EXHIBIT 4(b)
RETIREMENT SAVINGS AND
STOCK OWNERSHIP PLAN OF
ARMSTRONG WORLD INDUSTRIES, INC.
As Amended and Restated
Effective October 1, 1996
THIS WORKING COPY OF THE PLAN
INCORPORATES AMENDMENTS ADOPTED
THROUGH NOVEMBER 5, 1999
TABLE OF CONTENTS
PAGE
----
PREAMBLE..................................................................... 1
Article 1. Definitions...................................................... 4
1.01 Acquisition Loan...................................................... 4
1.02 Actual Deferral Percentage............................................ 4
1.03 Affiliated Company.................................................... 5
1.04 Beneficiary........................................................... 5
1.05 Board of Directors.................................................... 6
1.06 Break in Service...................................................... 6
1.07 Change in Control..................................................... 6
1.08 Code.................................................................. 6
1.09 Committee............................................................. 6
1.10 Company............................................................... 6
1.11 Company Stock......................................................... 6
1.12 Company Suspense Account.............................................. 7
1.13 Compensation.......................................................... 7
1.14 Contribution Percentage............................................... 8
1.15 Effective Date........................................................ 9
1.16 Eligible Employee..................................................... 9
1.17 Eligible Member....................................................... 9
1.18 Employee.............................................................. 9
1.19 Equity Account........................................................ 10
1.20 Equity Allocations.................................................... 10
1.21 ERISA................................................................. 10
1.22 Excess Exchange Contributions......................................... 10
1.23 Excess Matching Allocations........................................... 11
1.24 Excess Sheltered Contributions........................................ 12
1.25 Excess Standard Contributions......................................... 13
1.26 Exchange Contribution Account......................................... 14
1.27 Exchange Contributions................................................ 14
1.28 Full-Time Employee.................................................... 15
1.29 Highly Compensated Employee........................................... 15
1.30 Hour of Service....................................................... 18
1.31 Investment Fund....................................................... 18
1.32 Leveraged Shares...................................................... 18
1.33 Match Account......................................................... 19
1.34 Matching Allocations.................................................. 19
1.35 Member................................................................ 19
1.36 Member Account or Account............................................. 19
1.37 Parental Leave........................................................ 19
1.38 Participating Company................................................. 19
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1.39 Part-Time Employee.................................................... 19
1.40 Plan.................................................................. 20
1.41 Plan Fiduciary........................................................ 20
1.42 Plan Year............................................................. 20
1.43 Qualifying Year of Employment......................................... 20
1.44 Retirement............................................................ 20
1.45 Retirement Savings Account............................................ 20
1.46 Retirement Savings Matching Contributions............................. 21
1.47 Retirement Savings Trustee............................................ 21
1.48 Rollover Contributions................................................ 21
1.49 Service............................................................... 21
1.50 Sheltered Contributions............................................... 21
1.51 Standard Contributions................................................ 22
1.52 Standard Contributions Percentage..................................... 22
1.53 Stock Ownership Account............................................... 23
1.54 Stock Ownership Allocation Period..................................... 23
1.55 Stock Ownership Contributions......................................... 23
1.56 Stock Ownership Plan.................................................. 23
1.57 Stock Ownership Trustee............................................... 24
1.58 Tax Deductible Contributions.......................................... 24
1.59 Trust................................................................. 24
1.60 Trust Agreement....................................................... 24
1.61 Trust Fund............................................................ 24
1.62 Valuation Date........................................................ 24
1.63 Year of Service....................................................... 25
Article 2. Eligibility and Membership........................................ 26
2.01 Eligibility........................................................... 26
2.02 Excluded Employees.................................................... 26
2.03 Membership............................................................ 27
2.04 Events Affecting Membership........................................... 28
2.05 Membership Upon Reemployment.......................................... 29
Article 3. Service.......................................................... 31
3.01 Companies For Whom Credited........................................... 31
3.02 Hours of Service...................................................... 31
3.03 Additional Service Credit............................................. 35
Article 4. Contributions and Dividends...................................... 36
4.01 Member Pre-Tax Contributions.......................................... 36
4.02 Standard Contributions................................................ 38
4.03 Change or Suspension in Member Contributions.......................... 39
4.04 Stock Ownership Contributions......................................... 41
4.05 Manner of Contributions............................................... 43
4.06 Return of Contributions............................................... 43
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4.07 Dividends on Company Stock.......................................... 43
4.08 Correction of Errors in Contributions............................... 44
4.09 Rollover Contributions.............................................. 45
Article 5. Acquisition Loans.............................................. 47
5.01 Acquisition Loan.................................................... 47
5.02 Allocation of Leveraged Shares...................................... 48
Article 6. Allocations of and Limitations on Contributions................ 50
6.01 Members Eligible for Allocations.................................... 50
6.02 Method of Allocations............................................... 53
6.03 Limitation on Exchange Contributions Affecting Highly Compensated...
Employees...................................................... 57
6.04 Limitation on Sheltered Contributions Affecting Highly Compensated
Employees...................................................... 59
6.05 Maximum Exchange Contributions and Sheltered Contributions.......... 60
6.06 Limitation on Matching Allocations Affecting Highly Compensated
Employees...................................................... 62
6.07 Limitation on Standard Contributions Affecting Highly Compensated
Employees...................................................... 64
6.08 Limitations on Annual Additions..................................... 67
Article 7. Investment of Contributions.................................... 73
7.01 Investment Funds.................................................... 73
7.02 Investment of Contributions......................................... 75
7.03 Change of Election.................................................. 76
7.04 Transfers Among Funds............................................... 76
7.05 Investment Options.................................................. 79
7.06 Valuations.......................................................... 79
7.07 Annual Statements................................................... 80
7.08 Diversification of Stock Ownership Accounts......................... 80
Article 8. In-Service Withdrawals and Loans............................... 83
8.01 In-Service Withdrawals.............................................. 83
8.02 Determination of Financial Hardship................................. 84
8.03 Investment Fund to be Charged with Withdrawal....................... 87
8.04 Loans to Eligible Borrowers......................................... 87
Article 9. Vesting and Distributions...................................... 93
9.01 Vesting............................................................. 93
9.02 Distribution Upon Retirement or Other Termination of Employment..... 94
9.04 Latest Commencement of Payments..................................... 102
9.05 Forfeitures......................................................... 103
9.06 Direct Rollover Distributions....................................... 105
9.07 Inability to Locate Payee........................................... 107
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Article 10. Management of Funds............................................ 108
10.01 Trust Funds......................................................... 108
10.02 Investment of Stock Ownership Contributions......................... 109
10.03 Member Accounts..................................................... 109
10.04 Transfer of Trust Assets............................................ 111
10.05 Voting Rights for Company Stock..................................... 111
10.06 Tender Offer Rights with Respect to Company Stock................... 112
Article 11. Administration of Plan.......................................... 116
11.01 Appointment of Committee............................................ 116
11.02 Organization and Operation of the Committee......................... 116
11.03 Duties and Responsibilities of the Committee........................ 117
11.04 Required Information................................................ 118
11.05 Indemnification..................................................... 119
11.06 Claims and Appeal Procedure......................................... 119
11.07 Expenses of the Plan................................................ 121
Article 12. General Provisions.............................................. 122
12.01 Exclusiveness of Benefits........................................... 122
12.02 Limitation of Rights................................................ 122
12.03 Non-Assignability................................................... 122
12.04 Construction of Agreement........................................... 123
12.05 Severability........................................................ 123
12.06 Titles and Headings................................................. 124
12.07 Counterparts as Original............................................ 124
12.08 Construction........................................................ 124
12.09 Source of Benefits.................................................. 124
12.10 Top-Heavy Provisions................................................ 124
Article 13. Amendment, Merger And Termination.............................. 131
13.01 Amendment........................................................... 131
13.02 Termination, Sale of Assets or Sale of Subsidiary................... 131
13.03 Merger of Plans..................................................... 132
13.04 Additional Participating Companies, Locations, or Divisions......... 133
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RETIREMENT SAVINGS AND
STOCK OWNERSHIP PLAN OF
ARMSTRONG WORLD INDUSTRIES, INC.
PREAMBLE
The purpose of the Retirement Savings and Stock Ownership Plan of Armstrong
World Industries, Inc. (the "Plan"), formerly known as the "Retirement Savings
Plan for Salaried Employees of Armstrong World Industries, Inc.," is to build a
better and more prosperous Armstrong World Industries, Inc. (the "Company").
The Plan is designed to provide a means for long-term savings while providing
employees with additional incentive to give their best efforts to help the
Company prosper and grow, by permitting eligible employees to acquire a
proprietary interest in the Company and accumulate capital for their future
economic security. The Plan is designed to help provide additional benefits to
eligible employees at the time of retirement, disability or termination of
service, or for their beneficiaries in the event of their death.
The Plan consists of two portions. The first portion is a profit sharing
plan with a cash or deferred arrangement intended to qualify under Code Sections
401(a) and 401(k), under which contributions shall be made regardless of
Armstrong's profits. The second portion (the assets of which are invested in
the "Stock Ownership Fund") is both a stock bonus plan and an employee stock
ownership plan intended to qualify under Sections 401(a), 401(k) and 4975(e)(7)
of the Code, and as such is designed to invest primarily in common stock of
Armstrong. All Trust assets acquired under the Plan as a result of
contributions, income and other additions to the Plan shall be administered,
distributed, forfeited and otherwise governed by the provisions of the Plan.
1
The Plan was originally established effective August 1, 1983, and has been
amended from time to time since its adoption to comply with changes in the law
and certain design changes. The Plan was amended and restated in order to
comply with the Tax Reform Act of 1986 and other subsequent legislation and
official guidance.
Effective as of the close of business on September 30, 1996, the assets and
liabilities of the Armstrong World Industries, Inc. Employee Stock Ownership
Plan and the portion of the assets and liabilities of the Retirement Savings
Plan for Hourly-Paid Employees of Armstrong World Industries, Inc. attributable
to hourly employees employed at the Company's Mobile Plant and to all hourly
employees of the Affiliated Companies who are not members of a collective
bargaining unit were merged into the Plan. The Plan is hereby amended and
restated to change its name to the "Retirement Savings and Stock Ownership Plan
of Armstrong World Industries, Inc.," to reflect the merger of the Armstrong
World Industries, Inc. Employee Stock Ownership Plan and part of the Retirement
Savings Plan for Hourly-Paid Employees of Armstrong World Industries, Inc., and
to make certain changes in the design of the employee stock ownership portion of
the Plan.
The rights of any Member or former Member whose employment terminates prior
to the effective date of any amendment or restatement of the Plan, and the
rights of the Beneficiary of such Member or former Member, shall be governed by
the provisions of the Plan as in effect at the time of the Member's termination
of employment, except in the event such Member is rehired and except as
otherwise specifically provided herein or as required by law.
2
Unless a different date is specified for some purpose in the Plan, the
provisions of the Plan are generally effective as of October 1, 1996. However,
any Plan provision necessary to comply with the requirements of the Tax Reform
Act of 1986, other subsequent legislation, or official guidance, which
requirement has an earlier effective date, shall be effective retroactively to
the date required by the applicable law or guidance.
3
Article 1. Definitions
-----------
1.01 "Acquisition Loan" means a loan or other extension of credit
described in Section 4975(d)(3) of the Code which is used to finance or
refinance the purchase of Company Stock by the Trustee.
1.02 "Actual Deferral Percentage" means, with respect to a specified group
of Employees, any of whom is a Member or eligible to become a Member for a Plan
Year, the average of the ratios, calculated separately for each Employee in that
group, of (1) the amount of Exchange Contributions made on the Employee's behalf
pursuant to Section 4.01(a) for the Plan Year plus the amount of any qualified
nonelective contributions made on the Employee's behalf pursuant to Section
6.03(c) for the Plan Year, to (2) the Employee's Compensation for that Plan
Year. In the case of a Highly Compensated Employee who is subject to the family
aggregation requirements of Section 414(q)(6) of the Code, the combined Actual
Deferral Percentage for the family group (which is treated as one Highly
Compensated Employee) is determined by combining the Exchange Contributions,
Compensation, and amounts treated as Exchange Contributions that are paid to the
Trust Fund on behalf of all eligible family members for such Plan Year. In all
events, Actual Deferral Percentages will be determined in accordance with all of
the applicable requirements (including to the extent applicable, the plan
aggregation and disaggregation requirements) of Section 401(k) of the Code, and
the regulations issued thereunder. The percentage is determined by multiplying
the ratio calculated above by one hundred (100).
Notwithstanding the foregoing provisions, a separate Actual Deferral
Percentage with respect to Sheltered Contributions shall be determined in the
manner
4
indicated above, but with "Sheltered Contributions" replacing "Exchange
Contributions," "Section 4.01(b)" replacing "Section 4.01(a)," and "Section
6.04(c)" replacing "Section 6.03(c)."
1.03 "Affiliated Company" means any corporation which is a member with the
Company of a controlled group of corporations (determined under Section 1563(a)
of the Code without regard to Section 1563(a)(4) and (e)(3)(C)); any trade or
business (whether or not incorporated) which is under common control (as defined
in Section 414(c) of the Code) with the Company; a member of an affiliated
service group (as defined in Section 414(m) of the Code) which includes the
Company; and any other entity which is required to be aggregated with the
Company pursuant to regulations under Section 414(o) of the Code. Solely for
purposes of applying the Code Section 415 limitations under Section 6.08, when
determining whether an entity is an "Affiliated Company," "more than 50 percent"
shall be substituted for "at least 80 percent" where it appears in Section
1563(a)(1) of the Code.
1.04 "Beneficiary" means the person, persons or entity designated in writing
by a Member (on forms prescribed and filed with the Committee) to receive
benefits payable after the Member's death; provided, however, that the surviving
spouse of a Member who is married on the date of his death automatically shall
be the Beneficiary unless the spouse consents in writing to the Member's
designation of another Beneficiary. Any such consent shall be duly witnessed by
a Plan representative or notary public and shall acknowledge the effect to the
spouse of the Member's designation. If no person or entity is designated as
"Beneficiary" or if no designated person or entity survives the Member, the term
"Beneficiary" shall mean the Member's surviving spouse, or if none, the Member's
estate.
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1.05 "Board of Directors" means the Board of Directors of the Company.
1.06 "Break in Service" means a calendar year during which an Employee fails
to complete more than 500 Hours of Service.
1.07 "Change in Control" means the occurrence of any of the following events:
(1) any "person" becomes the "beneficial owner" of twenty-eight percent (28%) or
more of the then outstanding "voting stock" of the Company and within five years
thereafter, "disinterested directors" cease to constitute a majority of the
Company's entire Board of Directors; or (2) a "business combination" with an
"interested shareholder" that has not been approved by a majority of
disinterested directors occurs. The terms "person," "beneficial owner," "voting
stock," "disinterested directors," "business combination," and "interested
shareholder" shall have the meaning given to them in Article 7 of the Company's
Articles of Incorporation as in effect on May 1, 1985.
1.08 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
1.09 "Committee" means the entity appointed to administer and supervise the
Plan as provided in Article 11.
1.10 "Company" means Armstrong World Industries, Inc., a Pennsylvania
corporation, or any successor by merger, purchase, or otherwise with respect to
its employees.
1.11 "Company Stock" means the common stock of the Company which shall
constitute employer securities within the meaning of Section 409(l) of the Code.
Prior to August 1, 1996, Company Stock under the Stock Ownership Plan included
shares of
6
convertible preferred stock of the Company; on August 1, 1996, all such shares
under the Stock Ownership Plan were converted to shares of common stock of the
Company.
1.12 "Company Suspense Account" means the account under which Leveraged Shares
are held until released and allocated pursuant to Sections 5.02 and 6.02.
1.13 "Compensation" means the total earnings payable to an Employee while a
Member by a Participating Company during a Plan Year. Compensation shall be
determined prior to any elective deferrals made on behalf of the Member under
this Plan or under any other "qualified cash or deferred arrangement" (as
defined under Section 401(k) of the Code and applicable regulations), or under a
cafeteria plan (as defined under Section 125 of the Code and applicable
regulations) maintained by the Company or an Affiliated Company, and shall not
include reimbursements for expenses or any payments made following termination
of employment and resulting from such termination, nor shall it include any
awards, allowances, cost of living payments, payments on account of long-term
disability, payments made in lieu of vacation time, or payments following
layoff. Notwithstanding the foregoing, for purposes of Section 6.08,
Compensation means an Employee's wages as defined in Section 3401(a) of the Code
(without regard to any rules under Section 3401(a) that limit the remuneration
included in wages based on the nature or location of the employment or the
services performed (such as the exception for agricultural labor in Section
3401(a)(2))) and all other payments of compensation to the Employee by his
Participating Company (in the course of the Participating Company's trade or
business) for which the Participating Company is required to furnish the
Employee a written statement under Sections 6041(d), 6051(a)(3) and 6052 of the
Code (a Form W-2), and for purposes of Sections 1.02, 1.14 and 1.52,
Compensation shall be as
7
defined above for purposes of Section 6.08, plus any elective deferrals made on
behalf of the Member under this Plan or under any other "qualified cash or
deferred arrangement" (as defined under Section 401(k) of the Code and
applicable regulations), or under a cafeteria plan (as defined under Section 125
of the Code and applicable regulations) maintained by the Company or an
Affiliated Company. In the case of a Member who begins, resumes, or ceases to be
eligible to make contributions during a Plan Year, the amount of Compensation
taken into account in determining the Actual Deferral Percentage, Contribution
Percentage, and the Standard Contributions Percentage is the amount of
Compensation received by the Member during the entire Plan Year. Further, for
purposes of Sections 1.02, 1.14 and 1.52, and for purposes of any Equity
Allocations, the amount of Compensation taken into account during any Plan Year
shall not exceed $150,000 (adjusted in accordance with Section 401(a)(17) of the
Code and the regulations and other guidance issued thereunder). In determining a
Member's Compensation for this purpose, the family aggregation rules of Section
414(q)(6) of the Code shall apply, except that in applying such rules, the term
"family" shall include only the Member's spouse and any lineal descendants of
the Member who have not attained age nineteen (19) before the close of the Plan
Year. If any Plan Year consists of fewer than twelve (12) months, the foregoing
annual Compensation limit will be multiplied by a fraction, the numerator of
which is the number of months in the Plan Year, and the denominator of which is
twelve (12). The annual Compensation limit that is in effect for a calendar year
shall apply to any Plan Year that begins in such calendar year.
1.14 "Contribution Percentage" means, with respect to a specified group of
Employees, any of whom is a Member or eligible to become a Member, the average
of the
8
ratios, calculated separately for each Employee in that group, of (1) the value
of Company Stock at the time allocated on behalf of the Employee to his Match
Account for a Plan Year plus the amount of any qualified nonelective
contributions made on the Employee's behalf pursuant to Section 6.06(c) for the
Plan Year, to (2) the Employee's Compensation for that Plan Year. In the case of
a Highly Compensated Employee who is subject to the family aggregation
requirements of Section 414(q)(6) of the Code, the combined Contribution
Percentage for the family group (which is treated as one Highly Compensated
Employee) is determined by combining the Match Allocations, Compensation, and
amounts treated as Match Allocations that are paid to the Stock Ownership Trust
Fund on behalf of all eligible family members for such Plan Year. In all events,
Contribution Percentages will be determined in accordance with all of the
applicable requirements (including to the extent applicable, the plan
aggregation requirements) of Section 401(m) of the Code, and the regulations
issued thereunder. The percentage is determined by multiplying the ratio
calculated above by one hundred (100).
1.15 "Effective Date" means August 1, 1983.
1.16 "Eligible Employee" means an Employee who has satisfied the applicable
eligibility requirements of Section 2.01.
1.17 "Eligible Member" means a Member who is eligible for an allocation to his
Equity Account and/or his Match Account during the Stock Ownership Allocation
Period in accordance with Section 6.01.
1.18 "Employee" means any person (including leased employees within the
meaning of Section 414(n)(2) of the Code) employed by the Company or an
Affiliated Company and paid on an hourly or a salaried basis. Notwithstanding
the foregoing, the term
9
"Employee" shall not include leased employees covered by a plan described in
Section 414(n)(5)(B) of the Code if leased employees constitute less than twenty
percent (20%) of the Company's nonhighly compensated workforce within the
meaning of Section 414(n)(5)(C)(ii) of the Code.
1.19 "Equity Account" means the account established for each Eligible Member
under Section 6.01(b) to receive and hold Equity Allocations.
1.20 "Equity Allocations" means Company Stock allocated on behalf of an
Eligible Member pursuant to Section 6.02(c).
1.21 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.22 "Excess Exchange Contributions" means, with respect to each Highly
Compensated Employee, the amount of Exchange Contributions made to the Plan on
his behalf during the Plan Year, determined after application of Section 6.03(b)
and prior to application of the leveling procedure described below, minus the
product of the Member's Actual Deferral Percentage, determined after application
of Section 6.03(b) and the leveling procedure described below, multiplied by the
Member's Compensation, as determined for purposes of Section 1.02. In
accordance with the regulations issued under Section 401(k) of the Code, Excess
Exchange Contributions shall be determined by a leveling procedure under which
the Actual Deferral Percentage of the Highly Compensated Employee with the
highest such percentage shall be reduced to the extent required to enable the
limitation of Section 6.03(a) to be satisfied, or, if it results in a lower
reduction, to the extent required to cause such Member's Actual Deferral
Percentage to equal the Actual Deferral Percentage of the Highly Compensated
Employee
10
with the next highest Actual Deferral Percentage. This leveling procedure shall
be repeated until the limitation of Section 6.03(a) is first satisfied. In no
case shall the amount of Excess Exchange Contributions with respect to any
Highly Compensated Employee exceed the amount of Exchange Contributions made on
behalf of such Member in any Plan Year. The determination and correction of
Excess Exchange Contributions of a Highly Compensated Employee whose Actual
Deferral Percentage is determined under the family aggregation requirements of
Code Sections 401(k) and 414(q)(6) shall be accomplished by reducing the family
unit's Actual Deferral Percentage under the leveling procedure described in this
Section 1.22 and allocating the Exchange Contributions among the family group in
proportion to the Exchange Contributions made on behalf of each family member
that are combined to determine the family unit's Actual Deferral Percentage.
1.23 "Excess Matching Allocations" means, with respect to each Highly
Compensated Employee, the value of Company Stock allocated to his Match Account
during the Plan Year, determined prior to application of the leveling procedure
described below, minus the product of the Member's Contribution Percentage,
determined after application of the leveling procedure described below,
multiplied by the Member's Compensation, as determined for purposes of Section
1.14. In accordance with the regulations issued under Section 401(m) of the
Code, Excess Matching Allocations shall be determined by a leveling procedure
under which the Contribution Percentage of the Highly Compensated Employee with
the highest such percentage shall be reduced to the extent required to enable
the limitation of Section 6.06(a) to be satisfied, or, if it results in a lower
reduction, to the extent required to cause such Highly Compensated Employee's
11
Contribution Percentage to equal that of the Highly Compensated Employee with
the next highest Contribution Percentage. This leveling procedure shall be
repeated until the limitation of Section 6.06(a) is first satisfied. In no case
shall the amount of Excess Matching Allocations with respect to any Highly
Compensated Employee exceed the amount of Matching Allocations made on behalf of
such Member in such Plan Year. The determination and correction of Excess
Matching Allocations of a Highly Compensated Employee whose Contribution
Percentage is determined under the family aggregation requirements of Code
Sections 401(m) and 414(q)(6) shall be accomplished by reducing the family
unit's Contribution Percentage under the leveling procedure described in this
Section 1.23 and allocating the Excess Matching Allocations among the family
group in proportion to the Matching Allocations made on behalf of each family
member that are combined to determine the family unit's Contribution Percentage.
1.24 "Excess Sheltered Contributions" means, with respect to each Highly
Compensated Employee, the amount of Sheltered Contributions made to the Plan on
his behalf during the Plan Year, determined after application of Section 6.04(b)
and prior to application of the leveling procedure described below, minus the
product of the Member's Actual Deferral Percentage, determined after application
of Section 6.04(b) and the leveling procedure described below, multiplied by the
Member's Compensation, as determined for purposes of Section 1.02. In
accordance with the regulations issued under Section 401(k) of the Code, Excess
Sheltered Contributions shall be determined by a leveling procedure under which
the Actual Deferral Percentage of the Highly Compensated Employee with the
highest such percentage shall be reduced to the extent required to enable the
limitation of Section 6.04(a) to be satisfied, or, if it results in a
12
lower reduction, to the extent required to cause such Member's Actual Deferral
Percentage to equal the Actual Deferral Percentage of the Highly Compensated
Employee with the next highest Actual Deferral Percentage. This leveling
procedure shall be repeated until the limitation of Section 6.04(a) is first
satisfied. In no case shall the amount of Excess Sheltered Contributions with
respect to any Highly Compensated Employee exceed the amount of Sheltered
Contributions made on behalf of such Member in any Plan Year. The determination
and correction of Excess Sheltered Contributions of a Highly Compensated
Employee whose Actual Deferral Percentage is determined under the family
aggregation requirements of Code Sections 401(k) and 414(q)(6) shall be
accomplished by reducing the family unit's Actual Deferral Percentage under the
leveling procedure described in this Section 1.24 and allocating the Sheltered
Contributions among the family group in proportion to the Sheltered
Contributions made on behalf of each family member that are combined to
determine the family unit's Actual Deferral Percentage.
1.25 "Excess Standard Contributions" means, with respect to each Highly
Compensated Employee, the amount equal to his Standard Contributions (including
the amount of any Sheltered Contributions recharacterized pursuant to Section
6.07(c)) during the Plan Year, determined prior to application of the leveling
procedure described below, minus the product of the Member's Standard
Contribution Percentage, determined after the application of the leveling
procedure described below, multiplied by the Member's Compensation, as
determined for purposes of Section 1.52. In accordance with the regulations
issued under Section 401(m) of the Code, Excess Standard Contributions shall be
determined by a leveling procedure under which the Standard Contribution
Percentage
13
of the Highly Compensated Employee with the highest such percentage shall be
reduced to the extent required to enable the limitation of Section 6.07(a) to be
satisfied, or, if it results in a lower reduction, to the extent required to
cause such Member's Standard Contribution Percentage to equal that of the Highly
Compensated Employee with the next highest Standard Contribution Percentage.
This leveling procedure shall be repeated until the limitation of Section
6.07(a) is first satisfied. In no case shall the amount of Excess Standard
Contributions with respect to any Highly Compensated Employee exceed his
Standard Contributions in any Plan Year. The determination and correction of
Excess Standard Contributions of a Highly Compensated Employee whose Standard
Contribution Percentage is determined under the family aggregation requirements
of Code Sections 401(m) and 414(q)(6) is accomplished by reducing the family
unit's Standard Contribution Percentage under the leveling procedure described
in this Section 1.25 and allocating the Excess Standard Contributions among the
family group in proportion to the Standard Contributions made on behalf of each
family member that are combined to determine the family unit's Standard
Contribution Percentage.
1.26 "Exchange Contribution Account" means the subaccount established for each
Member under his Stock Ownership Account to receive and hold Exchange
Contributions and Stock Ownership Contributions made pursuant to Section
4.04(b)(i).
1.27 "Exchange Contributions" means that portion of a Member's Compensation
which is deferred and contributed to his Stock Ownership Account, in accordance
with Section 401(k) of the Code and as described in Section 4.01(a).
14
1.28 "Full-Time Employee" means any Employee who is employed on a continuing
basis and is expected to work the normal number of work hours for the location
as determined by the Participating Company.
1.29 "Highly Compensated Employee" means any Employee who meets the definition
of "Highly Compensated Employee" as determined under Section 414(q) of the Code
and regulations issued thereunder, as set forth herein. The term "Highly
Compensated Employee" includes "Highly Compensated Active Employees" and "Highly
Compensated Former Employees" and shall be determined as follows:
(a) A "Highly Compensated Active Employee" means an Employee who
performs services for the Company or an Affiliated Company during the current
Plan Year (the "determination year") and who, during the preceding Plan Year
(the "look-back year"), was an Employee who:
(i) received Compensation in excess of $75,000 (adjusted at the
same time and in the same manner as under Section 415(d) of the Code),
(ii) received Compensation in excess of $50,000 (adjusted at the
same time and in the same manner as under Section 415(d) of the Code) and was a
member of the "top-paid group", or
(iii) was an officer earning more than fifty percent (50%) of the
dollar limitation under Section 415(b)(1)(A) of the Code.
(b) A "Highly Compensated Active Employee" also includes an Employee
described in the preceding sentence if:
15
(i) the term "determination year" is substituted for the term
"look-back year" and the Employee was one of the one hundred (100) Employees who
earned the most Compensation during the determination year, or
(ii) the Employee was at any time during the determination year
or the look-back year a five percent (5%) owner of the Company or an Affiliated
Company as defined in Section 416(i)(1) of the Code.
(c) The "top-paid group" for any determination year or look-back year
shall include all Employees who are in the top twenty percent (20%) of all
Employees on the basis of Compensation. For purposes of determining the number
of Employees in the top-paid group, the following Employees shall be excluded:
(i) Employees who have not completed six (6) months of service
by the end of the year;
(ii) Employees who normally work less than seventeen and one-
half (17 1/2) hours per week for the year;
(iii) Employees who normally work during not more than six (6)
months during any year; and
(iv) Employees who have not attained age twenty-one (21) by the
end of such year.
(d) For purposes of determining the number of Employees who will be
considered "officers," no more than fifty (50) Employees (or, if less, the
greater of three Employees or ten percent (10%) of the Employees), excluding
those Employees who are excluded for purposes of determining the top-paid group
under the preceding Subsection, shall be treated as officers. If for any year
no officer has earned more than fifty percent
16
(50%) of the dollar limitation under Section 415(b)(1)(A) of the Code, the
highest paid officer of the Company or an Affiliated Company shall be treated as
having earned such amount.
(e) A "Highly Compensated Former Employee" means an Employee who
separated from service prior to the determination year, who performed no
services for the Company or an Affiliated Company during the determination year,
and who was a Highly Compensated Active Employee for either such Employee's
separation year or any determination year ending on or after the Employee's 55th
birthday.
(f) If during a determination year a Highly Compensated Employee is a
five percent (5%) owner or one of the ten (10) most Highly Compensated Employees
on the basis of Compensation paid during such determination year, then such
Employee shall be subject to the family aggregation requirements of Section
414(q)(6) of the Code, and the Compensation and contributions paid to or on
behalf of all family members who are Employees shall be aggregated with and
attributable to the Highly Compensated Employee. For this purpose, family
members shall include the Highly Compensated Employee's spouse and lineal
ascendants or descendants and the spouse of such lineal ascendants or
descendants.
(g) For purposes of determining Highly Compensated Employees,
Employees who are nonresident aliens receiving no United States source income
within the meaning of Sections 861(a)(3) and 911(d)(2) of the Code shall be
disregarded.
(h) For purposes of determining Highly Compensated Employees,
"Compensation" for a determination year or a look-back year shall be determined
in the same manner as "Compensation" for purposes of Section 6.08, increased by
pre-tax
17
amounts described in Sections 125 and 402(e)(3) of the Code under plans
maintained by the Company or an Affiliated Company.
(i) Notwithstanding the foregoing, the determination of Highly
Compensated Employees may be made under the calendar year calculation election
under the regulations issued pursuant to Code Section 414(q). In accordance
with such election, if it is made by the Committee or its designee, each look-
back year calculation shall be based on the calendar year ending within the
applicable determination year. Such election shall apply to all other plans
maintained by an Affiliated Company. The Committee or its designee may elect to
apply the calendar year election for any Plan Year. Further, the Committee or
its designee may elect to apply such other rules for determining Highly
Compensated Employees, including substantiation guidelines, as issued pursuant
to Code Section 414(q).
1.30 "Hour of Service" means each hour credited under Section 3.02.
1.31 "Investment Fund" means any of the separate funds in which contributions
to the Plan are invested in accordance with Article 7.
1.32 "Leveraged Shares" means shares of Company Stock acquired by the Trustee
with the proceeds of an Acquisition Loan pursuant to Section 5.01. Except as
required by Section 409(h) of the Code and by Treasury Regulation Sections
54.4975-7(b)(9) and (10), or as otherwise required by applicable law, no
Leveraged Shares may be subject to a put, call or other option, or buy-sell or
similar arrangement while held by, or when distributed from, the Plan, whether
or not the Plan is an employee stock ownership plan, within the meaning of Code
Section 4975(e)(7), at that time.
18
1.33 "Match Account" means the subaccount established for each Eligible Member
under his Stock Ownership Account pursuant to Section 6.01(c) to receive and
hold Matching Allocations and to hold bonus allocations made under the Stock
Ownership Plan prior to October 1, 1996.
1.34 "Matching Allocations" means Company Stock allocated on behalf of an
Eligible Member pursuant to Section 6.02(d).
1.35 "Member" means any Eligible Employee included in the membership of the
Plan, as provided in Article 2.
1.36 "Member Account" or "Account" means, as of any Valuation Date, the total
value of each Member's Retirement Savings Account and Stock Ownership Account.
1.37 "Parental Leave" means a period in which the Employee is absent from work
immediately following his active employment because of the Employee's pregnancy,
the birth of the Employee's child or the placement of a child with the Employee
in connection with the adoption of that child by the Employee, or for purposes
of caring for that child for a period beginning immediately following that birth
or placement. Parental leave shall include such periods of leave described in
the Family and Medical Leave Act of 1993 solely to the extent required
thereunder.
1.38 "Participating Company" means the Company and any other Affiliated
Company which adopts the Plan as provided in Section 13.04.
1.39 "Part-Time Employee" means any Employee who is employed on a continuing
basis and is expected to work less than the normal number of work hours for the
location as determined by the Participating Company, or any Employee who is not
employed on a continuing basis as determined by the Participating Company.
19
1.40 "Plan" means the Retirement Savings and Stock Ownership Plan of Armstrong
World Industries, Inc. (formerly named the Retirement Savings Plan for Salaried
Employees of Armstrong World Industries, Inc.), as set forth in this document or
as amended from time to time.
1.41 "Plan Fiduciary" means the boards of directors of the Participating
Companies, the Committee, the Trustees, and all other persons who exercise
discretionary authority or have responsibility of a fiduciary nature as
described in Title I of ERISA.
1.42 "Plan Year" means a period of twelve consecutive months commencing on
each October 1 and ending on September 30.
1.43 "Qualifying Year of Employment" means the twelve consecutive month period
beginning on a Part-Time Employee's first date of employment (or date of re-
employment, if applicable) or any calendar year commencing after such date,
during which the Part-Time Employee completes at least 1,000 Hours of Service.
1.44 "Retirement" means early, disability, normal or deferred retirement under
the Retirement Income Plan for Employees of Armstrong World Industries, Inc. or
any other retirement plan maintained by an Affiliated Company provided such
retirement results in the Member's separation from the employment of the Company
or Affiliated Company with no continuing employment immediately thereafter with
any Affiliated Company. "Retirement" for Members not covered by any such
retirement plan shall mean separation from Service on or after attaining age 65.
1.45 "Retirement Savings Account" means the portion of a Member's Account that
is attributable to Sheltered Contributions, Standard Contributions, Rollover
20
Contributions, Tax Deductible Contributions, and Retirement Savings Matching
Contributions, determined as of any Valuation Date.
1.46 "Retirement Savings Matching Contributions" means those contributions to
the Plan that were made as of no later than December 31, 1989 by Participating
Companies to match Tax Deferred Contributions to the Plan.
1.47 "Retirement Savings Trustee" means the party or parties, individual or
corporate, named in a Trust Agreement who holds the assets of the Plan
determined as of September 30, 1996; amounts attributable to Sheltered
Contributions, Standard Contributions, and Rollover Contributions made
subsequent to September 30, 1996; amounts attributable to Exchange Contributions
invested in a Money Market Fund until the allocation of Leveraged Shares for the
Stock Ownership Allocation Period in which such Exchange Contributions are made;
and amounts attributable to the shares of Company Stock that are diversified in
accordance with Section 7.08, as provided in Article 10.
1.48 "Rollover Contributions" means contributions made by an Eligible Employee
who is eligible to make Sheltered Contributions and Standard Contributions, in
accordance with Section 4.09.
1.49 "Service" means service credited pursuant to Article 3 of the Plan.
1.50 "Sheltered Contributions" means that portion of a Member's Compensation
which is deferred and contributed to the profit sharing portion of the Plan, in
accordance with Section 401(k) of the Code and as described in Section 4.01(b)
and which were referred to as "Tax Deferred Contributions" prior to October 1,
1996.
21
1.51 "Standard Contributions" means contributions made by a Member to the
profit sharing portion of the Plan, in accordance with Section 4.02 and which
were, prior to October 1, 1996, referred to as "Additional (After Tax)
Contributions" and included "Catch-Up Contributions," if any, that were made
under the Plan prior to January 1, 1990.
1.52 "Standard Contributions Percentage" means, with respect to a specified
group of Employees, any of whom is a Member or eligible to become a Member, the
average of the ratios, calculated separately for each Employee in that group, of
(1) the sum of (a) Standard Contributions made pursuant to Section 4.02 for such
Plan Year; (b) any Sheltered Contributions that are recharacterized as Standard
Contributions pursuant to Section 6.07(c) for such Plan Year; (c) any Sheltered
Contributions that are utilized in satisfying the requirements of Section
6.07(a) for such Plan Year; and (d) any qualified nonelective contributions made
on the Employee's behalf pursuant to Section 6.07(d) for the Plan Year, to (2)
the Employee's Compensation for that Plan Year. In the case of a Highly
Compensated Employee who is subject to the family aggregation requirements of
Section 414(q)(6) of the Code, the combined Standard Contributions Percentage
for the family group (which is treated as one Highly Compensated Employee) is
determined by combining the Standard Contributions, the recharacterized
Sheltered Contributions, the Sheltered Contributions that are utilized in
satisfying the requirements of Section 6.07(a), qualified nonelective
contributions, and Compensation, on behalf of all eligible family members for
such Plan Year. In all events, Standard Contributions Percentages will be
determined in accordance with all of the applicable requirements (including to
the extent applicable, the plan aggregation requirements) of Section 401(m) of
the Code, and the
22
regulations issued thereunder. The percentage is determined by multiplying the
ratio calculated above by one hundred (100).
1.53 "Stock Ownership Account" means all Leveraged Shares and other assets
held by the Stock Ownership Trustee under the Plan and allocated for the benefit
of a Member attributable to Exchange Contributions, Matching Allocations and
Equity Allocations, and all amounts attributable to Exchange Contributions
invested in a Money Market Fund until the allocation of Leveraged Shares for the
Stock Ownership Allocation Period in which such Exchange Contributions are made
and all amounts attributable to the shares of Company Stock that are diversified
in accordance with Section 7.08 held by the Retirement Savings Trustee,
determined as of any Valuation Date.
1.54 "Stock Ownership Allocation Period" means the period for which an
allocation of Leveraged Shares released from the Company Suspense Account under
Section 6.02 is made to Members' Stock Ownership Accounts; the Stock Ownership
Allocation Period initially shall be the period beginning July 1, 1996 and
ending December 12, 1996, and thereafter, shall be the approximate six-month
period ending on the second prior day on which the New York Stock Exchange is
open for trading that immediately precedes the scheduled repayment of principal
and interest on the Acquisition Loan.
1.55 "Stock Ownership Contributions" means contributions by a Participating
Company under Section 4.04.
1.56 "Stock Ownership Plan" means the Armstrong World Industries, Inc.
Employee Stock Ownership Plan, which was merged into this Plan on September 30,
1996.
23
1.57 "Stock Ownership Trustee" means the party or parties, individual or
corporate, named in a Trust Agreement by whom the funds of the employee stock
ownership portion of the Plan (other than amounts attributable to Exchange
Contributions made in a Stock Ownership Allocation Period invested in a Money
Market Fund until the allocation of Leveraged Shares for such Stock Ownership
Allocation Period and amounts attributable to the shares of Company Stock that
are diversified in accordance with Section 7.08) are held, as provided in
Article 10.
1.58 "Tax Deductible Contributions" means a Member's contributions to the Plan
made prior to January 1, 1987, that were tax deductible, in accordance with
Section 219 of the Code and as described in Section 3.06 of the Plan in effect
immediately preceding the effective date of this amendment and restatement.
1.59 "Trust" means the legal entity resulting from the Trust Agreements
between the Company and the Stock Ownership and Retirement Savings Trustees.
1.60 "Trust Agreement" means the individual agreements entered into between
the Company or the Committee and the Stock Ownership Trustee and the Company or
the Committee and the Retirement Savings Trustee, which fix the rights and
liabilities of each such party with respect to holding and administering the
applicable Trust Fund for the purposes of the Plan.
1.61 "Trust Fund" means, depending on the context in which used, the portion
of the Trust consisting of all Members' Retirement Savings Accounts and/or the
portion of the Trust consisting of all Members' Stock Ownership Accounts.
1.62 "Valuation Date" means each day that the New York Stock Exchange is open
for trading.
24
1.63 "Year of Service" means any calendar year in which the Employee has
completed 1,000 or more Hours of Service. For purposes of determining a
Member's vested interest in his Equity Account and Match Account under Section
9.01(b), any calendar year in which the Member was employed by Worthington
Armstrong Venture ("WAVE") shall be recognized, provided the Member commences
employment with the Company or an Affiliated Company directly following his
termination of employment with WAVE.
25
Article 2. Eligibility and Membership
--------------------------
2.01 Eligibility
-----------
On or after October 1, 1996 and prior to January 1, 1999, each Full-
Time Employee (other than a Full-Time Employee excluded under Section 2.02)
shall become an Eligible Employee on the first date on which he is credited with
an Hour of Service, and each Part-Time Employee (other than a Part-Time Employee
excluded under Section 2.02) shall become an Eligible Employee on the first day
of the month next following the date upon which he completes a Qualifying Year
of Employment. Effective January 1, 1999, any Employee (other than an Employee
excluded under Section 2.02) shall become an Eligible Employee as of the earlier
of January 1, 1999 or the date on which the Employee is first credited with an
Hour of Service. Notwithstanding Section 2.02(a), each hourly Employee employed
at the Company's Mobile Plant also shall be eligible to become a Member in the
manner indicated in the preceding two sentences.
2.02 Excluded Employees
------------------
The following Employees shall be excluded from becoming Eligible
Employees under the Plan:
(a) Any Employee who is (or becomes) a member of a collective
bargaining unit that is a party to a collective bargaining agreement with a
Participating Company unless there is in effect an agreement making the Plan
available to Employees in such unit.
(b) Any Employee who is a leased employee of a Participating Company
and who is employed by a leasing organization (as defined in Code Section
414(n)(2)) which is not an Affiliated Company.
26
(c) Any foreign national whose services are performed primarily for
and at a branch facility of the Participating Company outside the United States.
(d) Any citizen of a territorial possession of the United States
whose employment relationship or contract of employment originates at, and whose
services are performed primarily for and at, a branch facility of the
Participating Company outside the United States.
(e) Any person not employed by a Participating Company unless
designated as eligible by the Committee.
(f) Any person employed by a Participating Company at locations
established or acquired after June 1, 1989, unless included pursuant to Section
13.04.
(g) Any person employed on an hourly basis by Armstrong Industrial
Specialties, Inc. or The W.W. Henry Company.
2.03 Membership
----------
An Eligible Employee under Section 2.01 or Section 2.05(a) shall
become a Member under the Plan by designating a percentage of his Compensation
to be contributed to the Plan under Section 4.01(a), 4.01(b) and/or 4.02(a). An
Eligible Employee shall be provided one opportunity at any time during the
calendar year in which he becomes an Eligible Employee to designate the
percentage of his Compensation to be contributed to the Plan under Section
4.01(a); if no such designation is made during such calendar year, the Eligible
Employee shall be provided an opportunity to designate the percentage of his
Compensation to be contributed to the Plan for following calendar years under
Section 4.01(a) only during the annual election period designated by the
Committee. An Eligible Employee may designate the percentage of his Compensation
to be contributed to the Plan
27
under Sections 4.01(b) and 4.02(a) at any time after becoming an Eligible
Employee. Any designation under the preceding sentences shall become effective
as soon as practicable thereafter, provided the designation is made in the
manner authorized by the Committee and is accompanied by:
(a) an authorization for the Participating Company to make regular
payroll deductions to cover the amount of such contributions elected pursuant to
Section 4.01 and/or 4.02;
(b) an investment election with respect to Sheltered Contributions
under Section 4.01(b), Standard Contributions under Section 4.02(a), and the
remaining portion of his Retirement Savings Account, if any; and
(c) a designation of Beneficiary.
Notwithstanding the foregoing, an Eligible Employee's failure to designate
contribution percentages under Sections 4.01 and 4.02 shall not affect his
status as a Member and his entitlement to an allocation under Section 6.02(c),
in accordance with Section 6.01(b).
2.04 Events Affecting Membership
---------------------------
(a) If a Member is no longer employed by a Participating Company, is
transferred to employment with an Affiliated Company that is not a Participating
Company, or is transferred to a position with the Company or an Affiliated
Company that makes him ineligible to be a Member under Section 2.02, his active
participation under the Plan shall be suspended and, during the period of his
unemployment or his employment in such ineligible position, he shall not be
eligible to have allocated to his Retirement Savings Account or Stock Ownership
Account any contributions made under Section 4.01, 4.02 or 4.04, except as may
be required to satisfy the allocation requirements of Section 6.02(a).
28
(b) A Member who is employed by the Company and who is transferred
directly to an Affiliated Company (whether or not a Participating Company) other
than the Company shall not be eligible to have any Company Stock allocated to
his Equity Account during the period of his employment with such Affiliated
Company.
2.05 Membership Upon Reemployment
----------------------------
(a) Each individual described in Section 2.04(a) who is reemployed
by a Participating Company or who ceases to be an excluded Employee under
Section 2.02, shall again be an Eligible Employee on his date of reemployment or
the date he ceases to be an excluded Employee, in accordance with such rules and
regulations which are adopted by the Committee. Any such Eligible Employee shall
again become a Member in accordance with Section 2.03.
(b) Each individual described in Section 2.04(b) who is transferred
to the Company other than as an excluded Employee under Section 2.02, shall
again become eligible to have Company Stock allocated to his Equity Account as
of his date of transfer .
(c) A Part-Time Employee who terminates employment with the Company
or an Affiliated Company prior to becoming an Eligible Employee and who is
rehired by the Company or an Affiliated Company prior to January 1, 1999 and
after a one-year Break in Service, shall be treated as a newly-hired Employee
upon his reemployment. A Part-Time Employee who terminates employment with the
Company or an Affiliated Company prior to becoming an Eligible Employee and who
is rehired prior to January 1, 1999 and before the end of a one-year Break in
Service, shall be eligible to become a Member in accordance with Sections 2.01,
2.02 and 2.03, based on his original date of hire. Effective January 1, 1999,
any Part-Time Employee whose Continuous Employment has terminated and who is
reemployed prior to January 1, 1999 shall be eligible to become a Member as of
January 1, 1999.
29
Article 3. Service
-------
3.01 Companies For Whom Credited
---------------------------
Service shall mean periods of an Employee's employment with the Company,
an Affiliated Company (on and after the date of affiliation unless determined
otherwise by the Committee), and any predecessor corporation of a Participating
Company, or a corporation merged, consolidated or liquidated into the
Participating Company or a predecessor of the Participating Company, or a
corporation, substantially all of the assets of which have been acquired by the
Participating Company, if the Participating Company maintains a plan of such a
predecessor corporation. If the Participating Company does not maintain a plan
maintained by such a predecessor, periods of employment with such a predecessor
shall be credited as Service only to the extent required under regulations
prescribed by the Secretary of the Treasury pursuant to Section 414(a)(2) of the
Code.
3.02 Hours of Service
----------------
For purposes of determining an Employee's eligibility to participate
under Section 2.01 of the Plan and a Member's vested interest in his Match
Account and Equity Account under Section 9.01, with respect to any applicable
computation period:
(a) An Employee shall be credited with Hours of Service during periods
for which he is directly or indirectly paid by, or entitled to payment from the
Company or an Affiliated Company for the performance of duties;
(b) An Employee shall be credited with Hours of Service during periods
when no duties are performed:
(i) Due to vacation, holiday, layoff, or leave of absence; and during
which he is paid or entitled to payment from the Company or an Affiliated
Company;
30
(ii) Because of temporary total disability due to sickness, injury,
or incapacity; for which he receives or is entitled to receive either disability
benefits or Worker's Compensation, directly or indirectly from the Company or an
Affiliated Company;
(iii) Due to total disability for which he receives or is entitled
to receive benefits under a long-term disability income plan maintained by the
Company or an Affiliated Company or under the provisions of Article VI, Section
(8) of the Retirement Income Plan for Employees of Armstrong World Industries,
Inc.; or
(iv) Due to jury duty or military duty in the Armed Forces of the
United States; and during which he is paid or entitled to payment from the
Company or an Affiliated Company.
(c) An Employee shall be credited with Hours of Service during periods
for which back pay, irrespective of mitigation of damages, has been awarded or
agreed to by the Company or an Affiliated Company.
(d) The Committee shall determine whether an Employee is entitled to
credit for an Hour of Service on the basis of records of hours worked and
payments made or due. An exempt salaried Employee shall be credited with 45
Hours of Service for each week for which it is determined that he is entitled to
credit for at least one such Hour of Service.
(e) Hours of Service credited under Section 3.02(b) or (c) hereof for a
period during which the Employee is not performing duties but for which he is
paid or entitled to payment, directly or indirectly, by the Company or an
Affiliated Company shall be subject to the following rules:
31
(i) If payments made for a period of absence are computed with
specific reference to units of time, the number of Hours of Service credited
shall be the number of regularly scheduled working hours included in the units
of time on the basis of which the payment is calculated, consistently determined
with respect to all Employees within the same job classification.
(ii) If payments made for a period of absence are computed without
regard to units of time, the number of Hours credited shall be equal to the
amount of the payment made with respect to such period of absence divided by the
Employee's most recent hourly rate of pay or its equivalent.
(iii) Hours of Service credited hereunder for an absence shall be
credited to the calendar year during which the period of absence occurs;
provided, however, that if the period of absence falls within more than one
calendar year, the Committee, following uniform rules and governmental
regulations, may prorate such Hours between such calendar years. Hours of
Service credited by reason of an award or agreement for back pay shall be
credited to the calendar year to which the award or agreement pertains.
(iv) The Hours of Service credited hereunder for any period of
absence shall not exceed the number of working hours regularly scheduled for the
performance of duties during such period of absence, as determined in accordance
with procedures consistently applied by the Committee with respect to all
Employees within any one job classification. Nothing contained herein shall
result in double credit for the same period.
32
(v) No more than 501 Hours of Service shall be credited for a
period described under Section 3.02(b) or (c) on account of any single
continuous period during which the Employee performs no duties (whether or not
such period occurs in a single computation period).
(vi) No credit shall be given under this Section 3.02 during periods
for which payments are made or due under a plan maintained solely to comply with
applicable worker's compensation laws or unemployment compensation laws, for
which payments are made solely to reimburse an Employee for medical or
medically-related expenses incurred by the Employee, or for which payments are
made for the period following retirement.
(vii) The number of Hours of Service credited under the Plan for
military service or for any other period described in Section 3.02(b)(iv) hereof
during which the Employee is not paid or entitled to payment, directly or
indirectly, from the Company or an Affiliated Company shall be determined on the
basis of the number of regularly scheduled hours the Employee was working prior
to the absence.
(f) For the purposes of determining whether an Employee has incurred a
Break in Service, an Employee who is absent from work due to Parental Leave and
who is not entitled to credit for such absence under any of the other provisions
of this Section 3.02 shall be credited with a number of Hours of Service for
such absence equal to the number of Hours of Service that would have been
credited to the Employee had he been performing duties during the absence or, if
the Committee is unable to determine the number of such Hours, eight (8) Hours
of Service per day of such absence; provided, however, that in no event shall
more than 501 Hours of Service be credited for any single
33
continuous period of absence described in this Section 3.02(f). If in the year
in which the absence begins, the Employee has not yet been credited with 501
Hours of Service, then the Hours of Service credited by reason of this Section
shall be credited in such year; in any other case, the Hours of Service credited
by reason of this Section shall be credited in the year following the year in
which the absence begins.
3.03 Additional Service Credit
-------------------------
The Committee, in its sole discretion, may provide additional credit for
eligibility or vesting purposes for periods not required to be credited under
this Article 3, provided that the Committee shall act in a nondiscriminatory
manner.
34
Article 4. Contributions and Dividends
---------------------------
4.01 Member Pre-Tax Contributions
----------------------------
(a) Exchange Contributions
----------------------
Each Member may authorize the Participating Company by which he is
employed, in the manner described in Section 2.03, to reduce his Compensation by
not less than 1% and not more than 6% (or such lower maximum percentage as the
Committee may from time to time determine), in multiples of 1% as elected by the
Member, and have that amount contributed to the Plan by the Participating
Company as Exchange Contributions, subject to the limits of Sections 6.03 and
6.05. The specified portion of the Member's Compensation which would otherwise
be paid to the Member shall be paid by the Participating Company to the Stock
Ownership Trustee as soon as practicable after the end of each payroll period,
and shall be credited to the Member's Exchange Contribution Account. An
Eligible Employee who does not elect to reduce his Compensation under this
Section 4.01(a) as of the first day of the payroll period that begins coincident
with or immediately following the date on which he becomes an Eligible Employee
under Section 2.01, may make an election, in the manner described in Section
2.03, to reduce his Compensation effective for the payroll period coincident
with or immediately following any subsequent January 1.
(b) Sheltered Contributions
-----------------------
Subject to the last sentence of this Subsection (b), each Member may
authorize the Participating Company by which he is employed, in the manner
described in Section 2.03, to reduce his Compensation by not less than 1% and
not more than 15% (or such lower maximum percentage as the Committee may from
time to time determine), in
35
multiples of 1% as elected by the Member, and have that amount contributed to
the Plan by the Participating Company as Sheltered Contributions, subject to the
limits of Sections 6.04 and 6.05. The specified portion of the Member's
Compensation which would otherwise be paid to the Member shall be paid by the
Participating Company to the Retirement Savings Trustee as soon as practicable
after the end of each payroll period, and will be credited to the Member's
Sheltered Account. Notwithstanding the foregoing, any Member employed by The
W.W. Henry Company shall not be permitted to make Sheltered Contributions.
(c) In the event that Exchange Contributions or Sheltered Contributions
made under this Section are returned to the Employer in accordance with Section
4.06, the elections to reduce Compensation which were made by Members on whose
behalf those contributions were made shall be void retroactively to the
beginning of the period for which those contributions were made.
(d) Notwithstanding anything to the contrary in this Section 4.01, the
Committee may at any time reduce the maximum percentage by which some or all
Members may reduce their Compensation pursuant to Subsection (a) or (b) above.
The duration of such reduction shall be determined by the Committee at such
time.
(e) Notwithstanding any other provision of the Plan to the contrary, in
no event may the Exchange Contributions and Sheltered Contributions under
Subsections (a) and (b) above by any Member exceed in a Plan Year an amount
equal to 15% (or such lower maximum percentage as set by the Committee pursuant
to Sections 6.03 and 6.04) multiplied by the Member's Compensation not in excess
of $150,000 (adjusted in accordance with Section 401(a)(17) of the Code and the
regulations and other guidance
36
issued thereunder). This limitation shall be applied on a Plan Year basis, shall
not be prorated for any part of such Plan Year, and shall be applied only with
respect to amounts earned after becoming a Member.
4.02 Standard Contributions
----------------------
(a) Subject to the last sentence of this Subsection (a), each Member may
authorize contributions by payroll deduction on an after-tax basis of a stated
whole percentage of Compensation from 1% to 10%, with such amount being rounded
to the next higher multiple of one dollar per pay period and with such amount
being subject to the limits of Section 6.07. The specified portion of the
Member's Compensation shall be paid by the Participating Company to the
Retirement Savings Trustee as soon as practicable after the end of each payroll
period, and will be credited to the Member's Standard Account. Notwithstanding
the foregoing, any Member employed by The W.W. Henry Company shall not be
permitted to make Standard Contributions.
(b) Notwithstanding anything to the contrary in this Section 4.02, the
Committee may at any time reduce the maximum percentage by which some or all
Members may reduce their Compensation pursuant to Subsection (a) above. The
duration of such reduction shall be determined by the Committee at such time.
(c) Notwithstanding any other provision of the Plan to the contrary, in
no event may the Standard Contributions under Subsection (a) above by any Member
in a Plan Year exceed an amount equal to 10% (or such lower maximum percentage
as set by the Committee pursuant to Section 6.07) multiplied by the Member's
Compensation not in excess of $150,000 (adjusted in accordance with Section
401(a)(17) of the Code and the regulations and other guidance issued
thereunder). This limitation shall be applied on a
37
Plan Year basis, shall not be prorated for any part of such Plan Year, and shall
be applied only with respect to amounts earned after becoming a Member.
4.03 Change or Suspension in Member Contributions
--------------------------------------------
(a) Exchange Contributions
----------------------
Once a Member initially elects to reduce his Compensation under
Section 4.01(a), the Member may elect to change or suspend his rate of Exchange
Contributions only during the annual election period designated by the
Committee. Any such change or suspension shall be effective beginning with the
first payroll period that begins on or immediately following the next January 1.
Once made, a Member may not change his annual election with respect to the
remainder of the calendar year. If the Member does not elect to change or
suspend his Exchange Contributions during the annual election period, the
Member's elected reduction in Compensation shall continue until the earlier of
the end of the next calendar year, or the Member's separation from Service. Any
attempt to change or suspend a Member's Exchange Contributions which does not
comply with the provisions of Section 4.01(a) shall be invalid and the last
election with respect to Exchange Contributions shall be deemed to have remained
fully in effect. In the event a Member becomes an inactive Member, his Exchange
Contributions shall be deemed suspended on the first day of such Member's
payroll period next following the date he becomes an inactive Member and such
suspension shall end on the first day of such Member's payroll period subsequent
to the date he again becomes an active Member. A Member who is granted a
hardship withdrawal under Section 8.02 shall have his Exchange Contributions
automatically suspended for the 12-month period beginning with the first day of
the Member's payroll period next following the date the hardship
38
withdrawal is granted, and the percentage of Compensation designated by the
Member to measure such Exchange Contributions in effect immediately preceding
such suspension shall automatically be reinstated as soon as practicable
following the end of such 12-month period.
(b) Sheltered Contributions and Standard Contributions
--------------------------------------------------
The percentages of Compensation designated by a Member to measure the
Sheltered Contributions and Standard Contributions made to his Retirement
Savings Account will continue in effect, notwithstanding any change in his
Compensation, until he elects to change or suspend such percentage. A Member
may change or suspend such percentage at any time by applying to make such
change or suspension in the manner prescribed by the Committee (including
telephonic application). Any such change or suspension will become effective as
of the first day of the payroll period that begins as soon as practicable after
the Member applies to make such change or suspension. In the event a Member
becomes an inactive Member, his Sheltered Contributions and Standard
Contributions shall be deemed suspended on the first day of such Member's
payroll period next following the date he becomes an inactive Member and such
suspension shall end on the first day of such Member's payroll period subsequent
to the date he again becomes an active Member. A Member who is granted a
hardship withdrawal shall have his Sheltered Contributions and Standard
Contributions automatically suspended for the 12-month period beginning with the
first day of the Member's payroll period next following the date the hardship
withdrawal is granted, and the percentages of Compensation designated by the
Member to measure such Sheltered Contributions and Standard Contributions in
effect immediately preceding such suspension shall automatically be reinstated
as soon as
39
practicable following the end of such 12-month period.
4.04 Stock Ownership Contributions
-----------------------------
(a) For each Stock Ownership Allocation Period during which there are
Leveraged Shares in the Company Suspense Account, the Participating Companies
shall make Stock Ownership Contributions which, when aggregated with Exchange
Contributions made pursuant to Section 4.01(a), earnings on such Exchange
Contributions, and any cash dividends received by the Stock Ownership Trustee on
Company Stock (and earnings thereon), will at least equal the amount necessary
to enable the Stock Ownership Trustee to pay any currently maturing obligation
under an Acquisition Loan, without regard to the accumulated earnings and
profits of each Participating Company. To the extent the total of such Stock
Ownership and Exchange Contributions exceeds the amount required to pay any such
currently maturing obligation, such excess amount may then be used to repay any
outstanding Acquisition Loan.
(b) (i) In addition to contributions under Section 4.04(a), each
Participating Company shall contribute for each Plan Year, additional Stock
Ownership Contributions equal to the difference, if any, between: (1) the total
amount equal to the Exchange Contributions credited to the Members employed by
such Participating Company during the Plan Year, plus earnings, and (2) the fair
market value of the Leveraged Shares allocated to each such Member's Exchange
Contribution Account during the Plan Year excluding Leveraged Shares released
and allocated pursuant to Sections 5.02(b) and 6.02(a).
40
(ii) The Company also shall contribute for each Plan Year additional
Stock Ownership Contributions (in cash or Company Stock) in the amount necessary
to enable the Trustee to acquire such number of shares of Company Stock equal to
the difference, if any, between (1) the number of shares of Company Stock
initially intended to be credited to the Equity Accounts of Eligible Members of
the Company during the Plan Year in accordance with Section 6.02(c), and (2) the
number of Leveraged Shares actually allocated to each Member's Equity Account
during the Plan Year in the absence of this Section 4.04(b)(ii).
(iii) The Company also shall contribute for each Plan Year additional
Stock Ownership Contributions (in cash or Company Stock) in the amount necessary
to enable the Trustee to acquire such number of shares of Company Stock equal to
the difference, if any, between (1) the number of shares of Company Stock
initially intended to be credited as base allocations and supplemental
allocations to the Match Accounts of Eligible Members during the Plan Year in
accordance with Section 6.02(d), and (2) the number of Leveraged Shares actually
allocated as base allocations and supplemental allocations to each Member's
Match Account during the Plan Year in the absence of this Section 4.04(b)(iii).
(c) Notwithstanding anything to the contrary in this Section 4.04, except
as is necessary to satisfy the allocation requirements of Sections 6.02(a) and
6.02(b), each Participating Company's contribution to the Plan shall not exceed
the amount deductible from the Participating Company's income tax return for the
Plan Year under Section 404 of the Code when combined with amounts contributed
by the Participating Company to its
41
other benefit plans qualified under Section 401 of the Code and each
contribution shall be conditioned upon such deductibility.
4.05 Manner of Contributions
-----------------------
Each Participating Company shall make its contributions for a Plan Year
in cash or Company Stock on any date or dates which the Company may select,
subject to the consent of the Trustee; provided that the total contributions for
any Plan Year shall be paid within the time prescribed by law for filing the
Company's Federal income tax return for such taxable year, including extensions
thereof. Except to the extent applied to the payment of principal and/or
interest on an Acquisition Loan, the Stock Ownership Trustee shall invest cash
contributions in Company Stock or allocate such contributions to Members' Stock
Ownership Accounts in accordance with instructions from the Committee as soon as
practicable after it receives the contribution.
4.06 Return of Contributions
-----------------------
Notwithstanding anything herein to the contrary, a contribution which (i)
was made under a mistake of fact, or (ii) was conditioned upon deduction of the
contributions under Section 404 of the Code and such deduction is disallowed,
shall be returned to the Participating Company within one year after the payment
of the mistaken contribution or the disallowance of the deduction (to the extent
disallowed), whichever is applicable.
4.07 Dividends on Company Stock
--------------------------
All cash dividends on Company Stock held in the Stock Ownership Fund and
earnings thereon shall be utilized to repay an Acquisition Loan and shall be
allocated pursuant to Section 6.02, with such dividends first being utilized to
repay the principal amount of such Acquisition Loan.
42
4.08 Correction of Errors in Contributions
-------------------------------------
If, with respect to any Plan Year, any Member's Stock Ownership Account
is not credited with the Member's allocable share of Exchange Contributions or
Stock Ownership Contributions (including Matching Allocations or Equity
Allocations), any Member's Retirement Savings Account is not credited with the
Member's designated amount of Sheltered Contributions or Standard Contributions,
or earnings on any such contributions to which such Member is entitled under the
Plan are not credited to the appropriate account, and such failure is due to
administrative error in determining or allocating the proper amount of such
contributions or earnings, or any other error or mistake of fact in determining
an individual's eligibility for a contribution, the Committee may correct such
error by reallocation of amounts among Members' Stock Ownership Accounts and/or
Retirement Savings Accounts, as the case may be, and/or the Participating
Company may make additional contributions to the Stock Ownership Account or
Retirement Savings Account, as the case may be, of any affected Member to place
the affected Member's Stock Ownership Account or Retirement Savings Account, as
the case may be, in the position that would have existed if the error had not
been made; provided that any such reallocations or additional contributions are
made on a uniform and nondiscriminatory basis. In addition to the foregoing, if
an error is made with respect to the investment of the Trust's assets which
results in an error in the amount credited to a Member's Account, the Committee
may correct such error by reallocation of amounts among Members' Accounts and/or
the Participating Company may make additional contributions to the Account of
any affected Member to place the affected Member's Account in the position that
would have existed if the error had not been made; provided
43
that any such reallocations or additional contributions are made on a uniform
and nondiscriminatory basis.
4.09 Rollover Contributions
----------------------
(a) An Eligible Employee who is eligible to make Sheltered Contributions
and Standard Contributions may, with the permission of the Committee (which
shall be uniformly applied), make a Rollover Contribution. Such Eligible
Employee's Rollover Contribution shall be paid to the Retirement Savings Trustee
as soon as practicable and shall be credited to his "Rollover Contribution
Account" under his Retirement Savings Account.
(b) The term "Rollover Contribution" means the contribution of an
"eligible rollover distribution" to the Trustee by the Eligible Employee on or
before the 60th day immediately following the day such Eligible Employee
receives the "eligible rollover distribution" or a contribution of an "eligible
rollover distribution" to the Trustee by the Eligible Employee or the trustee of
another "eligible retirement plan" (as defined in Section 402(c)(8) of the Code)
in the form of a direct transfer under Section 401(a)(31) of the Code.
(c) The term "eligible rollover distribution" means:
(i) part or all of a distribution to the Eligible Employee from an
individual retirement account or individual retirement annuity (as defined in
Section 408 of the Code) maintained for the benefit of such Employee making the
Rollover Contribution, the funds of which are solely attributable to an eligible
rollover distribution from an employee plan and trust described in Section
401(a) of the Code which is exempt from tax under Section 501(a) of the Code (a
"conduit IRA"); or
44
(ii) part or all of the amount (other than nondeductible employee
contributions) received by such Eligible Employee or distributed directly to
this Plan on such Employee's behalf from an employee plan and trust described in
Code Section 401(a) which is exempt from tax under Code Section 501(a). In all
events, such amount shall constitute an "eligible rollover distribution" only if
such amount qualifies as such under Code Section 402(c) and the regulations and
other guidance thereunder and is a distribution of all or any portion of the
balance to the credit of the Employee from the distributing plan or conduit IRA
other than any distribution: (i) 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 for a specified period of ten years or more;
(ii) to the extent such distribution is required under Code Section 401(a)(9);
(iii) to the extent such distribution is not includible in gross income
(determined without regard to the exclusion for net unrealized appreciation with
respect to employer securities); or (iv) that is made to a non-spouse
beneficiary.
(d) Once accepted by the Trust, an amount rolled over pursuant to this
Section 4.09 shall be credited to the Member's "Rollover Contributions Account"
under his Retirement Savings Account, and thereafter, such Rollover
Contributions shall be administered and invested in accordance with Article 7
and subject to the withdrawal and distribution provisions set forth in Articles
8 and 9. The limitations of Sections 6.03 through 6.08 shall not apply to
Rollover Contributions. All Rollover Contributions shall be made in cash and
shall be fully vested.
45
Article 5. Acquisition Loans
-----------------
5.01 Acquisition Loan
----------------
The Company may direct the Trustee to incur Acquisition Loans from time
to time to finance the acquisition of Leveraged Shares or to repay a prior
Acquisition Loan. Any Acquisition Loan shall be primarily for the benefit of
Members and their beneficiaries. The proceeds of any Acquisition Loan shall be
used within a reasonable period of time only to finance the acquisition of
Leveraged Shares or to repay a prior Acquisition Loan. Any Acquisition Loan
shall be for a specific term, shall bear a reasonable rate of interest, and
shall not be payable on demand except in the event of default. In the event of
default upon an Acquisition Loan, the value of Trust assets transferred in
satisfaction of any Acquisition Loan shall not exceed the amount of the default.
Any Acquisition Loan may be secured by collateral pledge of the Leveraged Shares
so acquired. No other Trust assets may be pledged as collateral for an
Acquisition Loan, and no lender shall have recourse against Trust assets other
than any Leveraged Shares remaining subject to pledge. Any pledge of Leveraged
Shares must provide for the release of shares so pledged on a pro rata basis as
principal and interest on the Acquisition Loan are repaid by the Trustee and
such Leveraged Shares are allocated to Members' Stock Ownership Accounts as
provided under Section 6.02. Except upon termination of the Plan as provided
under Section 13.02, repayments of principal and interest on any Acquisition
Loan shall be made by the Trustee (as directed by the Committee) only from Stock
Ownership Contributions or Exchange Contributions paid in cash to enable the
Trustee to repay such Loan, from earnings attributable to such contributions,
from any cash dividends received by the Trustee on Company Stock and earnings
thereon, and from another
46
Acquisition Loan that refinances such Acquisition Loan. Any Acquisition Loan
that refinances an earlier Acquisition Loan shall bear an interest rate based on
the market conditions at the time such loan is made, and may be prepaid at any
time, without penalty. Any prepayment of an Acquisition Loan within the 30-day
period immediately following the end of the Stock Ownership Allocation Period
shall be deemed to be a repayment of principal and interest on the Acquisition
Loan for such Stock Ownership Allocation Period. In acquiring Leveraged Shares,
the Trustee shall pay no more than "adequate consideration" (as defined in
Section 3(18) of ERISA).
5.02 Allocation of Leveraged Shares
------------------------------
(a) Any Leveraged Shares shall initially be credited to the Company
Suspense Account and shall be allocated to the Members' Stock Ownership Accounts
for each Stock Ownership Allocation Period only as payments of principal and
interest on the Acquisition Loan used to purchase such Leveraged Shares are made
by the Trustee. The number of Leveraged Shares to be released from the Company
Suspense Account following any amortization of an Acquisition Loan shall equal
the number of Leveraged Shares in the Company Suspense Account immediately
before release multiplied by a fraction. The numerator of the fraction shall be
the amount of Stock Ownership Contributions, Exchange Contributions and any
dividends on Company Stock which are applied to the payment of principal and
interest on the Acquisition Loan during the Stock Ownership Allocation Period.
The denominator of the fraction shall be the sum of the numerator plus the
principal and interest to be paid for all future periods over the duration of
the Acquisition Loan repayment period, including the principal and interest to
be paid on an Acquisition Loan that refinances such Acquisition Loan. For this
purpose, the
47
number of future Allocation Periods under the Acquisition Loan must be
definitely ascertainable and must be determined without taking into account any
possible extensions or renewal periods. If the interest rate under the
Acquisition Loan is variable, the interest to be paid in future Allocation
Periods shall be computed by using the interest rate applicable as of the end of
the Plan Year. Any Leveraged Shares released within thirty (30) days following
the end of the Stock Ownership Allocation Period shall be deemed to be "Released
Leveraged Shares" for purposes of Section 6.02.
(b) In connection with the release of Leveraged Shares from the Company
Suspense Account as a result of a loan amortization payment made in whole or in
part with cash dividends on Company Stock held in Members' Stock Ownership
Accounts ("Allocated Dividends"), a portion of the total number of shares so
released, calculated with respect to each class of Company Stock, shall be
released for allocation to the Members' Accounts as of a date during the Plan
Year which is no later than the last day of the Plan Year in which the Allocated
Dividends are paid, based on the amount of such Allocated Dividends used to make
the loan amortization payment. The number of released shares with respect to
Allocated Dividends shall be the total number of shares released on account of
the loan amortization payment multiplied by a fraction. The numerator of the
fraction shall be the amount of the Allocated Dividends used to make the loan
amortization payment. The denominator of the fraction shall be the fair market
value of the total number of shares released as a result of the loan
amortization payment. The number of released shares with respect to Allocated
Dividends shall be allocated among the Members in the same proportion that each
Member's Allocated Dividends used to
48
make the loan amortization payment bears to the total amount of such Allocated
Dividends, in accordance with Section 6.02(a).
Article 6. Allocations of and Limitations on Contributions
-----------------------------------------------
6.01 Members Eligible for Allocations
--------------------------------
The Stock Ownership Account maintained for each Member will be credited
as of the last day of each Stock Ownership Allocation Period with his allocable
share of Company Stock released from the Company Suspense Account during the
Stock Ownership Allocation Period as determined under Section 6.02.
(a) Each Member shall be eligible for an allocation under Sections
6.02(a) and 6.02(b).
(b) For purposes of allocations under Section 6.02(c), an Eligible Member
shall be any Member (other than a Member who is a foreign national or a citizen
of a territorial possession of the United States who has been temporarily
assigned to perform services within the United States) who is: (1) employed by
the Company on a permanent full-time basis; (2) employed by the Company at its
Mobile Plant and paid on an hourly basis (regardless of the employment status);
or (3) employed by Armstrong Industrial Specialties, Inc. on a permanent full-
time basis and paid on a salaried basis after having been transferred from the
Company on or after January 1, 1996, provided the Member was an Eligible Member
under clause (1) of this Section 6.01(b) immediately prior to such Member's
transfer of employment; and who:
(i) is employed by a Participating Company on the last day of the
Stock Ownership Allocation Period;
49
(ii) enters Retirement and commences receipt of his retirement
income if covered under a retirement plan specified in Section 1.44, dies,
becomes totally disabled within the meaning of Section 9.01(c), or commences a
period of long-term military leave, directly from active employment at any time
during, but after the first day of, the Stock Ownership Allocation Period;
(iii) is on a Parental Leave as of the last day of the Stock
Ownership Allocation Period that has been approved by the Participating Company
for which he is employed; or
(iv) terminates employment with a Participating Company during the
Stock Ownership Allocation Period on account of a reduction in the workforce at
the office or manufacturing location at which the Member is employed which the
Committee determines is a result of (1) adverse economic conditions, (2) a
reorganization of the workforce or operating procedures, (3) technological
change, or (4) layoff.
Notwithstanding the above, a Member who becomes totally disabled (within
the meaning of Section 9.01(c)) while actively employed by a Participating
Company or an Affiliated Company shall be eligible for an Equity Allocation
under Section 6.02(c) for each Stock Ownership Allocation Period in which he
receives disability payments under a long-term disability plan sponsored by the
Participating Company for which he was employed or under the provisions of
Article VI, Section (8) of the Retirement Income Plan for Employees of Armstrong
World Industries, Inc., or until he is no longer a Member, if earlier.
Further, notwithstanding the foregoing, any Member who is employed by the
Company at the Sparrows Point, Maryland, Plant on December 31, 1996, and whose
50
employment is transferred on such day to Worthington Armstrong Venture ("WAVE"),
shall be eligible for an Equity Allocation under Section 6.02(c) for the Stock
Ownership Allocation Period ending June 12, 1997.
Further, notwithstanding the foregoing, any Member who is described in
clause (3) of this Subsection (b) and who is employed by Armstrong Industrial
Specialties, Inc. on June 30, 1999 shall be eligible for an Equity Account
allocation under Section 6.02(c) for the Stock Ownership Allocation Period
ending December 13, 1999.
Further, notwithstanding the foregoing, any Member who is employed by the
Corporation's textile products operations on September 30, 1999 shall be
eligible for an Equity Allocation under Section 6.02(c) for the Stock Ownership
Allocation Period ending December 13, 1999.
(c) For purposes of allocations under Section 6.02(d), an Eligible Member
shall be any Member who satisfies any one of the four conditions described in
Section 6.01(b)(i) - (iv). Notwithstanding the preceding sentence, any Member
who is employed by the Company at the Sparrows Point, Maryland Plant on December
31, 1996, and whose employment is transferred to WAVE, shall be eligible for an
allocation under Section 6.02(d) for the Stock Ownership Allocation Period
ending June 12, 1997. Further, notwithstanding the first sentence of this
Subsection (c), any Member who is employed by Armstrong Industrial Specialists,
Inc. on June 30, 1999 shall be eligible for an allocation under Section 6.02(d)
for the Stock Ownership Allocation Period ending December 13, 1999 based on the
Exchange Contributions made by such member from June 12, 1999 through June 30,
1999. Further, notwithstanding the first sentence of this Subsection (c), any
Member who is employed by the Corporation's textile products
51
operations on September 30, 1999 shall be eligible for an allocation under
Section 6.02(d) for the Stock Ownership Allocation Period ending December 13,
1999 based on the Exchange Contributions made by such Member from June 12, 1999
through September 30, 1999.
6.02 Method of Allocations
---------------------
(a) For each Plan Year in which Allocated Dividends are paid, Company
Stock with a fair market value equal to the amount of each Member's Allocated
Dividends shall be allocated to the Member's Exchange Contribution Account,
Equity Account and/or Match Account, as the case may be, to the extent such
Allocated Dividends are attributable to Company Stock held in such Accounts.
Each Participating Company shall be authorized to make a special contribution to
the Plan with respect to any Member (as determined by the Committee) to assure
that this requirement is satisfied.
(b) Leveraged Shares released from the Company Suspense Account as a
result of loan amortization payments made with respect to a Stock Ownership
Allocation Period ("Released Leveraged Shares") that have not and will not be
allocated pursuant to Section 6.02(a) and Stock Ownership Contributions made
pursuant to Section 4.04(b)(i) shall be allocated to the Exchange Contribution
Accounts of Members in dollar amounts equal to the Exchange Contributions made
on the Member's behalf pursuant to Section 4.01(a) prior to the end of such
Stock Ownership Allocation Period, plus earnings thereon. For purposes of this
Section 6.02(b), the value of all Company Stock allocated to Members' Exchange
Contribution Accounts shall be based on the closing price of such Company Stock
on the New York Stock Exchange on the last day of the Stock Ownership Allocation
Period.
52
(c) Released Leveraged Shares that have not and will not be allocated
pursuant to Section 6.02(a) and 6.02(b), and Company Stock acquired with the
Stock Ownership Contributions made pursuant to Section 4.04(b)(ii), shall be
allocated to the Equity Accounts so that each Eligible Member under Section
6.01(b) receives his Equity Allocation. Except as provided below with respect
to each such Eligible Member who (i) is an hourly Employee employed at the
Company's Mobile Plant, (ii) initially became a Member on June 19, 1989, the
effective date of the Stock Ownership Plan, or (iii) was employed by a
Participating Company on June 19, 1989, the effective date of the Stock
Ownership Plan, but who initially became an Eligible Member after such date, the
Equity Allocation shall be the number of shares designated in Schedule A hereof
with respect to individuals who are the same age as the Member was on such
effective date. The Equity Allocation with respect to an Eligible Member who
first is employed by a Participating Company after June 19, 1989, the effective
date of the Stock Ownership Plan, shall be the number of shares designated in
Schedule A hereof with respect to individuals who are age 21 on such effective
date. Notwithstanding the foregoing, with respect to each Eligible Member who
was employed as an hourly Employee at the Company's Mobile Plant and who
initially became a Member on October 1, 1990 or who was employed as an hourly
Employee at the Company's Mobile Plant on October 1, 1990 but who initially
became a Member after October 1, 1990, the Equity Allocation shall be the number
of shares designated in Schedule B hereof with respect to individuals who are
the same age as the Member was on October 1, 1990. The Equity Allocation with
respect to any Eligible Member who first is employed as an hourly Employee at
the Company's Mobile Plant after
53
October 1, 1990, shall be the number of shares designated in Schedule B hereof
with respect to individuals who are age 21 on October 1, 1990.
(d) Released Leveraged Shares that have not and will not be allocated
pursuant to Section 6.02(a), 6.02(b), or 6.02(c), and Company Stock acquired
with the Stock Ownership Contributions made pursuant to Section 4.04(b)(iii),
shall be allocated to the Match Accounts so that each Eligible Member under
Section 6.01(c) receives a base allocation in accordance with Paragraph (i)
below, and a supplemental allocation in accordance with Paragraph (ii) below.
(i) With respect to each Stock Ownership Allocation Period, each
Eligible Member under Section 6.01(c) shall receive a base allocation equal to
50% of the Exchange Contributions made by such Member for the Stock Ownership
Allocation Period. Such base allocations shall be made from amounts
attributable to Matching Allocations, subject to Sections 6.06 and 6.08, and
shall be credited to the Member's Match Account as of the last day of each Stock
Ownership Allocation Period in which the Member's Exchange Contributions were
made.
(ii) With respect to each Stock Ownership Allocation Period, each
Eligible Member under Section 6.01(c) also may have allocated to his Match
Account a supplemental allocation made from amounts attributable to Matching
Allocations, subject to Sections 6.06 and 6.08. Any supplemental allocation
shall be credited to the Member's Match Account as of the last day of each Stock
Ownership Allocation Period in which the Member's Exchange Contributions were
made. For the Stock Ownership Allocation Periods ending December 12, 1996, June
12, 1997 and December 11, 1997, the supplemental allocation shall equal twenty-
five percent (25%) of the Exchange
54
Contributions made by such Member for each such Stock Ownership Allocation
Period. For each subsequent Stock Ownership Allocation Period, a twenty-five
percent (25%) supplemental allocation will be made if the fair market value of
the Company Stock on the last business day of such Stock Ownership Allocation
Period is at least equal to the "share price target" as determined by the
Committee for such Stock Ownership Allocation Period. The Committee shall
determine the share price target annually in advance of each open enrollment
period in which Eligible Members under Section 6.01(c) can elect to change or
suspend their Exchange Contributions under Section 4.03(a). Notwithstanding the
foregoing, if Released Leveraged Shares remain at the end of a Stock Ownership
Allocation Period after allocations pursuant to Sections 6.02(a), 6.02(b),
6.02(c), 6.02(d)(i), and the preceding sentences of this Section 6.02(d)(ii)
have been made with respect to such Stock Ownership Allocation Period, all or a
portion of such Released Leveraged Shares shall be used to make additional
supplemental allocations for such Stock Ownership Allocation Period to the Match
Account of each Eligible Member as determined under Section 6.01(c) to the
extent not used to restore the forfeited portion of a Member's Stock Ownership
Account under Subsection (e) below. The Company shall determine whether any
Released Leveraged Shares shall be used for purposes of the preceding sentence.
(e) If Released Leveraged Shares remain after each Eligible Member has
had allocated to his Stock Ownership Account an allocation pursuant to Sections
6.02(a), 6.02(b), 6.02(c), and 6.02(d), all or a portion of such Released
Leveraged Shares may be used to restore the forfeited portion of the Stock
Ownership Account of a Member who is reemployed by a Participating Company,
pursuant to Section 9.05(b). The Company shall
55
determine whether any Released Leveraged Shares shall be used for purposes of
this Section 6.02(e).
6.03 Limitation on Exchange Contributions Affecting Highly Compensated
-----------------------------------------------------------------
Employees
---------
(a) Notwithstanding anything herein to the contrary, in no event shall
the Exchange Contributions made on behalf of Highly Compensated Employees with
respect to any Plan Year result in an Actual Deferral Percentage for such group
of Highly Compensated Employees that exceeds the greater of:
(i) an amount equal to 125% of the Actual Deferral Percentage for
all Members other than Highly Compensated Employees; or
(ii) an amount equal to the sum of the Actual Deferral Percentage for
all Members other than Highly Compensated Employees and two percent (2%),
provided that such amount does not exceed 200% of the Actual Deferral Percentage
for all Members other than Highly Compensated Employees.
(b) The Committee shall be authorized to implement rules limiting the
Exchange Contributions that may be made on behalf of Highly Compensated
Employees during the Plan Year (prior to any contributions to the Trust) so that
the limitation of Section 6.03(a) is satisfied.
(c) Notwithstanding any reductions pursuant to Section 6.03(b), if the
limitation under Section 6.03(a) is exceeded in any Plan Year, a Participating
Company may, in the sole discretion of the Committee and in accordance with the
regulations issued under Section 401(k) of the Code, make additional
contributions to the Exchange Contribution Accounts of Members who are not
Highly Compensated Employees, which
56
additional contributions shall be qualified nonelective contributions as
described in Section 401(m)(4)(C) of the Code and the regulations issued
thereunder, up to an amount necessary to assure that the limitation under
Section 6.03(a) is not exceeded in the Plan Year. Qualified nonelective
contributions shall be nonforfeitable when made and are distributable only in
accordance with the distribution and withdrawal provisions that are applicable
to Exchange Contributions under the Plan.
(d) To the extent the limitation under Section 6.03(a) continues to be
exceeded following the contribution of such qualified nonelective contributions,
if any, such Excess Exchange Contributions made on behalf of Highly Compensated
Employees with respect to a Plan Year and income allocable thereto shall be
distributed to such Highly Compensated Employees as soon as practicable after
the close of such Plan Year, but no later than twelve months after the close of
such Plan Year. The amount of income allocable to Excess Exchange Contributions
shall be determined in accordance with the regulations issued under Section
401(k) of the Code. The amount of any Excess Exchange Contributions distributed
to any Member under this Section 6.03(d) shall be reduced by the amount of any
excess deferrals attributable to Exchange Contributions previously distributed
to such Member pursuant to Section 6.05, if any, for such Plan Year.
(e) The Committee is authorized to implement rules under which it may
utilize any combination of the foregoing methods in Sections 6.03(b), (c) or (d)
to assure that the limitation of Section 6.03(a) is satisfied.
57
6.04 Limitation on Sheltered Contributions Affecting Highly Compensated
------------------------------------------------------------------
Employees
---------
(a) Notwithstanding anything herein to the contrary, in no event shall
the Sheltered Contributions made on behalf of Highly Compensated Employees with
respect to any Plan Year result in an Actual Deferral Percentage for such group
of Highly Compensated Employees that exceeds the greater of:
(i) an amount equal to 125% of the Actual Deferral Percentage for
all Members other than Highly Compensated Employees; or
(ii) an amount equal to the sum of the Actual Deferral Percentage
for all Members other than Highly Compensated Employees and two percent (2%),
provided that such amount does not exceed 200% of the Actual Deferral Percentage
for all Members other than Highly Compensated Employees.
(b) The Committee shall be authorized to implement rules limiting the
Sheltered Contributions that may be made on behalf of Highly Compensated
Employees during the Plan Year (prior to any contributions to the Trust) so that
the limitation of Section 6.04(a) is satisfied.
(c) Notwithstanding any reductions pursuant to Section 6.04(b), if the
limitation under Section 6.04(a) is exceeded in any Plan Year, a Participating
Company may, in the sole discretion of the Committee and in accordance with the
regulations issued under Section 401(k) of the Code, make additional
contributions to the Sheltered Accounts of Members who are not Highly
Compensated Employees, which additional contributions shall be qualified
nonelective contributions as described in Section 401(m)(4)(C) of the Code and
the regulations issued thereunder, up to an amount
58
necessary to assure that the limitation under Section 6.04(a) is not exceeded in
the Plan Year. Qualified nonelective contributions shall be nonforfeitable when
made and are distributable only in accordance with the distribution and
withdrawal provisions that are applicable to Sheltered Contributions under the
Plan.
(d) To the extent the limitation under Section 6.04(a) continues to be
exceeded following the contribution of such qualified nonelective contributions,
if any, such Excess Sheltered Contributions made on behalf of Highly Compensated
Employees with respect to a Plan Year and income allocable thereto shall be
distributed to such Highly Compensated Employees as soon as practicable after
the close of such Plan Year, but no later than twelve months after the close of
such Plan Year. The amount of income allocable to Excess Sheltered
Contributions shall be determined in accordance with the regulations issued
under Section 401(k) of the Code. The amount of any Excess Sheltered
Contributions distributed to any Member under this Section 6.04(d) shall be
reduced by the amount of any excess deferrals attributable to Sheltered
Contributions previously distributed to such Member pursuant to Section 6.05, if
any, for such Plan Year.
(e) The Committee is authorized to implement rules under which it may
utilize any combination of the foregoing methods in Sections 6.04(b), (c) or (d)
to assure that the limitation of Section 6.04(a) is satisfied.
6.05 Maximum Exchange Contributions and Sheltered Contributions
----------------------------------------------------------
Notwithstanding any other provision of the Plan including the limitations
of Section 6.03(a) and 6.04(a), in no event may the total of Exchange
Contributions and Sheltered Contributions to this Plan on behalf of any Member,
in addition to all such deferrals on behalf of such Member under all other cash
or deferred arrangements (as
59
defined in Section 401(k) of the Code) maintained by the Company or any
Affiliated Company in which the Member participates, exceed $7,000 (indexed as
provided in Section 402(g)(5) of the Code) in any calendar year of the Member.
If a Member participates in another cash or deferred arrangement in any calendar
year which is not maintained by the Company or an Affiliated Company, and his
total elective deferral contributions under this Plan and such other plan exceed
$7,000 (as indexed) in a calendar year, he may request to receive a distribution
of the amount of the excess deferral (a deferral in excess of $7,000, as
indexed) that is attributable to Exchange Contributions or Sheltered
Contributions in this Plan together with earnings thereon, notwithstanding any
limitations on distributions contained in this Plan. Such distribution shall be
made by the April 15 following the calendar year of the Exchange Contributions
or Sheltered Contributions were made, provided that the Member notifies the
Committee of the amount of the excess deferral that is attributable to Exchange
Contributions or Sheltered Contributions to this Plan and requests such a
distribution. The Member's notice must be received by the Committee no later
than the March 1 following the calendar year of the excess deferral. In the
absence of such notice, the amount of such excess deferral attributable to
Exchange Contributions or Sheltered Contributions to this Plan shall be subject
to all limitations on withdrawals and distributions in this Plan. The amount of
excess deferrals that may be distributed under this Section 6.05 with respect to
any Member for any Plan Year shall be reduced by the amount of any Excess
Exchange Contributions previously distributed pursuant to Section 6.03(a) or any
Excess Sheltered Contributions previously distributed pursuant to Section
6.04(a), if any, for such Plan Year.
60
6.06 Limitation on Matching Allocations Affecting Highly Compensated Employees
-------------------------------------------------------------------------
(a) Notwithstanding anything herein to the contrary, in no event shall
the Matching Allocations made on behalf of Highly Compensated Employees with
respect to any Plan Year result in a Contribution Percentage for such group of
Highly Compensated Employees that exceeds the greater of:
(i) an amount equal to 125% of the Contribution Percentage for all
Members other than Highly Compensated Employees; or
(ii) an amount equal to the sum of the Contribution Percentage for
all Members other than Highly Compensated Employees and two percent (2%),
provided that such amount does not exceed 200% of the Contribution Percentage
for all Members other than Highly Compensated Employees.
(b) The Committee shall be authorized to implement rules limiting the
Matching Allocations that may be allocated on behalf of Highly Compensated
Employees during the Plan Year (prior to any contributions to the Trust) so that
the limitation of Section 6.06(a) is satisfied.
(c) Notwithstanding any reductions pursuant to Section 6.06(b), if the
limitation under Section 6.06(a) is exceeded in any Plan Year, a Participating
Company may, in the sole discretion of the Committee and in accordance with the
regulations issued under Section 401(m) of the Code, make additional
contributions to the Match Accounts of Members who are not Highly Compensated
Employees, which additional contributions shall either be qualified nonelective
contributions as described in Section 401(m)(4)(C) of the Code and the
regulations issued thereunder, or additional Match Allocations, up to an amount
necessary to assure that the limitation under Section 6.06(a) is not exceeded in
the
61
Plan Year. Qualified nonelective contributions shall be nonforfeitable when made
and are distributable only in accordance with the distribution and withdrawal
provisions that are applicable to Exchange Contributions under the Plan. In
addition, in accordance with regulations issued under Section 401(m) of the
Code, the Committee may elect to treat amounts attributable to Exchange
Contributions as such additional Match Allocations solely for the purposes of
satisfying the limitation of Section 6.06(a).
(d) To the extent the limitation under Section 6.06(a) continues to be
exceeded following the contribution of such additional Matching Allocations, if
any, such Excess Matching Allocations made on behalf of Highly Compensated
Employees with respect to a Plan Year and income allocable thereto shall then be
distributed to such Highly Compensated Employees to the extent vested pursuant
to Section 9.01, or if not vested, forfeited. Any such forfeitures shall be used
to pay administrative expenses under the Plan in accordance with Section
9.05(a). All Excess Matching Allocations and any income allocable thereto shall
be forfeited or distributed, as described above, as soon as practicable after
the close of the Plan Year in which they occur, but no later than twelve months
after the close of such Plan Year. The amount of income allocable to Excess
Matching Allocations shall be determined in accordance with the regulations
issued under Code Section 401(m).
(e) The Committee is authorized to implement rules under which it may
utilize any combination of the foregoing methods described in Section 6.06(b),
(c) and (d) to assure that the limitation of Section 6.06(a) is satisfied.
(f) Notwithstanding anything to the contrary in Section 6.03 or this
Section 6.06, Exchange Contributions and Matching Allocations may not be made to
this Plan in
62
violation of the rules prohibiting multiple use of the alternative limitation
described in Sections 401(k)(3)(A)(ii)(II) and 401(m)(2)(A)(ii) of the Code and
the provisions of Treasury Regulation section 1.401(m)-2(b) and any further
guidance issued thereunder. If such multiple use occurs, the Contribution
Percentages for all Highly Compensated Employees (determined after applying the
foregoing provisions of Sections 6.03 and 6.06) shall be reduced in accordance
with Treasury Regulation section 1.401(m)-2(c) and any further guidance issued
thereunder in order to prevent such multiple use of the alternative limitation.
(g) Notwithstanding anything in the Plan to the contrary, if the rate of
Matching Allocations (determined after application of the corrective mechanisms
described in the foregoing provisions of this Section 6.06) discriminates in
favor of Highly Compensated Employees, the Matching Allocations attributable to
any Excess Exchange Contributions, Excess Matching Allocations, or excess
deferrals (as described in Section 6.05) of each affected Highly Compensated
Employee shall be forfeited so that the rate of Matching Allocations is
nondiscriminatory. Any such forfeitures shall be made no later than the end of
the Plan Year following the Plan Year for which the Matching Allocations were
made. Forfeitures, if any, shall be applied as set forth in Section 9.05(a).
6.07 Limitation on Standard Contributions Affecting Highly Compensated
-----------------------------------------------------------------
Employees
---------
(a) Notwithstanding anything herein to the contrary, in no event shall
the Standard Contributions made on behalf of eligible Highly Compensated
Employees with respect to any Plan Year result in a Standard Contribution
Percentage for such group of Highly Compensated Employees that exceeds the
greater of:
63
(i) an amount equal to 125% of the Standard Contribution
Percentage for all Members other than Highly Compensated Employees; or
(ii) an amount equal to the sum of the Standard Contribution
Percentages for all Members other than Highly Compensated Employees and two
percent (2%), provided that such amount does not exceed 200% of the Standard
Contribution Percentage for all Members other than Highly Compensated Employees.
(b) The Committee shall be authorized to implement rules authorizing or
requiring reductions in the Standard Contributions that may be made by Highly
Compensated Employees during the Plan Year (prior to any contributions to the
Trust) so that the limitation of Section 6.07(a) is satisfied.
(c) Notwithstanding any reductions pursuant to Section 6.07(b), if the
limitation under Section 6.07(a) is exceeded in any Plan Year, the Committee
may, in accordance with the regulations issued under Sections 401(k) and 401(m)
of the Code, elect to treat amounts attributable to Sheltered Contributions as
additional Standard Contributions solely for the purposes of satisfying the
limitation of Section 6.07(a).
(d) Notwithstanding any reductions pursuant to Section 6.07(b), if the
limitation under Section 6.07(a) is exceeded in any Plan Year, a Participating
Company may, in the sole discretion of the Committee and in accordance with the
regulations issued under Section 401(m) of the Code, make additional
contributions to the Standard Accounts of Members who are not Highly Compensated
Employees, which additional contributions shall be qualified nonelective
contributions as described in Section 401(m)(4)(C) of the Code and the
regulations issued thereunder, up to an amount necessary to assure that the
limitation under Section 6.07(a) is not exceeded in the Plan
64
Year. Qualified nonelective contributions shall be nonforfeitable when made and
are distributable only in accordance with the distribution and withdrawal
provisions that are applicable to Sheltered Contributions under the Plan. In
addition, in accordance with regulations issued under Section 401(m) of the
Code, the Committee may elect to treat amounts attributable to Sheltered
Contributions as such additional Standard Contributions solely for the purposes
of satisfying the limitation of Section 6.07(a).
(e) To the extent the limitation under Section 6.07(a) continues to be
exceeded following the application of Section 6.07(b), the Excess Standard
Contributions made with respect to Highly Compensated Employees with respect to
a Plan Year and income allocable thereto shall then be distributed to such
Highly Compensated Employees in an amount equal to each such Member's Standard
Contributions (including recharacterized Sheltered Contributions), as soon as
practicable after the close of the Plan Year in which they occur, but no later
than twelve months after the close of such Plan Year. The amount of income
allocable to Excess Standard Contributions shall be determined in accordance
with the regulations issued under Code Section 401(m).
(f) The Committee is authorized to implement rules under which it may
utilize any combination of the foregoing methods described in Section 6.07(b),
(c) and (d) to assure that the limitation of Section 6.07(a) is satisfied.
(g) Notwithstanding anything to the contrary in Section 6.04 or this
Section 6.07, Sheltered Contributions and Standard Contributions may not be made
to this Plan in violation of the rules prohibiting multiple use of the
alternative limitation described in Sections 401(k)(3)(A)(ii)(II) and
401(m)(2)(A)(ii) of the Code and the provisions of Treasury Regulation section
1.401(m)-2(b) and any further guidance issued thereunder. If
65
such multiple use occurs, the Contribution Percentages for all Highly
Compensated Employees (determined after applying the foregoing provisions of
Sections 6.04 and 6.07) shall be reduced in accordance with Treasury Regulation
section 1.401(m)-2(c) and any further guidance issued thereunder in order to
prevent such multiple use of the alternative limitation.
6.08 Limitations on Annual Additions
-------------------------------
(a) Basic Limitation
----------------
Subject to the adjustments hereinafter set forth, the maximum
aggregate Annual Addition allocated to a Member's Account in any calendar year
(which shall be the Limitation Year) shall not exceed the lesser of:
(i) 25% of the Member's Compensation in such Limitation Year, or
(ii) $30,000 or such greater amount in effect as established by
regulations issued pursuant to Section 415(d) of the Code.
(b) Limitation for Members in a Combination of Plans
------------------------------------------------
Notwithstanding the foregoing, effective for Limitation Years
beginning before January 1, 2000, in the case of a Member who participates in
this Plan and a qualified defined benefit plan maintained by the Company or an
Affiliated Company, the sum of the defined contribution plan fraction (as
defined in Section 415(e)(3) of the Code) and the defined benefit plan fraction
(as defined in Section 415(e)(2) of the Code) in any Limitation Year shall not
exceed 1.0.
66
(c) Preclusion of Excess Annual Additions; Reduction of Benefits
------------------------------------------------------------
The Committee shall maintain records showing the contributions
allocated to a Member's Account in any Limitation Year, and prior to the
allocation of any contributions, the Committee shall determine whether the
amount to be allocated would cause the limitations prescribed hereunder to be
exceeded with respect to any Member.
(i) In the event that the Committee determines that the allocation
of a contribution would cause the restrictions imposed by Section 6.08(a) to be
exceeded with respect to this Plan when combined with any other defined
contribution plan pursuant to Section 6.08(e), allocations shall be reduced in
the following order, but only to the extent necessary to satisfy such
restrictions:
(1) First, the Annual Additions under any other qualified
defined contribution plan maintained by the Company or an Affiliated Company;
(2) Second, the Annual Additions under this Plan.
(ii) If it becomes necessary to make an adjustment in Annual
Additions to a Member's Account under this Plan, either because of the
limitations as applied to this Plan alone or as applied to this Plan in
combination with another qualified defined contribution plan, the excess Annual
Addition under this Plan with respect to the affected Member shall be
reallocated proportionately in the same manner as Contributions are allocated to
the Accounts of other Members until the Annual Addition to the Account of each
Member reaches the limits of Section 415 of the Code.
(iii) Notwithstanding Paragraph (i) above, if the combination
limitation prescribed under Section 6.08(b) hereof would be exceeded in any
Limitation Year that begins prior to January 1, 2000, benefits under the defined
benefit plan shall be
67
frozen, or reduced if necessary, prior to making any reductions in this Plan or
any other qualified defined contribution plan; provided, however, if in a
subsequent year the limitations are increased due to cost of living adjustments
or any other factor, the freeze or reduction of the Member's benefits shall
lapse to the extent that additional benefits may be payable under the increased
limitations.
(iv) The Committee shall advise an affected Member of any
limitation on his Annual Addition required by this Section 6.08.
(d) Disposal of Excess Annual Additions
-----------------------------------
In the event that, notwithstanding the foregoing, the limitations
with respect to Annual Additions prescribed hereunder are exceeded with respect
to any Member, and such excess arises as a consequence of the allocation of
forfeitures, a reasonable error in estimating the Member's Compensation, a
reasonable error in determining the amount of Sheltered Contributions or
Exchange Contributions that may be made with respect to the Member under the
limits of Code Section 415, or under other limited facts and circumstances that
the Commissioner finds justify the availability of the rules set forth in this
Section 6.08(d), such excess amounts shall not be deemed Annual Additions in
that Limitation Year to the extent corrected hereunder. First, Standard
Contributions (together with earnings thereon) shall be returned to each
affected Member to the extent that such distribution would reduce the excess
amounts in the Member's Account. These amounts shall be disregarded in applying
the limitations of Sections 6.07. To the extent excess amounts remain after any
such distribution, Sheltered Contributions (together with earnings thereon)
shall be returned to each affected Member to the extent that such distribution
would reduce the excess amounts in the Member's Account. These amounts shall be
disregarded in applying the limitations of Sections 6.04 and 6.05. To the extent
excess amounts remain after any such distributions, Exchange Contributions
(together with earnings thereon) shall be returned to each affected Member to
the extent that such distribution would reduce the excess amounts in the
Member's Account. These
68
amounts shall be disregarded in applying the limitations of Sections 6.03 and
6.05. To the extent excess amounts remain after all such distributions, such
excess amounts shall be used to reduce future contributions on behalf of the
Member for the next succeeding Limitation Year and succeeding Limitation Years
as necessary. If the Member is not covered by the Plan as of the end of such
succeeding year, but an excess amount still exists, such excess amount will be
held unallocated in a suspense account. The suspense account will be applied to
reduce future contributions on behalf of the other Members entitled to an
allocation, in that Limitation Year, and succeeding Limitation Years, if
necessary.
(e) Aggregation of Plans
--------------------
For purposes of this Section 6.08, all qualified defined
contribution plans maintained by the Company or any Affiliated Company shall be
treated as a single plan, and all qualified defined benefit plans maintained by
the Company or any Affiliated Company shall be treated as a single plan.
(f) Definition of "Annual Additions"
--------------------------------
For purposes of this Section, the term "Annual Additions" shall mean
the sum for any Limitation Year of the following amounts allocated to an account
on behalf of a Member:
69
(i) Stock Ownership Contributions, and any other Company or
Affiliated Company contributions allocated to the Member's account under any
defined contribution plan maintained by the Company or an Affiliated Company and
qualified under Section 401(a) of the Code;
(ii) Exchange Contributions, Sheltered Contributions, Standard
Contributions, and any other contributions by the Member or on behalf of the
Member to any defined contribution plan maintained by the Company or an
Affiliated Company and qualified under Section 401(a) of the Code;
(iii) Any forfeitures allocated to the Member's account under any
other defined contribution plan maintained by the Company or an Affiliated
Company and qualified under Section 401(a) of the Code; and
(iv) Amounts described in Sections 415(l)(1) and 419A(d)(2) of the
Code.
Notwithstanding the above, any contributions under this Plan which are
applied by the Trustee (not later than the due date, including extension, for
filing the Company's federal income tax return for the taxable year which ends
with or within such Limitation Year) to pay interest on an Acquisition Loan, and
any forfeitures allocated to a Member's Stock Ownership Account shall not be
"Annual Additions."
In any case where an Acquisition Loan has been made to finance the
acquisition of Leveraged Shares for the Trust or to repay a prior Acquisition
Loan, the amount of contributions under this Plan which are considered Annual
Additions for the Limitation Year shall be calculated with respect to the
contributions which are used to repay principal on the Acquisition Loan during
such Limitation Year and not with respect to the Leveraged Shares which are
allocated to a Member's Account during such Limitation Year.
70
Article 7. Investment of Contributions
---------------------------
7.01 Investment Funds
----------------
The Committee shall designate the Investment Funds of the Trust which
shall include, but not be limited to, the following Investment Funds:
(a) Equity Investment Fund
----------------------
One or more diversified equity funds, as may be available from
time to time, invested in equity securities or securities convertible into
equity securities or in a commingled equity trust for the collective investment
of funds of employee benefit plans qualified under Section 401(a) of the Code
(or corresponding provisions of any subsequent Federal revenue law at the time
in effect), excluding, however, any stocks or other securities of the Retirement
Savings Trustee. This exclusion shall not apply to any investment in a
commingled trust or insurance company account not proscribed by applicable law.
Pending the selection and purchase of suitable investments for this Fund, any
part of this Fund may be invested in short-term and medium-term fixed income
securities, such as commercial paper, notes of finance companies, and
obligations of the U.S. Government and any agency or instrumentality thereof.
(b) Fixed Income Investment Fund
----------------------------
One or more fixed income funds, as may be available from time to
time, invested in, but not limited to, guaranteed income contracts, bonds,
notes, debentures, asset-backed securities and fixed income derivatives,
excluding securities of the Retirement Savings Trustee. This exclusion shall not
apply to any investment in a commingled trust or insurance company account not
prescribed by applicable law. Pending the selection and purchase of suitable
investments for this Fund, any part of this
71
Fund may be invested in short-term and medium-term fixed income securities, such
as commercial paper, notes of finance companies, bankers acceptances,
certificates of deposit, and obligations of the U.S. Government and any agency
or instrumentality thereof.
(c) Money Market Fund
-----------------
One or more money market funds, as may be available from time to
time, invested in short-term obligations of the United States Government, bank
certificates of deposit, commercial paper, bankers' acceptances, shares of money
market mutual funds and other similar types of short-term investments which may
include investment in any commingled trust fund qualified under Section 401(a)
of the Code (or corresponding provisions of any subsequent Federal revenue law
at the time in effect) and which is invested primarily in similar types of
securities.
(d) Balanced Fund
-------------
One or more balanced funds, as may be available from time to
time, that invest in a mixture of bonds, equities, and short-term instruments,
as determined by the Fund manager.
(e) Company Stock Fund
------------------
A fund designed solely to invest in Company Stock or to hold
Company Stock contributed to the Plan by the Company. Up to 100% of the assets
of a Member's Retirement Savings Account may be invested in the Company Stock
Fund.
(f) Stock Ownership Fund
--------------------
A fund consisting of Company Stock and cash for fractional
shares and earnings attributable thereto. All amounts credited to a Member's
Stock Ownership
72
Account shall be invested in the Stock Ownership Fund (except that a Member's
Exchange Contributions made in each Stock Ownership Allocation Period shall be
invested in a Money Market Fund until the allocation of Leveraged Shares under
Section 6.02(b) for such Stock Ownership Allocation Period) and may not be
transferred from such fund to any of the other Investment Funds, except as
provided in Section 7.08.
If there shall be available for investment at any time more than one
Equity Investment Fund, Fixed Income Investment Fund, Money Market Fund or
Balanced Fund, there shall be separate accounting for each available Fund. To
the extent allowed by applicable law and all other provisions of this Plan, all
or any portion of a Fund identified above in (a) through (d) may be invested in
securities of a foreign corporation or a foreign government and in other
property located outside the United States. Each such Fund may keep such
amounts of cash and cash equivalents as its managers shall deem necessary or
advisable as a part of such Fund, all within the limitations specified in the
applicable Trust Agreement. Dividends, interest and other distributions
received on the assets held in each Fund shall be reinvested in the respective
Fund.
7.02 Investment of Contributions
---------------------------
Each Member, as a part of the application for membership in the Plan,
shall designate the Investment Fund or Funds (other than the Stock Ownership
Fund) in which his Sheltered Contributions, Standard Contributions, and Rollover
Contributions, if any, shall be invested. The designated investments shall be
in 1% increments, provided that the total designated equals 100% of the
contributions to his Retirement Savings Account. In the event a Member fails to
designate the investment of his Retirement Savings Account, the Member's
Sheltered Contribution, Standard Contributions, and Rollover Contributions
73
shall be invested in one or more Fixed Income Investment Funds until the Member
properly designates other Funds. Amounts held in a Member's Stock Ownership
Account may not be invested in any Fund other than the Stock Ownership Fund,
provided, however, a Member's Exchange Contributions made in each Stock
Ownership Allocation Period shall be invested in a Money Market Fund until the
allocation of Leveraged Shares under Section 6.02(b) for such Stock Ownership
Allocation Period and all or a portion of a Member's Stock Ownership Account may
be invested in any of the Investment Funds described in Section 7.01(a), (b), or
(d), pursuant to Section 7.08.
7.03 Change of Election
------------------
A Member, by notice to the Retirement Savings Trustee in a format
approved by the Committee, may change the election of the Investment Funds in
which future contributions to his Retirement Savings Account shall be invested.
A Member may change the election of the Investment Funds in which such
contributions are to be invested by designating the percentage of contributions
that shall be invested in each of the Investment Funds, in 1% increments,
provided the total equals 100%. Such change shall be effective as soon as
practicable after such notice is received by the Retirement Savings Trustee.
7.04 Transfers Among Funds
---------------------
(a) An active or inactive Member may elect to transfer all or any
portion of the value of his Retirement Savings Account in one of the Investment
Funds to any other Investment Fund (except the Stock Ownership Fund) at the
following times (and under such uniform rules as the Committee may adopt from
time to time):
74
(i) Any election to transfer between and among the Equity
Investment Fund, the Fixed Income Investment Fund, the Money Market Fund and the
Balanced Fund (and any related funds maintained in the Equity Investment Fund,
the Fixed Income Investment Fund, the Money Market Fund and the Balanced Fund)
may be made at any time, to be effective as soon as practicable thereafter; and
(ii) Any election to transfer to or from the Company Stock Fund
may be made at any time, to be effective as follows: elections initiated by the
fifteenth day of the month shall be effective as soon as practicable after the
fifteenth day of the month; elections initiated after the fifteenth day of the
month and by the last day of the month shall be effective as soon as practicable
after the last day of the month. For purposes of the preceding sentence, if the
fifteenth or last day of a month falls on a Saturday, Sunday or holiday, the
fifteenth or last day of such month shall be deemed to be the last business day
preceding the fifteenth or last day, respectively.
(b) An active or inactive Member who has diversified all or part of
his Stock Ownership Account pursuant to Section 7.08 may elect to transfer the
diversified portion of his Stock Ownership Account in one of the Investment
Funds to any other Investment Fund (except the Stock Ownership Fund and the
Money Market Fund) at the following times (and under such uniform rules as the
Committee may adopt from time to time):
(i) Any election to transfer between and among the Equity
Investment Fund, the Fixed Income Investment Fund, and the Balanced Fund (and
any related funds maintained in the Equity Investment Fund, the Fixed Income
Investment
75
Fund, and the Balanced Fund) may be made at any time, to be effective as soon as
practicable thereafter; and
(ii) Any election to transfer to or from the Company Stock Fund
may be made at any time, to be effective as follows: elections initiated by the
fifteenth day of the month shall be effective as soon as practicable after the
fifteenth day of the month; elections initiated after the fifteen day of the
month and by the last day of the month shall be effective as soon as practicable
after the last day of the month. For purposes of the preceding sentence, if the
fifteenth or last day of a month falls on a Saturday, Sunday or holiday, the
fifteenth or last day of such month shall be deemed to be the last business day
preceding the fifteenth or last day, respectively.
(c) Notwithstanding the foregoing:
(i) no transfers are permitted to be made from the Company
Stock Fund with respect to that portion of a Member's Account attributable to
his Retirement Savings Matching Contributions prior to the Member's attainment
of age 59 1/2;
(ii) no direct transfers are permitted from the Fixed Income
Investment Fund to the Money Market Fund or the funds maintained in the Balanced
Fund that are designated by the Company as having goals and objectives
comparable to the Fixed Income Investment Fund (collectively the "Balanced
Income Fund");
(iii) amounts transferred from the Fixed Income Investment Fund
to any other Fund may not thereafter be transferred to the Money Market Fund or
any Balanced Income Fund for three(3) months following such transfer; and
76
(iv) amounts transferred from the Stock Ownership Fund to the
Equity Investment Fund, the Fixed Income Investment Fund, or any Balanced Income
Fund, in accordance with the diversification rules under Section 7.08, may not
thereafter be transferred to the Money Market Fund.
(d) Except as otherwise provided, transfers pursuant to this Section
7.04 may be made by telephoning notice to the Retirement Savings Trustee, and
shall be effective as soon as practicable following the Retirement Savings
Trustee's receipt of the notice.
7.05 Investment Options
------------------
Each active and inactive Member is solely responsible for the
selection of his investment options with respect to the amounts in his
Retirement Savings Account. The Retirement Savings Trustee, the Committee, the
Participating Companies or any of the officers or supervisors of the
Participating Companies are not empowered to advise a Member as to the manner in
which his Retirement Savings Account shall be invested. The fact that a security
is available to Members for investment under the Plan shall not be construed as
a recommendation for the purchase of that security, nor shall the designation of
any option impose any liability on any Participating Company, its directors,
officers or employees, the Retirement Savings Trustee, the Committee or any
Member of the Plan.
7.06 Valuations
----------
(a) The market value of each Investment Fund (other than the Stock
Ownership Fund) shall be determined by the Retirement Savings Trustee as of each
Valuation Date. The valuation shall reflect all income, as well as the payment
of brokerage fees and transfer taxes applicable to purchases and sales for each
Fund and all
77
similar transactions, and any Plan administrative expenses to the extent they
are not paid by a Participating Company, occurring since the last Valuation Date
with respect to each Fund. The value of a Member's interest in each Investment
Fund shall be represented by mutual fund shares, shares of Company stock, or in
dollars, whichever is applicable. Contributions made by a Member for any payroll
period shall be invested based on the value of the Fund as of the last Valuation
Date in that payroll period, regardless of when such contributions are actually
paid to and become part of an Investment Fund. The Trust Fund attributable to
Members' Retirement Savings Accounts, and each Member's allocable share of such
Trust Fund, shall be valued at fair market value periodically as determined
necessary by the Retirement Savings Trustee or as requested by the Committee.
(b) The market value of the Trust Fund attributable to Members'
Stock Ownership Accounts, and each Member's allocable share of such Trust Fund,
shall be determined by the Stock Ownership Trustee as of each Valuation Date.
7.07 Annual Statements
-----------------
At least once each Plan Year, each active and inactive Member shall
be furnished with a statement setting forth the value of his Retirement Savings
Account and Stock Ownership Account.
7.08 Diversification of Stock Ownership Accounts
-------------------------------------------
(a) Eligibility for Diversification
-------------------------------
Each Member who has completed five (5) Years of Service and
attained an age specified in the schedule below shall be permitted to direct the
investment of up to a corresponding percentage of the number of shares of
Company Stock in his Stock
78
Ownership Account, as specified in the schedule below and as determined in
Subsection 7.08(b), in any of the Investment Funds described in Section 7.01(a),
(b), or (d).
Maximum Percentage of
Stock Ownership Account
Age Eligible for Diversification
--- ----------------------------
50-54 25%
55-59 50%
60 and older 100%
In addition to the foregoing, a Member who is fully vested in his Stock
Ownership Account upon his termination of employment and who has not received a
distribution of his Stock Ownership Account in accordance with Section 9.02,
shall be permitted to direct the investment of up to 100% of the shares of
Company Stock in his Stock Ownership Account in accordance with any of the
Investment Funds described in Section 7.01(a), (b), or (d).
(b) Maximum Number of Shares Permitted to be Diversified
----------------------------------------------------
The maximum number of shares of Company Stock that may be
directed by a Member under this Section 7.08 shall equal the total number of
shares of Company Stock that have ever been allocated to the Member's Stock
Ownership Account multiplied by the applicable percentage (based on the schedule
in Subsection (a) above), and then reduced by the number of shares of Company
Stock previously directed by the Member under this Section 7.08, rounded to the
nearest whole integer.
(c) Separate Diversification Elections
----------------------------------
A Member who is eligible to diversify his Stock Ownership
Account under Subsection (a) above shall be permitted to designate separately
the percentage of his
79
Exchange Contribution Account, Equity Account, and Match Account to be
diversified, in accordance with the maximum percentages specified above.
(d) Direction to Diversify
----------------------
A Member's direction to diversify pursuant to this Section 7.08
may be at any time, to be effective as follows: elections initiated by the
fifteenth day of a month shall be effective as soon as practicable after the
fifteenth day of the month; elections initiated after the fifteenth day of the
month and by the last day of the month shall be effective as soon as practicable
after the last day of the month. If the fifteenth or last day of a month falls
on a Saturday, Sunday or holiday, the fifteenth or last day of the month shall
be deemed to be the last business day preceding the fifteenth or last day of the
month, respectively. Any direction to diversify may be made by telephoning
direction to the Retirement Savings Trustee. Any direction to diversify may be
revoked or modified before the fifteenth or last day of the month next following
the request in the manner authorized by the Committee (including
telephonically). All directions shall be in accordance with any notice, rulings,
or regulations or other guidance issued by the Internal Revenue Service with
respect to Section 401(a)(28)(B) of the Code.
(e) Diversified Shares
------------------
Notwithstanding a Member's direction to diversify under this
Section 7.08, any amounts invested in the Investment Funds described in Section
7.01(a), (b), or (d) as a result of such direction shall continue to be part of
the Member's Stock Ownership Account.
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Article 8. In-Service Withdrawals and Loans
--------------------------------
8.01 In-Service Withdrawals
----------------------
A Member who is actively employed by the Company or any Affiliated
Company may elect in the manner prescribed by the Committee (including
telephonically) to withdraw in cash a portion or all of his Standard
Contributions Account, Tax Deductible Contributions Account, Rollover Account,
or Sheltered Account, less the amount of any outstanding loan, according to the
order in which the following Subsections are presented, as the amounts described
in each successive Subsection are exhausted:
(a) An amount equal to all or part of the Member's before-1987
Standard Contributions (i.e., after-tax contributions made by the Member), but
----
no more than the current value thereof in the event such value is less than the
net amount of such Standard Contributions.
(b) An amount equal to all or part of the Member's after-1986
Standard Contributions and a pro rata portion of the earnings on all Standard
Contributions, but no more than the current value thereof in the event such
value is less than the net amount of such Standard Contributions.
(c) An amount equal to all or part of the Member's Tax Deductible
Contributions Account.
(d) An amount equal to all or part of the Member's Rollover
Contributions, but no more than the current value thereof in the event such
value is less than the net amount of such Rollover Contributions.
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(e) An amount equal to all or part of the Member's Sheltered
Contributions, but no more than the current value thereof in the event such
value is less than the net amount of such Sheltered Contributions, provided:
(i) the Member has attained age 59 1/2;
(ii) the Member demonstrates financial hardship in accordance
with the rules provided under Section 8.02, and only to the extent required to
meet the need created by the financial hardship; or
(iii) the Member becomes disabled in accordance with Code
Section 401(k)(2)(B)(i)(A).
In no event shall a Member who is actively employed be permitted to
withdraw any portion of his Retirement Savings Matching Contributions (and
earnings thereon) or Stock Ownership Account.
8.02 Determination of Financial Hardship
-----------------------------------
(a) In order to demonstrate financial hardship, the Member shall
provide written notice to the Committee setting forth the amount requested and
the facts establishing the existence of such hardship. Upon receipt of such a
request, the Committee shall determine whether an immediate and heavy financial
hardship exists; if the Committee determines that such a hardship exists, it
shall further determine what portion of the amount requested by the Member is
required to meet the immediate and heavy financial need created by the hardship,
taking into account such additional amounts necessary to pay any federal, state,
or local income taxes or penalties reasonably anticipated to result from the
distribution.
82
(b) The amount to be withdrawn must not be reasonably available
from other resources of the Member, as determined by the Committee under rules
uniformly applicable to all Members similarly situated. Notwithstanding the
foregoing, a Member shall be deemed to have no other resources reasonably
available only if: (i) the Member has obtained all withdrawals and distributions
currently available to the Member under the Plan and all other qualified defined
contribution plans maintained by the Company or an Affiliated Company; (ii) the
Member has obtained all loans reasonably available to the Member under the Plan
and all other qualified defined contribution plans maintained by the Company or
an Affiliated Company, to the extent any required repayment of such loan would
not itself cause an immediate and heavy financial need; (iii) the Member agrees
to cease all Exchange Contributions, Sheltered Contributions and Standard
Contributions under the Plan as well as all similar contributions to all other
qualified defined contribution plans maintained by the Company or an Affiliated
Company for a period of 12 months from the date of the hardship withdrawal; and
(iv) the amount of pre-tax elective contributions under all qualified defined
contribution plans maintained by the Company or an Affiliated Company for the
year following the year of the withdrawal are limited in accordance with
regulations issued under Section 401(k) of the Code.
(c) The determination of whether an immediate and heavy financial
need exists shall be based on all relevant facts and circumstances, which need
shall not be disqualified because it was reasonably foreseeable or voluntarily
incurred by the Member, and shall be determined in accordance with regulations
(and any other rulings, notices, or documents of general applicability) issued
pursuant to Section 401(k) of the Code and, to the extent permitted by such
authorities, shall be limited to any financial need arising from:
83
(i) medical expenses (as defined in Section 213(d) of the
Code) incurred by the Member or a Member's spouse or any dependent of the Member
(as defined in Code Section 152), or expenses necessary for these persons to
obtain medical care (as defined in Section 213(d) of the Code);
(ii) expenses relating to the payment of tuition and related
educational fees for the next 12 months of post-secondary education for the
Member, his spouse, children or dependents (as defined in Code Section 152);
(iii) costs directly related to the purchase (excluding
mortgage payments) of a principal residence for the Member;
(iv) payments necessary to prevent the eviction of the Member
from his principal residence or foreclosure on the mortgage of the Member's
principal residence; or
(v) expenses arising from circumstances of sufficient
severity that a Member is confronted by present or impending financial ruin or
his family is clearly endangered by present or impending want or deprivation. To
demonstrate such a need, the Member must prepare a statement indicating the
reason for the need and the extent to which the Member has other resources
reasonably available to relieve that need.
(d) The amount of Sheltered Contributions that is available for
withdrawal under Section 8.01(c)(ii) shall not exceed the lesser of: (i) the
value of pre-tax contributions as of December 31, 1988 (taking into account
earnings and losses attributable to such amounts), plus the total amount of the
Member's pre-tax contributions (without account earnings) that are made after
December 31, 1988, or (ii) the value of all pre-tax contributions made to the
Plan (taking into account earnings and losses
84
attributable to such amounts), reduced by any amounts previously withdrawn from
the Member's Sheltered Account.
(e) Notwithstanding the foregoing, no withdrawal may be made by a
Member during the period in which the Committee is making a determination of
whether a domestic relations order affecting the Member's Account is a qualified
domestic relations order, within the meaning of Section 414(p) of the Code.
Further, if the Committee is in receipt of a qualified domestic relations order
with respect to any Member's Account, it may prohibit such Member from making a
withdrawal until the alternate payee's rights under such order are determined.
8.03 Investment Fund to be Deducted for Withdrawal
---------------------------------------------
The amount withdrawn under Section 8.01 shall be deducted from the
Investment Fund or Funds in which the amounts withdrawn are invested in
accordance with such uniform rules as the Committee shall adopt from time to
time.
8.04 Loans to Eligible Borrowers
---------------------------
Loans from the Plan may be made to any Member who is actively
employed by a Participating Company, or any Member or Beneficiary who is a
"party in interest" within the meaning of Section 3(14) of ERISA. Each such
individual is referred to herein as an "Eligible Borrower."
(a) An application for a loan by an Eligible Borrower shall be made
to the Committee or its designee in the manner prescribed by the Committee
(including telephonic applications), whose action in approving or disapproving
such application shall be final. The decisions by the Committee or its designee
on loan applications shall be made on a reasonably equivalent, uniform and
nondiscriminatory basis and within a
85
reasonable period after each loan application is received. In determining
whether to make a loan pursuant to this Section 8.03, the Committee or its
designee shall consider only those factors which would be considered in a normal
commercial setting by an entity in the business of making loans which are
similar to loans made hereunder. Notwithstanding the foregoing, the Committee or
its designee may apply different terms and conditions for loans to Eligible
Borrowers who are not actively employed by an Employer, or for whom payroll
deduction is not available, based on economic and other differences affecting
the individuals' ability to repay any loan. In no event shall loans be made from
a Member's Stock Ownership Account, or from amounts attributable to a Member's
Tax Deductible Contributions or a Member's Retirement Savings Matching
Contributions.
(b) The amount of the loan must be at least $1,000 and shall not
exceed the lesser of:
(i) $50,000, reduced by the highest outstanding balance of
loans from the Plan and any other defined contribution plan maintained by the
Company or an Affiliated Company during the one-year period ending on the day
before the date on which the loan was made, and
(ii) one-half of the value of his Member Account (other than
his Tax Deductible Contributions) as of the Valuation Date coincident with or
immediately following the date the Eligible Borrower applies to the Committee or
its designee for a loan.
(c) The interest rate to be charged on loans made during the Plan
Year shall be a reasonable rate as determined by the Committee from time to
time. For loans granted or renewed after October 18, 1989, and for changes in
the interest rate under an existing
86
loan after that date, the interest rate shall not be less than the commercial
rate of interest charged by persons in the business of lending money on loans
which are made under similar circumstances, as determined by the Committee from
time to time.
(d) A loan may be subject to a loan initiation fee, as determined
by the Committee from time to time, which fee shall be obtained from an Eligible
Borrower's Retirement Savings Account at the time of such loan. The amount of
the loan, reduced by such loan initiation fee, is to be transferred from the
Eligible Borrower's Retirement Savings Account invested in the Investment Funds
enumerated in Section 7.01, other than amounts attributable to Tax Deductible
Contributions or amounts invested in the Company Stock Fund that are
attributable to his Retirement Savings Matching Contributions, to a special
"Loan Reserve" for such Eligible Borrower, invested solely in the loan made to
the Eligible Borrower. Such amounts will be transferred from the Investment
Funds in a uniform manner as determined by the Committee from time to time.
Payments of principal on the loan will reduce the amount held in the Eligible
Borrower's Loan Reserve. Such payments, together with the attendant interest
payment, will be credited to the Eligible Borrower's Retirement Savings Account
invested in the Investment Funds in accordance with the Eligible Borrower's
election in effect under Sections 7.02 or 7.03 at the time of such payment. If
an Eligible Borrower has no election in effect, payments will be credited to the
Money Market Fund.
(e) In addition to such rules and regulations as the Committee may
adopt, all loans shall comply with the following terms and conditions:
(i) To the extent required by the Committee, each loan shall
be evidenced by a promissory note payable to the Plan.
87
(ii) Loans will be adequately secured, as determined by the
Committee as of the date the loan is originated.
(iii) Loans will be available to all Eligible Borrowers on a
reasonably equivalent basis and will not be made available to Highly Compensated
Employees in an amount greater than the amount made available to Members who are
not Highly Compensated Employees.
(iv) The period of repayment for any loan shall be arrived at
by mutual agreement between the Committee and the Eligible Borrower, but such
period shall not be less than twelve (12) months and greater than five years. In
the event a loan is refinanced, the total cumulative period of repayment for the
initial loan and the refinanced loan also shall not exceed five years.
(v) Payments of principal and interest will be made by level
payments by payroll deductions or in a manner agreed to by the Eligible Borrower
and the Committee. In the case of an Eligible Borrower who is not employed by
the Company or an Affiliated Company, or in the case of any other Eligible
Borrower where at any time during the repayment period, it is not possible to
repay the loan by payroll deduction, the Member and the Committee shall agree to
another form of repayment. In any event, however, such payments will be in an
amount sufficient to amortize the loan over the repayment period and shall be
made at least quarterly.
(vi) A loan may be prepaid in full as of any date without
penalty.
(vii) Only one loan may be outstanding at any given time.
(viii) Outstanding loans may be subject to an annual loan
administration fee, as determined by the Committee from time to time. Loan
88
administration fees shall be obtained from an Eligible Borrower's Retirement
Savings Account on a quarterly basis, in such manner as determined by the
Committee.
(ix) If a loan is outstanding when a Member terminates his
employment with a Participating Company other than on account of (1) Involuntary
Termination (as defined in the Retirement Income Plan for Employees of Armstrong
World Industries, Inc., (2) the sale of substantially all of the assets of a
trade or business, unit or location where the Member is employed, or (3) the
sale by a Participating Company of its interest in a subsidiary where the Member
is employed, the Member shall be considered in default with respect to the loan
unless the Member continues to be a party in interest to the Plan (as defined in
Section 3(14) of ERISA). Any other Eligible Borrower shall be considered in
default on the loan if a required payment of principal or interest thereon is
not paid within 60 days after it is due. If a loan is not repaid in accordance
with the terms contained in the promissory note and a default occurs, the Plan
may execute upon its security interest in the Eligible Borrower's Retirement
Savings Account under the Plan to satisfy the debt. Alternatively, if the
Eligible Borrower has not repaid the loan as of the date benefits are to
commence, the Committee may reduce the Eligible Borrower's distribution by the
amount of the outstanding principal and interest on the loan. However, the Plan
shall not levy against any portion of the Loan Reserve attributable to amounts
held in the Member's Sheltered Account until such time as a distribution of the
Sheltered Account could otherwise be made under the Plan. An Eligible Borrower
must repay any loan prior to distribution of the Eligible Borrower's Retirement
Savings Account.
89
(f) Notwithstanding anything herein to the contrary, no loan shall
be made to an Eligible Borrower during a period in which the Committee is making
a determination of whether a domestic relations order affecting the Eligible
Borrower's Account is a qualified domestic relations order, within the meaning
of Section 414(p) of the Code. Further, if the Committee is in receipt of a
qualified domestic relations order with respect to any Eligible Borrower's
Retirement Savings Account, it may prohibit such Eligible Borrower from
obtaining a loan until the alternate payee's rights under such order are
satisfied.
(g) Loan amounts shall be withdrawn from a Member's Retirement
Savings Account in the following order: (i) Sheltered Contributions; (ii)
Rollover Contributions; and (iii) Standard Contributions. Within each category
(i) through (iii), the Investment Fund or Funds in which the Member is invested
will be reduced to reflect the amount of the loan and any applicable set-up or
maintenance charges in accordance with such uniform rules as the Committee shall
adopt from time to time. Payroll deductions made to repay the loan will be
invested in the various Investment Funds in accordance with the Member's
investment election in effect at the time of such repayment.
90
Article 9. Vesting and Distributions
-------------------------
9.01 Vesting
-------
(a) A Member shall always have a vested and nonforfeitable
interest in his Retirement Savings Account and his Exchange Contribution
Account.
(b) A Member shall have a vested and nonforfeitable interest in
his Equity Account and Match Account upon his completion of five (5) Years of
Service.
(c) Notwithstanding anything in the Plan to the contrary, a
Member shall have a vested and nonforfeitable interest in his Equity Account and
Match Account upon (i) attaining age 65 provided he is actively employed by the
Company or an Affiliated Company on that date; (ii) Retirement; (iii) death;
(iv) total disability, provided that the Member is eligible to receive
disability benefits under a long-term disability plan sponsored by the
Affiliated Company for which he was employed, under the provisions of Article
VI, Section (8) of the Retirement Income Plan for Employees of Armstrong World
Industries, Inc., or under the Social Security Act; (v) a Change in Control;
(vi) separation from Service from a Participating Company due to a reduction in
the workforce at the office or manufacturing location at which the Member is
employed which the Committee determines is a result of (1) adverse economic
conditions, (2) a reorganization of the workforce or operating procedures, (3)
technological change, or (4) layoff; (vii) the sale of substantially all of the
assets of a trade or business, unit or location where the Member is employed, or
the sale by a Participating Company of its interest in a subsidiary where the
Member is employed; or (viii) the Member's termination of employment with the
Company or an Affiliated Company on account of the Member's transfer to
employment with Worthington Armstrong Venture (WAVE), a Delaware general
partnership.
91
9.02 Distribution Upon Retirement or Other Termination of Employment
---------------------------------------------------------------
If a Member terminates employment for any reason other than death, he may
elect, in the manner prescribed by the Committee (including telephonically), at
any time following his termination to receive an "eligible rollover
distribution" (as defined in Code Section 402(c) and the regulations and other
guidance issued thereunder) of the nonforfeitable portion of his Account. The
amount of such eligible rollover distribution shall be determined as follows:
for any request made by the fifteenth day of the month, the amount of such
eligible rollover distribution shall be determined as soon as practicable after
the fifteenth day of the month; for any request made after the fifteenth day of
the month and by the last day of the month, the amount of such eligible rollover
distribution shall be determined as soon as practicable after the last day of
the month. For purposes of the preceding sentence, if the fifteenth or last day
of a month falls on a Saturday, Sunday or holiday, the fifteenth or last day of
such month shall be deemed to be the last business day preceding the fifteenth
or last day, respectively. Such eligible rollover distribution shall be subject
to Section 9.04(b) and the following:
(a) Except as provided in Subsection (b), (c) or (d) below, the portion
of the Member's Account attributable to his Retirement Savings Account that is
not invested in the Company Stock Fund shall be distributed in cash, and the
portion of the Member's Account attributable to his Retirement Savings Account
that is invested in the Company Stock Fund and the nonforfeitable portion of the
Member's Account attributable to his Stock Ownership Account shall be
distributed in a single sum in either cash or Company Stock (with cash for
fractional shares), as elected by the Member. If the Member fails to
92
elect to receive the distribution in Company Stock, such distributions shall be
made in cash.
(b) If the Member does not elect to receive an eligible rollover
distribution of the nonforfeitable portion of his Account by a Valuation Date
(specified by the Committee) by the February following the Member's termination
of employment, and his Account (including the amount of any outstanding loan
plus accrued interest, if any) equals $5,000 or less as of such Valuation Date,
as soon as practicable thereafter the Committee or its designee will notify the
Member of his right to elect to make an eligible rollover distribution and his
right to receive all or a portion of such distribution in Company Stock in
accordance with Subsection (a).
(i) If the Member notifies the Committee or its designee of his
elections within forty-five (45) calendar days following the above-described
Valuation Date, the Committee or its designee shall make a distribution or
direct rollover in cash or Company Stock (as elected by the Member) of the
nonforfeitable portion of the Member's Account as soon as practicable following
receipt by the Committee or its designee of the Member's election, in an amount
determined as of the Valuation Date on which the Committee or its designee
receives such election.
(ii) If the Member fails to notify the Committee or its designee of
his elections within such forty-five (45) day period, the Committee or its
designee shall determine the value of the nonforfeitable portion of the Member's
Account as of the Valuation Date that coincides with or immediately follows the
end of such 45-day period, and if the Member's Account (including the amount of
any outstanding loan plus accrued interest, if any) equals $5,000 or less as of
such Valuation Date, the Committee or its
93
designee shall make a single lump sum cash distribution (less any mandatory
withholding for federal income tax purposes) of the nonforfeitable portion of
the Member's Account determined as of such Valuation Date.
Notwithstanding the foregoing provisions of this Subsection (b), the Committee
or its designee shall identify each former Member who as of a Valuation Date
(specified by the Committee) in November, 1999 has not commenced receiving
payments under the Plan and has an Account balance (including the amount of any
outstanding loan plus accrued interest) of $5,000 or less. As soon as
practicable after such Valuation Date, the Committee or its designee will notify
each such Member of his right to make an eligible rollover distribution and to
receive all or a portion of such distribution in Company Stock in accordance
with Subsection (a) and will make either a distribution or a direct rollover in
accordance with the procedures described above in paragraphs (i) and (ii),
except that any reference to 45 calendar days shall be replaced with 30 calendar
days.
(c) A married Member whose Account (including the amount of any
outstanding loan plus accrued interest, if any) exceeds $5,000 as of any
Valuation Date following his termination of employment may elect (in the manner
prescribed by the Committee) to have his Retirement Savings Account used to
purchase an annuity under which payments shall commence as soon as practicable
following the Member's attainment of age 65 (unless the Member requests earlier
commencement) and shall be made monthly for the Member's life, with 50% of the
amount payable to the Member continued after his death for the remainder of the
life of the spouse to whom the Member is married on the date payments are due to
commence. If such a married Member obtains the consent of his spouse (which
consent shall be in writing and notarized or witnessed by a member of the
94
Committee or its designee), he may instead elect (in the manner prescribed by
the Committee) to have his Retirement Savings Account used to purchase a life
annuity under which payments shall commence as soon as practicable following the
Member's attainment of age 65 (unless the Member requests earlier commencement)
and shall be made monthly for the Member's life.
(d) An unmarried Member whose Account (including the amount of any
outstanding loan plus accrued interest, if any) exceeds $5,000 as of any
Valuation Date following his termination of employment may elect (in the manner
prescribed by the Committee) to have his Retirement Savings Account used to
purchase a life annuity under which payments shall commence as soon as
practicable following the Member's attainment of age 65 (unless the Member
requests earlier commencement) and shall be made monthly for the Member's life.
(e) A Member may revoke the election of an annuity form of benefit under
Subsection (c) or (d) at any time prior to commencing the receipt of benefits.
The Committee, or its designee, shall furnish to each Member who elects an
annuity described in Subsection (c) or (d) above, a written explanation of the
annuity, the circumstances in which it will be provided in that form, the
availability of such an election, and the relative financial effect on a
Member's benefits of such an election. A Member may, at any time, after receipt
of the aforementioned explanation, request a further written explanation of the
terms and conditions of the annuity and the financial effect upon the particular
Member's benefits of making an election not to receive his benefits in such
form. Within 30 days of the date of the Member's request or as soon thereafter
as practicable, the Committee shall furnish to the Member a written explanation
of the effect of such an
95
election, given in terms of dollars per payment, calculated on the basis of the
current value of the Member's Retirement Savings Account determined as of the
Valuation Date on which the Committee receives the Member's written election to
receive an annuity form of payment.
(f) The Committee or its designee shall notify each Member, at such time
and in such manner as required by Sections 402(f) and 411(a)(11) of the Code and
the regulations and other guidance issued thereunder, of his right to make a
"direct rollover distribution" in accordance with Section 9.06 below, and his
right to receive an immediate distribution of the nonforfeitable portion of his
Account. Distribution of the nonforfeitable portion of a Member's Account under
the Plan may occur prior to 30 days after the Committee or its designee provides
such notice, provided:
(i) the Member is informed that he has a right to a period of at
least 30 days after receiving the notice to consider the decision of whether to
make a direct rollover distribution and whether to receive an immediate
distribution; and
(ii) the Member, after receiving the notice, requests to receive an
immediate distribution, in the manner prescribed by the Committee (including
telephonically).
(g) In the event an allocation of Company Stock resulting from Stock
Ownership Contributions or dividends is made to a Member's Stock Ownership
Account following the date on which an initial distribution is made or begins
under this Section 9.02, distribution of the nonforfeitable portion of such
allocation shall be made to the Member in a single lump sum payment (in cash or
Company Stock, as elected by the Member with respect to the initial
distribution) as soon as practicable following the
96
allocation of such Company Stock and/or dividends in an amount determined as of
the Valuation Date coinciding with or immediately following such allocation.
Further, to the extent a Member is entitled to a distribution under this Section
9.02 and there are dividends on Company Stock which have not been allocated to
the Member's Stock Ownership Account and have not been utilized to pay any
amounts due under an Acquisition Loan, such dividends shall be paid to the
Member in cash.
(h) Notwithstanding any other provision in the Plan to the contrary, in
the event a Member who terminates employment because of his Retirement has not
requested a lump sum distribution of his entire Account under this Section 9.02
or the purchase of an annuity under Subsection (c) or (d), the Member may elect
(in the manner prescribed by the Committee, including telephonically) to
withdraw in cash a portion of his Account and investment income thereon, less
the amount of any outstanding loan, according to the order in which the
following Paragraphs are presented, as the amounts described in each successive
Paragraphs are exhausted:
(i) An amount equal to all or part of the Member's before-1987
Standard Contributions (i.e., after-tax contributions made by the Member), but
----
no more than the current value thereof in the event such value is less than the
net amount of such Standard Contributions.
(ii) An amount equal to all or part of the Member's after-1986
Standard Contributions and a pro rata portion of the earnings on all Standard
Contributions, but no more than the current value thereof in the event such
value is less than the net amount of such Standard Contributions.
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(iii) An amount equal to all or part of the Member's Tax Deductible
Contributions Account.
(iv) An amount equal to all or part of the Member's Rollover
Contributions, but no more than the current value thereof in the event such
value is less than the net amount of such Rollover Contributions.
(v) An amount equal to all or part of the Member's Sheltered
Contributions, but no more than the current value thereof in the event such
value is less than the net amount of such Sheltered Contributions.
(vi) An amount equal to all or part of the Retirement Savings
Matching Contributions made on the Member's behalf, but no more than the current
value thereof in the event such value is less than the net amount of such
Retirement Savings Matching Contributions.
(vii) An amount equal to all or part of the Member's Stock Ownership
Account attributable to his Equity Allocations.
(viii) An amount equal to all or part of the Member's Stock Ownership
Account attributable to his Exchange Contributions, but no more than the current
value thereof in the event such value is less than the net amount of such
Exchange Contributions.
(ix) An amount equal to all or part of the Member's Stock Ownership
Account attributable to his Matching Allocations.
Solely for the calendar quarter beginning October 1, 1996, a Member who
terminates employment for any reason and who has not requested a lump sum
distribution of his entire Account under this Section 9.02 or the purchase of an
annuity under
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Subsection (c) or (d) shall have the right to withdraw in cash all or any
portion of his Account described in Paragraphs (i) through (v).
(i) Notwithstanding any other provision in the Plan to the contrary, in
no event shall any distribution or withdrawal of a Member's Stock Ownership
Account be permitted between October 1, 1996 and December 31, 1996.
9.03 Distribution on Account of Death
--------------------------------
(a) If a Member dies before the distribution of his entire Account under
Section 9.02, the entire amount outstanding in his Account, determined as of the
Valuation Date coinciding with or immediately following the Member's death or
notification of the Member's death, if later, shall be paid to his Beneficiary
in a single lump sum distribution as soon as practicable thereafter. The
portion of the Member's Retirement Savings Account not invested in the Company
Stock Fund shall be distributed to his Beneficiary in cash, and the portion of
the Member's Retirement Savings Account invested in the Company Stock Fund and
the Member's Stock Ownership Account shall be distributed in a single sum in
either cash or Company Stock (with cash for fractional shares), as elected by
the Beneficiary.
(b) In the event an allocation of Company Stock resulting from Stock
Ownership Contributions or dividends is made to the Member's Stock Ownership
Account following the date on which a single lump sum distribution is made to
the Member's Beneficiary under Section 9.03(a), distribution of such allocations
shall be paid to the Member's Beneficiary in a single lump sum distribution (in
cash or Company Stock, as elected by the Beneficiary with respect to the initial
distribution) as soon as practicable following such allocation in an amount
determined as of the Valuation Date coinciding
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with or immediately following the latest of the Member's death, the notification
of the Member's death, or the allocation of such Company Stock or dividends.
Further, to the extent a Member's Beneficiary is entitled to a distribution
under this Section 9.03 and there are dividends on Company Stock which have not
been allocated to the Member's Stock Ownership Account and have not been
utilized to pay any amounts due under an Acquisition Loan, such dividends shall
be paid to the Beneficiary in cash.
(c) Notwithstanding any other provision in the Plan to the contrary, in
no event shall any distribution of a deceased Member's Stock Ownership Account
be permitted under this Section 9.03 between October 1, 1996 and December 31,
1996.
9.04 Latest Commencement of Payments
-------------------------------
(a) Notwithstanding the provisions of Section 9.02 or 9.03, unless the
Member otherwise elects, the vested portion of a Member's Account shall be
distributed not later than the 60th day following the end of the Plan Year in
which the latest of the following occurs:
(i) the Member's 65th birthday,
(ii) the tenth anniversary of the date on which he became a Member,
or
(iii) the date he terminates service with the Company or an
Affiliated Company.
(b) Notwithstanding anything in the Plan to the contrary, distribution
of any Member's Account shall commence not later than the April 1 following the
close of the calendar year in which the Member attains age 70 1/2, regardless of
whether his employment with the Company or an Affiliated Company is terminated
as of that date. If the Member
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is actively employed by the Company or an Affiliated Company as of that date,
the Member shall elect whether to receive the minimum amount required under Code
section 401(a)(9) and the regulations issued thereunder (based on the life
expectancy of such Member), or his entire Account. If the Member is no longer
actively employed, he shall be entitled to elect to receive his distribution in
either manner indicated in the preceding sentence or in accordance with the
other provisions of this Article 9. If the Member elects to receive the minimum
amount required under Code section 401(a)(9), unless otherwise elected by the
Member by the time distributions are required to begin under this Subsection
(b), the Member's life expectancy shall be recalculated annually. Also, any such
election shall be irrevocable and shall apply to all subsequent years. Amounts
required to be paid for each year shall be based on the value of the Member's
Account on the last day of the immediately preceding calendar year, adjusted to
reflect any additional benefits accrued during such immediately preceding
calendar year, and may be subject to an administration fee, which fee shall be
obtained from the Member's Account on a monthly or annual basis. In the event an
actively employed Member elects to receive his entire Account, a distribution of
the total value of his Account shall be made no later than the last day of each
subsequent Plan Year.
9.05 Forfeitures
-----------
(a) Termination of Employment
-------------------------
If a Member terminates employment prior to the date on which he is
fully vested in his Account, the non-vested portion of his Account shall be
forfeited as of the close of the Plan Year in which the earlier of the following
occurs: (i) the terminated Member incurs five (5) consecutive Breaks in Service,
or (ii) the terminated Member
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receives a distribution of the vested portion of his Account. If the non-vested
portion of a Member's Stock Ownership Account is forfeited, Company Stock
allocated pursuant to an Acquisition Loan shall be forfeited only after other
assets. The cash equivalent of any forfeited Company Stock shall be based on the
fair market value of the Company Stock as of the last Valuation Date in such
Plan Year of forfeiture. If interests in more than one class of Company Stock
have been allocated to the Member's Stock Ownership Account, such Member must be
treated as having forfeited the same portion of each such class. Any forfeited
amount under this Section 9.05(a) shall be used first to reduce any future
Participating Company contributions, and then to pay administrative expenses
under the Plan in accordance with Section 11.07 no later than as of the end of
the Plan Year in which the forfeiture occurs.
(b) Restoration of Account Balance
------------------------------
If the non-vested portion of a Member's Account has been forfeited
in accordance with Section 9.05(a), that amount shall be subsequently restored
to his Stock Ownership Account and used to purchase shares of Company Stock,
provided (i) he is reemployed by a Participating Company before he has a period
of five (5) consecutive Breaks in Service, and (ii) he repays to the Plan within
five (5) years of his reemployment a cash lump sum payment equal to the full
amount distributed to him from the Plan on account of his termination of
employment. The fair market value of Company Stock as of the date of restoration
shall be used to determine the number of shares to be restored to the Member's
Stock Ownership Account. Any amounts to be restored to a Member's Stock
Ownership Account shall be taken first from any forfeitures which have not been
used to reduce future Participating Company contributions or to pay
administrative
102
expenses, then from Released Leveraged Shares if the Committee determines to use
Released Leveraged Shares for this purpose, and if any amounts remain to be
restored, the Member's Participating Company shall make a special contribution
in an amount necessary to restore such amounts. If Released Leveraged Shares are
used to restore a Member's Stock Ownership Account, the fair market value of
such Released Leveraged Shares as of the date of restoration shall be used to
determine the number of shares to be credited to the Member's Stock Ownership
Account.
9.06 Direct Rollover Distributions
-----------------------------
(a) At the request of a Member, a surviving spouse of a Member, or a
spouse or former spouse of a Member that is an alternate payee under a qualified
domestic relations order as defined in Section 414(p) of the Code (referred to
as the "distributee"), the Retirement Savings Trustee shall effectuate a direct
rollover distribution of the amount requested by the distributee, in accordance
with Section 401(a)(31) of the Code, to an eligible retirement plan (as defined
in Section 402(c)(8)(B) of the Code). Such amount may constitute all or any
whole percent of any distribution from the Plan otherwise to be made to the
distributee, provided that such distribution constitutes an "eligible rollover
distribution" as defined in Section 402(c) of the Code and the regulations and
other guidance issued thereunder. All direct rollover distributions shall be
made in accordance with the following Subsections (b) through (h).
(b) A direct rollover shall only be made to one eligible retirement
plan; a distributee may not elect to have a direct rollover distribution
apportioned between or among more than one eligible retirement plan.
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(c) Direct rollover distributions shall be made, in accordance with such
forms and procedures as may be established by the Committee or its designee and
to the extent any such distribution is to be made in shares of Company stock
otherwise distributable under the Plan to the distributee, such shares shall be
registered in a manner necessary to effectuate a direct rollover under Section
401(a)(31) of the Code.
(d) No direct rollover distribution shall be made unless the distributee
furnishes the Committee or its designee with such information as the Committee
or its designee shall require and deems to be sufficient.
(e) A distributee may elect to divide an eligible rollover distribution
into two components, with one portion paid as a direct rollover distribution and
the remainder paid to the distributee.
(f) No direct rollover distribution may be made unless the distributee
has received a written explanation of the consequences of such a distribution
and such other information required by the Code at such time and in such manner
as required by Sections 402(f) and 411(a)(11) of the Code and the regulations
and other guidance issued thereunder, and in accordance with rules established
by the Committee.
(g) No direct rollover distribution shall be permitted unless the amount
of the distribution exceeds $200.
(h) Direct rollover distributions shall be treated as all other
distributions under the Plan and shall not be treated as a direct trustee-to-
trustee transfer of assets and liabilities.
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9.07 Inability to Locate Payee
-------------------------
If a Member or Beneficiary cannot be located by reasonable efforts of the
Committee within a reasonable period of time after the latest date such benefits
are otherwise payable under the Plan, the amount in such Member's Account shall
be forfeited and used, not later than as of the last day of the Plan Year in
which the forfeiture occurs to reduce future Participating Company
contributions, to defray administrative expenses of the Plan, and to restore
Members' Stock Ownership Accounts in accordance with Section 9.05(b). Such
forfeited amount shall be restored (without earnings) if, at any time, the
Member or Beneficiary who was entitled to receive such benefit when it first
became payable, after furnishing proof of their identity and right to make such
claim to the Committee, files a written request for such benefit with the
Committee.
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Article 10. Management of Funds
-------------------
10.01 Trust Funds
-----------
All contributions and all other cash, securities or other property
received by the Retirement Savings Trustee from time to time and held by it
shall constitute the Retirement Savings Trust Fund; all contributions and all
other cash, securities or other property received by the Stock Ownership Trustee
from time to time and held by it shall constitute the Stock Ownership Trust
Fund. Each Trust Fund shall be held and invested upon such terms and in such
manner as set forth in the Plan and its respective Trust Agreement. The
Retirement Savings Trustee shall have exclusive authority and control to manage
and control the assets of the Plan attributable to: (i) the profit sharing
portion of the Plan, (ii) the initial investment of Exchange Contributions in a
Money Market Fund pursuant to Section 7.02, and (iii) the diversification by
certain Members of a portion of their Stock Ownership Accounts pursuant to
Section 7.08, subject to the terms of the Plan and the Retirement Savings Trust
Agreement; the Stock Ownership Trustee shall have exclusive authority and
control to manage and control the assets of the Plan attributable to the
employee stock ownership portion of the Plan, excluding the initial investment
of Exchange Contributions in a Money Market Fund pursuant to Section 7.02 and
the diversification by certain Members of a portion of their Stock Ownership
Accounts pursuant to Section 7.08, subject to the terms of the Plan and the
Stock Ownership Trust Agreement. All payments of benefits as provided in this
Plan shall be made solely out of, and to the extent of, the assets held in
Trust, and no Participating Company shall be liable, directly or indirectly, for
the payment of any benefits provided in this Plan, nor shall any Participating
Company be liable for any deficiency existing at any time in the Trust.
106
10.02 Investment of Stock Ownership Contributions
-------------------------------------------
The investment policy of the employee stock ownership portion of the Plan
is to invest primarily in Company Stock and to that end, up to 100% of the
assets in the Stock Ownership Trust Fund may be so invested, subject to the
initial investment of Exchange Contributions in a Money Market Fund pursuant to
Section 7.02 and the rights of certain Members to transfer to other Investment
Funds pursuant to Section 7.08. Such Company Stock shall be purchased by the
Stock Ownership Trustee through an established securities market or from the
Company, or any other person or entity, at a price not less than fair market
value. Company Stock may be sold by the Stock Ownership Trustee through an
established securities market or to the Company or to any other person or
entity, at a price not less than fair market value. To the extent funds are
available, the Stock Ownership Trustee may invest assets temporarily in savings
accounts, certificates of deposit, U.S. Government obligations, obligations of
agencies of the U.S. Government or in other types of short-term investments
including commercial paper, or other investments deemed desirable for the Stock
Ownership Trust Fund, or the funds may be held in cash or cash equivalents.
10.03 Member Accounts
---------------
(a) Retirement Savings Account
--------------------------
The Committee shall authorize the establishment of the following
subaccounts within each Member's Retirement Savings Account, to provide for the
administration of the profit sharing portion of the Trust, in accordance with
the provisions of this Plan:
107
(i) Sheltered Account, to hold the Member's Sheltered
Contributions, and earnings thereon.
(ii) Standard Account, to hold the Member's Standard
Contributions, and earnings thereon.
(iii) Retirement Savings Matching Account, to hold any
Retirement Savings Matching Contributions made on the Member's behalf under the
Plan, and earnings thereon.
(iv) Rollover Contributions Account, to hold any Rollover
Contributions made by the Member, and earnings thereon.
(v) Tax Deductible Contributions Account, to hold the Member's
Tax Deductible Contributions made under the Plan, and earnings thereon.
(b) Stock Ownership Account
-----------------------
The Committee shall authorize the establishment of the following
subaccounts within each Member's Stock Ownership Account, to provide for the
administration of the employee stock ownership portion of the Trust in
accordance with the provisions of this Plan:
(i) Exchange Contribution Account.
(ii) Match Account, which shall include the Bonus Account in
existence under the Stock Ownership Plan prior to October 1, 1996.
(iii) Equity Account.
Each such subaccount shall include any cash dividends received
by the Trustee on shares of Company Stock held in the Members' Stock Ownership
Accounts or in the Stock Ownership Suspense Account (and earnings attributable
thereto), and any
108
proceeds of the sale of Leveraged Shares. Funds in this Account may be invested
only in the Stock Ownership Fund, subject to the initial investment of Exchange
Contributions in a Money Market Fund pursuant to Section 7.02 and the rights of
certain Members to transfer to other Investment Funds pursuant to Section 7.08.
10.04 Transfer of Trust Assets
------------------------
(a) The Committee may make a transfer of liabilities and corresponding
assets from the Trust to trusts of other plans qualified under Code Section
401(a). The Committee may accept a transfer of liabilities and corresponding
assets from the trusts of other plans qualified under Code Section 401(a). Any
assets received under the provisions of this Section shall thereafter constitute
part of the corpus of the Trust. All such transfers and allocations shall be
made in accordance with the provisions of ERISA.
(b) Effective as of September 30, 1996, all of the assets and liabilities
under the Stock Ownership Plan were transferred to this Plan and the portion of
the assets and liabilities under the Retirement Savings Plan for Hourly-Paid
Employees of Armstrong World Industries, Inc. attributable to Employees of the
Company employed at its Mobile Plant and Employees who are not subject to any
collective bargaining agreement was transferred to this Plan.
10.05 Voting Rights for Company Stock
-------------------------------
Each Member (or Beneficiary of a deceased Member) is, for purposes of
this Section 10.05, hereby designated as a "named fiduciary" (within the meaning
of ERISA) with respect to the shares of Company Stock allocated to his
Retirement Savings Account, the shares of Company Stock allocated to his Stock
Ownership Account and to a pro rata portion of the unallocated shares of Company
Stock held in the Stock Ownership
109
Suspense Account and shall have the right to direct the Retirement Savings
Trustee and/or the Stock Ownership Trustee, as the case may be, with respect to
the vote of the shares of Company Stock allocated to his Retirement Savings
Account and/or his Stock Ownership Account, on each matter brought before any
meeting of the stockholders of the Company. Before each such meeting of
stockholders, the Company shall cause to be furnished to each Member (or
Beneficiary) a copy of the proxy solicitation material, together with a form
requesting confidential directions to the Retirement Savings Trustee and/or the
Stock Ownership Trustee on how such shares of Company Stock allocated to such
Member's (or Beneficiary's) Account shall be voted on each such matter. Upon
timely receipt of such directions the appropriate Trustee shall, on each such
matter, vote as directed the number of shares (including fractional shares) of
Company Stock allocated to such Member's (or Beneficiary's) Retirement Savings
Account or Stock Ownership Account, and the appropriate Trustee shall have no
discretion in such matter. The instructions received by the Retirement Savings
Trustee and/or the Stock Ownership Trustee from Members (or Beneficiaries) shall
be held by them in confidence and shall not be divulged or released to any
person, including the Committee, officers or employees of the Company or an
Affiliated Company. Each Trustee shall vote all Company Stock held by it,
including Company Stock for which it has not received direction, as well as
unallocated shares in the employee stock ownership portion of the Plan, in the
same proportion as directed shares are voted determined by the votes of Members
(or Beneficiaries) on all shares allocated to Members' (or Beneficiaries')
Accounts, and the appropriate Trustee shall have no discretion in such matter.
10.06 Tender Offer Rights with Respect to Company Stock
-------------------------------------------------
110
The provisions of this Section 10.06 shall apply in the event a tender or
exchange offer, including, but not limited to, a tender offer or exchange offer
within the meaning of the Securities Exchange Act of 1934, as from time to time
amended and in effect (hereinafter, a "tender offer"), for Company Stock is
commenced by a person or persons. In the event a tender offer for Company Stock
is commenced, the Committee, promptly after receiving notice of the commencement
of any such tender offer, shall transfer certain of the Committee's record-
keeping functions under the Plan to an independent record-keeper (which if one
of the Trustees consents in writing, may be such Trustee). The functions so
transferred shall be those necessary to preserve the confidentiality of any
directions given by the Members (or Beneficiaries) in connection with the tender
offer. The Retirement Savings Trustee and the Stock Ownership Trustee shall
have no discretion or authority to sell, exchange or transfer any of such shares
pursuant to such tender offer except to the extent, and only to the extent, as
provided in this Plan and the applicable Trust Agreement. Each Member (or
Beneficiary) is, for purposes of this Section 10.06, hereby designated as a
"named fiduciary" (within the meaning of ERISA) with respect to the shares of
Company Stock allocated to his Retirement Savings Account, the shares of Company
Stock allocated to his Stock Ownership Account, and to a pro rata portion of the
unallocated shares of Company Stock held in the Stock Ownership Suspense Account
and shall have the right, to the extent of the number of whole shares of Company
Stock allocated to his Retirement Savings Account and/or his Stock Ownership
Account, to direct the Trustee in writing as to the manner in which to respond
to a tender offer with respect to shares of Company Stock. The Company shall
use its best efforts to timely distribute or cause to be
111
distributed to each Member (or Beneficiary) such information as will be
distributed to stockholders of the Company in connection with any such tender
offer. Upon timely receipt of such instructions, the Retirement Savings Trustee
and/or the Stock Ownership Trustee shall respond as instructed with respect to
such shares of Company Stock. The instructions received by the appropriate
Trustee from Members (or Beneficiaries) shall be held by such Trustee in
confidence and shall not be divulged or released to any person, including the
Committee, officers or employees of the Company or any Affiliated Company. If
the Retirement Savings Trustee and/or Stock Ownership Trustee shall not receive
timely instructions from a Member (or Beneficiary) as to the manner in which to
respond to such a tender offer, such Trustee shall not tender or exchange any
shares of Company Stock with respect to which such Member (or Beneficiary) has
the right of direction, and such Trustee shall have no discretion in such
matter. Unallocated shares of Company Stock and fractional shares of Company
Stock allocated to Members' (or Beneficiaries') Accounts shall be tendered or
exchanged by such Trustee in the same proportion it tenders or exchanges the
shares with respect to which Members (or Beneficiaries) have the right of
direction, and the Retirement Savings Trustee and/or Stock Ownership Trustee
shall have no discretion in such matter. In determining such proportion, the
Trustee shall under all circumstances include in its calculation the direction
of Members (or Beneficiaries) on all shares of Company Stock allocated to
Members' (or Beneficiaries') Accounts. The independent record-keeper shall
solicit confidentially from each Member (or Beneficiary) the directions
described in this Section 10.06 as to whether shares are to be tendered. The
independent record-keeper, if different from one of the Trustees, shall instruct
the Trustees as to the amount of shares to be tendered, in accordance with the
above provisions.
112
Article 11. Administration of Plan
----------------------
11.01 Appointment of Committee
------------------------
(a) The Committee shall be comprised of the members of the Retirement
Committee of the Retirement Income Plan for Employees of Armstrong World
Industries, Inc. The Chairman and Secretary of the Retirement Income Plan's
Committee shall be the Chairman and Secretary of the Committee.
(b) If no members of the Committee are in office, the Company shall be
deemed the Committee.
11.02 Organization and Operation of the Committee
-------------------------------------------
(a) The Committee shall endeavor to act, in carrying out its duties and
responsibilities in the interest of the Members and Beneficiaries, with the
care, skill, prudence and diligence under the prevailing circumstances that a
prudent man, acting in a like capacity and familiar with such matters, would use
in the conduct of an enterprise of like character and aims.
(b) The Committee shall act by a majority of its members or by unanimous
approval of its members if there are two or less members in office at the time,
and any action may be taken either by a vote taken in a meeting or by action
taken in writing without the formality of convening a meeting. In the event of
a deadlock, the Committee shall determine the method for resolving such
deadlock. If there are two or more Committee members, no member shall act upon
any question pertaining solely to himself, and the other member or members shall
alone make any determination required by the Plan in respect thereof.
113
(c) The Committee may authorize any one or more of its members, or
members of a separate administrative subcommittee it may form, to execute any
routine administrative document on behalf of the Committee.
(d) The Committee may, in addition to the execution of routine
administrative documents, delegate specific duties and powers to one or more of
its members or to a separate administrative subcommittee it may form. Such
delegation shall remain in effect until rescinded in writing by the Committee.
The members or persons so designated shall be solely liable, jointly and
severally, for their acts or omissions with respect to such delegated
responsibilities.
(e) The Committee shall endeavor not to engage directly or indirectly in
any prohibited transaction, as set forth in ERISA.
11.03 Duties and Responsibilities of the Committee
--------------------------------------------
The Committee, except for such investment and other responsibilities
vested in one of the Trustees, a designated investment manager or the investment
committee of the Board of Directors, shall have full authority and
responsibility for administering the Plan in accordance with its provisions and
under applicable law. The duties and responsibilities of the Committee shall
include, but shall not be limited to, the following:
(a) To appoint such accountants, consultants, administrators, counsel, or
such other persons it deems necessary for the administration of the Plan.
Members of the Committee shall not be precluded from serving the Committee in
one or more of such individual capacities.
(b) To determine, in its full and exclusive discretion, all benefits and
to resolve all questions arising from the administration, interpretation, and
application of Plan
114
provisions, either by general rules or by particular decisions, including
determinations as to whether a claimant is eligible for benefits, the amount,
form and timing of benefits, and any other matter (including any question of
fact) raised by a claimant or identified by the Committee.
(c) To advise each Trustee with respect to all benefits which become
payable under the Plan and to direct each Trustee as to the manner in which such
benefits are to be paid.
(d) To adopt such forms and regulations it deems advisable for the
administration of the Plan and the conduct of its affairs.
(e) To take such steps as it considers necessary and appropriate to
remedy any inequity resulting from incorrect information received or
communicated or as a consequence of administrative error
(f) To assure that its members, each Trustee and every other person who
handles funds or other property of the Plan are bonded as required by law.
(g) To settle or compromise any claims or debts arising from the
operation of the Plan and to defend any claims in any legal or administrative
proceeding.
All duties and responsibilities of the Committee shall be carried out in
its sole discretion, and its decisions shall be final and binding upon all
affected persons, except for the right any such persons shall have to appeal
such decisions pursuant to Section 11.06 or through any court proceeding.
11.04 Required Information
--------------------
Each Participating Company and each Member and Beneficiary entitled to
benefits shall furnish the Committee any information or proof requested by the
Committee
115
and required for the proper administration of the Plan. Failure on the part of
any Member or Beneficiary to comply with such request shall be sufficient
grounds for the delay in payment of benefits under the Plan until the requested
information or proof is received.
11.05 Indemnification
---------------
The Company will indemnify and save harmless the members of the Committee
and any person to whom fiduciary responsibilities are delegated under this Plan
against any cost or expense (including attorney's fees) or liability (including
any sum paid in settlement of a claim with the approval of the Company) arising
out of any act or omission to act, except in the case of willful misconduct.
11.06 Claims and Appeal Procedure
---------------------------
(a) Any request or claim for Plan benefits must be made in writing and
shall be deemed to be filed by a Member or Beneficiary when a written request is
made by the claimant or the claimant's authorized representative which is
reasonably calculated to bring the claim to the attention of the Committee.
(b) The Committee shall provide notice in writing to any Member or
Beneficiary where a claim for benefits under the Plan has been denied in whole
or in part. Such notice shall be made within 90 days of the receipt by the
Committee of the Member's or Beneficiary's claim or, if special circumstances
require, and the Member or Beneficiary is so notified in writing, within 180
days of the receipt by the Committee of the Member's or Beneficiary's claim.
The notice shall be written in a manner calculated to be understood by the
claimant and shall:
(i) set forth the specific reasons for the denial of benefits;
116
(ii) contain specific references to Plan provisions relative to
the denial;
(iii) describe any material and information, if any, necessary for
the claim for benefits to be allowed, which had been requested, but not received
by the Committee; and
(iv) advise the Member or Beneficiary that any appeal of the
Committee's adverse determination must be made in writing to the Committee,
within 60 days after receipt of the initial denial notification, setting forth
the facts upon which the appeal is based.
(c) If notice of the denial of a claim is not furnished within the time
periods set forth above, the claim shall be deemed denied and the claimant shall
be permitted to proceed to the review procedures set forth below. If the Member
or Beneficiary fails to appeal the Committee's denial of benefits in writing and
within 60 days after receipt by the claimant of written notification of denial
of the claim (or within 60 days after a deemed denial of the claim), the
Committee's determination shall become final and conclusive.
(d) If the Member or Beneficiary appeals the Committee's denial of
benefits in a timely fashion, the Committee shall re-examine all issues relevant
to the original denial of benefits. Any such claimant, or his duly authorized
representative may review any pertinent documents, as determined by the
Committee, and submit in writing any issues or comments to be addressed on
appeal.
(e) The Committee shall advise the Member or Beneficiary and such
individual's representative of its decision which shall be written in a manner
calculated to be understood by the claimant, and include specific references to
the pertinent Plan
117
provisions on which the decision is based. Such response shall be made within 60
days of receipt of the written appeal, unless special circumstances require an
extension of such 60 day period for not more than an additional 60 days. Where
such extension is necessary, the claimant shall be given written notice of the
delay. If the decision on review is not furnished within the time set forth
above, the claim shall be deemed denied on review.
11.07 Expenses of the Plan
--------------------
All reasonable expenses of the Committee and of the Plan (other than
expenses of the Company which relate to settlor functions), including the
expenses of the Trustees, and other reasonable expenses related to the financial
administration of the Plan, shall be approved by the Committee and shall be paid
out of the Trust Fund to the extent they are not paid by the Company.
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Article 12. General Provisions
------------------
12.01 Exclusiveness of Benefits
-------------------------
The Plan has been created for the exclusive benefit of the Members and
their Beneficiaries. No part of the Trust shall ever revert to a Participating
Company nor shall any part of such Trust ever be used other than for the
exclusive benefit of the Members and their Beneficiaries, except as provided in
accordance with Section 12.03(b). No Member or Beneficiary shall have any
interest in or right to any part of the Trust, or any equitable right under the
Trust Agreements except to the extent expressly provided in the Plan or Trust
Agreements.
12.02 Limitation of Rights
--------------------
The establishment of this Plan shall not be considered as giving to any
Member or other employee of a Participating Company the right to be retained in
the employ of a Participating Company, and all Members and other employees shall
remain subject to discharge to the same extent as if the Plan had never been
adopted.
12.03 Non-Assignability
-----------------
(a) No benefit or interest under the Plan shall be subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any such action shall be void for purposes of the Plan. No benefit
or interest shall in any manner be subject to the debts, contracts, liabilities,
engagements or torts of any person entitled to such benefit or interest, nor
shall it be subject to attachment or other legal process for or against any
person, except to such extent as may be required by law or permitted by Treasury
Regulation. If any payee or representative of a payee under the Plan becomes
bankrupt or attempts to anticipate, alienate, sell, transfer, assign, pledge,
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encumber, or charge any such benefit or interest, the Committee may hold or
apply the benefit or interest or any part thereof to or for such person, his
spouse, his children, or other dependents, or any of them in such manner and in
such proportions as the Committee shall determine in its sole discretion.
(b) Notwithstanding any other provisions of the Plan to the contrary, the
Committee and the Trustees shall comply with a "qualified domestic relations
order" as such term in defined in Section 414(p) of the Code and the benefits
otherwise payable to the Member, and to any other person than the payee entitled
to benefits under the order, shall be adjusted accordingly. Benefits payable
under a qualified domestic relations order may be paid prior to the "earliest
retirement age" as such term is defined in Code Section 414(p). The Committee
shall establish reasonable procedures for determining the qualified status of
any domestic relations order and for administering distributions under any such
order.
12.04 Construction of Agreement
-------------------------
The Plan shall be construed according to the laws of the Commonwealth of
Pennsylvania and all provisions hereof shall be administered according to, and
its validity shall be determined under, the laws of such Commonwealth, except
where preempted by Federal law.
12.05 Severability
------------
(a) Should any provision of the Plan be deemed or held to be illegal or
invalid for any reason, such invalidity shall not adversely affect any other
Plan provision and in such case, the appropriate parties shall immediately adopt
a new provision or regulation to take the place of the one deemed or held to be
illegal or invalid.
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(b) If the invalidity inhibits the proper operation of this Plan a new
provision shall be adopted to take the place of the one deemed or held to be
illegal or invalid.
12.06 Titles and Headings
-------------------
The titles and headings of the Sections and any Subsections in this
instrument are for convenience of reference only. In the event of any conflict
between the text of this instrument and the titles or headings, the text rather
than such titles or headings shall control.
12.07 Counterparts as Original
------------------------
The Plan may be prepared in counterparts, each of which so prepared shall
be construed as an original.
12.08 Construction
------------
The singular, where appearing in the Plan shall include the plural and
the plural shall include the singular; and the masculine pronoun, where
appearing in the Plan shall include the feminine and the feminine shall include
the masculine.
12.09 Source of Benefits
------------------
All benefits under the Plan shall be provided solely from the Trust
Funds, and neither the Participating Companies nor their officers, directors or
stockholders shall have any liability or responsibility therefor. Neither the
Participating Companies nor the Trustees guarantee the funds of the Plan against
any loss or depreciation or guarantee the payment of any benefit under the Plan.
No person shall have any rights under the Plan with respect to the funds of the
Plan, or against either Trustee, any Participating Company or any member of the
Committee, except as specifically provided herein.
12.10 Top-Heavy Provisions
--------------------
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(a) General Rule
------------
The Plan shall meet the requirements of this Section 12.10 in the
event that the Plan is or becomes a Top-Heavy Plan.
(b) Top-Heavy Plan
--------------
Subject to the aggregation rules set forth in Subsection (c), the Plan
shall be considered a Top-Heavy Plan pursuant to Section 416(g) of the Code in
any Plan Year if, as of the Determination Date, the value of the cumulative
Accounts of all Key Employees exceeds sixty percent (60%) of the value of the
cumulative Accounts of all of the Employees as of such Date, excluding former
Key Employees, and excluding any Employee who has not performed services for the
Company or any Affiliated Company during the five (5) consecutive Plan Year
period ending on the Determination Date, but taking into account in computing
the ratio any distributions made during the five (5) consecutive Plan Year
period ending on the Determination Date. For purposes of the above ratio, the
Account of a Key Employee shall be counted only once each Plan Year,
notwithstanding the fact that an individual may be considered a Key Employee for
more than one reason in any Plan Year.
(c) Aggregation Rules
-----------------
For purposes of determining whether the Plan is a Top-Heavy Plan and
for purposes of meeting the requirements of this Section 12.10, the Plan shall
be aggregated and coordinated with other qualified plans, including terminated
plans, in a Required Aggregation Group and may be aggregated or coordinated with
other qualified plans in a Permissive Aggregation Group. If such Required
Aggregation Group is
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Top-Heavy, this Plan shall be considered a Top-Heavy Plan. If such Permissive
Aggregation Group is not Top-Heavy, this Plan shall not be a Top-Heavy Plan.
(d) Definitions
-----------
For the purpose of determining whether the Plan is Top-Heavy, the
following definitions shall be applicable:
(i) The term "Determination Date" shall mean, in the case of
the first Plan Year, the last day of such Plan Year and in the case of any
subsequent Plan Year, the last day of the preceding Plan Year. The value of an
individual Member's Account shall be determined as of the Determination Date.
(ii) An individual shall be considered a "Key Employee" if he is
an Employee or former Employee who at any time during the current Plan Year or
any of the four (4) preceding Plan Years:
(1) was an officer of the Company who has annual
compensation from the Company in the applicable Plan Year in excess of 50% of
the dollar limitation under Section 415(b)(1)(A) of the Code; provided, however,
that the number of individuals treated as Key Employees by reason of being
officers hereunder shall not exceed the lesser of fifty (50) or ten percent
(10%) of all Employees, and provided further, that if the number of Employees
treated as officers is limited to fifty (50) hereunder, the individuals treated
as Key Employees shall be those who, while officers, received the greatest
annual Compensation in the applicable Plan Year and any of the four preceding
Plan Years; or
(2) was one of the ten (10) Employees owning or considered
as owning the largest interests in the Company who has annual Compensation from
the
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Company in the applicable Plan Year in excess of the dollar limitation under
Section 415(c)(1)(A) of the Code as increased under Section 415(d) of the Code;
or
(3) was a more than five percent (5%) owner of the
Company; or
(4) was a more than one percent (1%) owner of a
Participating Company whose annual Compensation from the Company in the
applicable Plan Year exceeded $150,000.
For purposes of determining who is a Key Employee, ownership shall
mean ownership of the outstanding stock of the Company or of the total combined
voting power of all stock of the Company, taking into account the constructive
ownership rules of Section 318 of the Code, as modified by Section 416(i)(1) of
the Code. For purposes of Subparagraph (1) but not for purposes of
Subparagraphs (2), (3) and (4) (except for purposes of determining Compensation
under (4)), the term "Company" shall include any entity aggregated with the
Company pursuant to Section 414(b), (c) or (m) of the Code. For purposes of
Subparagraph (2), an Employee (or former Employee) who has some ownership
interest is considered to be one of the top ten (10) owners unless at least ten
(10) other Employees (or former Employees) own a greater interest than such
Employee (or former Employee), provided that if an Employee has the same
ownership interest as another Employee, the Employee having greater annual
Compensation from the Company is considered to have the larger ownership
interest.
(iii) The term "Non-Key Employee" shall mean any Employee who is a
Member and who is not a Key Employee.
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(iv) Whenever the term "Key Employee," "former Key Employee," or
"Non-Key Employee" is used herein, it includes the beneficiary or beneficiaries
of such individual. If an individual is a Key Employee by reason of the
foregoing sentence as well as a Key Employee in his own right, both the value of
his inherited benefit and the value of his own Account will be considered his
Account for purposes of determining whether the Plan is a Top-Heavy Plan.
(v) For purposes of this Section 12.10, except as otherwise
specifically provided, the term "Compensation" shall be determined in the same
manner as "Compensation" for purposes of Section 6.08, increased by pre-tax
amounts described in Sections 125 and 402(e)(3) of the Code under plans
maintained by the Company or an Affiliated Company.
(vi) The term "Required Aggregation Group" shall mean all other
qualified defined benefit and defined contribution plans maintained by the
Company in which a Key Employee participates, and each other plan of the Company
which enables any plan in which a Key Employee participates to meet the
requirements of Sections 401(a)(4) and 410 of the Code.
(vii) The term "Permissive Aggregation Group" shall mean all other
qualified defined benefit and defined contribution plans maintained by the
Company that meet the requirements of Sections 401(a)(4) and 410 of the Code
when considered with a Required Aggregation Group.
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(e) Requirements Applicable If Plan Is Top-Heavy
--------------------------------------------
In the event the Plan is determined to be Top-Heavy for any Plan
Year, the following requirements shall be applicable:
(i) Minimum Allocations shall be as follows:
(1) In the case of a Non-Key Employee who is covered under this
Plan but does not participate in any qualified defined benefit plan maintained
by the Company, the minimum allocation of contributions plus forfeitures
allocated to the account of each Non-Key Employee who has not separated from
service at the end of a Plan Year in which the Plan is Top-Heavy shall equal the
lesser of three percent (3%) of Compensation for such Plan Year or the largest
percentage of Compensation (including Sheltered Contributions and Exchange
Contributions) provided on behalf of any Key Employee for such Plan Year.
Sheltered Contributions and Exchange Contributions may not be used to satisfy
this minimum allocation requirement. The minimum allocation provided hereunder
may not be suspended or forfeited under Section 411(a)(3)(B) or (D) of the Code.
(2) A Non-Key Employee who is covered under this Plan and under
a qualified defined benefit plan maintained by the Company shall not be entitled
to the minimum allocation under this Plan but shall receive the minimum benefit
provided under the terms of the qualified defined benefit plan. If a Non-Key
Employee is covered under one or more qualified defined contribution plans in
addition to this Plan, the minimum allocation requirements may be satisfied
through contributions and forfeitures allocated to his accounts under such other
plans.
126
(ii) Effective for Plan Years beginning before January 1, 2000, for
purposes of computing the defined benefit plan fraction and defined contribution
plan fraction as set forth in Section 415(e)(2)(B) and (e)(3)(B) of the Code,
the dollar limitations on benefits and Annual Additions applicable to a
limitation year shall be multiplied by 1.0 rather than by 1.25.
(iii) The Member's nonforfeitable right to a percentage of his
Account shall be determined in accordance with the following table:
Nonforfeitable
Years of Service Percentage
---------------- ----------
2 20
3 40
4 60
5 80
6 or more 100
Notwithstanding the foregoing, in no event will a Member's
nonforfeitable right to a percentage of his Account be less than his
nonforfeitable right determined prior to the Plan's becoming a Top-Heavy Plan.
127
Article 13. Amendment, Merger And Termination
---------------------------------
13.01 Amendment
---------
The Company, by written resolution of the Board of Directors, reserves
the right at any time and from time to time to modify or amend, in whole or in
part, any or all of the provisions of the Plan, provided that:
(a) no modification or amendment shall be made that makes it possible
for any portion of the assets of the Trust to revert to or become the property
of any Participating Company, and
(b) no modification or amendment shall have any retroactive effect so
as to cause any reduction in the Member's Account as of the date of such
amendment or shall deprive any Member or Beneficiary of any benefit accrued
hereunder.
Notwithstanding the foregoing, the Board of Directors has
delegated the authority to amend the Plan to the Committee; provided, however,
that the Board of Directors reserves the right to rescind or modify such
delegation at any time and for any reason and retains the right to amend the
Plan itself at any time. Further notwithstanding the foregoing, any modification
or amendment of the Plan may be made, retroactively if necessary, which the
Board of Directors or its delegate deems necessary or proper to bring the Plan
into conformity with any law or governmental regulation relating to plans or
trusts of this character, including the qualification of any trust or other fund
created under the Plan as exempt from income taxes under the Code.
13.02 Termination, Sale of Assets or Sale of Subsidiary
-------------------------------------------------
While the Plan and Trust are intended to be permanent, they may be
terminated at any time at the discretion of the Board of Directors or its
delegate by written resolution,
128
solely as to all or any one Participating Company. Written notification of such
action shall be given to each Participating Company and the Trustees setting
forth the date of termination and such date of termination shall be deemed a
Valuation Date. Thereafter, no further contributions shall be made to any Trust
Fund by a Participating Company involved in the termination.
Upon the complete or partial termination of the Plan, or upon the
complete discontinuance of all contributions by all Participating Companies, the
rights of all affected Members in their Accounts shall be fully vested. Any
unallocated Leveraged Shares shall be sold to the Company or on the open market.
The proceeds of such sale shall be used to satisfy any outstanding Acquisition
Loan and the balance of any funds remaining shall be allocated to each Member's
Account based on the proportion that the balance of each such Member's Account
bears to the total of the balances of all Accounts. Upon termination, a Member's
Account shall not be distributed until such time as otherwise provided under
Article 9 hereof. Upon the sale of substantially all of the assets of a
Participating Company in a trade or business or the sale by a Participating
Company of its interest in a subsidiary, a Member who is employed by such
Participating Company shall be considered to have separated from service for
purposes of determining a Member's entitlement to a distribution pursuant to the
provisions of Section 9.02, to the extent permitted under Sections 401(k)(10)
and 409(d) of the Code. Upon such event, the Members may no longer actively
participate in the Plan.
13.03 Merger of Plans
---------------
Upon the merger or consolidation of this Plan with any other plan or the
transfer of assets or liabilities from the Trust to another trust, all Members
shall be entitled to a
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benefit at least equal to the benefit they would have been entitled to receive
had the Plan been terminated in accordance with Section 13.02 immediately prior
to such merger, consolidation or transfer of assets or liabilities.
13.04 Additional Participating Companies, Locations, or Divisions
-----------------------------------------------------------
Any domestic subsidiary which is now or becomes an Affiliated Company
shall become a Participating Company upon appropriate action by the board of
directors of such subsidiary necessary to adopt the Plan with respect to its
employees. In order for a domestic subsidiary to become a Participating Company
the Board, the Executive Committee of the Board, or the Committee must consent
to such action. The Board, the Executive Committee of the Board, or the
Committee also may approve the inclusion of employees of any newly established
or acquired location or division as Employees eligible for membership under the
Plan. The Committee shall determine to what extent, if any, credit for
eligibility and vesting purposes shall be granted for previous service with the
subsidiary, location or division, but subject to the continued qualification of
the Trust for the Plan as tax-exempt under the Code.
130