<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>dex104.txt
<DESCRIPTION>RETIREMENT PLAN FOR SALARIED EMPLOYEES
<TEXT>
<PAGE>

                                                                    Exhibit 10.4


                                 RETIREMENT PLAN

                             FOR SALARIED EMPLOYEES

                                OF RAYONIER INC.



                          Effective as of March 1, 1994
                      Amended and Restated January 1, 2000
                  And Further Amended Through October 19, 2001

<PAGE>

                                    FOREWORD
                                    --------

The Plan as set forth in this document is known as the Retirement Plan for
Salaried Employees of Rayonier Inc. (hereinafter called the Plan).

Unless otherwise expressly provided in this Plan and consistent with applicable
law, (i) the rights and benefits of any Member who retires or whose employment
is terminated, whichever first occurs, are determined in accordance with the
provisions of the Plan in effect at the time of such retirement or termination,
and (ii) no revision to the Plan shall deprive any Member who retires or whose
employment is terminated prior to such revisions, of any rights and benefits
which theretofore had accrued under the Plan.

This Plan is intended to qualify under the Internal Revenue Code of 1986.

Subject to the preceding sentence, the Plan shall be construed, regulated and
administered under the laws of the State of Florida, to the extent such laws are
not superseded by applicable federal law.

<PAGE>

                     RETIREMENT PLAN FOR SALARIED EMPLOYEES
                                OF RAYONIER INC.

                                TABLE OF CONTENTS
                                -----------------

<TABLE>
<CAPTION>
                                                                                                            Page
                                                                                                            ----
<S>                                                                                                         <C>
ARTICLE 1 -- DEFINITIONS....................................................................................   1
------------------------


ARTICLE 2 -- SERVICE........................................................................................  14
--------------------

         2.01     Eligibility Service.......................................................................  14
                  -------------------

         2.02     Benefit Service...........................................................................  21
                  ---------------

         2.03     Questions Relating to Service Under the Plan..............................................  25
                  --------------------------------------------


ARTICLE 3 -- MEMBERSHIP.....................................................................................  27
-----------------------

         3.01     Persons Employed on the Effective Date....................................................  27
                  --------------------------------------

         3.02     Persons First Employed as Employees On or After the Effective Date........................  27
                  ------------------------------------------------------------------

         3.03     Reemployment After March 1, 1994 of ITT Rayonier Incorporated Salaried Employees..........  28
                  --------------------------------------------------------------------------------

         3.04     Persons Employed as a Leased Employee With the Company or an Associated Company...........  28
                  -------------------------------------------------------------------------------

         3.05     Persons Employed as Other Than Employees by the Company...................................  28
                  -------------------------------------------------------

         3.06     Reemployment of Former Employees, Former Members and Retired Members......................  29
                  --------------------------------------------------------------------

         3.07     Termination of Membership.................................................................  29
                  -------------------------

         3.08     Questions Relating to Membership in the Plan..............................................  30
                  --------------------------------------------


ARTICLE 4 -- BENEFITS.......................................................................................  31
---------------------

         4.01     Normal Retirement Allowance...............................................................  31
                  ---------------------------

         4.02     Postponed Retirement Allowance............................................................  33
                  ------------------------------

         4.03     Standard Early Retirement Allowance.......................................................  35
                  -----------------------------------

         4.04     Special Early Retirement Allowance........................................................  36
                  ----------------------------------

         4.05     Vested Benefit............................................................................  38
                  --------------

         4.06     Forms of Benefit Payment After Retirement.................................................  39
                  -----------------------------------------

         4.07     Survivor's Benefit Applicable Before Retirement...........................................  46
                  -----------------------------------------------

         4.08     Maximum Benefits..........................................................................  62
                  ----------------
</TABLE>

<PAGE>

                     RETIREMENT PLAN FOR SALARIED EMPLOYEES
                                OF RAYONIER INC.

                                TABLE OF CONTENTS
                                -----------------
                                    (cont'd)

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
         4.09     No Duplication..............................................................................   63
                  --------------

         4.10     Payment of Benefits.........................................................................   64
                  -------------------

         4.11     Reemployment of Former Member or Retired Member.............................................   67
                  -----------------------------------------------

         4.12     Top-heavy Provisions........................................................................   71
                  --------------------

         4.13     Payment of Medical Benefits for Benefits for Certain Members Who Retire Under the Plan......   74
                  --------------------------------------------------------------------------------------

         4.14     Transfers From Hourly Plans Maintained by the Company or an Associated Company..............   76
                  ------------------------------------------------------------------------------

         4.15     Direct Rollover of Certain Distributions....................................................   77
                  ----------------------------------------


ARTICLE 5 -- ADMINISTRATION OF PLAN...........................................................................   79
-----------------------------------

         5.01     Appointment of Retirement Committee.........................................................   79
                  -----------------------------------

         5.02     Pension Trust Fund and Investment Committee.................................................   79
                  -------------------------------------------

         5.03     Named Fiduciaries...........................................................................   80
                  -----------------

         5.04     Meetings and Action of Majority.............................................................   80
                  -------------------------------

         5.05     Duties of Committees........................................................................   80
                  --------------------

         5.06     Management of Plan Assets...................................................................   81
                  -------------------------

         5.07     Establishment of Rules and Rights of Retirement Committee...................................   81
                  ---------------------------------------------------------

         5.09     Claims and Review Procedure.................................................................   83
                  ---------------------------


ARTICLE 6 -- CONTRIBUTIONS....................................................................................   86
--------------------------

         6.01     Company Contributions.......................................................................   86
                  ---------------------

         6.02     Return of Contributions.....................................................................   86
                  -----------------------


ARTICLE 7 -- MANAGEMENT OF FUNDS..............................................................................   87
--------------------------------

         7.01     Trustee.....................................................................................   87
                  -------

         7.02     Exclusive Benefit Rule......................................................................   87
                  ----------------------

         7.03     Investment in Company Securities or Real Property...........................................   88
                  -------------------------------------------------

         7.04     Appointment of Investment Managers..........................................................   88
                  ----------------------------------


ARTICLE 8 -- CERTAIN RIGHTS AND LIMITATIONS...................................................................   89
-------------------------------------------
</TABLE>

<PAGE>

                     RETIREMENT PLAN FOR SALARIED EMPLOYEES
                                OF RAYONIER INC.

                                TABLE OF CONTENTS
                                -----------------
                                    (cont'd)

<TABLE>
<CAPTION>
                                                                                                           Page
                                                                                                           ----
<S>                                                                                                        <C>
         8.01     Termination of the Plan.................................................................   89
                  -----------------------

         8.02     Limitation Concerning Highly Compensated Employees or Highly Compensated Former
                  --------------------------------------------------------------------------------
                  Employees...............................................................................   90
                  ---------

         8.03     Conditions of Employment Not Affected by Plan...........................................   91
                  ---------------------------------------------

         8.04     Offsets.................................................................................   92
                  -------

         8.05     Denial of Benefits......................................................................   92
                  ------------------

         8.06     Change in Control.......................................................................   93
                  -----------------

         8.07     Prevention of Escheat...................................................................   96
                  ---------------------


ARTICLE 9 -- NONALIENATION OF BENEFITS....................................................................   98
--------------------------------------


ARTICLE 10 -- AMENDMENTS..................................................................................  100
------------------------
</TABLE>


APPENDIX A
----------

APPENDIX B
----------

APPENDIX C
----------

APPENDIX D
----------

APPENDIX E
----------

APPENDIX F
----------

<PAGE>

                     RETIREMENT PLAN FOR SALARIED EMPLOYEES
                                OF RAYONIER INC.


                            ARTICLE 1 -- DEFINITIONS
                            ------------------------

1.01     Accrued Benefit shall mean, as of any date of determination, the
         ---------------
         retirement allowance computed under Section 4.01(b) on the basis of the
         Member's Benefit Service and applicable components of the Plan formula
         as of the determination date and with respect to the amount determined
         under Section 4.01(b)(i)(4), the applicable components of the Prior
         Salaried Plan as of the determination date.

1.02     Annuity Starting Date shall mean the first day of the first period for
         -----------------------
         which an amount is due on behalf of a Member or former Member as an
         annuity or any other form of payment under the Plan.

1.03     Appendix shall mean the tables of factors which are used in determining
         --------
         the amount of the various forms of benefits payable under the Plan.

1.04     Associated Company shall mean any subsidiary or affiliated company of
         ------------------
         Rayonier Inc. not participating in the Plan which is (i) a component
         member of a controlled group of corporations (as defined in Section
         414(b) of the Code), which controlled group of corporations includes as
         a component member Rayonier Inc., (ii) any trade or business under
         common control (as defined in Section 414(c) of the Code) with Rayonier
         Inc., (iii) any organization (whether or not incorporated) which is a
         member of an affiliated service group (as defined in Section 414(m) of
         the Code) which includes Rayonier Inc. or (iv) any other entity
         required to be aggregated with Rayonier Inc. pursuant to regulations
         under Section 414(o) of the Code, during the period such entity is
         described in clause (i), (ii), (iii), or (iv). Notwithstanding the
         foregoing, for purposes of the preceding

                                                                       Article 1

<PAGE>
                                                                          Page 2

         sentence and Section 4.08 of the Plan, the definitions of Section
         414(b) and (c) of the Code shall be modified as provided in Section
         415(h) of the Code.

1.05     Beneficiary shall mean any person or entity named by a Member by
         -----------
         written designation to receive certain benefits payable in the event of
         his or her death as provided under Section 4.07.

1.06     Benefit Service shall mean employment recognized as such for the
         ----------------
         purposes of computing a benefit under the Plan as provided under
         Article 2.

1.07     Board of Directors shall mean the Board of Directors of Rayonier Inc.
         ------------------
         or of any successor to Rayonier Inc. by merger, purchase or otherwise.

1.08     Change in Control shall mean the occurrence of any one or more of the
         -----------------
         following events: (i) subject to the conditions contained in the final
         paragraph of this definition, the filing of a report on Schedule 13D
         with the Securities and Exchange Commission pursuant to Section 13(d)
         of the Securities Exchange Act of 1934 (the "Act") disclosing that any
         person, other than the Corporation or any employee benefit plan
         sponsored by the Corporation, is the beneficial owner (as the term is
         defined in Rule 13d-3 under the Act) directly or indirectly, of
         securities representing twenty percent or more of the total voting
         power represented by the Corporation's then outstanding Voting
         Securities (calculated as provided in paragraph (d) of Rule 13d-3 under
         the Act in the case of rights to acquire Voting Securities); or (ii)
         the purchase by any person, other than the Corporation or any employee
         benefit plan sponsored by the Corporation, of shares pursuant to a
         tender offer or exchange offer to acquire any Voting Securities of the
         Corporation (or securities convertible into such Voting Securities) for
         cash, securities or any other consideration, provided that after
         consummation of the offer, the person in question is the beneficial
         owner, directly or indirectly, of

                                                                       Article 1

<PAGE>
                                                                          Page 3

         securities representing twenty percent or more of the total voting
         power represented by the Corporation's then outstanding Voting
         Securities (all as calculated under clause (i)); or (iii) the approval
         by the shareholders of the Corporation of (A) any consolidation or
         merger of the Corporation in which the Corporation is not the
         continuing or surviving corporation (other than a merger of the
         Corporation in which holders of Common Shares of the Corporation
         immediately prior to the merger have the same proportionate ownership
         of Common Shares of the surviving corporation immediately after the
         merger as immediately before), or pursuant to which Common Shares of
         the Corporation would be converted into cash, securities or other
         property, or (B) any sale, lease, exchange, or other transfer (in one
         transaction or a series of related transactions) of all or
         substantially all the assets of the Corporation; or (iv) a change in
         the composition of the Board of Directors of the Corporation at any
         time during any consecutive twenty-four month period such that
         "continuing directors" cease for any reason to constitute at least a
         70% majority of the Board. For purposes of this definition of "Change
         in Control," the term "Voting Securities" means any securities of the
         Corporation which vote generally in the election of members of the
         Board of Directors and the term "continuing directors" means those
         members of the Board who either were directors at the beginning of a
         consecutive twenty-four month period or were elected during such
         period by or on the nomination or recommendation of at least a 70%
         majority of the then-existing Board.

         So long as there has not been a Change in Control within the meaning of
         clause (iv) above, the Board of Directors may adopt by a majority vote
         of the "continuing directors" a resolution to the effect that the
         occurrence of an event described in clause (i) (a "Clause (i) Event")
         does not constitute a "Change in Control" (an "Excluding Resolution")
         or a resolution to the effect that the occurrence of a Clause (i) Event
         does constitute a "Change in Control" (an "Including Resolution"). The
         adoption of an Excluding Resolution with respect to any Clause (i)
         Event shall

                                                                       Article 1

<PAGE>
                                                                          Page 4

         not deprive the Board of Directors of the right to adopt an Including
         Resolution with respect to such Clause (i) Event at a later date. A
         Clause (i) Event shall not in and of itself constitute a "Change in
         Control" until the earlier of (x) the effective date of an Including
         Resolution with respect thereto or (y) the passage of a period of five
         (5) business days after the Corporation's receipt of a copy of the
         subject report on Schedule 13D in compliance with Rule 13d-7 under the
         Act without an Excluding Resolution having been adopted with respect
         thereto; notwithstanding the adoption of an Excluding Resolution
         within the five business-day period referred to in (y), an Including
         Resolution may subsequently be adopted with respect to the relevant
         Clause (i) Event while it continues to exist, in which event a "Change
         in Control" shall be deemed to have occurred for purposes of this
         definition upon the effective date of such Including Resolution. The
         provisions of this second paragraph of the definition of "Change in
         Control" relate only to situations where a Clause (i) Event has
         occurred and no Change in Control within the meaning of clause (ii),
         (iii) or (iv) of the preceding paragraph has occurred, and nothing in
         this paragraph shall derogate from the principle that the occurrence
         of an event described in clause (ii), (iii) or (iv) of the preceding
         paragraph shall be deemed an immediate Change in Control regardless of
         whether or not a Clause (i) Event has occurred and an Excluding
         Resolution or Including Resolution become effective.

1.09     Code shall mean the Internal Revenue Code of 1986, as amended from time
         ----
         to time.

1.10     Company or Corporation shall mean Rayonier Inc. (formerly known as ITT
         -------
         Rayonier Incorporated) with respect to its Employees; and any
         Participating Unit with respect to its Employees. When used herein, the
         term Company shall collectively include Rayonier Inc. and any
         Participating Unit.

1.11     Compensation shall mean the total remuneration paid to a Member
         ------------
         (whether before or after membership in the Plan) for services rendered
         on and after the Effective Date, including annual

                                                                       Article 1

<PAGE>
                                                                          Page 5

          base salary, overtime, leadman's pay, shift differential, and bonuses
          paid under the Rayonier Inc. local bonus and gain share plans as in
          effect on March 1, 1994 (determined prior to any pre-tax contributions
          under a "qualified cash or deferred arrangement," as defined under
          Section 401(k) of the Code and its applicable regulations, under a
          "cafeteria plan," as defined under Section 125 of the Code and its
          applicable regulations or under a "qualified transportation fringe,"
          as defined under Section 132(f) of the Code and its applicable
          regulations), and for Members who receive no other source of
          remuneration from the Company, commissions, but excluding, except to
          the extent specifically included above, foreign service pay,
          automobile allowance, separation pay, incentive pay or other special
          pay or allowances of similar nature, commissions for any Member who
          receives any other form of remuneration from the Company, bonuses, and
          the cost of any public or private employee benefit plan, including the
          Plan. Commencing with the Plan Year beginning in 1994, Compensation
          taken into account for any purpose under the Plan, including the
          determination of Final Average Compensation, shall not exceed $150,000
          (as adjusted from time to time by the Secretary of the Treasury in
          accordance with Section 401(a)(17)(B) of the Code). Effective January
          1, 1997, the compensation limit shall be applied without regard to the
          family aggregation provisions of Section 414(q)(6) of the Code in
          determining benefit accruals for Plan Years beginning on and after
          January 1, 1997, and to the extent permissible under the IRS rules or
          regulations, for any earlier Plan Year.

1.12      Early Retirement Date shall mean the date as determined in the manner
          ---------------------
          set forth in Section 4.03.

1.13      Effective Date of the Plan shall mean March 1, 1994.
          --------------------------

1.14      Eligibility Service shall mean any employment recognized as such for
          -------------------
          the purposes of meeting the eligibility requirements for membership in
          the Plan and for eligibility for benefits under the Plan as provided
          under Article 2.

                                                                       Article 1

<PAGE>

                                                                          Page 6

1.15     Employee shall mean any person regularly employed by the Company who is
         --------
         paid from a payroll maintained in the continental United States,
         Hawaii, Puerto Rico or the U.S. Virgin Islands and who receives regular
         and stated compensation other than a pension or retainer; provided,
         however, that except as the Board of Directors or the Retirement
         Committee, pursuant to the authority delegated to it by the Board of
         Directors, may otherwise provide on a basis uniformly applicable to all
         persons similarly situated, no person shall be an Employee for purposes
         of the Plan who is (i) engaged as a consultant, (ii) a non-resident
         alien, (iii) paid on an hourly basis and who, under the Company's
         employment classification practices, is considered as an hourly-rated
         employee for purposes of the Company's employee benefit plans, (iv)
         accruing benefits in respect of current service under any other
         pension, retirement, qualified profit-sharing or other similar plan of
         the Company (other than the Rayonier Inc. Investment and Savings Plan
         for Salaried Employees,) or of any Associated Company, (v) a Leased
         Employee, or (vi) a Non-Benefits Worker; and provided further, that no
         person shall be an Employee for purposes of the Plan whose terms and
         conditions of employment are determined by a collective bargaining
         agreement with the Company which does not make this Plan applicable to
         such person. In addition, effective January 1, 1998, any person
         considered to be an independent contractor by the Company shall not be
         considered an Employee even if he is reclassified as an employee by any
         taxing authority such as the Internal Revenue Service or any other
         authority or agency.

1.16     Equivalent Actuarial Value shall mean equivalent value of a benefit
         --------------------------
         under the Plan determined on the basis of the applicable factors set
         forth in Appendix A, except as otherwise specified in the Plan. In any
         other event, Equivalent Actuarial Value shall be determined on the same
         actuarial basis utilized to compute the factors set forth in Appendix
         A.

                                                                       Article 1

<PAGE>

                                                                          Page 7

1.17     ERISA shall mean the Employee Retirement Income Security Act of 1974,
         -----
         as amended from time to time.

1.18     Final Average Compensation shall mean the sum of:
         --------------------------
         (a)      The average of a Member's annual base salary recognized as
                  Compensation received in any five calendar years of
                  Eligibility Service in which such annual base salary was
                  highest, plus

         (b)      The average of a Member's annual Compensation in excess of
                  annual base salary received in any five calendar years of
                  Eligibility Service in which such Compensation was highest;

         provided, however, that the calendar years on which such averages are
         based shall be any five calendar years during the last 120 calendar
         months of a Member's Eligibility Service, or if the Member has less
         than five calendar years of Eligibility Service, all of his or her
         calendar years of Eligibility Service; provided, further, however, that
         (i) the annual base salary earned in any calendar year and taken into
         account for purposes of "Final Average Compensation," and (ii) the
         amount in excess of base annual salary earned in any calendar year and
         taken into account for purposes of "Final Average Compensation," and
         (iii) the sum of (i) and (ii) taken into account for any calendar year,
         each shall be subject to the provisions of Section 401(a)(17) of the
         Code. If the Member terminates employment before the last day of the
         calendar year or otherwise experiences an interruption in Eligibility
         Service, the Retirement Committee shall, in accordance with rules
         uniformly applicable to all persons similarly situated, determine the
         amount of the Member's Final Average Compensation. The term Eligibility
         Service as used in this Section shall include all service recognized as
         Eligibility Service for purposes of eligibility requirements under
         Article 2.

1.19     Hour of Service shall mean hours of employment as defined pursuant to
         ---------------
         the provisions of Section 2.01(b).

                                                                       Article 1

<PAGE>
                                                                          Page 8

1.20     IRS Interest Rate shall mean the annual rate of interest on 30-year
         -----------------
         Treasury Securities, as specified by the Commissioner of Internal
         Revenue for the second full calendar month preceding the applicable
         Stability Period.

1.21     IRS Mortality Table shall mean the mortality table prescribed by the
         -------------------
         Secretary of the Treasury under Code Section 417(e)(3)(A)(ii)(I) as in
         effect on the first day of the applicable Stability Period.

1.22     Leased Employee shall mean any person as so defined in Section 414(n)
         ---------------
         of the Code by virtue of his or her performance of services for the
         Company or an Associated Company.

1.23     Member shall mean any person included in the membership of the Plan as
         ------
         provided in Article 3.

1.24     Non-Benefits Worker shall mean any individual designated by the Company
         -------------------
         as ineligible to participate in any Company-sponsored employee benefit
         program and any individual who the Company considers to be an
         independent contractor. The designation of an individual as a
         Non-Benefits Worker by the Company shall be final and not subject to
         any redetermination of employment classification by any taxing
         authority such as the Internal Revenue Service or any other
         governmental authority or agency.

1.25     Normal Retirement Date shall mean the first day of the calendar month
         ----------------------
         coincident with or next following the date the Employee attains age 65,
         which is his or her Normal Retirement Age.

                                                                       Article 1

<PAGE>

                                                                          Page 9

1.26     Parental Leave shall mean a period in which a person is absent from
         --------------
         work because of the person's pregnancy, the birth of a person's child,
         the adoption by a person of a child, or for purposes of caring for that
         child, for a period beginning immediately following such birth or
         adoption.

1.27     Participating Unit shall mean, in addition to Rayonier Inc., any
         ------------------
         subsidiary or affiliated company of Rayonier Inc., any designated
         location(s) only of such subsidiary or affiliated company or any
         designated unit(s) only of such subsidiary, or affiliated company which
         has by appropriate action of the Board of Directors been designated as
         a Participating Unit and the board of directors of any such subsidiary
         or affiliated company shall have taken appropriate action to adopt the
         Plan. The Board of Directors shall take action (i) to designate such
         entity as a Participating Unit, (ii) to determine that such persons are
         Employees, and (iii) to establish, by written amendment of the Plan,
         the terms and conditions under which such Employees are to be included
         in the Plan.

         If a group of persons is transferred to or assigned to a Participating
         Unit or is hired by a Participating Unit as the result of the opening
         or purchase of a plant or the merger of one unit into another, such
         persons shall not be deemed to be Employees for purposes of the Plan
         until further action by the Board of Directors, by written amendment of
         the Plan, including the determination that such persons are Employees
         for purposes of the Plan, and the establishment of the terms and
         conditions under which such Employees are to be included in the Plan.

         To the extent that the Board of Directors shall have authorized and
         established the basis for recognition under the Plan of service with a
         predecessor corporation(s), if any, reference in this Plan to service
         with a Participating Unit shall include service with the predecessor
         corporation(s) of such Participating Unit, provided that all or part of
         the business and assets of any such corporation shall have been
         acquired by Rayonier Inc. or by a Participating Unit.

                                                                       Article 1

<PAGE>

                                                                         Page 10

1.28     Pension Fund Trust and Investment Committee shall mean the committee
         -------------------------------------------
         established by Rayonier Inc. for the purposes of managing the assets of
         the Plan as provided in Article 5.

1.29     Plan shall mean the Retirement Plan for Salaried Employees of Rayonier
         ----
         Inc. as set forth herein or as hereafter amended.

1.30     Plan Year shall mean the calendar year.
         ---------

1.31     Postponed Retirement Date shall mean, with respect to an Employee who
         -------------------------
         does not retire at Normal Retirement Date but who works after such
         date, the first day of the calendar month coincident with or next
         following the date on which such Employee retires from active service.
         No retirement allowance shall be paid to the Employee until his or her
         Postponed Retirement Date, except as otherwise provided in Article 4.

1.32     Prior Salaried Plan shall mean the Retirement Plan for Salaried
         -------------------
         Employees of ITT Corporation (now known as the "ITT Industries Salaried
         Retirement Plan"), as in effect on February 28, 1994 and as thereafter
         amended from time to time.

1.33     Qualified Joint and Survivor Annuity shall mean an annuity described in
         ------------------------------------
         Section 4.06(a)(i).

1.34     Retirement Committee shall mean the committee established for the
         ---------------------
         purposes of administering the Plan as provided in Article 5.

                                                                       Article 1

<PAGE>

                                                                         Page 11

1.35     Severance Date shall mean the date an Employee is considered to have
         --------------
         severed his or her employment as defined pursuant to the provisions of
         Section 2.01(a).

1.36     Social Security Benefit shall mean the amount of annual old age or
         -----------------------
         disability insurance benefit under Title II of the Federal Social
         Security Act as determined by the Retirement Committee under reasonable
         rules uniformly applied, on the basis of such Act as in effect at the
         time of retirement or termination to which a Member or former Member is
         or would upon application be entitled, even though the Member does not
         receive such benefit because of his or her failure to apply therefor or
         he or she is ineligible therefor by reason of earnings he or she may be
         receiving in excess of any limit on earnings for full entitlement to
         such benefit. In computing the Member's Social Security Benefit, no
         wage index adjustment or cost of living adjustment shall be assumed
         with respect to any period after the end of the calendar year in which
         the Member retires or terminates service. For all years prior to
         retirement or other termination of employment with the Company where
         actual earnings are not available, the Member's Social Security Benefit
         shall be determined on the basis of the Member's actual earnings in
         conjunction with a salary increase assumption based on the actual
         yearly change in national average wages as determined by the Social
         Security Administration. If, within a reasonable time after the later
         of (i) the date of retirement or other termination of employment or
         (ii) the date on which a Member is notified of the retirement allowance
         or vested benefit to which he or she is entitled, the Member provides
         documentation from the Social Security Administration as to his or her
         actual earnings history with respect to those prior years, his or her
         Social Security Benefit shall be redetermined using the actual earnings
         history. If this recalculation results in a different Social Security
         Benefit, his or her retirement allowance or vested benefit shall be
         adjusted to reflect this change. Any adjustment to his or her
         retirement allowance or vested benefit shall be made retroactive to the
         date his or her payments

                                                                       Article 1

<PAGE>

                                                                         Page 12

         commenced. The Retirement Committee shall resolve any questions
         arising under this Section on a basis uniformly applicable to all
         Employees similarly situated.

1.37     Social Security Retirement Age shall mean age 65 with respect to a
         ------------------------------
         Member who was born before January 1, 1938; age 66 with respect to a
         Member who was born after December 31, 1937 and before January 1, 1955;
         and age 67 with respect to a Member who was born after December 31,
         1954.

1.38     Special Early Retirement Date shall mean the date as determined in the
         -----------------------------
         manner set forth in Section 4.04.

1.39     Spousal Consent shall mean written consent given by a Member's or
         ---------------
         former Member's spouse to an election made by the Member or former
         Member which specifies the form of retirement allowance, vested
         benefit, Beneficiary, or contingent annuitant designated by the Member
         or former Member. The specified form or specified Beneficiary or
         contingent annuitant shall not be changed unless further Spousal
         Consent is given. Spousal Consent shall be duly witnessed by a notary
         public, or in accordance with uniform rules of the Retirement
         Committee, by a Plan representative and shall acknowledge the effect on
         the spouse of the Member's or former Member's election. The requirement
         for Spousal Consent may be waived by the Retirement Committee in
         accordance with applicable law. Spousal Consent shall be applicable
         only to the particular spouse who provides such consent.

1.40     Stability Period shall mean the Plan Year in which occurs the Annuity
         ----------------
         Starting Date for the distribution.

                                                                       Article 1

<PAGE>

                                                                         Page 13

1.41     Transferred Employee shall mean an employee of the Company on the
         --------------------
         Effective Date who is paid on an hourly basis, classified as an
         hourly-rated employee for purposes of the Company's employee benefit
         plans, and who is entitled to a benefit under the Prior Salaried Plan.

1.42     Trustee shall mean the trustee or trustees by which the funds of the
         -------
         Plan are held as provided in Article 7.

                                                                       Article 1

<PAGE>
                                                                         Page 14

                              ARTICLE 2 -- SERVICE
                              --------------------

2.01     Eligibility Service
         -------------------

(a)      Eligibility Service On and After the Effective Date. Except as
         ---------------------------------------------------
         otherwise provided in this Article 2, all uninterrupted employment with
         the Company or with an Associated Company rendered on and after (i) the
         Effective Date or (ii) date of employment, if later, and prior to such
         Member's Severance Date shall be recognized as Eligibility Service for
         all Plan purposes. "Severance Date" shall mean the earlier of (i) the
         date a Member resigns, is discharged, retires or dies or (ii) one year
         from the date the Member is continuously absent from service for any
         other reason as provided in this Article 2. Eligibility Service for any
         period of employment rendered prior to the Effective Date shall be
         determined as set forth in Section 2.01(g).

(b)      Eligibility Service for Plan Membership by Employees Hired on Other
         -------------------------------------------------------------------
         Than a Full-Time Basis. With respect to any Employee whose employment
         ----------------------
         with the Company or with an Associated Company is on a temporary or
         less than full-time basis, "one year of Eligibility Service" for
         purposes of meeting the requirements for membership in the Plan as
         provided in Article 3 shall mean a period of 12 consecutive months of
         employment and measured from the date on which he or she first
         completes an Hour of Service or from any subsequent anniversary thereof
         and during which he or she has completed at least 1,000 Hours of
         Service with the Company or with an Associated Company. After such an
         Employee has met the requirements for membership in the Plan as
         provided in Article 3, Eligibility Service for purposes of meeting the
         eligibility requirements for benefits and for vesting shall be
         determined in accordance with Sections 2.01(a) and 2.01(g).

                                                                       Article 2


<PAGE>

                                                                         Page 15

         "Hours of Service" shall include hours worked and hours for which a
         person is compensated by the Company or by an Associated Company for
         the performance of duties for the Company or an Associated Company,
         although he or she has not worked (such as: paid holidays, paid
         vacation, paid sick leave, paid time off and back pay for the period
         for which it was awarded), and each such hour shall be computed as only
         one hour, even though he or she is compensated at more than the
         straight time rate. This definition of "Hours of Service" shall be
         applied in a consistent and non-discriminatory manner in compliance
         with 29 Code of Federal Regulations, Section 2530.200b-2(b) and (c) as
         promulgated by the United States Department of Labor and as may
         hereafter be amended.

         Solely for purposes of this paragraph (b), if a temporary or less than
         full-time Employee does not complete more than 500 Hours of Service in
         the 12 month period beginning on the date on which he or she first
         completes an Hour of Service or beginning on any subsequent anniversary
         thereof (which for purposes of this paragraph (b) shall be known as the
         "computation period"), he or she shall incur a one-year break in
         service. Solely for purposes of determining whether such an Employee
         has incurred a break in service, hours shall include each Hour of
         Service for which such Employee would otherwise have been credited
         under this paragraph (b) were it not for the Employee's absence due to
         Parental Leave. Hours of Service credited under the preceding sentence
         shall not exceed the number of hours needed to avoid a break in service
         in the computation period in which the Parental Leave first began, and
         in any event shall not exceed 501 hours; if no hours are needed to
         avoid a break in service in such computation period, then the
         provisions of the preceding sentence shall apply as though the Parental
         Leave began in the immediately following computation period. If such an
         Employee has had a break in service before becoming eligible for
         membership, Eligibility Service shall begin from the date of his or her
         return

                                                                       Article 2

<PAGE>

                                                                         Page 16

         to the employ of the Company or an Associated Company. Except as
         otherwise provided in this Article 2, his or her Eligibility Service
         before the break in service shall be restored only upon completion of
         one year of Eligibility Service within the 12-month period following
         his or her break in service. If, however, the periods of consecutive
         one-year breaks in service equals or exceeds the greater of (i) five
         years or (ii) the total number of years of Eligibility Service before
         the break in service, his or her Eligibility Service prior to the
         break shall never be restored.

 (c)     Employment With the Company or an Associated Company but not as an
         ------------------------------------------------------------------
         Employee. Eligibility Service with respect to prior employment rendered
         --------
         by any person who, on or after the Effective Date and prior to the date
         on which he or she becomes an Employee, is or was in the employ of the
         Company or an Associated Company but not as an Employee shall, subject
         to the provisions of Section 2.01(e) and Section 2.01(f), be equal to:

         (i)      the number of years credited to him, if any, on the basis of
                  the "1,000 hour rule" under a pension plan maintained by the
                  Company or an Associated Company applicable to him or her for
                  the period of such prior employment ending on the last day of
                  the calendar year preceding the date on which he or she
                  becomes an Employee or the date on which such prior employment
                  terminated, plus

         (ii)     the greater of (1) the service credited to him, if any, on the
                  basis of the "1,000 hour rule" for the portion of the calendar
                  year ending on the date immediately preceding the date he or
                  she becomes an Employee or the date on which such prior
                  employment terminated, or (2) the Eligibility Service he or
                  she would be credited with under this Plan for the entire
                  calendar year in which the transfer or termination of
                  employment took place.

         Notwithstanding the foregoing provisions of this paragraph (c), in the
         event a person's prior employment was not covered by or credited under
         a pension plan which recognized employment on

                                                                       Article 2

<PAGE>

                                                                         Page 17

         the basis of the "1,000 hour rule," any such prior employment with the
         Company or an Associated Company whether rendered before or after the
         Effective Date shall be recognized in accordance with the terms of
         this Article 2.

 (d)     Certain Absences to be Recognized as Eligibility Service. Except as
         --------------------------------------------------------
         otherwise indicated in this Article 2, the following periods of
         approved absence rendered on and after the Effective Date shall be
         recognized as Eligibility Service under the Plan and shall not be
         considered as breaks in Eligibility Service:

         (i)      The period of any leave of absence granted in respect of
                  service with the armed forces of the United States on or after
                  the Effective Date provided the Employee shall have returned
                  to the service of the Company or an Associated Company in
                  accordance with reemployment rights under applicable law and
                  shall have complied with all of the requirements of such law
                  as to reemployment.

         (ii)     Except as provided by law, the period on or after the
                  Effective Date of any leave of absence granted in respect of
                  service, not exceeding two years, with any other agency or
                  department of the United States Government.

         (iii)    The period on and after the Effective Date of any total and
                  permanent disability during which an Employee becomes entitled
                  to a disability benefit under Title II of the Federal Social
                  Security Act as amended from time to time or the period on and
                  after the Effective Date of total and permanent disability as
                  determined by the Retirement Committee on the basis of such
                  medical information as it shall require.

         (iv)     The period of any leave of absence on and after the Effective
                  Date during which Company sickness or accident benefits are
                  payable.

                                                                       Article 2

<PAGE>

                                                                         Page 18

         (v)      The period on and after the Effective Date of any leave of
                  absence approved by the Company during which an Employee is
                  paid Compensation at a rate which is at least one-half of the
                  Employee's basic rate of Compensation in effect immediately
                  prior to such leave.

         (vi)     In any event, Eligibility Service shall include the period,
                  with or without Compensation, immediately preceding the
                  Employee's Severance Date but not in excess of 12 consecutive
                  months inclusive of those periods of approved absences already
                  included in subparagraphs (i) through (v) above, during which
                  an Employee is continuously absent from service.

         (vii)    The period between an Employee's Severance Date and his or her
                  reemployment if he or she returns to the employ of the Company
                  or an Associated Company before the first anniversary date of
                  his or her Severance Date; provided, however, that the
                  combined periods recognized under subparagraph (vi) above and
                  under this subparagraph (vii) shall not exceed 12 consecutive
                  months.

         (viii)   The period of any periodic salary continuation payments an
                  Employee receives under any severance pay plan of the Company.

         Except to the extent provided under subparagraph (vi), and if
         applicable, under subparagraph (vii) above, if an Employee fails to
         return to active employment upon expiration of the approved absences
         specified in subparagraphs (i), (ii), (iv) and (v) above, such periods
         of approved absence shall not be considered as Eligibility Service
         under the Plan.

 (e)     Breaks in Service. All absences from the Company or from an Associated
         -----------------
         Company, other than the absences specified in paragraph (d) above,
         shall be considered as breaks in Eligibility Service; provided,
         however, that in no event shall there be a break in Eligibility Service
         if an Employee (i) is continuously absent from service with the Company
         or with an Associated Company and returns to

                                                                       Article 2

<PAGE>

                                                                         Page 19

         the employ of the Company or an Associated Company before the first
         anniversary of his or her Severance Date or (ii) is absent from work
         because of a Parental Leave and returns to the employ of the Company
         or an Associated Company within two years of his or her Severance
         Date. If the provisions of clause (ii) above are applicable, the first
         year of such absence for Parental Leave, measured from an Employee's
         Severance Date, shall not be considered in determining the Employee's
         period of break in service for purposes of Section 2.01(f) below.

 (f)     Bridging Breaks in Service
         --------------------------

         (i)      If an Employee has a break in service and such Employee was
                  eligible for a vested benefit under Section 4.05 at the time
                  of his or her break in service, except as otherwise provided
                  in Section 4.11, employment both before and after the
                  Employee's absence shall be immediately recognized as
                  Eligibility Service, subject to the provisions of this Section
                  2.01, upon his or her return to the employ of the Company or
                  an Associated Company.

         (ii)     If an Employee has a break in service and such Employee was
                  not eligible for a vested benefit under Section 4.05 at the
                  time of his or her break in service, Eligibility Service shall
                  begin from the date of his or her return to the employ of the
                  Company or an Associated Company. If such Employee returns to
                  the employ of the Company or an Associated Company and the
                  period of the Employee's break is less than the greater of (1)
                  five years or (2) the service rendered prior to such break,
                  the service prior to such break shall be included as
                  Eligibility Service, subject to the provisions of this Section
                  2.01, only upon completion of at least 12 months of
                  Eligibility Service following his or her break in service.
                  However, if the period of the Employee's break in service
                  equals or exceeds the greater of (1) five years or (2) the
                  service rendered prior to such break, the service rendered
                  prior to such break shall be included as Eligibility Service,
                  subject to the

                                                                       Article 2

<PAGE>

                                                                         Page 20

               provisions of this Section 2.01, only upon completion of a period
               of Eligibility Service equal to the lesser of the period of his
               or her break in service or ten years.

 (g)     Eligibility Service Prior to the Effective Date
         -----------------------------------------------

         Notwithstanding any foregoing provisions to the contrary, Eligibility
         Service shall include (i) with respect to any person who becomes a
         Member of the Plan on the Effective Date pursuant to the provisions of
         Section 3.01(a) or (b) or Section 3.05, any employment rendered by such
         Member prior to the Effective Date to the extent such employment is
         recognized as Eligibility Service under the provisions of the Prior
         Salaried Plan, (ii) with respect to any person who was employed by ITT
         Rayonier Incorporated on a salaried basis as of February 28, 1994 but
         was not a member of the Prior Salaried Plan as of such date and who
         becomes a Member of the Plan on or after the Effective Date pursuant to
         the provisions of Section 3.01(c), any uninterrupted employment with
         the Company or with an Associated Company rendered by such Member prior
         to the Effective Date and prior to his or her Severance Date, and (iii)
         with respect to any person who was employed by ITT Rayonier
         Incorporated on a salaried basis on December 1, 1993 but was not
         employed by the Company on the Effective Date, any employment rendered
         by the Member prior to the Effective Date to the extent such employment
         is recognized as Eligibility Service under the provisions of the Prior
         Salaried Plan. With respect to a person not described in clause (i),
         (ii), or (iii) of the preceding sentence who becomes a Member after the
         Effective Date, Eligibility Service for the purpose of determining
         eligibility for benefits but not for the purpose of determining
         eligibility for Plan membership or Final Average Compensation shall
         include, subject to the provisions of Section 2.01(f)(ii) with respect
         to bridging breaks in service, any employment with ITT Rayonier
         Incorporated rendered by such Member prior to the Effective Date to the
         extent such employment

                                                                       Article 2

<PAGE>

                                                                         Page 21

         is recognized or would have been recognized as Eligibility Service
         under the provisions of the Prior Salaried Plan.

2.02     Benefit Service
         ---------------

 (a)     Benefit Service On and After the Effective Date. Except as hereinafter
         -----------------------------------------------
         otherwise provided, all uninterrupted employment with the Company
         rendered by a Member as an Employee on and after the Effective Date and
         prior to his or her Severance Date shall be recognized as Benefit
         Service under the Plan. Benefit Service for any period of employment
         rendered prior to the Effective Date shall be determined as set forth
         in Section 2.02(f).

(b)      Employment With an Associated Company. Except as otherwise provided in
         -------------------------------------
         an Appendix to the Plan, no employment with an Associated Company
         rendered by a Member shall be recognized as Benefit Service under the
         Plan; except, however, if a Member completes 36 months of Eligibility
         Service as an Employee, any employment rendered on and after the
         Member's date of hire with an Associated Company before classification
         as an Employee shall be recognized as Benefit Service subject to any
         limitations for the Associated Company at which the Member was employed
         set forth in writing by the Retirement Committee. If a Member ceases to
         be an Employee and is again employed at an Associated Company, such
         further employment will not be recognized as Benefit Service unless and
         until the Member again (i) becomes an Employee and (ii) completes 36
         months of Eligibility Service as an Employee.

(c)      Employment With the Company but not as an Employee. Except as otherwise
         --------------------------------------------------
         provided in Section 3.04, with respect to (i) any person who on or
         after the Effective Date and immediately prior to the date on which he
         or she becomes an Employee, is in the employ of the Company but not as
         an

                                                                       Article 2

<PAGE>

                                                                         Page 22

         Employee and (ii) any Member who completes an Hour of Service on and
         after the Effective Date, and who thereafter ceases to be an Employee
         but remains in the employ of the Company, and on or after the
         Effective Date again becomes an Employee, uninterrupted employment
         with the Company otherwise than as an Employee rendered on and after
         the Effective Date shall be recognized as Benefit Service in
         accordance with the terms of this Section 2.02, provided such person
         is a Member of the Plan, upon completion of 36 months of Eligibility
         Service as an Employee, subject to the limitations set forth in
         writing by the Board of Directors or the Retirement Committee for the
         Participating Unit at which such person was first employed.

 (d)     Certain Absences to be Recognized as Benefit Service. Except as
         ----------------------------------------------------
         otherwise indicated below, the following periods of approved absence
         rendered on and after the Effective Date shall be recognized as Benefit
         Service and shall not be considered as breaks in Benefit Service:

         (i)      The period of any leave of absence granted in respect of
                  service with the armed forces of the United States on and
                  after the Effective Date provided the Employee shall have
                  returned to the service of the Company or an Associated
                  Company in accordance with reemployment rights under
                  applicable law and shall have complied with all of the
                  requirements of such law as to reemployment.

         (ii)     Except as provided by law, the period on and after the
                  Effective Date of any leave of absence granted in respect of
                  service, not exceeding two years, with any other agency or
                  department of the United States Government.

         (iii)    The period on and after the Effective Date of any total and
                  permanent disability during which an Employee becomes entitled
                  to a disability benefit under Title II of the Federal Social
                  Security Act as amended from time to time; provided, however,
                  that, if such disability benefit ceases to be paid solely due
                  to the Employee's age, Benefit Service shall

                                                                       Article 2

<PAGE>

                                                                         Page 23

                  include the period of total and permanent disability during
                  which the Employee is entitled or would have been entitled if
                  he or she had participated in the Company's applicable long
                  term disability plan to receive disability benefit under such
                  long term disability plan.

         (iv)     The period on and after the Effective Date of any leave of
                  absence during which Company sickness or accident benefits are
                  payable.

         (v)      The period on and after the Effective Date of any leave of
                  absence approved by the Company during which an Employee is
                  paid Compensation at a rate which is at least one-half of the
                  Employee's basic rate of Compensation in effect immediately
                  prior to such leave.

         (vi)     In any event, Benefit Service shall include the period, with
                  or without Compensation, immediately preceding the Employee's
                  Severance Date not in excess of 12 consecutive months
                  inclusive of those periods of approved absences already
                  included in subparagraphs (i) through (v) above, during which
                  an Employee is continuously absent from service.

         (vii)    The period of any periodic salary continuation payments an
                  Employee receives under any severance pay plan of the Company.

         Except to the extent provided under subparagraph (vi) above, if an
         Employee fails to return to active employment upon expiration of the
         approved absences specified in subparagraphs (i), (ii), (iv) and (v)
         above, such periods of approved absence shall not be considered as
         Benefit Service under the Plan.

         The Compensation of a Member during the periods of absence covered by
         clause (i), (ii), (iv) or (vi) above shall be the Compensation the
         Member actually receives during such period. The Compensation of a
         Member during the period of absence covered by clause (iii) above shall
         be deemed to be the Member's Final Average Compensation based on his or
         her Eligibility Service up

                                                                       Article 2

<PAGE>

                                                                         Page 24

         to such absence. Unless the Retirement Committee determines otherwise
         on a basis uniformly applicable to all persons similarly situated, the
         Social Security Benefit of a Member covered by clause (iii) above
         shall be based on the benefit awarded by the Social Security
         Administration at the date of his or her total and permanent
         disability.

(e)      All Other Absences for Employees
         --------------------------------

         (i)      No period of absence approved by the Company other than those
                  specified in Section 2.02(d) above shall be recognized as
                  Benefit Service.

         (ii)     No other absence, other than the absence covered by the
                  exception in clause (i) above, shall be recognized as Benefit
                  Service and any such absence shall be considered as a break in
                  Benefit Service; provided, however, that in no event shall
                  there be a break in Benefit Service if an Employee is
                  continuously absent from service with the Company or with an
                  Associated Company for a period not in excess of 12 months and
                  returns as an Employee to the employ of the Company before the
                  first anniversary date of his or her Severance Date. However,
                  any period between a Severance Date and a reemployment date
                  which is counted as Eligibility Service under Section
                  2.01(d)(vii) shall not be counted as Benefit Service.

                  If the Employee was eligible for a vested benefit under
                  Section 4.05 at the time of a break in service, Benefit
                  Service both before and after the Employee's absence shall be
                  immediately recognized as Benefit Service under the Plan upon
                  his or her return to service.

                  If the Employee was not eligible for a vested benefit under
                  Section 4.05 at the time of a break in service, Benefit
                  Service shall begin from the date of the Employee's return to
                  the

                                                                       Article 2

<PAGE>

                                                                         Page 25

                  employ of the Company. However, any Benefit Service rendered
                  prior to such break in service shall be included, subject to
                  the provisions of this Section 2.02, as Benefit Service only
                  at the time that he or she bridges his or her Eligibility
                  Service in accordance with the provisions of Section
                  2.01(f).

(f)      Benefit Service Prior to the Effective Date. Notwithstanding any
         -------------------------------------------
         foregoing provisions to the contrary, Benefit Service shall include (i)
         with respect to any person who becomes a Member of the Plan on the
         Effective Date pursuant to the provisions of Section 3.01(a) or (b) or
         Section 3.05, any employment rendered by such Member prior to the
         Effective Date to the extent such employment is recognized as Benefit
         Service under the provisions of the Prior Salaried Plan, (ii) with
         respect to any person who was employed by ITT Rayonier Incorporated on
         a salaried basis as of February 28, 1994 but who was not a Member of
         the Prior Salaried Plan as of such date and who becomes a Member of the
         Plan on or after the Effective Date pursuant to the provisions of
         Section 3.01(c), any uninterrupted employment with the Company rendered
         by such Member as an Employee prior to the Effective Date and prior to
         his or her Severance Date, and (iii) with respect to any person who was
         employed by ITT Rayonier Incorporated on a salaried basis on or after
         December 1, 1993 but was not employed by the Company on the Effective
         Date, any employment rendered by the Member prior to the Effective Date
         to the extent such employment is recognized as Benefit Service under
         the provisions of the Prior Salaried Plan.

2.03     Questions Relating to Service Under the Plan
         --------------------------------------------

         If any question shall arise hereunder as to an Employee's Eligibility
         Service or Benefit Service, such question shall be resolved in writing
         by the Retirement Committee on a basis uniformly applicable to all
         Employee(s) similarly situated. The Retirement Committee may, with
         respect to

                                                                       Article 2

<PAGE>

                                                                         Page 26

         any person or any group of persons which it considers to be not
         substantial in number, determine whether the employment of such
         person(s), the Company or any Associated Company shall be recognized
         under the Plan as Eligibility Service or Benefit Service. If, in the
         judgment of the Retirement Committee, a group of persons is considered
         to be substantial in number, the employment of such persons with the
         Company or any Associated Company shall not be recognized under the
         Plan as Eligibility Service or Benefit Service until further action by
         the Board of Directors. Such further documentation is hereby
         incorporated into the Plan by reference.

                                                                       Article 2

<PAGE>
                                                                         Page 27

                             ARTICLE 3 -- MEMBERSHIP
                             -----------------------

3.01     Persons Employed on the Effective Date
         --------------------------------------

 (a)     Any person who is an Employee as defined in Section 1.15 on the
         Effective Date and who was a member of the Prior Salaried Plan on
         February 28, 1994 shall become a Member of the Plan on the Effective
         Date.

 (b)     Any person who would be classified as an Employee as defined in Section
         1.15 on the Effective Date but is absent from work at the Company by
         reason of layoff, leave of absence, short term disability or long term
         disability and who is a Member of the Prior Salaried Plan on February
         28, 1994 shall become a Member of the Plan on the Effective Date.

 (c)     Any person who is an Employee as defined in Section 1.15 on the
         Effective Date and who as of February 28, 1994 was not a member of the
         Prior Salaried Plan but was in the process of satisfying the age and
         service eligibility requirements for membership in the Prior Salaried
         Plan, shall become a Member of the Plan as of the first day of the
         calendar month coincident with or next following the date he or she
         completes the age and service requirements set forth in Section 3.02(a)
         and (b).

3.02     Persons First Employed as Employees On or After the Effective Date
         ------------------------------------------------------------------

         Every person who is first employed as an Employee on or after the
         Effective Date shall become a Member of the Plan as of the first day of
         the calendar month coincident with or next following the later of:

         (a)  the date on which he or she attains the 21st anniversary of his or
              her birth, or

                                                                       Article 3

<PAGE>

                                                                         Page 28

         (b)   the date on which he or she completes one year of Eligibility
               Service.

3.03     Reemployment After March 1, 1994 of ITT Rayonier Incorporated Salaried
         ----------------------------------------------------------------------
         Employees
         ---------

         Any person who was employed by ITT Rayonier Incorporated on a salaried
         basis on December 1, 1993 and who was a member of the Prior Salaried
         Plan but who terminated employment prior to the Effective Date shall
         become a Member of the Plan on the first day he is employed as an
         Employee.

3.04     Persons Employed as a Leased Employee With the Company or an Associated
         -----------------------------------------------------------------------
         Company
         -------

         Any person who is a Leased Employee shall not be eligible to
         participate in the Plan. However notwithstanding any other Plan
         provision to the contrary, if a Leased Employee subsequently becomes an
         Employee as defined in Section 1.15 or an Employee as defined in
         Section 1.15 subsequently becomes employed as a Leased Employee,
         uninterrupted employment with the Company or an Associated Company as a
         Leased Employee, shall be counted for the sole purpose of determining
         Eligibility Service but not for the purpose of determining Benefit
         Service; provided, however, that Eligibility Service shall not be
         counted for any Leased Employee for any period of his or her employment
         during which the requirements of Section 414(n)(5) of the Code are met.

3.05     Persons Employed as Other Than Employees by the Company
         -------------------------------------------------------

         Every person employed as other than an Employee by a Participating Unit
         shall become a Member of the Plan as of the first day of the calendar
         month coincident with or next following the date on which he or she
         first becomes an Employee, but not unless and until he or she satisfies
         the same terms and conditions which would have been applicable had he
         or she always been an Employee at

                                                                       Article 3

<PAGE>

                                                                         Page 29

         such Participating Unit. Notwithstanding the foregoing, a Transferred
         Employee shall become a Member on the Effective Date.

3.06     Reemployment of Former Employees, Former Members and Retired Members
         --------------------------------------------------------------------

         Except as provided in Section 3.03, any person reemployed by the
         Company as an Employee shall be considered a new Employee for
         membership purposes under the Plan if such Employee was not previously
         a Member of the Plan.

         The membership of any person reemployed by the Company as an Employee
         shall be immediately resumed if such Employee was previously a Member
         of the Plan.

         If a retired Member or a former Member is reemployed by the Company or
         by an Associated Company in a capacity other than as a Non-Benefits
         Worker, his or her membership in the Plan shall be immediately resumed
         and any payment of a retirement allowance with respect to his or her
         original retirement or any payment of a vested benefit with respect to
         his or her original employment shall cease in accordance with the
         provisions of Section 4.11.

3.07     Termination of Membership
         -------------------------

         Unless otherwise determined by the Retirement Committee in writing
         under rules uniformly applicable to all person(s) or Employee(s)
         similarly situated, an Employee's membership in the Plan shall
         terminate if he or she ceases to be an Employee and he or she is not
         entitled to either a retirement allowance or vested benefit under
         Sections 4.01, 4.02, 4.03, 4.04 or 4.05, except that an Employee's
         membership shall continue (a) during any period while on leave of
         absence approved by the Company, (b) while absent by reason of
         temporary disability, (c) during the period of any

                                                                       Article 3

<PAGE>

                                                                         Page 30

         total and permanent disability which continues to be recognized as
         Eligibility Service and Benefit Service as provided in Article 2, (d)
         while he or she is not an Employee as herein defined but is in the
         employ of the Company or an Associated Company, or (e) during the
         period of any periodic salary continuation payments an Employee
         receives under any severance pay plan of the Company. Employees covered
         by the Plan may not waive such coverage.

3.08     Questions Relating to Membership in the Plan
         --------------------------------------------

         If any question shall arise hereunder as to the commencement, duration
         or termination of the membership of any person(s) or Employee(s)
         employed by the Company or by an Associated Company, such question
         shall be resolved by the Retirement Committee in writing under rules
         uniformly applicable to all person(s) or Employee(s) similarly
         situated. Such further documentation is hereby incorporated into the
         Plan by reference.

                                                                       Article 3

<PAGE>
                                                                         Page 31

                              ARTICLE 4 -- BENEFITS
                              ---------------------

4.01     Normal Retirement Allowance
         ---------------------------

 (a)     The right of a Member to his or her normal retirement allowance shall
         be nonforfeitable as of his or her Normal Retirement Age. A Member may
         retire from active service on a normal retirement allowance upon
         reaching his or her Normal Retirement Date. If a Member postpones his
         or her retirement and continues in active service after his or her
         Normal Retirement Date or returns to service after his or her Normal
         Retirement Date, the provisions of Section 4.02 shall be applicable.

 (b)     Benefit. Prior to adjustment in accordance with Sections 4.06(a) and
         -------
         4.07(c), the annual normal retirement allowance payable on a lifetime
         basis upon retirement at a Member's Normal Retirement Date shall be
         equal to the sum of (i) and (ii) where:

         (i)      equals:

                  (1)      2 percent of the Member's Final Average Compensation
                           multiplied by the portion of the first 25 years of
                           his or her Benefit Service rendered prior to the
                           Effective Date;

                  (2)      plus 1 1/2 percent of the Member's Final Average
                           Compensation multiplied by the next 15 years of his
                           or her Benefit Service rendered prior to the
                           Effective Date, to a combined maximum of 40 years of
                           Benefit Service;

                  (3)      reduced by 1 1/4 percent of the Social Security
                           Benefit multiplied by the portion of his or her years
                           of Benefit Service rendered prior to the Effective
                           Date, and not in excess of 40 years;

                  (4)      reduced, but not below zero, by the annual normal
                           retirement allowance determined under the provisions
                           of Section 4.01(b) of the Prior Salaried Plan prior

                                                                       Article 4

<PAGE>

                                                                         Page 32

                         to the imposition of any limitations under Section 415
                         of the Code and the application of any offset
                         provisions of the Prior Salaried Plan, with respect to
                         the Member's period of employment rendered prior to the
                         Effective Date which has been credited as Benefit
                         Service hereunder pursuant to the provisions of Section
                         2.02(f); and

         (ii)    equals:

                 (1)     2 percent of the Member's Final Average Compensation
                         multiplied by the portion of the first 25 years of his
                         or her Benefit Service rendered on and after the
                         Effective Date;

                 (2)     plus 1 1/2 percent of the Member's Final Average
                         Compensation multiplied by the portion of the next 15
                         years of his or her Benefit Service rendered on or
                         after the Effective Date, to a combined maximum of 40
                         years of Benefit Service minus the total number of
                         years of Benefit Service rendered prior to the
                         Effective Date;

                 (3)     reduced by 1 1/4 percent of the Social Security Benefit
                         multiplied by the portion of the number of years of his
                         or her Benefit Service rendered on or after the
                         Effective Date not in excess of 40 years minus the
                         total number of years of Benefit Service rendered prior
                         to the Effective Date.

         The combined maximum years of Benefit Service used to compute the
         amounts under clauses (i) and (ii) above shall not exceed 40 years.

         The annual normal retirement allowance determined prior to reduction to
         be made on account of the Social Security Benefit shall be an amount
         not less than the greatest annual early retirement allowance which
         would have been payable to a Member had he or she retired under Section
         4.03 or Section 4.04 at any time before his or her Normal Retirement
         Date and as such early retirement

                                                                       Article 4

<PAGE>

                                                                         Page 33

         allowance would have been reduced to commence at such earlier date but
         without reduction on account of the Social Security Benefit. The
         reduction to be made on account of the Social Security Benefit shall in
         any event be based on the Federal Social Security Act in effect at the
         time of the Member's actual retirement.

4.02     Postponed Retirement Allowance
         ------------------------------

(a)      A Member who continues in active service after his or her Normal
         Retirement Date or returns to active service on or after his or her
         Normal Retirement Date shall be retired from active service on a
         postponed retirement allowance on the first day of the month following
         his or her termination of employment, which date shall be the Member's
         Postponed Retirement Date.

(b)      Benefit. Except as hereinafter provided and prior to adjustment in
         -------
         accordance with Sections 4.06(a) and 4.07(c), the annual postponed
         retirement allowance payable on a lifetime basis upon retirement at a
         Member's Postponed Retirement Date shall be equal to the greater of:

         (i)      an amount determined in accordance with Section 4.01(b) but
                  based on the Member's Benefit Service, Social Security Benefit
                  and Final Average Compensation, and with respect to the amount
                  determined under Section 4.01(b)(i)(4), any applicable
                  components under the Prior Salaried Plan as of his or her
                  Postponed Retirement Date or

         (ii)     the annual normal retirement allowance to which the Member
                  would have been entitled under Section 4.01(b) had he or she
                  retired on his or her Normal Retirement Date, increased by an
                  amount which is the Equivalent Actuarial Value of the monthly
                  payments which would have been payable with respect to each
                  month in which he or she worked fewer than eight days. Any
                  monthly payment determined under this subparagraph (ii) with
                  respect to any such month in which he or she worked fewer than
                  eight days shall be

                                                                       Article 4

<PAGE>

                                                                         Page 34

                computed as if the Member had retired on his or her Normal
                Retirement Date and shall reflect additional benefit accruals,
                if any, recomputed as of the first day of each subsequent Plan
                Year during which payment would have been made on the basis of
                his or her Final Average Compensation and Benefit Service
                accrued to such recomputation date.

 (c)     Benefit for Member in Active Service After He or She Attains Age
         ----------------------------------------------------------------
         70 1/2. In the event a Member's retirement allowance is required to
         ------
         begin under Section 4.10 while the Member is in active service, the
         January 1 immediately following the calendar year in which the Member
         attained age 70 1/2 shall be the Member's Annuity Starting Date for
         purposes of this Article 4 and the Member shall receive a postponed
         retirement allowance commencing on that January 1 in an amount
         determined as if he or she had retired on such date. As of each
         succeeding January 1 prior to the Member's actual Postponed Retirement
         Date and as of his or her actual Postponed Retirement Date, the
         Member's retirement allowance shall be:

         (i)    recomputed to reflect any additional retirement allowance
                attributable to his or her Compensation and Benefit Service
                earned during the immediately preceding calendar year and based
                on his or her age at each succeeding January 1 or actual
                Postponed Retirement Date, and

         (ii)   reduced by the Equivalent Actuarial Value of the total payments
                of his or her postponed retirement allowance made with respect
                to each month of continued employment in which he or she was
                credited with at least eight days of service and which were paid
                prior to each such recomputation;

         provided that no such reduction shall reduce the Member's postponed
         retirement allowance below the amount of postponed retirement allowance
         payable to the Member immediately prior to the recomputation of such
         retirement allowance.

                                                                       Article 4

<PAGE>

                                                                         Page 35

4.03     Standard Early Retirement Allowance
         -----------------------------------

 (a)     Eligibility. A Member, who has not reached his or her Normal Retirement
         -----------
         Date but has, prior to his or her termination of employment reached the
         55th anniversary of his or her birth and completed ten years of
         Eligibility Service, is eligible to retire on a standard early
         retirement allowance on the first day of the calendar month coincident
         with or next following termination of employment, which date shall be
         the Member's Early Retirement Date.

 (b)     Benefit. Except as hereinafter provided and prior to adjustment in
         -------
         accordance with Sections 4.06(a) and 4.07(c) the standard early
         retirement allowance shall be an allowance deferred to commence on the
         Member's Normal Retirement Date and shall be equal to the Member's
         Accrued Benefit earned up to his or her Early Retirement Date, computed
         on the basis of his or her Benefit Service, Final Average Compensation,
         Social Security Benefit and any applicable components of the Prior
         Salaried Plan as of his or her Early Retirement Date, with the Social
         Security Benefit determined on the assumption that the Member had no
         earnings after his or her Early Retirement Date.

         The Member may, however, elect to receive an early retirement allowance
         commencing on his or her Early Retirement Date or the first day of any
         calendar month before his or her Normal Retirement Date specified in
         his or her later request therefor in a reduced amount which, prior to
         adjustment in accordance with Sections 4.06(a) and 4.07(c) shall be
         equal to his or her Accrued Benefit earned up to his or her Early
         Retirement Date prior to the reduction for the Social Security Benefit,
         reduced by 1/4 of 1 percent per month for each month by which the
         commencement date of his or her retirement allowance precedes his or
         her Normal Retirement Date.

                                                                       Article 4

<PAGE>

                                                                         Page 36

         The reduction to be made on account of the Social Security Benefit,
         with respect to the retirement allowance payable to a Member retiring
         prior to his or her 62nd birthday, shall not be made until such time as
         the Member is or would upon proper application first be entitled to
         receive said Social Security Benefit. With respect to a Member who
         retires on and after said date and prior to attaining age 62, the
         reduction to be made to the retirement allowance payable to such Member
         or any benefit payable after his or her death to his or her spouse or
         to a contingent annuitant pursuant to the provisions of Section 4.06 on
         account of the Social Security Benefit shall not be made until such
         time as the Member is or would have, had he or she survived, upon
         proper application first been entitled to receive said Social Security
         Benefit.

4.04     Special Early Retirement Allowance
         ----------------------------------

(a)      Eligibility. A Member who has not reached his or her Normal Retirement
         -----------
         Date but who prior to his or her termination of employment (i) has
         reached the 55th anniversary of his or her birth and completed 15 years
         of Eligibility Service or (ii) has reached the 50th anniversary of his
         or her birth but not the 55th anniversary of his or her birth and whose
         age plus years of Eligibility Service equals 80 or more, is eligible,
         in either case, to retire on a special early retirement allowance on
         the first day of the calendar month coincident with or next following
         termination of employment, which date shall be the Member's Special
         Early Retirement Date.

(b)      Benefit. Except as hereinafter otherwise provided and prior to
         -------
         adjustment in accordance with Sections 4.06(a) and 4.07(c) the special
         early retirement allowance shall be an allowance deferred to commence
         on the Member's Normal Retirement Date and shall be equal to his or her
         Accrued Benefit earned up to the Member's Special Early Retirement
         Date, computed on the basis of his or

                                                                       Article 4

<PAGE>

                                                                         Page 37

         her Benefit Service, Final Average Compensation, Social Security
         Benefit and any applicable components of the Prior Salaried Plan as of
         his or her Special Early Retirement Date, with the Social Security
         Benefit determined on the assumption that the Member had no earnings
         after his or her Special Early Retirement Date.

         At or after his or her Special Early Retirement Date, however, the
         Member may elect to receive early payment of his or her Accrued Benefit
         commencing on the later of his or her Special Early Retirement Date or
         the first day of any later calendar month prior to his or her Normal
         Retirement Date as specified in his or her request therefor.

         In the event of early payment commencing on the first day of the month
         coincident with or following the 60th anniversary of a Member's birth,
         the special early retirement allowance, prior to any adjustment in
         accordance with Sections 4.06(a) and 4.07(c), payable prior to age 62
         shall be equal to his or her Accrued Benefit earned up to the Member's
         Special Early Retirement Date prior to the reduction for the Social
         Security Benefit; such retirement allowance shall not be increased to
         reflect a commencement date later than the 60th anniversary of the
         Member's birth.

         In the event of early payment commencing prior to the 60th anniversary
         of a Member's birth, the special early retirement allowance, prior to
         any adjustment in accordance with Sections 4.06(a) and 4.07(c), payable
         prior to age 62 shall be equal to his or her Accrued Benefit earned up
         to the Member's Special Early Retirement Date prior to the reduction
         for the Social Security Benefit but reduced by 5/12 of 1 percent per
         month for each month up to 60 months by which the commencement date of
         his or her special early retirement allowance precedes the first day of
         the calendar month coinciding with or next following the 60th
         anniversary of his or her birth.

                                                                       Article 4

<PAGE>

                                                                         Page 38

         The reduction to be made on account of the Social Security Benefit,
         with respect to the retirement allowance payable to a Member retiring
         prior to his or her 62nd birthday, shall be made at such time as the
         Member is or would upon proper application first be entitled to receive
         said Social Security Benefit. With respect to a Member who retires
         prior to attaining age 62, the reduction to be made to the retirement
         allowance payable to such Member or any benefit payable after his or
         her death to his or her spouse or to a contingent annuitant pursuant to
         the provisions of Section 4.06 on account of the Social Security
         Benefit shall not be made until such time as the Member is or would
         have, if he or she had survived, upon proper application first been
         entitled to receive said Social Security Benefit.

4.05     Vested Benefit
         --------------

(a)      Eligibility. A Member shall be vested in, and have a nonforfeitable
         -----------
         right to, his or her Accrued Benefit upon completion of five years of
         Eligibility Service. If such Member's services are subsequently
         terminated for reasons other than death or early retirement prior to
         his or her Normal Retirement Date, he or she shall be entitled to a
         vested benefit under the provisions of this Section 4.05.

(b)      Benefit. Prior to adjustment in accordance with Sections 4.06(a) and
         -------
         4.07(a), the vested benefit payable to a Member shall be a benefit
         deferred to commence on the former Member's Normal Retirement Date and
         shall be equal to his or her Accrued Benefit earned up to the date the
         Member's employment is terminated, computed on the basis of his or her
         Benefit Service, Final Average Compensation, Social Security Benefit
         and any applicable component of the Prior Salaried Plan as of his or
         her date of termination, with the Social Security Benefit determined on

                                                                       Article 4

<PAGE>

                                                                         Page 39

         the assumption that the Member continued in service to his or her
         Normal Retirement Date at his or her rate of Compensation in effect as
         of his or her date of termination. On or after the date on which the
         former Member shall have reached the 55th anniversary of his or her
         birth he or she may elect to receive a benefit commencing on the first
         day of any calendar month coincident with or next following the 55th
         anniversary of his or her birth and prior to his or her Normal
         Retirement Date as specified in his or her request therefor, after
         receipt by the Retirement Committee of written application therefor
         made by the former Member and filed with the Retirement Committee.
         Upon such earlier payment, the vested benefit otherwise payable at the
         former Member's Normal Retirement Date will be reduced by 1/180th for
         each month up to 60 months by which the commencement date of such
         payments precedes his or her Normal Retirement Date and further
         reduced by 1/360th for each such month in excess of 60 months.

4.06     Forms of Benefit Payment After Retirement
         -----------------------------------------

(a)      Automatic Forms of Payment
         --------------------------

         (i)    Automatic Joint and Survivor Annuity. If a Member or former
                ------------------------------------
                Member who is married on his or her Annuity Starting Date has
                not made an election of an optional form of payment as
                provided in Section 4.06(b), the retirement allowance or vested
                benefit payable to such Member or former Member shall
                automatically be adjusted as follows in order to provide that,
                after his or her death, a lifetime benefit as described below
                shall be payable to the spouse to whom he or she is married on
                his or her Annuity Starting Date:

                (1)  90/50 Spouse's Annuity. If such Member retires from active
                     ----------------------
                     service under Section 4.01, Section 4.02, Section 4.03 or
                     Section 4.04, the automatic joint and survivor annuity
                     payable to the Member shall provide (A) a reduced
                     retirement allowance payable to the Member during his or
                     her life equal to 90 percent of the

                                                                       Article 4

<PAGE>

                                                                         Page 40

                    retirement allowance otherwise payable without optional
                    modification to the Member under Section 4.01, 4.02, 4.03 or
                    4.04, as the case may be, further adjusted, if necessary, as
                    provided in the following sentence and (B) a benefit payable
                    after his or her death to his or her surviving spouse equal
                    to 50 percent of the retirement allowance otherwise payable
                    without optional modification to the Member under Section
                    4.01, 4.02, 4.03 or 4.04, as the case may be, and without
                    further adjustment as provided in the following sentence. If
                    such spouse is more than five years older than the Member,
                    the reduced retirement allowance payable to the Member shall
                    be increased for each such additional full year in excess of
                    five years, but for not more than 20 years, by one-half of 1
                    percent of the retirement allowance payable to the Member
                    prior to optional modification. If such spouse is more than
                    five years younger than the Member, the reduced retirement
                    allowance payable to the Member shall be further reduced for
                    each such additional full year in excess of five years by
                    one-half of 1 percent of the retirement allowance payable to
                    the Member prior to optional modification.

                    Notwithstanding the foregoing, the retirement allowance
                    payable to the Member shall not be less than the retirement
                    allowance otherwise payable without optional modification
                    to the Member at retirement under Section 4.01, 4.02, 4.03
                    or 4.04, as the case may be, multiplied by the appropriate
                    factor contained in Table 3 of Appendix A.

              (2)   Vested Spouse's Annuity. If such Member terminates service
                    -----------------------
                    and is entitled to a vested benefit under Section 4.05, the
                    joint and survivor annuity payable to the former Member
                    shall provide (A) a reduced vested benefit payable to the
                    former

                                                                       Article 4

<PAGE>

                                                                         Page 41

                    Member during his or her life equal to his or her vested
                    benefit computed in accordance with Section 4.05 multiplied
                    by the appropriate factor contained in Table 1 of Appendix A
                    and (B) a benefit payable after his or her death to his or
                    her surviving spouse equal to 50 percent of the reduced
                    vested benefit payable to the former Member.

        (ii)    Automatic Life Annuity. If a Member or former Member is not
                ----------------------
                married on his or her Annuity Starting Date, the retirement
                allowance or vested benefit computed in accordance with Section
                4.01, 4.02, 4.03, 4.04 or 4.05, as the case may be, shall be
                paid to the Member or former Member in the form of a lifetime
                benefit payable during his or her own lifetime with no further
                benefit payable to anyone after his or her death, unless the
                Member or former Member is eligible for and makes an election of
                an optional form of payment under Section 4.06(b).

(b)     Optional Forms of Payment
        -------------------------

        (i)     Life Annuity Option. Any Member or former Member who retires or
                -------------------
                terminates employment with the right to a retirement allowance
                or vested benefit may elect, in accordance with the provisions
                of Section 4.06(d), to provide that the retirement allowance
                payable to him or her under Section 4.01, 4.02, 4.03 or 4.04 or
                the vested benefit payable to him or her under Section 4.05
                shall be in the form of a lifetime benefit payable during his or
                her own lifetime with no further benefit payable to anyone after
                his or her death.

        (ii)    80/80 Spouse's Annuity Option. Any Member who retires from
                -----------------------------
                active service under Section 4.01, 4.02, 4.03 or 4.04, who is
                married on his or her Annuity Starting Date, may elect, in
                accordance with the provisions of Section 4.06(d), to convert
                the retirement allowance otherwise payable to him or her without
                optional modification under Section

                                                                       Article 4

<PAGE>

                                                                         Page 42

          4.01, 4.02, 4.03 or 4.04, as the case may be, into the following
          alternative benefit in order to provide that, after his or her death,
          a lifetime benefit shall be payable to the spouse to whom the Member
          is married on his or her Annuity Starting Date.

          The Member shall receive a reduced retirement allowance payable during
          his or her life equal to 80 percent of the retirement allowance
          otherwise payable without optional modification to the Member at
          retirement under Section 4.01, 4.02, 4.03 or 4.04, as the case may be,
          further adjusted, if necessary, as provided below. The Member's
          surviving spouse shall receive a benefit payable after the Member's
          death equal to the Member's retirement allowance as reduced in this
          Section 4.06(b)(ii).

          If such spouse is more than five years older than the Member, the
          reduced retirement allowance payable to the Member shall be increased
          for each such additional full year in excess of five years, but for
          not more than 20 years, by 1 percent of the retirement allowance
          payable to the Member prior to optional modification. If such spouse
          is more than five years younger than the Member, the reduced
          retirement allowance payable to the Member shall be further reduced
          for each such additional full year in excess of five years by 1
          percent of the retirement allowance payable to the Member prior to
          optional modification.

          Notwithstanding the foregoing, the retirement allowance payable to the
          Member and his or her surviving spouse shall not be less than the
          retirement allowance that would have been payable if the Member had
          elected Option 1 under Section 4.06(b)(iii).

                                                                       Article 4

<PAGE>

                                                                         Page 43

     (iii) Contingent Annuity Option. Any Member who retires from active service
           -------------------------
           under Section 4.01, 4.02, 4.03 or 4.04 may elect, in accordance with
           the provisions of Section 4.06(d), to convert the retirement
           allowance otherwise payable to him or her without optional
           modification under Section 4.01, 4.02, 4.03 or 4.04, as the case may
           be, into one of the following alternative options in order to provide
           that after his or her death, a lifetime benefit shall be payable to
           the person who, when the option became effective, was designated by
           him or her to be his or her contingent annuitant. The optional
           benefit elected shall be the Equivalent Actuarial Value of the
           retirement allowance otherwise payable without optional modification
           under Section 4.01, 4.02, 4.03 or 4.04.

           Option 1. A reduced retirement allowance payable during the Member's
           --------
           life with the provisions that after his or her death a benefit equal
           to 100 percent of his or her reduced retirement allowance shall be
           paid during the life of, and to, his or her surviving contingent
           annuitant.

           Option 2. A reduced retirement allowance payable during the Member's
           --------
           life with the provision that after his or her death a benefit equal
           to 50 percent of his or her reduced retirement allowance shall be
           paid during the life of, and to, his or her surviving contingent
           annuitant.

(c)  Required Notice. No less than 30 days and no more than 90 days before his
     ---------------
     or her Annuity Starting Date, the Retirement Committee shall furnish to
     each Member or former Member a written explanation in non-technical
     language of the terms and conditions of the Automatic Joint and Survivor
     Annuity and the Automatic Life Annuity as described in Section 4.06(a) and
     the optional forms of benefits described in Section 4.06(b). Such
     explanation shall include (i) a general description of the eligibility
     conditions for, the material features of and the relative values

                                                                       Article 4

<PAGE>

                                                                         Page 44

     of the optional forms of payment under the Plan, (ii) any rights the Member
     or former Member may have to defer commencement of his or her retirement
     allowance or vested benefit, (iii) the requirement for Spousal Consent as
     provided in Section 4.06(d) and (iv) the right of the Member or former
     Member, prior to his or her Annuity Starting Date to make and to revoke
     elections under Section 4.06.

(d)  Election of Options. A Member may, subject to the provisions of this
     -------------------
     Section 4.06(d), elect to receive his or her retirement allowance or vested
     benefit in the optional form of payment described in Section 4.06(b)(i), or
     in the case of a Member who retires under the provisions of Section 4.01,
     4.02, 4.03 or 4.04, one of the optional forms of payment described in
     Section 4.06(b)(ii) or 4.06(b)(iii), in lieu of the automatic forms of
     payment described in Section 4.06(a). A married Member's or a married
     former Member's election of a Life Annuity form of payment under Section
     4.06(b)(i) or any optional form of payment under Section 4.06(b)(ii) and
     Section 4.06(b)(iii), which does not provide for monthly payments to his or
     her spouse for life after the Member's or former Member's death, in an
     amount equal to at least 50 percent but not more than 100 percent of the
     monthly amount payable under that form of payment to the Member or former
     Member and which is not of Equivalent Actuarial Value to the Automatic
     Joint and Survivor Annuity described in Section 4.06(a)(i), shall be
     effective only with Spousal Consent; provided such Spousal Consent to the
     election has been received by the Retirement Committee.

     Any election made under Section 4.06(a) or Section 4.06(b) shall be made on
     a form approved by the Retirement Committee and may be made during the
     90-day period ending on the Member's Annuity Starting Date, but not prior
     to the date the Member or former Member receives the written explanation
     described in Section 4.06(c). Any such election shall become effective on
     the

                                                                       Article 4

<PAGE>

                                                                         Page 45

     Member's or former Member's Annuity Starting Date, provided the appropriate
     form is filed with and received by the Retirement Committee and may not be
     modified or revoked after his or her Annuity Starting Date. Any election
     made under Section 4.06(a) or Section 4.06(b) after having been filed, may
     be revoked or changed by the Member or former Member only by written notice
     received by the Retirement Committee before his or her election becomes
     effective on his or her Annuity Starting Date. Any subsequent elections and
     revocations may be made at any time and from time to time during the 90-day
     period ending on the Member's or former Member's Annuity Starting Date. A
     revocation shall be effective when the completed notice is received by the
     Retirement Committee. A re-election shall be effective on the Member's or
     former Member's Annuity Starting Date. If, however, the Member or the
     spouse or the contingent annuitant designated in the election dies before
     the election has become effective, the election shall thereby be revoked.

     Notwithstanding the provisions of paragraph (c) above, a Member may, after
     having received the notice, affirmatively elect to have his or her
     retirement allowance or vested benefit commence sooner than 30 days
     following his or her receipt of the notice, provided all of the following
     requirements are met:

     (i)  the Retirement Committee clearly informs the Member that he or she has
          a period of at least 30 days after receiving the notice to decide when
          to have his or her retirement allowance or vested benefit begin, and
          if applicable, to choose a particular optional form of payment;

     (ii) the Member affirmatively elects a date for his or her retirement
          allowance or vested benefit to begin, and if applicable, an optional
          form of payment, after receiving the notice;

                                                                       Article 4

<PAGE>

                                                                         Page 46

     (iii) the Member is permitted to revoke his or her election until the later
           of his or her Annuity Starting Date or seven days following the day
           he or she received the notice;

     (iv)  payment does not commence less than seven days following the day
           after the notice is received by the Member; and

     (v)   the Member's Annuity Starting Date is after the date the notice is
           provided.

     With respect to a Member who retires under the provisions of Section 4.03
     or Section 4.04, the reduction on account of the Social Security Benefit to
     be made to the benefit, if any, payable in accordance with Section 4.06(a)
     or Section 4.06(b) to his or her designated spouse or to his or her
     contingent annuitant shall not be made until such time as the Member would
     have, had he or she survived, upon proper application first been entitled
     to receive said Social Security Benefit.

     If a Member dies after his or her Annuity Starting Date, any payment
     continuing on to his or her spouse or contingent annuitant shall be
     distributed at least as rapidly as under the method of distribution being
     used as of the Member's date of death.

4.07 Survivor's Benefit Applicable Before Retirement
     -----------------------------------------------

     The term "Beneficiary" for purposes of this Section 4.07 shall mean any
     person or any trust established by the Member or the Member's estate, named
     by the Member by written designation to receive benefits payable under the
     automatic Pre-Retirement Survivor's Benefit and under the optional
     Supplemental Pre-Retirement Survivor's Benefit; provided, however, that,
     for any married Member the term "Beneficiary" shall automatically mean the
     Member's spouse and any prior designation to the contrary will be canceled,
     unless the Member, with Spousal Consent, designates otherwise. An election
     of a non-spouse Beneficiary by a married Member shall be effective only if

                                                                       Article 4

<PAGE>

                                                                         Page 47

     accompanied by Spousal Consent and such Spousal Consent has been received
     by the Retirement Committee. If the Member dies without an effective
     designation of Beneficiary, the Member's Beneficiary for purposes of this
     Section 4.07 shall automatically be the Member's spouse, if any, or his or
     her estate. If the Member elects the additional optional protection of the
     Supplemental Pre-Retirement Survivor's Benefit, the Member's Beneficiary
     thereunder shall be the same as the Beneficiary under the Automatic
     Pre-Retirement Survivor's Benefit. The Retirement Committee shall resolve
     any questions arising hereunder as to the meaning of "Beneficiary" on a
     basis uniformly applicable to all Members similarly situated.

(a)  Automatic Vested Spouse's Benefit
     ---------------------------------

     (i)  Automatic Vested Spouse's Benefit Applicable Before Termination of
          ------------------------------------------------------------------
          Employment. The surviving spouse of a Member who has completed five
          ----------
          years of Eligibility Service but who has not yet completed ten years
          of Eligibility Service and attained age 55 shall automatically receive
          a benefit payable under the Automatic Vested Spouse's Benefit of this
          Section 4.07(a)(i) in the event said Member should die after the
          effective date of coverage hereunder and before termination of
          employment. The benefit payable to the Member's spouse shall be equal
          to 50 percent of the benefit the Member would have received if he or
          she had terminated his or her employment on his or her date of death,
          survived to Normal Retirement Date, and on the day before he or she
          would have reached Normal Retirement Date had elected to begin
          receiving his or her vested benefit in the form of the Automatic Joint
          and Survivor Annuity under Section 4.06(a)(i)(2), or with respect to a
          Member who had met the eligibility requirements set forth in Section
          4.04(a)(ii) and who died in active employment prior to the 55th
          anniversary of his or her birth, his or her early retirement allowance
          accrued to his or her date of death in the form of the Automatic Joint

                                                                       Article 4

<PAGE>

                                                                         Page 48

          and Survivor Annuity under Section 4.06(a)(i)(1). Such benefit shall
          be payable for the life of the spouse commencing on what would have
          been the Member's Normal Retirement Date. However, the Member's spouse
          may elect, by written application filed with the Retirement Committee,
          to have payments begin as of the first day of any calendar month on or
          after the date the former Member would have reached the 55th
          anniversary of his or her birth provided, however, if the Member dies
          after having met the requirements set forth in Section 4.04(a)(ii) for
          a special early retirement allowance, the Member's spouse may elect to
          have payments begin under this Automatic Vested Spouse's Benefit as of
          the first day of any month following the Member's death.

          If the Member's spouse elects to commence payment of the Automatic
          Vested Spouse's Benefit prior to what would have been the Member's
          Normal Retirement Date, the amount of such benefit payable to the
          spouse shall be based on (i) the reduced vested benefit to which the
          Member would have been entitled, had the Member elected to have
          payments commence to himself on such earlier date in accordance with
          the provisions of Section 4.05(b) or (ii) in the case of a Member who
          dies after having met the requirements for a special early retirement
          allowance as set forth Section 4.04(a)(ii), the reduced early
          retirement allowance to which the Member would have been entitled had
          he or she elected to have payments commence to himself on such earlier
          date in accordance with the provisions of Section 4.04(b).

          Coverage hereunder shall be applicable to a married Member in active
          service who has satisfied the eligibility requirements for a vested
          benefit under Section 4.05 and shall become effective on the date the
          Member marries and shall cease on the earlier of (i) the

                                                                       Article 4

<PAGE>

          date such active Member reaches the 55th anniversary of his or her
          birth and completes ten years of Eligibility Service, (ii) the date
          such active Member reaches the 65th anniversary of his or her birth,
          (iii) the date such active Member's marriage is legally dissolved by a
          divorce decree, or (iv) the date such active Member's spouse dies.
          Coverage under Section 4.07(b)(i) shall commence on the date a Member
          in active service reaches the earlier of (i) the 55th anniversary of
          his or her birth, or if later, the date he or she completes ten years
          of Eligibility Service or (ii) the 65th anniversary of his or her
          birth.

     (ii) Automatic Vested Spouse's Benefit Applicable Upon Termination of
          ----------------------------------------------------------------
          Employment. In the case of a former Member who is married and entitled
          ----------
          to a vested benefit under Section 4.05, the provisions of this Section
          4.07(a)(ii) shall apply to the period between the date his or her
          services are terminated or the date, if later, the former Member is
          married and his or her Annuity Starting Date, or other cessation of
          coverage as later specified in this Section 4.07(a)(ii).

          In the event of a married former Member's death during any period in
          which these provisions have not been waived or revoked by the former
          Member and his or her spouse, the benefit payable to the former
          Member's spouse shall be equal to 50 percent of the vested benefit the
          former Member would have received on his or her Normal Retirement Date
          if he or she had elected to receive such benefit in the form of the
          Automatic Joint and Survivor Annuity under Section 4.06(a)(i).

          The spouse's benefit shall be payable for the life of the spouse
          commencing on what would have been the former Member's Normal
          Retirement Date. However, the former Member's spouse may elect, by
          written application filed with the Retirement Committee, to have

                                                                       Article 4

<PAGE>

                                                                         Page 50

          payments begin as of the first day of any calendar month on or after
          the date the former Member would have reached the 55th anniversary of
          his or her birth. If the former Member's spouse elects to commence
          payment of this Automatic Vested Spouse's Benefit prior to what would
          have been the former Member's Normal Retirement Date, the amount of
          such benefit payable to the spouse shall be based on the reduced
          vested benefit to which the former Member would have been entitled,
          had the former Member elected to have payments commence to himself on
          such earlier date in accordance with the provisions of Section
          4.05(b).

          The vested benefit payable to a former Member whose spouse is covered
          under this Section 4.07(a)(ii), or if applicable, the benefit payable
          to his or her spouse upon his or her death shall be reduced by the
          applicable percentages shown below. Such reduction shall commence on
          and after the first of the month coincident with or following the
          effective date of coverage hereunder and cease when coverage ceases;
          provided, however, no reduction shall be made with respect to any
          period before the later of (1) the date the Retirement Committee
          furnishes the Member the notice of his or her right to waive the
          Automatic Vested Spouse's Benefit or (2) the commencement of the
          election period specified below.

                     ANNUAL REDUCTION FOR SPOUSE'S COVERAGE
                         AFTER TERMINATION OF EMPLOYMENT

                       Age                             Reduction
                       ---                             ---------

                  Less than 40                    1/10 of 1% per year
               40 but prior to 50                 2/10 of 1% per year
               50 but prior to 55                 3/10 of 1% per year
               55 but prior to 60                 5/10 of 1% per year
               60 but less than 65                    1% per year

                                                                       Article 4

<PAGE>

                                                                         Page 51

          The Retirement Committee shall furnish to each former Member a written
          explanation which describes (1) the terms and conditions of the
          Automatic Vested Spouse's Benefit, (2) the former Member's right to
          make, and the effect of, an election to waive the Automatic Vested
          Spouse's Benefit, (3) the rights of the former Member's spouse, and
          (4) the right to make, and the effect of, a revocation of such a
          waiver. Such written explanation shall be furnished to each former
          Member before the first anniversary of the date he or she terminated
          service and shall be furnished to such former Member even though he or
          she is not married.

          The period during which the former Member may make an election to
          waive the Automatic Vested Spouse's Benefit provided under this
          Section 4.07(a)(ii) shall begin not later than the date his or her
          employment terminates and end on his or her Annuity Starting Date, or
          if earlier, his or her date of death. Any waiver, revocation or
          re-election of the Automatic Vested Spouse's Benefit shall be made on
          a form provided by the Retirement Committee and any waiver or
          revocation shall require Spousal Consent. If, upon termination of
          employment, the former Member waives coverage hereunder in accordance
          with administrative procedures established by the Retirement Committee
          for all Members similarly situated, such waiver shall be effective as
          of the Member's Severance Date. Any later re-election or revocation
          shall be effective on the first day of the month coincident with or
          next following the date the completed form is received by the
          Retirement Committee. If a former Member dies during the period after
          a waiver or revocation is in effect there shall be no benefits payable
          under the provisions of this Section 4.07.

                                                                       Article 4

<PAGE>

                                                                         Page 52

          Except as described above in the event of a waiver or revocation,
          coverage under this Section 4.07(a)(ii) shall cease to be effective
          upon a former Member's Annuity Starting Date, or upon the date a
          former Member's marriage is legally dissolved by a divorce decree, or
          upon the death of the spouse, whichever event shall first occur.

(b)  Automatic Pre-Retirement Survivor's Benefit
     -------------------------------------------

     (i)  Automatic Pre-Retirement Survivor's Benefit Applicable Before a Member
          ----------------------------------------------------------------------
          Retires Under the Provisions of Section 4.01, Section 4.02, Section
          -------------------------------------------------------------------
          4.03 or Section 4.04. The Beneficiary of a Member who has reached the
          --------------------
          65th anniversary of his or her birth or who has reached the 55th
          anniversary of his or her birth and completed ten years of Eligibility
          Service, shall automatically receive a Pre-Retirement Survivor's
          Benefit payable under the provisions of this Section 4.07(b)(i) in the
          event said Member should die before he or she retires under the
          provisions of Section 4.01, 4.02, 4.03 or 4.04 or reaches his or her
          Annuity Starting Date pursuant to the provisions of Section 4.02(d),
          if earlier. The benefit payable during the life of, and to, the
          Beneficiary shall be equal to one-half of the Member's Accrued
          Benefit, without optional modification in accordance with the
          provisions of Section 4.06, accrued to the date of his or her death,
          adjusted to take into account the Member's Social Security Benefit.
          The Social Security Benefit shall be determined on the assumption that
          the Member had no earnings after his or her date of death, and if his
          or her death occurs prior to the time the Member is or would upon
          proper application first be entitled to receive such Social Security
          Benefit, such adjustment shall nevertheless be made at the Member's
          date of death. If the Beneficiary is more than five years younger than
          the Member, the benefit payable to the Beneficiary shall be reduced by
          one-half of 1 percent for each full year the Beneficiary is more than
          five years younger.

                                                                       Article 4

<PAGE>

                                                                         Page 53

          Coverage hereunder shall be effective on the first day of the calendar
          month coincident with or next following the date the Member reaches
          his or her 55th birthday and completes ten years of Eligibility
          Service, or if earlier, his or her Normal Retirement Date. In the case
          of a married Member coverage under Section 4.07(a)(i) shall cease on
          the date coverage under this Section 4.07(b)(i) is effective as set
          forth in the preceding sentence.

     (ii) Automatic Pre-Retirement Survivor's Benefit Applicable Between Early
          --------------------------------------------------------------------
          Retirement Date or Special Early Retirement Date and the Member's
          -----------------------------------------------------------------
          Annuity Starting Date. In the case of a Member retired early under
          ---------------------
          Section 4.03 or Section 4.04 of the Plan with the payment of the early
          retirement allowance deferred to commence at a date later than his or
          her Early Retirement Date or Special Early Retirement Date, whichever
          is applicable, the provisions of this Section 4.07(b)(ii) shall apply
          to the period between his or her Early Retirement Date or Special
          Early Retirement Date and his or her Annuity Starting Date. The Member
          shall, at his or her Early Retirement Date or Special Early Retirement
          Date, complete such forms as are required under this Section
          4.07(b)(ii) and coverage hereunder shall be effective as of his or her
          Early Retirement Date or Special Early Retirement Date.

          In the event of the Member's death during the period in which these
          provisions are in effect, the benefit payable during the life of, and
          to, the Beneficiary shall be equal to one-half of the Member's Accrued
          Benefit, without optional modification in accordance with the
          provisions of Section 4.06, accrued to the date of his or her Early
          Retirement Date or Special Early Retirement Date, whichever is
          applicable, adjusted to take into account the Member's Social Security
          Benefit. If the Member's death occurs prior to the time the Member is
          or would upon proper application first be entitled to receive such
          Social

                                                                       Article 4

<PAGE>

                                                                         Page 54

          Security Benefit, such adjustment shall nevertheless be made at the
          Member's date of death. If the Beneficiary is more than five years
          younger than the Member, the benefit payable to the Beneficiary shall
          be reduced by one-half of 1 percent for each full year the Beneficiary
          is more than five years younger.

     The Automatic Pre-Retirement Survivor's Benefit shall be payable for the
     life of the Beneficiary commencing on what would have been the Member's
     Normal Retirement Date or date of death, if later. However, if a Member
     dies prior to his or her Normal Retirement Date, the Beneficiary of the
     Member may elect, by written application filed with the Retirement
     Committee, to have such payments begin as of the first day of any calendar
     month following the Member's date of death and prior to what would have
     been the Member's Normal Retirement Date. If the Beneficiary elects to
     commence payment of the Automatic Pre-Retirement Survivor's Benefit prior
     to what would have been the Member's Normal Retirement Date the amount of
     such benefit shall be determined in accordance with Sections 4.07(b)(i) and
     (ii) above, as applicable, and without reduction for such early
     commencement.

     Notwithstanding the foregoing, in the event the Member's Beneficiary is
     someone other than his or her spouse, payment of the automatic
     Pre-Retirement Survivor's Benefit shall commence within one year of the
     Member's date of death and in the event such commencement date is prior to
     the 55th anniversary of the Member's birth, the benefit payable to the
     Beneficiary shall be of Equivalent Actuarial Value to the benefit otherwise
     payable hereunder to the Beneficiary on the date the Member would have
     attained age 55.

                                                                       Article 4

<PAGE>

                                                                         Page 55

(c)  Optional Supplemental Pre-Retirement Survivor's Benefit
     -------------------------------------------------------

     (i)  Optional Supplemental Pre-Retirement Survivor's Benefit Applicable
          ------------------------------------------------------------------
          Before a Member Retires Under the Provisions of Section 4.01, Section
          ---------------------------------------------------------------------
          4.02, Section 4.03 or Section 4.04. A Member, who has reached the 65th
          ----------------------------------
          anniversary of his or her birth or who has reached the 55th
          anniversary of his or her birth and completed ten years of Eligibility
          Service, may elect to receive a reduced retirement allowance upon his
          or her retirement in order to provide that, if he or she should die
          after his or her election becomes effective but before he or she
          retires under the provisions of Section 4.01, Section 4.02, 4.03 or
          4.04 or reaches his or her Annuity Starting Date pursuant to the
          provisions of Section 4.02(d), a benefit shall be paid to the
          Beneficiary designated by him or her in accordance with the following
          terms and conditions.

          The Member may elect to reduce the retirement allowance to which he or
          she would otherwise be entitled at retirement under Section 4.01,
          4.02, 4.03 or 4.04 by one-half of 1 percent per year for each year
          between the date on which the election becomes effective and the
          earliest of the Member's Early Retirement Date, Special Early
          Retirement Date, Annuity Starting Date, or the date the election is
          revoked as provided in Section 4.07(i).

          If the Member makes such an election and dies before he or she retires
          under the provisions of Section 4.01, 4.02, 4.03 or 4.04, the benefit
          payable during the life of, and to, the Beneficiary shall be equal to
          25 percent of the Member's Accrued Benefit without optional
          modification in accordance with the provisions of Section 4.06,
          accrued to the date of his or her death adjusted (1) to take into
          account the Member's Social Security Benefit and (2) as provided
          below. The Social Security Benefit shall be determined on the

                                                                       Article 4

<PAGE>

                                                                         Page 56

          assumption that the Member had no earnings after his or her date of
          death, and if his or her death occurs prior to the time the Member is
          or would upon proper application first be entitled to receive such
          Social Security Benefit, such adjustment shall nevertheless be made at
          the Member's date of death. The benefit payable to the Beneficiary
          shall be reduced by one-half of 1 percent per year for each year
          between the date on which the election became effective and the date
          of the Member's death. If the Beneficiary is more than five years
          younger than the Member, the benefit payable to the Beneficiary shall
          be further reduced by one-half of 1 percent for each full year the
          Beneficiary is more than five years younger.

          If the Member makes an election under this Section 4.07(c)(i) at or
          prior to the time he or she is first eligible to do so, it shall
          become effective on the first day of the calendar month coincident
          with or next following the date the Member reaches his or her 55th
          birthday and completes ten years of Eligibility Service, or if
          earlier, his or her Normal Retirement Date. A Member will be deemed to
          have waived coverage under this Section 4.07(c)(i) if he or she does
          not file the appropriate forms with the Retirement Committee when
          first eligible to do so. If the Member does not make such election
          until after he or she is first eligible to do so, it shall become
          effective one year after the first day of the calendar month
          coincident with or next following (1) the date the notice is received
          by the Retirement Committee or (2) the date specified in such notice,
          if later.

     (ii) Optional Supplemental Pre-Retirement Survivor's Benefit Applicable
          ------------------------------------------------------------------
          Between Early Retirement Date or Special Early Retirement Date and the
          ----------------------------------------------------------------------
          Member's Annuity Starting Date. In the case of a Member retired early
          ------------------------------
          under the provisions of Section 4.03 or Section 4.04 of the Plan with
          the payment of the early retirement allowance deferred to commence at
          a date later than his or her Early Retirement Date or Special Early

                                                                       Article 4

<PAGE>

                                                                         Page 57

          Retirement Date, the provisions of this Section 4.07(c)(ii) shall
          apply to the period between his or her Early Retirement Date or
          Special Early Retirement Date and his or her Annuity Starting Date.

          The Member may elect to reduce the early retirement allowance to which
          he or she would otherwise be entitled under Section 4.03 or Section
          4.04 by one-half of 1 percent per year for each year between his or
          her Early Retirement Date or Special Early Retirement Date and the
          earlier of the date the election is revoked pursuant to Section
          4.07(i) or his or her Annuity Starting Date.

          If the Member makes such an election and dies during the period the
          election is in effect, the benefit payable during the life of, and to,
          his or her Beneficiary shall be equal to 25 percent of the Member's
          Accrued Benefit, without optional modification in accordance with the
          provisions of Section 4.06, accrued to his or her Early Retirement
          Date or Special Early Retirement Date, adjusted (1) to take into
          account the Member's Social Security Benefit and (2) as provided
          below. If the Member's death occurs prior to the time the Member is or
          would upon proper application first be entitled to receive such Social
          Security Benefit, such adjustment shall nevertheless be made at the
          Member's date of death. The benefit payable to the Beneficiary shall
          be reduced by one-half of 1 percent per year for each year between the
          date on which the election became effective and the date of the
          Member's death. If the Beneficiary is more than five years younger
          than the Member, the benefit payable to the Beneficiary shall be
          further reduced by one-half of 1 percent for each full year the
          Beneficiary is more than five years younger.

                                                                       Article 4

<PAGE>

                                                                         Page 58

          The Member shall, at his or her Early Retirement Date or Special Early
          Retirement Date, complete such forms as are required under this
          Section 4.07(c)(ii), and if he or she so elects, coverage hereunder
          shall be effective as of his or her Early Retirement Date or Special
          Early Retirement Date. A Member will be deemed to have waived coverage
          under this Section 4.07(c)(ii) if he or she does not file the
          appropriate forms with the Retirement Committee at his or her Early
          Retirement Date or Special Early Retirement Date. If the Member
          subsequently makes an election hereunder, it shall become effective
          one year after the first day of the calendar month coincident with or
          next following (1) the date the notice is received by the Retirement
          Committee or (2) the date specified in such notice, if later.

     The optional Supplemental Pre-Retirement Survivor's Benefit shall be
     payable for the life of the Beneficiary commencing on what would have been
     the Member's Normal Retirement Date or date of death, if later. However, if
     a Member dies prior to his or her Normal Retirement Date, the Beneficiary
     may elect, by written application filed with the Retirement Committee, to
     have such payments begin as of the first day of any calendar month
     coincident with or next following the Member's date of death and prior to
     what would have been the Member's Normal Retirement Date. If the
     Beneficiary elects to commence payment of the optional Supplemental
     Pre-Retirement Survivor's Benefit prior to what would have been the
     Member's Normal Retirement Date and after what would have been the 55th
     anniversary of the Member's birth, the amount of such benefit shall be
     determined in accordance with Section 4.07(c)(i) and (ii) above, as
     applicable and without reduction for such early commencement. If the
     Beneficiary elects to commence payment of the optional Supplemental
     Pre-Retirement Survivor's Benefit prior to what would have been the 55th
     anniversary of the Member's birth, the benefit payable to the Beneficiary
     shall be of Equivalent Actuarial Value to the benefit otherwise payable to
     Beneficiary on the date the Member would have

                                                                       Article 4

<PAGE>

                                                                         Page 59

     attained age 55. Notwithstanding any foregoing provision to the contrary,
     payment of the optional Supplemental Pre-Retirement Survivor Benefit must
     commence as of the same date payment of the Automatic Pre-Retirement
     Survivor Benefit commences.

     Notwithstanding the foregoing, in the event the Member's Beneficiary is
     someone other than his or her spouse, payment of the optional Supplemental
     Pre-Retirement Survivor's Benefit shall commence within one year of the
     Member's date of death and in the event such commencement date is prior to
     the 55th anniversary of the Member's birth, the benefit payment to the
     Beneficiary shall be of Equivalent Actuarial Value to the benefit otherwise
     payable hereunder to the Beneficiary on the date the Member would have
     attained age 55.

(d)  Notwithstanding any provision of Section 4.07(b) or Section 4.07(c) to the
     contrary, in no event shall the sum of the Automatic Pre-Retirement
     Survivor's Benefit payable under the provisions of Section 4.07(b) and the
     optional Supplemental Pre-Retirement Survivor's Benefit payable under the
     provisions of Section 4.07(c) to a Beneficiary be less than the amount of
     benefit the spouse would have received if the retirement allowance to which
     the Member was entitled at his or her date of death (i) had commenced on
     the date the spouse elects to have such Pre-Retirement Survivor's Benefit
     payments commence, (ii) in the form of an Automatic Joint and Survivor
     Annuity under Section 4.06(a)(i), and (iii) the Member had died immediately
     thereafter. However, in lieu of the Automatic Joint and Survivor Annuity
     referred to in the preceding sentence, the 80/80 Spouse's Annuity Option
     described in Section 4.06(b)(ii) shall be used to compute the amount
     payable to the spouse if, within the 90-day period prior to his or her
     Annuity Starting Date, the Member had elected such optional form of
     payment.

                                                                       Article 4

<PAGE>

                                                                         Page 60

(e)  Benefits Payable to an Estate or Trust. If a Member's Beneficiary under
     --------------------------------------
     this Section 4.07 is his or her estate or a trust, the benefits otherwise
     payable under Section 4.07(b), and if elected, under Section 4.07(c) shall
     be commuted into a single lump sum amount, which amount shall be determined
     by multiplying the benefits otherwise payable by the appropriate factor in
     Tables 4 or 5 of Appendix A and calculated by assuming the Beneficiary had
     been a person of the same age as the Member at the Member's date of death.
     In no event shall the amount of the lump sum be less than the amount
     required by applicable law. The payment of such single lump sum amount
     shall represent the full and total payment of all benefits due under the
     Plan. The Retirement Committee shall resolve any questions arising
     hereunder on a basis uniformly applicable to all Members similarly
     situated.

(f)  If the Member's Beneficiary dies during the period coverage is effective
     under Sections 4.07(b) and Section 4.07(c), the Beneficiary designation
     shall thereby be canceled. However, coverage under Section 4.07(b), and if
     elected, under Section 4.07(c) shall nevertheless continue in full effect.
     The Member's Beneficiary thereafter shall be in accordance with his or her
     subsequent designation of a new Beneficiary or in accordance with the term
     "Beneficiary" as defined herein.

     If the Member's Beneficiary is his or her spouse and if the Member's
     marriage to said spouse is legally dissolved by a divorce decree, the
     Beneficiary designation under Sections 4.07(b) and 4.07(c) shall remain in
     effect until a subsequent Beneficiary designation is submitted by the
     Member to the Retirement Committee or until the Member remarries. Coverage
     under Section 4.07(b), and if elected, under Section 4.07(c) shall continue
     in full effect.

                                                                       Article 4

<PAGE>

                                                                         Page 61

     A Member may change his or her Beneficiary designation at any time after
     receiving the written explanation described in Section 4.07(g), subject to
     Spousal Consent. Any such change shall become effective on the first day of
     the calendar month coincident with or next following the (i) date the
     notice of change is received by the Retirement Committee or (ii) the date
     specified in such notice, if later, and the original designation shall
     remain in effect until such date.

(g)  The Retirement Committee shall furnish to each Member a written explanation
     in non-technical language which describes (i) the terms and conditions of
     the Automatic Pre-Retirement Survivor's Benefit and the Optional
     Supplemental Pre-Retirement Survivor's Benefit, (ii) the Member's right to
     make an election to designate a Beneficiary other than his or her spouse
     and the effect of such election, (iii) the right to revoke, prior to the
     Annuity Starting Date, such designation and the effect of such revocation,
     and (iv) the rights of the Member's spouse, if any. The Retirement
     Committee shall furnish this written explanation to each Member during the
     period beginning one year prior to the earlier of (i) the date the Member
     retires pursuant to the provision of Section 4.04(a)(ii), (ii) the date the
     Member reaches the 55th anniversary of his or her birth and completes ten
     years of Eligibility Service, or (iii) in the Member's Normal Retirement
     Date, and ending within one year after such date.

(h)  A Member may revoke an election made under Section 4.07(c) at any time
     prior to his or her Annuity Starting Date. There shall be no further
     reduction to the Member's retirement allowance for any period during which
     an election under Section 4.07(c) is not in effect. The Member may make a
     new election at any time thereafter and any subsequent election shall
     become effective one year after the first day of the calendar month
     coincident with or next following the (i) date the notice is received by
     the Retirement Committee or (ii) the date specified in such notice, if
     later.

                                                                       Article 4

<PAGE>

                                                                         Page 62

     If the Member dies prior to the time an election under Section 4.07(c)
     becomes effective, the election shall thereby be canceled.

     Any designation of a Beneficiary and any election made under Section 4.07
     (including any waiver or revocation of either of them) shall be made on a
     form approved by and filed with the Retirement Committee and in accordance
     with the term "Beneficiary" as defined in this Section 4.07.

4.08 Maximum Benefits
     ----------------

(a)  Notwithstanding any provision of the Plan to the contrary, the maximum
     annual retirement allowance payable to a Member under the Plan shall be
     subject to the limitations set forth in Section 415 of the Code and any
     regulations or rulings issued thereunder. If the retirement allowance
     begins before the Member's 62nd birthday, the dollar limitation described
     in Section 415(b)(1)(A) of the Code shall be of Equivalent Actuarial Value
     to the maximum benefit payable at age 62. If the retirement allowance
     begins after the Member's Social Security Retirement Age, such dollar
     limitation shall be of Equivalent Actuarial Value to the maximum benefit
     payable at the Member's Social Security Retirement Age. If the retirement
     allowance is payable neither as a life annuity nor as a qualified joint and
     survivor annuity with the Member's spouse as beneficiary, the maximum
     limitation shall be of Equivalent Actuarial Value to the maximum limitation
     otherwise applicable. Effective on September 1, 1995, Equivalent Actuarial
     Value for purposes of this Section 4.08 shall be determined in accordance
     with Section 415(b) of the Code and the regulations or rulings issued
     thereunder and using the Plan's early retirement, late retirement, or
     optional benefit factors as appropriate, or if less, using factors
     calculated from the IRS Mortality Table, if applicable, and 5 percent.

                                                                       Article 4

<PAGE>

                                                                         Page 63

(b)  Notwithstanding paragraph (a) above, no Member shall be subject to the
     provisions of Code Section 415(e) on or after January 1, 2000. If a
     Member's retirement allowance, death in service benefit, or vested benefit
     commenced prior to January 1, 2000 and was limited by the provisions of
     Code Section 415(e), such retirement allowance, death in service benefit,
     or vested benefit shall be redetermined as of January 1, 2000 without
     regard to the provisions of Section 415(e) and such recomputed retirement
     allowance, death in service benefit, or vested benefit shall be payable on
     and after said date, but only if the Retirement Committee finds that doing
     so will not result in the duplication of benefits payable from this Plan
     and any other qualified or non-qualified plans sponsored by the Company.

(c)  For purposes of Section 4.08(a), "remuneration" with respect to any
     Employee shall mean the wages, salaries, and other amounts paid in respect
     of such Employee by the Company or an Associated Company for personal
     services actually rendered, determined before any pre-tax contributions
     under a "qualified cash or deferred arrangement" (as defined under Section
     401(k) of the Code and its applicable regulations) or under a "cafeteria
     plan" (as defined under Section 125 of the Code and its applicable
     regulations), or under a "qualified transportation fringe" (as defined
     under Section 132(f) of the Code and its applicable regulations), and shall
     include, but not by way of limitation, bonuses, overtime payments, and
     commissions; and shall exclude deferred compensation, stock options, and
     other distributions which receive special tax benefits under the Code.

4.09 No Duplication
     --------------

     Except as hereinafter provided, there shall be deducted from any retirement
     allowance or vested benefit payable under this Plan the part of any pension
     or comparable benefit, including any lump

                                                                       Article 4

<PAGE>

                                                                         Page 64

     sum payment, provided by employer contributions which Rayonier Inc., any
     Participating Unit, (including any former Participating Unit divested by
     Rayonier Inc.), any Associated Company or any affiliate of the Company is
     obligated to pay or has paid to or under any defined benefit plan or other
     agreement which provides for benefits comparable to those benefits paid
     under a defined benefit plan (except for any pension plan or other
     agreement which provides for the payment of that portion of any benefits
     accrued under the Plan but not payable from the Plan on account of Section
     401(a)(17)(B) of the Code or Section 4.08) with respect to any service
     rendered on or after March 1, 1994 which is Benefit Service for purposes of
     computation of benefits under this Plan.

4.10 Payment of Benefits
     -------------------

(a)  Unless otherwise provided under an optional benefit elected pursuant to
     Section 4.06, the survivor's benefits available under Section 4.07, or the
     provisions of Section 4.10(e)(ii), all retirement allowances, vested
     benefits or other benefits payable under the Plan will be paid in monthly
     installments as of the end of each month beginning with (i) the month in
     which a Member has reached his or her Normal Retirement Date and has
     retired from active service, (ii) the month in which a Member has reached
     his or her Postponed Retirement Date and has retired from active service,
     (iii) the month in which a Member, upon proper application, has requested
     commencement of his or her vested benefit or early retirement allowance, or
     (iv) the month in which benefits under an optional benefit under Section
     4.06 or the survivor's benefits under Section 4.07 become payable,
     whichever is applicable. Such monthly installments shall cease with the
     payment for the month in which the recipient dies. In no event shall a
     retirement allowance or vested benefit be payable to a Member who continues
     in or resumes active service with the Company or an Associated Company for
     any period between his or her Normal Retirement Date and Postponed
     Retirement Date, except as provided in Sections 4.02(d), and 4.10(e).

                                                                       Article 4

<PAGE>

                                                                         Page 65

(b)  In any case, a lump sum payment equal to the vested benefit payable under
     Section 4.05 or the vested spouse's benefit payable under Section 4.07(a)
     multiplied by the appropriate factor contained in Table 4, 5 or 6 of
     Appendix A shall be made in lieu of any vested benefit payable to a former
     Member or any vested spouse's benefit payable to a spouse of a Member or a
     former Member, if the lump sum present value of such benefit amounts to
     $3,500 ($5,000 effective January 1, 1998) or less. In no event, however,
     with respect to any Member who terminates employment prior to September 1,
     1995, shall that adjustment factor produce a lump sum that is less than the
     amount determined by using the interest rate assumption used by the Pension
     Benefit Guaranty Corporation for valuing benefits for determining lump sum
     payments under single employer plans that terminate on January 1 of the
     Plan Year in which the Annuity Starting Date occurs. With respect to any
     Member who terminates employment on or after September 1, 1995, the lump
     sum present value shall be based on the IRS Mortality Table and the IRS
     Interest Rate. The lump sum payment may be made at any time on or after the
     date the Member has terminated employment or died, but in any event prior
     to the date his or her benefit payment would have otherwise commenced.

     In the event a Member is not entitled to any retirement allowance or vested
     benefit upon his or her termination of employment, he or she shall be
     deemed "cashed-out" under the provisions of this paragraph (b) as of the
     date he or she terminated service.

(c)  In the event that the Retirement Committee shall find that a person to whom
     benefits are payable is unable to care for his or her affairs because of
     illness or accident or is a minor or has died, then, unless claim shall
     have been made therefor by a legal representative, duly appointed by a
     court of

                                                                       Article 4

<PAGE>

                                                                         Page 66

     competent jurisdiction, the Retirement Committee may direct that any
     benefit payment due him or her be paid to his or her spouse, a child, a
     parent or other blood relative, or to a person with whom he or she resides,
     and any such payment made shall be a complete discharge of the liabilities
     of the Plan therefor.

(d)  Before any benefit shall be payable to a Member, a former Member, or other
     person who is or may become entitled to a benefit hereunder, such Member,
     former Member, or other person shall file with the Retirement Committee
     such information as it shall require to establish his or her rights and
     benefits under the Plan.

(e)  (i)  Except as otherwise provided in this Article 4, payment of a Member's
          retirement allowance or a former Member's vested benefit shall begin
          as soon as administratively practicable following the latest of (1)
          the Member's Normal Retirement Age or (2) the date he or she
          terminates service with the Company and all Associated Companies (but
          not more than 60 days after the close of the Plan Year in which the
          latest of (1) or (2) occurs).

     (ii) Notwithstanding anything contained in the Plan to the contrary, in the
          case of a Member who owns either (1) more than 5 percent of the
          outstanding stock of the Company or (2) stock possessing more than 5
          percent of the total combined voting power of all stock of the
          Company, the Member's retirement allowance shall begin not later than
          the April 1 following the calendar year in which he or she attains age
          70 1/2.

          Effective January 1, 2000, payment of any other Member's retirement
          allowance or vested benefit shall begin not later than April 1 of the
          calendar year following the calendar year in which the later of the
          Member's retirement or attainment of age 70 1/2 occurs. Before

                                                                       Article 4

<PAGE>

                                                                         Page 67

               January 1, 2000, the payment of a retirement allowance or vested
               benefit for a Member in active service who is not a 5-percent
               owner as described above shall begin not later than April 1 of
               the calendar year following the calendar year in which he or she
               attains age 70 1/2. A Member who attained age 70 1/2 prior to
               January 1, 1988 and who is not a 5-percent owner as described
               above shall not receive payment while in active service under the
               provisions of this paragraph.

(f)      Notwithstanding any other provision of this Article 4, all
         distributions from this Plan shall conform to the regulations issued
         under Section 401(a)(9) of the Code, including the incidental death
         benefit provisions of Section 401(a)(9)(G) of the Code. Further, such
         regulations shall override any plan provision that is inconsistent with
         Section 401(a)(9) of the Code.

4.11     Reemployment of Former Member or Retired Member
         -----------------------------------------------

(a)      Cessation of Benefit Payments. If a former Member or a retired Member
         -----------------------------
         entitled to or in receipt of a vested benefit or retirement allowance
         is reemployed by the Company or by an Associated Company in a capacity
         other than as a Non-Benefits Worker, any benefit payments he or she is
         receiving shall cease, except as otherwise provided in Section 4.02(c)
         and Section 4.10(e). If a former Member or a retired Member returns to
         the Company or an Associated Company as a Non-Benefits Worker, benefit
         payments shall continue and paragraphs (b) and (c) shall not apply.

(b)      Optional Forms of Pension Benefits
         ----------------------------------

         (i)      If the Member is reemployed in a capacity other than as a
                  Non-Benefits Worker any previous election of an optional
                  benefit under Section 4.06 or a survivor's benefit under

                                                                       Article 4

<PAGE>

                                                                         Page 68

          Section 4.07 shall be revoked and the terms and conditions of
          subparagraph (ii) of this paragraph (b) shall apply.

     (ii) Any Member who is at least age 55 with ten or more years of
          Eligibility Service when he or she is reemployed in a capacity other
          than as a Non-Benefits Worker shall, with respect to the vested
          benefit or retirement allowance earned prior to his or her
          reemployment and with respect to any additional benefits earned during
          reemployment, be covered by the provisions of Section 4.07(b) -
          Pre-Retirement Survivor's Benefit - and be eligible to elect coverage
          under Section 4.07(c) Supplemental Pre-Retirement Survivor's Benefit.
          Coverage under Section 4.07(b) shall be effective on the first day of
          the calendar month coincident with or next following the date of his
          or her reemployment and any previous election shall remain in effect
          until such date. If, within 30 days after reemployment, the Member
          elects coverage under Section 4.07(c), such coverage shall be
          effective as of the first day of the calendar month coincident with or
          next following the date of his or her reemployment. If the Member does
          not make an election under Section 4.07(c) within 30 days after his or
          her reemployment or he or she waives such coverage, any later election
          shall become effective one year after the first day of the calendar
          month coincident with or next following the date notice is received by
          the Retirement Committee or on the date specified in such notice, if
          later.

          Any Member or former Member with five or more years of Eligibility
          Service who is less than age 55 when he or she is reemployed shall be
          covered by the provisions of Section 4.07(a)(i) - Automatic Vested
          Spouse's Benefit - until he or she attains age 55 and such coverage
          shall be effective on the first day of the calendar month coincident
          with or next following the date of his or her reemployment and any
          previous election shall remain in

                                                                       Article 4

<PAGE>

                                                                         Page 69

          effect until such date. Such former Member and any other Member or
          former Member shall be covered by the provisions of Section 4.07(b) -
          Pre-Retirement Survivor's Benefit - and shall be eligible to elect
          coverage under Section 4.07(c) Supplemental Pre-Retirement Survivor's
          Benefit upon the later of the date he or she attains age 55, the date
          he or she completes ten years of Eligibility Service, or his or her
          Normal Retirement Date, and such coverage shall be in accordance with
          the provisions of such Sections and shall apply with respect to his or
          her retirement allowance or vested benefit earned prior to his or her
          reemployment, as well as any additional benefits earned during
          reemployment.

(c)  Benefit Payments at Subsequent Termination or Retirement
     --------------------------------------------------------

     (i)  In accordance with the procedure established by the Retirement
          Committee on a basis uniformly applicable to all Members similarly
          situated, upon the subsequent retirement of a Member in service after
          his or her Normal Retirement Date, payment of such Member's retirement
          allowance shall resume no later than the third month after the final
          month during the reemployment period in which he or she is credited
          with at least eight days of service.

     (ii) Upon the subsequent retirement or termination of employment of a
          retired or former Member, the Retirement Committee shall, in
          accordance with rules uniformly applicable to all Members similarly
          situated, determine the amount of vested benefit or retirement
          allowance which shall be payable to such Member at such subsequent
          retirement or termination. Such vested benefit or retirement allowance
          shall not be less than the sum of (1) the original amount of vested
          benefit or retirement allowance previously earned by such Member in
          accordance with the terms of the Plan in effect during such previous
          employment adjusted to reflect the election of any survivor's benefits
          pursuant to Section

                                                                       Article 4

<PAGE>

                                                                         Page 70

               4.07(a)(ii) or 4.07(c) and reduced by an amount of equivalent
               value to the benefits, if any, he or she received before the
               earlier of the date of his or her restoration to service or his
               or her Normal Retirement Date and (2) any additional vested
               benefit or retirement allowance earned during his or her period
               of reemployment, such amounts to be adjusted to reflect the
               election during reemployment of any survivor's benefits pursuant
               to Section 4.07(a)(ii) or 4.07(c). Notwithstanding anything to
               the contrary contained in this Plan, with respect to an Employee
               who has incurred a break in service, the vested benefit or
               retirement allowance for Benefit Service credited prior to the
               date of reemployment shall not be recalculated or increased until
               the Member, regardless of his or her vested status, has completed
               at least 12 months of Eligibility Service following his or her
               reemployment, and in such event, the recalculated vested benefit
               or retirement allowance, prior to any optional modification in
               accordance with the provisions of Section 4.06, shall be reduced
               by an amount of equivalent value to any payments previously
               received by the former Member or retired Member before the
               earlier of his or her restoration to service or his or her Normal
               Retirement Date; provided that no such reduction shall reduce
               such retirement allowance or vested benefit below the amount
               determined pursuant to clause (1) of the preceding sentence.

     (d)  Questions Relating to Reemployment of Former Members or Retired
          ---------------------------------------------------------------
          Members. If, at subsequent termination of employment or retirement,
          -------
          any question shall arise under this Section 4.11 as to the calculation
          or recalculation of a reemployed former Member's or retired Member's
          vested benefit or retirement allowance or election of an optional form
          of benefit under the Plan, such question shall be resolved by the
          Retirement Committee on a basis uniformly applicable to all Members
          similarly situated.

                                                                       Article 4

<PAGE>

                                                                         Page 71

4.12     Top-heavy Provisions
         --------------------

 (a)     The following definitions apply to the terms used in this Section:

         (i)   "applicable determination date" means the last day of the
               preceding Plan Year;

         (ii)  "top-heavy ratio" means the ratio of (A) the present value of the
               cumulative Accrued Benefits under the Plan for key employees to
               (B) the present value of the cumulative Accrued Benefits under
               the Plan for all key employees and non-key employees; provided,
               however, that if a key employee has not performed services for
               the Company at any time during the five-year period ending on the
               applicable determination date, any Accrued Benefit for such
               individual (and any account balances of such individual) shall
               not be taken into account;

         (iii) "applicable valuation date" means the date within the preceding
               Plan Year as of which annual Plan costs are or would be computed
               for minimum funding purposes;

         (iv)  "key employee" means an Employee determined to be a "key
               employee" in accordance with the provisions of Section 416(i)(1)
               and (5) of the Code and any regulations thereunder, and where
               applicable, on the basis of the Employee's compensation as
               reported on Form W-2 for the applicable Plan Year;

         (v)   "non-key employee" means any employee who is not a key employee;

         (vi)  "average remuneration" means the average annual remuneration of a
               Member for the five consecutive years of his or her Eligibility
               Service during which he or she received the greatest aggregate
               remuneration, as limited by Section 401(a)(17) of the Code, from
               the Company or Associated Company, excluding any remuneration for
               service after the last Plan Year with respect to which the Plan
               is top-heavy;

                                                                       Article 4

<PAGE>

                                                                         Page 72

         (vii)    "required aggregation group" means each other qualified plan
                  of the Company or an Associated Company (including plans that
                  terminated within the five-year period ending on the
                  determination date) in which there are members who are key
                  employees or which enables the Plan to meet the requirements
                  of Section 401(a)(4) or 410 of the Code; and

         (viii)   "permissive aggregation group" means each plan in the required
                  aggregation group and any other qualified plan(s) of the
                  Company or an Associated Company in which all members are
                  non-key employees, if the resulting aggregation group
                  continues to meet the requirements of Sections 401(a)(4) and
                  410 of the Code.

(b)      For purposes of this Section 4.12, the Plan shall be "top-heavy" with
         respect to any Plan Year if, as of the applicable determination date,
         the top-heavy ratio exceeds 60 percent. The top-heavy ratio shall be
         determined as of the applicable valuation date in accordance with
         Section 416(g)(3) and (4)(B) of the Code on the basis of the same
         mortality and interest rate assumptions used to value the Plan. For
         purposes of determining whether the Plan is top-heavy, the present
         value of Accrued Benefits under the Plan will be combined with the
         present value of accrued benefits or account balances under each other
         plan in the required aggregation group, and in the Company's
         discretion, may be combined with the present value of accrued benefits
         or account balances under any other qualified plan(s) in the permissive
         aggregation group. The Accrued Benefit of a non-key employee under the
         Plan or any other defined benefit plan in the aggregation group shall
         be (i) determined under the method, if any, that uniformly applies for
         accrual purposes under all plans maintained by the Company or an
         Associated Company or (ii) if there is no such method, as if such
         benefit accrued not more rapidly than the slowest accrual rate
         permitted under the fractional rule described in Section 411(b)(i)(C)
         of the Code.

                                                                       Article 4




<PAGE>

                                                                         Page 73

(c)  The following provisions shall be applicable to Members for any Plan
     Year with respect to which the Plan is top-heavy:

     (i)   In lieu of the vesting requirements specified in Section 4.05, the
           following vesting schedule shall apply:

                 Years of Eligibility Service         Percentage Vested
                 ----------------------------         -----------------

                       Less than 2 years                      0%
                            2 years                          20
                            3 years                          40
                            4 years                          60
                        5 or more years                     100

     (ii)  The Accrued Benefit of a Member who is a non-key employee shall not
           be less than 2 percent of his or her "average remuneration"
           multiplied by the number of years of his or her Eligibility Service,
           not in excess of 10, during the Plan Years for which the Plan is
           top-heavy. Such minimum benefit shall be payable at a Member's Normal
           Retirement Date. If payments commence at a time other than the
           Member's Normal Retirement Date, the minimum Accrued Benefit shall be
           of Equivalent Actuarial Value to such minimum benefit, as determined
           on the basis of the actuarial assumptions stated in Section 4.14(b)
           above.

     (iii) The multiplier "1.25" in Sections 415(e)(2)(B)(i) and (3)(B)(i) of
           the Code shall be reduced to "1.0", and the dollar amount "$51,875"
           in Section 415(e)(7)(B)(i)(I) of the Code shall be reduced to
           "$41,500".

(d)  If the Plan is top-heavy with respect to a Plan Year and ceases to be
     top-heavy for a subsequent Plan Year, the following provisions shall be
     applicable:

                                                                       Article 4

<PAGE>

                                                                         Page 74

     (i)   The Accrued Benefit in any such subsequent Plan Year shall not be
           less than the minimum Accrued Benefit provided in Section 4.12(c)
           (ii) above, computed as of the end of the most recent Plan Year for
           which the Plan was top-heavy.

     (ii)  If a Member has completed three years of Eligibility Service on or
           before the last day of the most recent Plan Year for which the Plan
           was top-heavy, the vesting schedule set forth in Section 4.12(c)(i)
           above shall continue to be applicable.

     (iii) If a Member has completed at least two, but less than three years of
           Eligibility Service on or before the last day of the most recent Plan
           Year for which the Plan is top-heavy, the vesting provisions of
           Section 4.05 shall again be applicable; provided, however, that in no
           event shall the vested percentage of a Member's accrued benefit be
           less than the percentage determined under Section 4.12(c)(i) above as
           of the last day of the most recent Plan Year for which the Plan was
           top-heavy.

4.13 Payment of Medical Benefits for Benefits for Certain Members Who Retire
     -----------------------------------------------------------------------
     Under the Plan
     --------------

     This Section 4.13 defines the basis of providing medical benefits to
     eligible Members or their eligible dependents as defined below for those
     expenses incurred by such Members or their eligible dependents on or after
     the date specified by the Board of Directors.

(a)  In order to be eligible for the benefits provided hereunder, a person must
     be a Plan Member who retired under the Plan provisions during the period
     designated by the Retirement Committee and be currently eligible for
     post-retirement medical benefits under a plan maintained by the Company and
     hereinafter referred to as the "Medical Plan" or be an eligible dependent
     of such a Member. To the extent they are not otherwise reimbursed from
     Company assets, covered medical expenses incurred

                                                                       Article 4

<PAGE>

                                                                         Page 75

     during the applicable period shown below by such a Member or his or her
     eligible dependents shall be reimbursed hereunder.

(b)  The level of medical benefits covered under the provisions of this Section
     4.13 shall be the medical coverage in effect under the terms of the Medical
     Plan. Except as provided in Article 10, such medical coverage or benefit
     plan may be withdrawn or amended from time to time as the Company shall
     determine.

(c)  Except as provided in Section 4.13(e), all contributions made to the trust
     to provide medical benefits under this Section 4.13 shall be maintained in
     a separate account and such assets may not be used for or diverted to any
     purpose other than to provide said medical benefits; provided, however,
     none of the assets so set aside may be used to provide medical benefits for
     a Member, former Member or their dependents if the Member or former Member
     is a "key employee" as determined in accordance with the provisions of
     Section 416(i)(1) and (5) of the Internal Revenue Code. Similarly, none of
     the assets accumulated to provide the retirement allowances or vested
     benefits set forth in the foregoing provisions of this Article 4 may, prior
     to the termination of the Plan and satisfaction of all the liabilities for
     such retirement allowances or vested benefits, be used or diverted to
     provide medical benefits under this Section 4.13. The assets, if any,
     accumulated to provide medical benefits under this Section 4.13 may be
     invested pursuant to the provisions of Article 7.

(d)  It is the intention of the Company to continue providing medical benefits
     under this Section 4.13 and to make contributions to the Trustee to fund
     such medical benefits in such amounts as the Company shall deem necessary
     or appropriate. The aggregate contributions made to fund the

                                                                       Article 4

<PAGE>

                                                                         Page 76


     medical benefits provided under this Section, when added to the actual
     contributions for any life insurance protection provided under the Plan,
     shall not exceed 25 percent of the total actual contributions made to the
     Plan (other than contributions to fund past service credits) after the
     later of the adoption or effective date of this Section. Any forfeitures of
     a Member's interest in the medical benefit accounts as provided hereunder
     prior to any discontinuance of medical benefits by the Board of Directors
     shall be applied to reduce any subsequent Company contributions made
     pursuant to this Section 4.13.

(e)  Except as provided in Article 10, the Board of Directors may discontinue
     providing medical benefits under this Section 4.13 for any reason at any
     time, in which event the assets allocated to provide medical benefits
     hereunder, if any remain, shall, to the extent they are not otherwise
     reimbursed from Company assets, be used to continue medical benefits to
     Members who are eligible for them prior to the discontinuance date as long
     as any assets remain. However, if, after the satisfaction of all medical
     benefits provided hereunder, there remain any assets, the program shall be
     deemed to be terminated and such remainder shall be returned to the
     Company, in accordance with Section 401(h)(5) of the Code.

4.14 Transfers From Hourly Plans Maintained by the Company or an Associated
     ----------------------------------------------------------------------
     Company
     -------

     At the discretion and direction of the Retirement Committee, the Plan may
     accept from a hourly pension plan maintained by the Company or an
     Associated Company which is qualified under Section 401(a) of the Code a
     transfer of (i) liabilities with respect to the accrued benefit under such
     hourly plan of a Member who has employment with the Company rendered
     otherwise than as an Employee recognized as Benefit Service pursuant to the
     provisions of Section 2.02(c) of the Plan and (ii) with respect to such
     liabilities, any assets determined by the Company to be applicable.

                                                                       Article 4

<PAGE>

                                                                         Page 77

         All such transfers shall be made in accordance with the provisions of
         the Code and ERISA.

4.15     Direct Rollover of Certain Distributions
         ----------------------------------------

         Notwithstanding any other provision of this Plan, with respect to any
         distribution from this Plan which is (a) payable to a "distributee" and
         (b) determined by the Retirement Committee to be an "eligible rollover
         distribution," such distributee may elect, at the time and in the
         manner prescribed by the Retirement Committee, to have the Plan make a
         "direct rollover" of all or part of such distribution to an "eligible
         retirement plan" which accepts such rollover. The following definitions
         apply to the terms used in this Section:

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

         (b)   an "eligible rollover distribution" is any distribution of all or
               any portion of the retirement allowance or vested benefit owing
               to the credit of a distributee, except that the following
               distributions shall not be eligible rollover distributions: (i)
               any distribution that is one of a series of substantially equal
               periodic payments (not less frequently than annually) made for
               the life or life expectancy of the distributee or the joint lives
               or joint life expectancies of the distributee and the
               distributee's designated beneficiary, or for a specified period
               of ten years or more, (ii) any distribution to the extent such
               distribution is required under Section 401(a)(9) of the Code,
               (iii) the portion of a distribution not includible in gross
               income, and (iv) any distribution where all otherwise eligible
               distributions are expected to total less than $200;

                                                                       Article 4

<PAGE>

                                                                         Page 78

     (c)  an "eligible retirement plan" is an individual retirement account
          described in Section 408(a) of the Code, an individual retirement
          annuity described in Section 408(b) of the Code, an annuity plan
          described in Section 403(a) of the Code or a qualified trust described
          in Section 401(a) of the Code that accepts the eligible rollover
          distribution; however, in the case of an eligible rollover
          distribution to the Member's surviving spouse, an eligible retirement
          plan is an individual retirement account or individual retirement
          annuity only; and

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

     In the event that the provisions of this Section 4.15 or any part thereof
     cease to be required by law as a result of subsequent legislation or
     otherwise, this Section 4.15 or applicable part thereof shall be
     ineffective without necessity of further amendment of the Plan.

                                                                       Article 4

<PAGE>
                                                                         Page 79

                       ARTICLE 5 -- ADMINISTRATION OF PLAN
                       -----------------------------------

5.01     Appointment of Retirement Committee
         -----------------------------------

         The responsibility for carrying out all phases of the administration of
         the Plan except those phases connected with the management of assets,
         shall be placed in a Retirement Committee of not less than three
         persons appointed from time to time by the Board of Directors to serve
         at the pleasure of the Board of Directors. The Board of Directors may
         also designate alternate members to act in the absence of the regular
         members. The Board of Directors shall designate a Chairman of the
         Retirement Committee from among the regular members and a Secretary who
         may be, but need not be, one of its members. Any member of the
         Retirement Committee may resign by delivering his or her written
         resignation to the Board of Directors and the Secretary of the
         Retirement Committee.

5.02     Pension Trust Fund and Investment Committee
         -------------------------------------------

         The responsibility for the management of the assets of the Plan shall
         be placed in a Pension Fund Trust and Investment Committee of not less
         than three persons appointed from time to time by the Board of
         Directors to serve at the pleasure of the Board of Directors. The Board
         of Directors may also designate alternate members to act in the absence
         of the regular members. The Board of Directors shall designate a
         Chairman of the Pension Fund Trust and Investment Committee from among
         the regular members and a Secretary who may be, but need not be, one of
         the members of the Pension Fund Trust and Investment Committee. Any
         member of the Pension Fund Trust and Investment Committee may resign by
         delivering his or her written resignation to the Board of Directors and
         the Secretary of the Pension Fund Trust and Investment Committee.

                                                                       Article 5

<PAGE>

                                                                         Page 80

5.03     Named Fiduciaries
         -----------------

         The Retirement Committee and the Pension Fund Trust and Investment
         Committee (hereinafter collectively referred to as the ("Committees")
         are designated as named fiduciaries within the meaning of Section
         402(a) of ERISA. In addition, the Company and any officer of the
         Company appointed as a named fiduciary by the Retirement Committee
         shall also be "named fiduciaries" within the meaning of Section 402(a)
         of ERISA.

5.04     Meetings and Action of Majority
         -------------------------------

         The Committees shall hold meetings upon such notice, at such place or
         places, and at such time or times as each may respectively determine.
         The action of at least a majority of the members, or alternate members,
         of a Committee expressed from time to time by a vote at a meeting or in
         writing without a meeting shall constitute the action of that Committee
         and shall have the same effect for all purposes as if assented to by
         all members of such Committee at the time in office. No member of
         either Committee shall receive any compensation for his or her service
         as such.

5.05     Duties of Committees
         --------------------

         Each Committee may authorize one or more of its number or any agent to
         execute or deliver any instrument or make any payment on its behalf;
         may retain counsel, employ agents and such clerical, accounting and
         actuarial services as it may require in carrying out the provisions of
         the Plan for which it has responsibility; may allocate among its
         members or to other persons all or such portion of its duties hereunder
         as it, in its sole discretion, shall decide.

                                                                       Article 5

<PAGE>

                                                                         Page 81

5.06     Management of Plan Assets
         -------------------------

         The Pension Fund Trust and Investment Committee shall be responsible
         for managing the assets under the Plan. If it deems such action to be
         advisable, the Committee, subject to the provisions of the trust
         instrument(s) adopted for use in implementing the Plan pursuant to
         Section 7.01 hereof, may:

         (a)   provide direction to the trustee(s) thereunder, including, but
               not by way of limitation, the direction of investment of all or
               part of the Plan assets and the establishment of investment
               criteria, and

         (b)   appoint and provide for use of investment advisors and investment
               managers.

         In discharging its responsibility, the Committee shall evaluate and
         monitor the investment performance of the trustee(s) and investment
         manager, if any.

5.07     Establishment of Rules and Rights of Retirement Committee
         ---------------------------------------------------------

         Subject to the limitations of the Plan, the Retirement Committee from
         time to time shall establish rules or regulations for the
         administration of the Plan and the transaction of its business. The
         Retirement Committee shall have full discretionary authority, except as
         to matters which the Board of Directors from time to time may reserve
         to itself, to interpret the Plan and to make factual determinations
         regarding any and all matters arising hereunder, including but not
         limited to, the right to determine eligibility for benefits and to
         construe the terms of the Plan including the right to remedy possible
         ambiguities, inequities, inconsistencies or omissions. The Retirement
         Committee shall also have the right to exercise powers otherwise
         exercisable by the Board of Directors hereunder to the extent that the
         exercise of such powers does not involve the management of Plan assets.
         In addition, the Retirement Committee shall have the further right to
         exercise such powers

                                                                       Article 5

<PAGE>

                                                                         Page 82

     as may be delegated to the Retirement Committee by the Board of Directors.
     The Retirement Committee may delegate to any duly authorized officer, in
     writing, any or all of its authority and its right to exercise powers
     otherwise exercised or delegated by the Board of Directors.

     Subject to applicable Federal and State Law, all interpretations,
     determinations and decisions of a duly authorized officer, the Retirement
     Committee or the Board of Directors in respect of any matter hereunder
     shall be final, conclusive and binding on all parties affected thereby.

5.08 Prudent Conduct and Limitation of Liability
     -------------------------------------------

     The members of the Committees and any officer appointed pursuant to Section
     5.03 shall use that degree of care, skill, prudence and diligence in
     carrying out their duties that a prudent man, acting in a like capacity and
     familiar with such matters, would use in the conduct of an enterprise of a
     like character and with like aims. A member of either Committee and any
     officer appointed pursuant to Section 5.03 shall not be liable for the
     breach of fiduciary responsibility of another fiduciary unless:

     (a)  the person participates knowingly in, or knowingly undertakes to
          conceal, an act or omission of such other fiduciary, knowing such act
          or omission is a breach; or

     (b)  by the person's failure to discharge such person's duties solely in
          the interest of the Members and other persons entitled to benefits
          under the Plan, for the exclusive purpose of providing benefits and
          defraying reasonable expenses of administering the Plan not met by the
          Company, the person has enabled such other fiduciary to commit a
          breach; or

     (c)  the person has knowledge of a breach by such other fiduciary and does
          not make reasonable efforts to remedy the breach; or

                                                                       Article 5

<PAGE>

                                                                         Page 83

     (d)  in the case of a member of either Committee, if the Committee of which
          the person is a member improperly allocates responsibilities among its
          members or to others and the person fails to review prudently such
          allocation.

5.09 Claims and Review Procedure
     ---------------------------

(a)  Applications for benefits and inquiries concerning the Plan (or concerning
     present or future rights to benefits under the Plan) shall be submitted to
     the Company in writing. An application for benefits shall be submitted on
     the prescribed form and shall be signed by the Member, or in the case of a
     benefit payable after his death, by his Beneficiary.

(b)  In the event that an application for benefits is denied in whole or in
     part, the Company shall notify the applicant in writing of the denial and
     of the right to review of the denial. The written notice shall set forth,
     in a manner calculated to be understood by the applicant, specific reasons
     for the denial, specific references to the provisions of the Plan on which
     the denial is based, a description of any information or material necessary
     for the applicant to perfect the application, an explanation of why the
     material is necessary, and an explanation of the review procedure under the
     Plan.

     The written notice shall be given to the applicant within a reasonable
     period of time (not more than 90 days) after the Company received the
     application, unless special circumstances require further time for
     processing and the applicant is advised of the extension. In no event shall
     the notice be given more than 180 days after the Company received the
     application.

(c)  An applicant whose application for benefits was denied in whole or in part,
     or the applicant's duly authorized representative, may appeal the denial by
     submitting to the Retirement Committee a

                                                                       Article 5

<PAGE>

                                                                         Page 84

     request for a review of the application within 60 days after receiving
     written notice of the denial from the Company. The Company shall give the
     applicant or his representative an opportunity to review pertinent
     materials, other than legally privileged documents, in preparing the
     request for review. The request for a review shall be in writing and
     addressed to the Retirement Committee. The request for a review shall set
     forth all of the grounds on which it is based, all facts in support of the
     request and any other matters that the applicant deems pertinent. The
     Retirement Committee may require the applicant to submit such additional
     facts, documents, or other materials as it may deem necessary or
     appropriate in making its review.

(d)  The Retirement Committee shall act on each request for a review within 60
     days after receipt, unless special circumstances require further time for
     processing and the applicant is advised of the extension. In no event shall
     the decision on review be rendered more than 120 days after the Retirement
     Committee received the request for a review. The Retirement Committee shall
     give prompt written notice of its decision to the applicant and or the
     Company. In the event that the Retirement Committee confirms the denial of
     the application for benefits in whole or in part, the notice shall set
     forth, in a manner calculated to be understood by the applicant, the
     specific reasons for the decision and specific references to the provisions
     of the Plan on which the decision is based.

(e)  The Retirement Committee shall adopt such rules, procedures, and
     interpretations of the Plan as it deems necessary or appropriate in
     carrying out its responsibilities under this Section 5.09.

(f)  No legal action for benefits under the Plan shall be brought unless and
     until the claimant (i) has submitted a written application for benefits in
     accordance with paragraph (a), (ii) has been notified by the Company that
     the application is denied, (iii) has filed a written request for a review
     of the

                                                                       Article 5

<PAGE>

                                                                         Page 85

     application in accordance with paragraph (c), and (iv) has been notified in
     writing that the Retirement Committee has affirmed the denial of the
     application; provided, however, that legal action may be brought after the
     Company or the Retirement Committee has failed to take any action on the
     claim within the time by paragraphs (b) and (d) above.

                                                                       Article 5

<PAGE>
                                                                         Page 86

                           ARTICLE 6 -- CONTRIBUTIONS
                           --------------------------

6.01 Company Contributions
     ---------------------

     It is the intention of the Company to continue the Plan and make regular
     contributions to the Trustee each year in such amounts as are necessary to
     maintain the Plan on a sound actuarial basis and to meet minimum funding
     standards as prescribed by any applicable law. However, subject to the
     provisions of Article 8, the Company may reduce or suspend its
     contributions for any reason at any time. Any forfeitures shall be used to
     reduce the Company contributions otherwise payable, and will not be applied
     to increase the benefits any Member or other person would otherwise receive
     under the Plan.

6.02 Return of Contributions
     -----------------------

(a)  The Company's contributions to the Plan are conditioned upon their
     deductibility under Section 404 of the Code. In the event that all or part
     of the Company's deductions under Section 404 of the Code for contributions
     to the Plan are disallowed by the Internal Revenue Service, the portion of
     the contributions to which such disallowance applies shall be returned to
     the Company without interest, but reduced by any investment loss
     attributable to those contributions. Such return shall be made within one
     year after the disallowance of deduction.

(b)  The Company may recover without interest the amount of its contributions to
     the Plan made on account of a mistake in fact, reduced by any investment
     loss attributable to those contributions if recovery is made within one
     year after the date of those contributions.

                                                                       Article 5

<PAGE>

                                                                         Page 87

                        ARTICLE 7 -- MANAGEMENT OF FUNDS
                        --------------------------------

7.01  Trustee
      -------

      All the funds of the Plan shall be held by a Trustee or Trustees including
      any member(s) of the Rayonier Inc. Pension Fund Trust and Investment
      Committee, appointed from time to time by said Committee or Rayonier, in
      one or more trusts under a trust instrument or instruments approved or
      authorized by said Committee or Rayonier Inc. for use in providing the
      benefits of the Plan and paying any expenses of the Plan not paid directly
      by the Company; provided, however, that the Pension Fund Trust and
      Investment Committee may, in its discretion, also enter into any type of
      contract with any insurance company or companies selected by it for
      providing benefits under the Plan.

7.02  Exclusive Benefit Rule
      ----------------------

      Prior to the satisfaction of all liabilities with respect to persons
      entitled to benefits, except for the payment of expenses, no part of the
      corpus or income of the funds shall be used for, or diverted to, purposes
      other than for the exclusive benefit of Members and other persons who are
      or may become entitled to benefits hereunder, under the Prior Salaried
      Plan, or under any trust instrument or under any insurance contract made
      pursuant to this Plan. Subject to applicable Federal and State law, no
      person shall have any interest in or right to any part of the corpus or
      income of the funds, except as and to the extent expressly provided in the
      Plan and in any trust instrument or under any insurance contract made
      pursuant to this Plan. Subject to applicable Federal and State law, the
      Company shall have no liability for the payment of benefits under the Plan
      nor for the administration of the funds paid over to the Trustee(s) or
      insurer(s) except as expressly provided under this Plan.

                                                                       Article 7

<PAGE>

                                                                         Page 88

7.03  Investment in Company Securities or Real Property
      -------------------------------------------------

      Except as permitted by applicable Federal law, no part of the corpus or
      income of the trust shall be invested in securities of the Company or of
      any Associated Company or in real property and related personal property
      which is leased to the Company or any Associated Company or in the
      securities of the Trust or Trustees or their subsidiary companies, if any.

7.04  Appointment of Investment Managers
      ----------------------------------

      The Pension Fund Trust and Investment Committee may, in its discretion,
      appoint one or more investment managers (within the meaning of Section
      3(38) of ERISA) to manage (including the power to acquire and dispose of)
      all or part of the assets of the Plan, as the Investment Committee shall
      designate. In that event, authority over and responsibility for the
      management of the assets so designated shall be the sole responsibility of
      that investment manager.

                                                                    Article 7

<PAGE>
                                                                         Page 89

                   ARTICLE 8 -- CERTAIN RIGHTS AND LIMITATIONS
                   -------------------------------------------

The following provisions shall apply in all cases whenever a Member or any other
person is affected thereby.

8.01     Termination of the Plan
         -----------------------

(a)      The Board of Directors may terminate the Plan for any reason at any
         time. In case of termination of the Plan, the rights of Members to the
         benefits accrued under the Plan to the date of the termination, to the
         extent then funded or protected by law, if greater, shall be
         nonforfeitable. The funds of the Plan shall be used for the exclusive
         benefit of persons entitled to benefits under the Plan as of the date
         of termination, except as provided in Section 6.02. However, any funds
         not required to satisfy all liabilities of the Plan for benefits
         because of erroneous actuarial computation shall be returned to the
         Company except as otherwise provided in Section 8.06. The Retirement
         Committee shall determine on the basis of an actuarial valuation the
         share of the funds of the Plan allocable to each person entitled to
         benefits under the Plan in accordance with Section 4044 of ERISA or
         corresponding provision of any applicable law in effect at the time. In
         the event of a partial termination of the Plan, the provisions of this
         Section shall be applicable only to the Members affected by that
         partial termination.

(b)      Plan Merger or Consolidation. The Board of Directors may, in its sole
         ----------------------------
         discretion, merge this Plan with another qualified plan, subject to any
         applicable legal requirements. However, the Plan may not be merged or
         consolidated with, nor may its assets or liabilities be transferred to,
         any other plan unless each Member or other person entitled to a benefit
         under the Plan would, if the resulting plan were then terminated,
         receive a benefit immediately after the merger, consolidation, or
         transfer

                                                                       Article 8

<PAGE>

                                                                         Page 90

         which is equal to or greater than the benefit he or she would have been
         entitled to receive immediately before the merger, consolidation, or
         transfer, if the Plan had then terminated; provided that, subject to
         the provisions of Article 10 on or after the date of the first
         occurrence of a Change in Control (i) no transfer of assets or
         liabilities, except as specifically permitted under Section 8.01(a),
         between the Plan and any Employee Benefit Plan, as hereinafter
         defined, (ii) no spin-off of Plan assets or Plan liabilities to any
         Employee Benefit Plan, (iii) no withdrawal of Plan assets, in the event
         such withdrawal is permitted under applicable law or (iv) no merger or
         consolidation of the Plan with any Employee Benefit Plan shall be
         permitted.

         For purposes of this Section 8.01(b), Employee Benefit Plan has the
         same meaning as the term "employee benefit plan" has under Section 3(3)
         of ERISA.

8.02     Limitation Concerning Highly Compensated Employees or Highly
         ------------------------------------------------------------
         Compensated Former Employees
         ----------------------------

(a)      The provisions of this Section shall apply (i) in the event the Plan is
         terminated, to any Member who is a highly compensated employee or
         highly compensated former employee (as those terms are defined in
         Section 414(q) of the Code) of the Company or an Associated Company and
         (ii) in any other event, to any Member or former Member who is one of
         the 25 highly compensated employees or highly compensated former
         employees of the Company or Associated Company with the greatest
         compensation in any Plan Year. The amount of the annual payments to any
         one of the Members or former Member to whom this Section applies shall
         not be greater than an amount equal to the payments that would be made
         on behalf of the Member or former Member under a single life annuity
         that is of Equivalent Actuarial Value to the sum of the Member's or
         former Member's Accrued Benefit and any other benefits payable to the
         Member and former Member under the Plan.


                                                                       Article 8

<PAGE>

                                                                         Page 91

(b)      If, (i) after payment of an Accrued Benefit or other benefits to any
         one of the Members or to whom this Section applies, the value of Plan
         assets equals or exceeds 110 percent of the value of current
         liabilities (as that term is defined in Section 412(1)(7) of the Code)
         of the Plan, (ii) the value of the Accrued Benefit and other benefits
         of any one of the Members or former Members to whom this Section
         applies is less than 1 percent of the value of current liabilities of
         the Plan, or (iii) the value of the Accrued Benefit and other benefits
         of any one of the Members or former Members to whom this Section
         applies does not exceed $3,500 ($5,000 effective January 1, 1998), the
         provisions of paragraph (a) above will not be applicable to the payment
         of benefits to the Member or former Member.

(c)      Notwithstanding paragraph (a) of this Section, in the event the Plan is
         terminated, the restriction of this Section shall not be applicable if
         the benefits payable to any highly compensated employee and any highly
         compensated former employee is limited to a benefit that is
         nondiscriminatory under Section 401(a)(4) of the Code.

(d)      If it should subsequently be determined by statute, court decision
         acquiesced in by the Commissioner of Internal Revenue, or ruling by the
         Commissioner of Internal Revenue, that the provisions of this Section
         are no longer necessary to qualify the Plan under the Code, this
         Section shall be ineffective without the necessity of further amendment
         to the Plan.

8.03     Conditions of Employment Not Affected by Plan
         ---------------------------------------------

         The establishment of the Plan shall not be construed as conferring any
         legal rights upon any Employee or other person for a continuation of
         employment, nor shall it interfere with the rights of the Company to
         discharge any Employee or other person and to treat him or her without
         regard to the effect which such treatment might have upon him or her
         under the Plan.

                                                                       Article 8

<PAGE>

                                                                         Page 92

8.04     Offsets
         -------

         Unless the Board of Directors otherwise provides under written rules
         uniformly applicable to all Employees similarly situated, the
         Retirement Committee shall deduct from the amount of any retirement
         allowance or vested benefit under the Plan, any amount paid or payable
         to or on account of any Member under the provisions of any present or
         future law, pension or benefit scheme of any sovereign government, or
         any political subdivision thereof or any fund or organization or
         government agency or department on account of which contributions have
         been made or premiums or taxes paid by the Company, any Participating
         Unit, or any Associated Company with respect to any service which is
         Benefit Service for purposes of computation of benefits under the Plan;
         provided, however, that pensions payable for government service or
         benefits under Title II of the Social Security Act are not to be used
         to reduce the benefits otherwise provided under this Plan except as
         specifically provided herein.

8.05     Denial of Benefits
         ------------------

         The Retirement Committee may prescribe rules on a basis uniformly
         applicable to all Employees similarly situated under which an Employee
         whose employment is terminated because of dishonesty, conviction of a
         felony or other conduct prejudicial to the Company may be denied any
         benefit or benefits for which he or she would otherwise be eligible
         under the Plan, except his or her retirement allowance pursuant to
         Section 4.01 or his or her vested benefit pursuant to Section 4.05;
         provided, however, that such denial is not contrary to applicable law.

                                                                       Article 8

<PAGE>

                                                                         Page 93

8.06     Change in Control
         -----------------

         In the event of a Change in Control the following restrictions shall
         apply:

         (a)   Notwithstanding any other provision of the plan, in the event of
               a Change in Control, neither the Board of Directors, its
               designee, the Retirement Committee nor the Trustee may merge or
               consolidate the Plan with any other plan, transfer any Plan
               assets to any other retirement or welfare benefit plan, transfer
               any other welfare or retirement benefit plan's liabilities to the
               Plan, spin-off or split-off any part of the Plan or group of
               Members in the Plan, or reduce future Plan benefits, or cause or
               permit the Plan to acquire any security or real or personal
               property of the Company or any Associated Company, during the
               five-year period commencing on the date on which the Change in
               Control occurs.

         (b)   Notwithstanding any other provision of the Plan, in the event of
               a Change in Control, neither the Board of Directors nor its
               designee may, during the five-year period commencing on the date
               on which the Change in Control occurs, designate any new
               Participating Units or designate any new groups of Employees as
               eligible to participate in the Plan.

         (c)   Notwithstanding any other provision of the Plan, if at any time
               during the five-year period commencing on the date on which a
               Change in Control occurs, the Plan is terminated, any Member who
               was an Employee on the date of the Change in Control shall, if
               not previously vested, become fully vested in all Plan benefits.
               If the Plan has surplus assets, all of the surplus assets shall
               be allocated to Plan Members who were Members as of the date on
               which a Change in Control occurs (including Members who
               terminated employment with entitlement to a retirement allowance
               and Members who are, on the date on which a Change in Control
               occurs, receiving a retirement allowance) on pro rata basis, in
               relation to the benefits accrued prior to the date of Change in
               Control and none of this

                                                                       Article 8

<PAGE>

                                                                         Page 94

               surplus may be recovered by the Company, any successor or any
               Associated Company. For purposes of this Section 8.06(c) the
               amount of surplus assets will be determined as part of the
               process of purchasing non-participating group annuity contracts
               in connection with the termination of the Plan. In purchasing
               such annuities, the Plan shall seek competitive bids from at
               least three unrelated insurance companies. In no event shall the
               increase in the Retirement Allowance payable pursuant to this
               paragraph cause the retirement allowance to exceed the
               limitations in Section 4.08 of the Plan.

         (d)   Notwithstanding any other provision of the Plan, if at any time
               during the five-year period commencing on the date on which a
               Change in Control occurs (i) a Substantial Reduction in Force (as
               hereinafter defined) occurs or (ii) any action prohibited by
               paragraph (a) or (b) of this Section 8.06 is taken, then any
               Member who was an Employee on the date of the Change in Control
               shall, if not previously vested, become fully vested in all Plan
               benefits. Furthermore, if, as of the date either of the events
               described in (i) or (ii) above occurs, the fair market value of
               the Plan's assets exceeds the Plan's current liability pursuant
               to Section 412(l)(7) of the Code (based on the Plan's actuarial
               assumptions on the date the Change in Control occurs except that
               the interest rate shall be the maximum rate permitted under
               Section 412 of the Code) the amount of such excess assets shall
               be applied to increase, as described below, the Accrued Benefit
               of all Plan Members who were Members as of the date on which a
               Change in Control occurs. For purposes of determining the
               increase in Accrued Benefit under this Section 8.06(d), Plan
               Member includes both Members who are Employees as well as former
               Employees, or Beneficiaries of former Employees either entitled
               to future benefits or currently in receipt of Plan benefits. The
               Equivalent Actuarial Value of each Plan Member's Accrued Benefit
               shall be increased by the amount determined by multiplying (a)
               the Plan's excess assets as defined

                                                                       Article 8

<PAGE>

                                                                         Page 95

               in this Section 8.06(d) by (b) the ratio that the Current
               Liability of each Plan Member bears to the sum of the Current
               Liability of all Plan Members. Such increased present value will
               be converted into an enhanced Accrued Benefit for each Plan
               Member. In no event, however, shall such increase cause a Plan
               Member's Accrued Benefit to exceed the limitation of Section 4.08
               of the Plan.

               For purposes of this Section 8.06,

               (i)   a "Substantial Reduction in Force" shall mean the
                     Involuntary Separation from employment, following a Change
                     in Control, of the percentage of Members set forth below
                     who were Employees when the Change in Control occurred:

                     (1)  10 percent or more within any consecutive 12-month
                          period.

                     (2)  15 percent or more within any consecutive 24-month
                          period.

                     (3)  20 percent or more within any consecutive 36-month
                          period.

                     (4)  25 percent or more within any consecutive 48-month
                          period.

                     (5)  30 percent or more within a 60-month period; and

               (ii)  "Involuntary Separation" shall mean the termination of a
                     Member's employment with the Company as a result of Company
                     action such as a discharge, a resignation after a reduction
                     in pay, position or responsibilities, a retirement after
                     the Company has requested such Member to resign or retire,
                     a layoff, or any relocation of the work location of a
                     Member to a place more than 35 miles from such Member's
                     principal residence; provided, however, that an Involuntary
                     Separation shall not be deemed to have occurred if a Member
                     resigns or retires other than in response to a Company
                     request, or is terminated for serious misconduct in
                     connection with such Member's work.

                                                                       Article 8

<PAGE>

                                                                         Page 96

         (e)   In the event the Internal Revenue Service makes a final
               determination that the utilization of surplus assets of the Plan
               (or any portion thereof) in accordance with paragraph (c) or (d)
               of this Section 8.06 cannot be accomplished in any manner without
               disqualifying the Plan, the Company shall utilize such assets
               which cannot be so utilized to provide benefits to those Members
               who were Employees on the date of the Change in Control in any
               manner that the Company deems to be in the best interests of such
               Members and which would not disqualify the Plan. Such utilization
               may include the transfer of such assets to another employee
               benefit plan of the Company, including a voluntary employees'
               beneficiary association as described in Section 501(c)(9) of the
               Code; provided, however, that in no event shall any such assets
               be transferred to any entity other than a trust devoted
               exclusively to providing benefits to employees and retirees who
               were Plan Members as of the date of the Change in Control.

8.07     Prevention of Escheat
         ---------------------

         If the Retirement Committee cannot ascertain the whereabouts of any
         person to whom a payment is due under the Plan, the Retirement
         Committee may, no later than two years from the date such payment is
         due, mail a notice of such due and owing payment to the last known
         address of such person as shown on the records of the Retirement
         Committee or the Company. If such person has not made written claim
         therefor within three months of the date of the mailing, the Retirement
         Committee may, if it so elects and upon receiving advice from counsel
         to the Plan, direct that such payment and all remaining payments
         otherwise due such person be canceled on the records of the Plan and
         the amount thereof applied to reduce the contributions of the Company.
         Upon such cancellation, the Plan shall have no further liability
         therefor except that, in the event such person or his or her
         beneficiary later notifies the Retirement Committee of his or her
         whereabouts and

                                                                       Article 8

<PAGE>

                                                                         Page 97

         requests the payment or payments due to him or her under the Plan, the
         amount so applied shall be paid to him or her in accordance with the
         provisions of the Plan.

                                                                       Article 8

<PAGE>

                                                                         Page 98

                     ARTICLE 9 -- NONALIENATION OF BENEFITS
                     --------------------------------------

(a)   Except as required by any applicable law or by paragraph (e), no benefit
      under the Plan shall be subject in any manner to anticipation, alienation,
      sale, transfer, assignment, pledge, encumbrance or charge except any
      election to make a contribution necessary to provide post-retirement
      medical benefits under any Plan maintained by the Company, and any attempt
      so to do shall be void, except as specifically provided in the Plan, nor
      shall any such benefit be in any manner liable for or subject to
      garnishment, attachment, execution or levy or liable for or subject to the
      debts, contracts, liabilities, engagements or torts of the person entitled
      to such benefit.

(b)   Subject to applicable Federal and State law, in the event that the
      Retirement Committee shall find that any Member or other person who is or
      may become entitled to benefits hereunder has become bankrupt or that any
      attempt has been made to anticipate, alienate, sell, transfer, assign,
      pledge, encumber or charge any of his or her benefits under the Plan,
      except as specifically provided in the Plan, or if any garnishment,
      attachment, execution, levy or court order for payment of money has been
      issued against any of his or her benefits under the Plan, then such
      benefit shall cease and terminate. In such event the Retirement Committee
      shall hold or apply the payments to or for the benefit of such Member or
      other person who is or may become entitled to benefits hereunder, his or
      her spouse, children, parents or other blood relatives, or any of them.

(c)   Notwithstanding the foregoing provisions of the Plan, payment shall be
      made in accordance with the provisions of any judgment, decree, or
      domestic relations order which:

      (i)  creates for, or assigns to, a spouse, former spouse, child or other
           dependent of a Member the right to receive all or a portion of the
           Member's benefits under the Plan for the purpose

                                                                       Article 9

<PAGE>

                                                                         Page 99

            of providing child support, alimony payments or marital property
            rights to that spouse, child or dependent,

      (ii)  is made pursuant to the domestic relations law of any State (as such
            term is defined in Section 3(10) of ERISA,

      (iii) does not require the Plan to provide any type of benefit, or any
            option, not otherwise provided under the Plan, and

      (iv)  otherwise meets the requirements of Section 206(d) of ERISA to be a
            "qualified domestic relations order" as determined by the Retirement
            Committee.

      If the lump sum present value of any series of payments made under the
      criteria set forth in paragraphs (i) through (iv) above amounts to $3,500
      ($5,000 effective January 1, 1998) or less, then a lump sum payment of
      Equivalent Actuarial Value (determined in the manner described in Section
      4.10) shall be made in lieu of the series of payments.

(d)   The Retirement Committee shall resolve any questions arising under this
      Article 9 on a basis uniformly applicable to all persons similarly
      situated.

(e)   A Member's benefits under the Plan shall be offset by the amount the
      Member is required to pay to the Plan under the circumstances set forth in
      Section 401(a)(13) of the Code.

                                                                       Article 9

<PAGE>
                                                                        Page 100

                            ARTICLE 10 -- AMENDMENTS
                            ------------------------

10.01   Subject to Section 10.02, the Board of Directors or its delegate
        reserves the right at any time and from time to time, and retroactively
        if deemed necessary or appropriate to conform with governmental
        regulations or other policies, to modify or amend in whole or in part
        any or all of the provisions of the Plan; provided that no such
        modification or amendment shall make it possible for any part of the
        funds of the Plan to be used for, or diverted to, purposes other than
        for the exclusive benefit of Members, spouses, or contingent annuitants
        or other persons who are or may become entitled to benefits hereunder
        prior to the satisfaction of all liabilities with respect to them; and
        that no modification or amendment shall be made which has the effect of
        decreasing the Accrued Benefit of any Member or of reducing the
        nonforfeitable percentage of the Accrued Benefit of a Member
        attributable to Company contributions below that nonforfeitable
        percentage thereof computed under the Plan as in effect on the later of
        the date on which the amendment is adopted or becomes effective. Any
        action to amend the Plan by the Board of Directors shall be taken in
        such manner as may be permitted under the by-laws of the Company and any
        action to amend the Plan by a delegate of the Board of Director shall be
        in writing.

10.02   Notwithstanding the above, on or after the date a Change in Control
        first occurs, Section 8.01, Section 8.06 and this Article 10, as they
        pertain to events occurring on or after the date such Change in Control
        occurs, may not be further amended by the Board of Directors without
        written consent of not less than three-quarters of the Members and other
        persons then receiving benefits under the Plan.

                                                                      Article 10

</TEXT>
</DOCUMENT>
