant, but only to the extent
                                            that these amounts are not
                                            deductible by the Participant under
                                            Code section 217;

                                       cl
<PAGE>   61

                                                   (5) value of a nonqualified
                            stock option granted to the Participant, but only to
                            the extent that the value of the option is
                            includable in the gross income of the Participant in
                            the taxable year in which granted;

                                                   (6) the amount includable in
                            the gross income of a Participant upon making the
                            election described in Code section 83(b).

                                           (B) excludes -

                                                   (1) amounts contributed to
                            this Plan by Employers on behalf of Participants as
                            Before-Tax Contributions (and not considered Basic
                            After-Tax Contributions under Section 3.5(a)(ii) nor
                            recharacterized as Basic After-Tax Contributions
                            under Section 3.5(b)(iii)) and any amount which is
                            contributed or deferred by the Employer at the
                            election of the Employee under Section 125 of the
                            Code; provided, however that for Limitation Years
                            beginning after December 31, 1997, such amounts
                            shall be included as "Compensation" with respect to
                            such Limitation Year.

                                                   (2) contributions made by the
                            Company to a plan of deferred compensation to the
                            extent that, before the application of the Code
                            section 415 limitations to that plan, the
                            contributions are not includable in the gross income
                            of the Participant for the taxable year in which
                            contributed and any distributions from a plan of
                            deferred compensation, regardless of whether such
                            amounts are includable in the gross income of the
                            Participant when distributed; provided however, any
                            amounts received by a Participant pursuant to an
                            unfunded nonqualified plan shall be considered as
                            Compensation in the year such amounts are includable
                            in the gross income of the Participant;

                                                   (3) amounts realized from the
                            exercise of a nonqualified stock option, or
                            recognized when restricted stock (or property) held
                            by a Participant either becomes freely transferable
                            or is no longer subject to a substantial risk of
                            forfeiture pursuant to Code section 83 and the
                            regulations thereunder;

                                                   (4) amounts realized from the
                            sale, exchange or other disposition of stock
                            acquired under a qualified stock option;

                                      cli
<PAGE>   62

                                                   (5) other amounts which
                                           receive special tax benefits such as
                                           premiums for group term life
                                           insurance (but only to the extent
                                           that the premiums are not includable
                                           in the gross income of the
                                           Participant); and

                                                   (6) Compensation in excess of
                                            the limit set forth in Section
                                            11.12.

                           In lieu of the above definition of "Compensation,"
                           effective for Plan Years beginning after December 31,
                           1991, the following alternative definitions of
                           "Compensation" in (A) or (B) below may be applied
                           with respect to a Limitation Year, as determined by
                           the Committee in its discretion:

                           (A)      Wages within the meaning of Section 3401(a)
                                    of the Code and all other payments of
                                    compensation to an Employee by his Employer
                                    (in the course of the Employer's trade or
                                    business) for which the Employer is required
                                    to furnish the Employee a written statement
                                    under Section 6041(d), 6051(a)(3), and 6052
                                    of the Code, but excluding amounts paid or
                                    reimbursed by the Employer for moving
                                    expenses incurred by an Employee, but only
                                    to the extent that at the time of the
                                    payment it is reasonable to believe that
                                    these amounts are deductible by the Employee
                                    under Section 217 of the Code, and
                                    determined without regard to any rules under
                                    Section 3401(a) of the Code that limit the
                                    remuneration included in wages based on the
                                    nature or location of the employment or the
                                    services performed.

                           (B)      Wages within the meaning of Section 3401(a)
                                    of the Code (for purposes of income tax
                                    withholding at the source) of the
                                    Participant but determined without regard to
                                    any rules that limit the remuneration
                                    included in wages based on the nature or
                                    location of the employment or the services
                                    performed.

                           For Limitation Years after December 31, 1997,
                           "Compensation" hereunder includes amounts contributed
                           or deferred by the Employer on behalf of the Employee
                           under sections 125 or 401(k) of the Code.

                                    (v)     "Limitation Year" - a calendar year;

                                    (vi)    "Maximum Permissible Amount" -

                                               (A) for a Limitation Year, with
                                    respect to any Participant, subject to the
                                    rule in paragraph (B), the lesser of

                                                   (1) $30,000 (or, if greater,
                                           1/4 of the dollar limitation in
                                           effect under Code section
                                           415(b)(1)(A)), or

                                      clii
<PAGE>   63

                                                   (2) 25% of the Participant's
                                             Compensation for the Limitation
                                             Year.

                                                     (B) As of January 1 of each
                                    calendar year, the dollar limitation set
                                    forth in subparagraph (A)(1) above shall be
                                    adjusted automatically for cost-of-living
                                    increases to equal the dollar limitation as
                                    determined by the Commissioner for that
                                    calendar year under Code section
                                    415(d)(1)(B). This adjusted dollar
                                    limitation applies for the Limitation Year
                                    ending with that calendar year.

                                    (vii) "Projected Annual Benefit" - the
                           Annual Benefit to which a Participant would be
                           entitled under a defined benefit plan maintained by
                           the Company on the assumptions that he or she
                           continues employment until the normal retirement age
                           (or current age, if that is later) thereunder, that
                           his or her Compensation continues at the same rate as
                           in effect for the Limitation Year under consideration
                           until such age, and that all other relevant factors
                           used to determine benefits under the Plan remain
                           constant as of the current Limitation Year for all
                           future Limitation Years;

                  (b) Other Rule. For purposes of applying the limitations of
                  Code section 415(b), (c) and (e) applicable to a Participant
                  for a particular Limitation Year, all qualified defined
                  contribution plans (without regard to whether a plan has been
                  terminated) ever maintained by the Company will be treated as
                  part of this Plan and all qualified defined benefit plans
                  (without regard to whether a plan has been terminated) ever
                  maintained by the Company will be treated as one defined
                  benefit plan.

12.2     Limits.

                  (a) Annual Addition Limit. The amount of the Annual Addition
                  which may be credited under this Plan to any Participant's
                  Accounts as of any allocation date shall not exceed the
                  Maximum Permissible Amount (based upon his Compensation up to
                  such allocation date) reduced by the sum of any Annual
                  Additions made to the Participant's Accounts under this Plan
                  as of any preceding allocation date within the Limitation
                  Year. If an allocation date of this Plan coincides with an
                  allocation date of any other qualified defined contribution
                  plan maintained by the Company, the amount of the Annual
                  Additions which may be credited under this Plan to any
                  Participant's Accounts as of such date shall be an amount
                  equal to the product of the amount to be credited under this
                  Plan without regard to this Section 12.2 multiplied by the
                  lesser of 1.0 or a fraction, the numerator of which is the
                  amount described in this subsection (a) of Section 12.2 during
                  the Limitation Year and the denominator of which is the amount
                  that would otherwise be credited on this allocation date under
                  all plans without regard to this Section 12.2. If
                  contributions to this Plan by or on behalf of a Participant
                  are to be reduced as a result of this Section 12.2, such
                  reduction shall be effected by

                                     cliii
<PAGE>   64

                  first reducing any Unrestricted After-Tax Contributions and
                  second, if and to the extent necessary, by proportionately
                  reducing any Basic After-Tax Contributions and corresponding
                  Company Matching Contributions and then, if and to the extent
                  necessary, by proportionately reducing any Before-Tax
                  Contributions and corresponding Company Matching
                  Contributions. If as a result of a reasonable error in
                  estimating a Participant's Compensation, or under the limited
                  facts and circumstances which the Commissioner finds justify
                  the availability of the rules set forth in this Section 12.2,
                  the allocation of Annual Additions under the terms of the Plan
                  for a particular Participant would cause the limitations of
                  Code section 415 applicable to that Participant for the
                  Limitation Year to be exceeded, the excess amounts shall not
                  be deemed to be Annual Additions in that Limitation Year if
                  they are treated as follows:

                                     (i) The excess amounts in the Participant's
                           Account consisting of Participant Contributions and
                           Contributions made on his behalf and any increment
                           attributable thereto shall be paid to the Participant
                           as soon as administratively feasible.

                                    (ii) The excess amounts in the Participant's
                           Account consisting of Company Matching Contributions
                           shall be used to reduce Company Matching
                           Contributions for the next Limitation Year (and
                           succeeding Limitation Years, as necessary) for all
                           Participants in the Plan.

                  (b) Overall Limit. For any Participant of this Plan who at any
                  time participated in a defined benefit plan maintained by the
                  Company, the rate of benefit accrual by such Participant in
                  each defined benefit plan in which the Participant
                  participates during the Limitation Year will be reduced to the
                  extent necessary to prevent the sum of the following
                  fractions, computed as of the close of the Limitation Year,
                  from exceeding 1.0:

                                    (i) The Projected Annual Benefit of the
                           Participant under the defined benefit plan

                                    over

                                            The lesser of (1) the product of
                           1.25 multiplied by the dollar limitation in effect
                           under Code section 415(b)(1)(A) for such Limitation
                           Year or (2) the product of 1.4 multiplied by the
                           amount which may be taken into account under Code
                           section 415(b)(1)(B) with respect to such Participant
                           for such Limitation Year,

                                    plus

                                    (ii) The sum of Annual Additions to such
                           Participant's Accounts under this Plan in such
                           Limitation Year and for all prior Limitation Years

                                      cliv
<PAGE>   65

                                    over

                                            The sum of the lesser of the
                           following amounts determined for such year and for
                           each prior year of service with the Company: (1) the
                           product of 1.25 multiplied by the dollar limitation
                           in effect under Code section 415(c)(1)(A) for such
                           Limitation Year or (2) the product of 1.4 multiplied
                           by 25% of the Participant's Compensation for such
                           Limitation Year.

                  (c)      Special Rules Applicable to Computation of Overall
                           Limit.

                                    (i) For purposes of applying the defined
                           contribution plan fraction in Section 12.2(b), for
                           any Limitation Year beginning after December 31,
                           1975, the following rules shall apply with respect to
                           Limitation Years before January 1, 1976:

                                                     (A) The aggregate amount
                                    taken into account in determining the
                                    numerator of such fraction is deemed not to
                                    exceed the aggregate amount taken into
                                    account in determining the denominator of
                                    the fraction.

                                                     (B) The amount taken into
                                    account for purposes of subsection
                                    12.1(a)(i)(C)(1) is an amount equal to the
                                    excess of the aggregate amount of the
                                    Participant's contributions for such years
                                    during which he was an active participant in
                                    the Plan over 10% of the Participant's
                                    aggregate Compensation for all such years,
                                    multiplied by a fraction, the numerator of
                                    which is 1.0 and the denominator of which is
                                    the number of years beginning before January
                                    1, 1976, during which the Participant
                                    participated in the Plan. Participant
                                    contributions made on or after October 2,
                                    1973, shall be taken into account for
                                    purposes of the preceding sentence only to
                                    the extent that the amount of such
                                    contributions was permissible under a plan
                                    as in effect on that date.

                                    (ii) In any case where the sum of the
                           fractions in Section 12.2(b) is greater than 1.0
                           calculated as of the close of the last Limitation
                           Year beginning before January 1, 1983 for a
                           Participant in accordance with regulations prescribed
                           by the Commissioner pursuant to Section 235(g)(3) of
                           the Tax Equity and Fiscal Responsibility Act of 1982,
                           an amount shall be subtracted from the numerator of
                           the defined contribution plan fraction so that the
                           sum of such fractions does not exceed 1.0 for such
                           Limitation Year.

         (d)      Repeal of Overall Limit. For Limitation Years beginning after
                  December 31, 1999, the overall limit described in subsection
                  12.2(b) and (c) shall no longer apply under the Plan.

                                      clv
<PAGE>   66

                                  ARTICLE XIII

                                     MERGER

No merger or consolidation with or transfer of any assets or liabilities to any
other plan after September 2, 1974, shall be made unless, upon completion
thereof, the value of each Participant's Account shall immediately after said
merger, consolidation, or transfer be equal to or greater than the value of the
Participant's Account immediately before the merger, consolidation, or transfer
(if the Plan had then terminated).

                                      clvi
<PAGE>   67

                                   ARTICLE XIV

                             TOP-HEAVY REQUIREMENTS

14.1     Top-Heavy Requirements. Notwithstanding any other provisions of this
         Plan, the following rules shall apply for any Plan Year if as of the
         last day of the preceding Plan Year, based on valuations as of such
         date, the sum of the present value of accrued benefits and Accounts of
         "key employees" (within the meaning of Code section 416) exceeds 60% of
         a similar sum for all employees under each plan of the Employer or any
         Affiliated Employer in which a "key employee" participates and each
         other plan of the Employer or any Affiliated Employer which enables any
         such plan to meet the requirements of Code section 401(a)(4) or 410. A
         Plan Year during which such rules apply shall be known as a "Top-Heavy
         Plan Year."

         (a)      Vesting. A Participant who is credited with an Hour of Service
                  during the Top-Heavy Plan Year, or in any Plan Year after the
                  Top-Heavy Plan Year, and who has completed at least three
                  years of Service shall have a nonforfeitable right to 100% of
                  his Employer Accounts and no such amount may become
                  forfeitable if the Plan later ceases to be Top-Heavy nor may
                  such amount be forfeited under the provisions of Code sections
                  411(a)(3)(B) (relating to suspension of benefits upon
                  reemployment) or 411(a)(3)(D) (relating to forfeitures upon
                  withdrawal of mandatory contributions). If the Plan become
                  Top-Heavy and later ceases to be Top-Heavy, this vesting
                  schedule shall no longer apply and benefits which have not at
                  such time vested under this schedule shall vest only in
                  accordance with other provisions of this Plan, provided that
                  any Participant with at least 3 years of Service shall be
                  entitled to continue to utilize this schedule for vesting
                  purposes by making an election at the time and in the manner
                  specified by the Committee.

         (b)      Required Contributions. Each Employer shall contribute on
                  behalf of each employee eligible to participate in the Plan,
                  the lesser of:

                  (i)      3% of such employee's compensation (within the
                           meaning of Code section 415); or

                  (ii)     the percentage of such employee's compensation
                           (within the meaning of Code section 415) which is
                           equal to the percentage at which contributions were
                           made for that Plan Year on behalf of the "key
                           employee" for whom such percentage is the greatest
                           for such Plan Year, as prescribed by Code section
                           416(c)(2)(B) and regulations thereunder;

                  provided, however, that any contributions for any employee
                  required of any Employer by the above provisions of this
                  subsection 14.1(b) shall be reduced by the amount of any
                  Company Matching Contribution made with respect to such Plan
                  Year for such employee under Article IV of this Plan. Any
                  contribution made pursuant to this subsection 14.1(b) shall be
                  allocated to the Employer K-C Stock Account on behalf of the
                  employee for whom such contribution is made.

                                     clvii
<PAGE>   68

         (c)      Additional Limitations. No allocations may be made to the
                  Account of a Participant the sum of whose defined benefit plan
                  fraction and defined contribution plan fraction, as defined in
                  Code section 415(e), exceeds 1.0 when the dollar amounts, as
                  defined in Section 12.2(b) hereof, are multiplied by 1.0
                  rather than 1.25.

                  The provisions of this Section 14.1 shall be interpreted in
                  accordance with the provisions of Code section 416 and any
                  regulations thereunder, which are hereby expressly
                  incorporated by reference.

         (d)      Coordination. In the event a top heavy minimum contribution or
                  benefit is required under this Plan or a defined benefit plan
                  of an Employer that covers a Participant, the top heavy
                  minimum contribution or benefit, as appropriate, shall be
                  provided in this Plan. In the event a top heavy minimum
                  contribution is required under this Plan or another defined
                  contribution plan of an Employer that covers a Participant,
                  the top heavy minimum contribution shall be provided in the
                  other plan.

                                     clviii
<PAGE>   69

                                   APPENDIX A

                     LIST OF EMPLOYERS, PARTICIPATING UNITS
                AND EFFECTIVE DATES OF PARTICIPATION IN THE PLAN

<TABLE>
<CAPTION>
List of Employers and Participating Units                                                  Effective Date
-----------------------------------------                                                  --------------
<S>                                                                                        <C>
Kimberly-Clark Corporation

(b)      Atlas Mill: All hourly employees of this unit who are represented by              April 1, 1981
         the Kimberly-Clark Atlas Union, including those on temporary assignment
         in other classifications or at other units or Employers, but excluding
         employees on temporary assignment from another unit, Employer or
         classification.

(c)      Beech Island Mill: All hour employees of this unit, including those on            February 1, 1968
         temporary assignment in other classifications or at other units or
         Employers, but excluding employees on temporary assignment from another
         unit, Employer or classification.

(d)      Berkeley Mills: All hourly employees of this unit, including those on             August 1, 1967
         temporary assignment in other classifications or at other units or
         Employers, but excluding employees on temporary assignment from another
         unit, Employer or classification.

(e)      Chester: All hourly employees of this unit who are represented by the             January 1, 1998
         United Paperworkers International Union, Local No. 448, including those
         on temporary assignment in other classifications or at other units or
         Employers, but excluding employees on temporary assignment from another
         unit, Employer or classification.

(f)      Everett: All hourly employees of this unit who are represented by the             January 1, 1998
         Association of Western Pulp and Paper Workers, Local Nos. 183 and 644,
         including those on temporary assignment in other classifications or at
         other units or Employers, but excluding employees on temporary
         assignment from another unit, Employer or classification.

(g)      Kimtech Plant: All hourly machinist employees of this unit who are                January 1, 1988
         represented by Lodge No. 1855 of the International Association of                 (Kimtech Ltd. -
         Machinists and Aerospace Workers, AFL-CIO, including those on temporary           January 1, 1984
         assignment in other classifications or at other units or Employers, but           through December 31,
         excluding employees on temporary assignment from another unit, Employer           1987)
         or classification.

(h)      Fullerton Mill: All hourly employees of this unit who are represented             October 1, 1986
         by the Association of Western Pulp & Paperworkers, Local No. 672,                 to December 31,
         including those on temporary assignment in other classifications or at            1996
         other units or Employers, but excluding employees on temporary
         assignment from another unit, Employer or classification.
</TABLE>

                                      clix
<PAGE>   70

<TABLE>
<CAPTION>
List of Employers and Participating Units                                                  Effective Date
-----------------------------------------                                                  --------------
<S>                                                                                        <C>
(i)      LaGrange Mill: All nonexempt salaried employees of this unit, including           January 1, 1986
         those on temporary assignment in other classifications or at other
         units or Employers, but excluding employees on temporary assignment
         from another unit, Employer or classification.

(j)      Lexington Mill: All nonexempt salaried employees of this unit,                    October 1, 1985
         including those on temporary assignment in other classifications or at
         other units or Employers, but excluding employees on temporary
         assignment from another unit, Employer or classification.

(k)      Marinette: All hourly employees of this unit who are represented by the           January 1, 1998
         United Paperworkers International Union, Local No. 86 including those
         on temporary assignment in other classifications or at other units or
         Employers, but excluding employees on temporary assignment from another
         unit, Employer or classification.

(l)      Maumelle Facility: All nonexempt salaried employees of this unit,                 July 1, 1992
         including those on temporary assignment in other classifications or at
         other units or Employers, but excluding employees on temporary
         assignment from another unit, Employer or classification.

(m)      Mobile: All hourly employees of this unit who are represented by the              January 1, 1998
         United Paperworkers International Union, Local Nos. 423, 1421, 1575 and
         1873, or the International Brotherhood of Electrical Workers, Local
         2129, including those on temporary assignment in other classifications
         or at other units or Employers, but excluding employees on temporary
         assignment from another unit, Employer or classification.

(n)      Munising Mill: All hourly employees of this unit who are represented by           October 1, 1982
         the United Paperworkers International Union, Locals No. 87 and 96,
         including those on temporary assignment in other classifications or at
         other units or Employers, but excluding employees on temporary
         assignment from another unit, Employer or classification.

(o)      Neenah Mill: All hourly employees of this unit who are represented by             April 1, 1979
         The United Paperworkers International Union, affiliated with the
         AFL-CIO, Local Union No. 482, including those on temporary assignment
         in other classifications or at other units or Employers, but excluding
         employees on temporary assignment from another unit, Employer or
         classification.

</TABLE>

                                      clx
<PAGE>   71

<TABLE>
<CAPTION>
List of Employers and Participating Units                                                  Effective Date
-----------------------------------------                                                  --------------
<S>                                                                                        <C>
(p)      Neenah Paper: All hourly employees of this unit who are represented by            April 1, 1979
         the United Paperworkers International Union, Local No. 1170, including
         those on temporary assignment in other classifications or at other
         units or Employers, but excluding employees at the Whiting Mill and
         employees on temporary assignment from another unit, Employer or
         classification.

(q)      Neenah Paper - Whiting Mill: All hourly employees of this unit who are            April 1, 1993
         represented by the United Paperworkers International Union, AFL-CIO,
         Local 370, including those on temporary assignment in other
         classifications or at other units or Employers, but excluding employees
         on temporary assignment from another unit, Employer or classification.

(r)      New Milford Mill: All hourly employees of this unit, including those on           August 1, 1967
         temporary assignment in other classifications or at other units or
         Employers, but excluding employees on temporary assignment from another
         unit, Employer or classification.

(s)      Ogden Mill: All nonexempt salaried employees of this unit, including              July 1, 1986 to
         those on temporary assignment in other classifications or at other                December 31,
         units or Employers, but excluding employees on temporary assignment               1996
         from another unit, Employer or classification.

(t)      Paris Plant: All nonexempt salaried employees of this unit, including             April 1, 1984
         those on temporary assignment in other classifications or at other
         units or Employers, but excluding employees on temporary assignment
         from another unit, Employer or classification.

(u)      Sani-Fresh: All hourly employees (other than "office hourly employees")           January 1, 1997
         of this unit located at San Antonio, Texas, including those on
         temporary assignment in other classifications or at other units or
         Employers, but excluding employees on temporary assignment from another
         unit, Employer or classification.

(v)      Winslow: All hourly employees of this unit who are represented by the             January 1, 1998
         United Paperworkers International Union, Waterville Local Nos. 911 and
         431, the International Brotherhood of Electrical Workers, Local No.
         1768, the Office and Professional Employees International Union,
         AFL-CIO, Local 260 or the International Association of Machinists,
         Local 1828, including those on temporary assignment in other
         classifications or at other units or Employers, but excluding employees
         on temporary assignment from another unit, Employer or classification.
</TABLE>

                                      clxi

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