EXHIBIT 4
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 ALL AMENDMENTS
ADOPTED THROUGH APRIL 12, 2001
RETIREMENT COMMITTEE MEETING
RETIREMENT SAVINGS AND
STOCK OWNERSHIP PLAN OF
ARMSTRONG WORLD INDUSTRIES, INC.
TABLE OF CONTENTS
PAGE
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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..................................................................6
1.05 Board of Directors...........................................................6
1.06 Break in Service.............................................................6
1.07 Change in Control............................................................6
1.08 Code.........................................................................7
1.09 Committee....................................................................7
1.10 Company......................................................................7
1.11 Company Stock................................................................7
1.12 Company Suspense Account.....................................................7
1.13 Compensation.................................................................7
1.14 Effective Date...............................................................9
1.15 Eligible Employee............................................................9
1.16 Employee....................................................................10
1.17 Equity Account..............................................................10
1.18 Equity Allocations..........................................................10
1.19 ERISA.......................................................................10
1.20 Excess Sheltered Contributions..............................................10
1.21 Excess Standard and Retirement Savings Matching Contributions...............12
1.22 Exchange Contribution Account...............................................14
1.23 Exchange Contributions......................................................14
1.24 Full-Time Employee..........................................................14
1.25 Highly Compensated Employee.................................................14
1.26 Hour of Service.............................................................16
1.27 Investment Fund.............................................................16
1.28 Leveraged Shares............................................................16
1.29 Match Account...............................................................16
1.30 Matching Allocations........................................................17
1.31 Member......................................................................17
1.32 Member Account or Account...................................................17
1.33 Non-Leveraged Shares........................................................17
1.34 Parental Leave..............................................................17
1.35 Participating Company.......................................................17
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1.36 Part-Time Employee..........................................................17
1.37 Plan........................................................................18
1.38 Plan Fiduciary..............................................................18
1.39 Plan Year...................................................................18
1.40 Qualifying Year of Employment...............................................18
1.41 Released Leveraged Shares...................................................18
1.42 Retirement..................................................................18
1.43 Retirement Savings Account..................................................19
1.44 Retirement Savings Matching Contributions...................................19
1.45 Retirement Savings Trustee..................................................19
1.46 Rollover Contributions......................................................19
1.47 Service.....................................................................19
1.48 Sheltered Contributions.....................................................20
1.49 Standard Contributions......................................................20
1.50 Standard and Retirement Savings Matching Contributions Percentage...........20
1.51 Stock Ownership Account.....................................................21
1.52 Stock Ownership Allocation Period...........................................21
1.53 Stock Ownership Plan........................................................22
1.54 Stock Ownership Trustee.....................................................22
1.55 Tax Deductible Contributions................................................22
1.56 Transferred Exchange Contributions..........................................22
1.57 Trust.......................................................................23
1.58 Trust Agreement.............................................................23
1.59 Trust Fund..................................................................23
1.60 Valuation Date..............................................................23
1.61 Year of Service.............................................................23
Article 2. Eligibility and Membership..................................................24
2.01 Eligibility.................................................................24
2.02 Excluded Employees..........................................................24
2.03 Membership..................................................................25
2.04 Events Affecting Membership.................................................26
2.05 Membership Upon Reemployment................................................26
Article 3. Service.....................................................................28
3.01 Companies For Whom Credited.................................................28
3.02 Hours of Service............................................................28
3.03 Additional Service Credit...................................................32
3.04 Credit for Military Leave Required Under USERRA.............................32
Article 4. Contributions...............................................................33
4.01 Member Sheltered Contributions..............................................33
4.02 Standard Contributions......................................................34
4.03 Change or Suspension in Member Contributions................................35
4.04 Retirement Savings Matching Contributions...................................36
4.05 Stock Ownership Contributions...............................................36
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4.06 Deductible Contributions....................................................37
4.07 Manner of Contributions.....................................................37
4.08 Return of Contributions.....................................................38
4.09 Dividends on Company Stock..................................................38
4.10 Correction of Errors in Contributions.......................................39
4.11 Rollover Contributions......................................................40
4.12 Other Matching Contributions................................................42
Article 5. Acquisition Loans...........................................................44
5.01 Acquisition Loan............................................................44
5.02 Allocation of Leveraged Shares..............................................45
Article 6. Limitations on Contributions................................................48
6.01 Limitation on Sheltered Contributions Affecting Highly
Compensated Employees.......................................................48
6.02 Maximum Sheltered Contributions.............................................50
6.03 Limitation on Standard and Retirement Savings
Matching Contributions Affecting Highly Compensated Employees...............51
6.04 Limitations on Annual Additions.............................................56
Article 7. Investment of Contributions.................................................62
7.01 Investment Funds............................................................62
7.02 Investment of Contributions.................................................65
7.03 Change of Election..........................................................66
7.04 Transfers Among Funds.......................................................67
7.05 Investment Options..........................................................69
7.06 Valuations..................................................................70
7.07 Annual Statements...........................................................71
7.08 Diversification of Stock Ownership Accounts.................................71
Article 8. In-Service Withdrawals and Loans............................................74
8.01 In-Service Withdrawals......................................................74
8.02 Investment Fund to be Deducted for Withdrawal...............................76
8.03 Loans to Eligible Borrowers.................................................76
Article 9. Vesting and Distributions...................................................82
9.01 Vesting.....................................................................82
9.02 Distribution Upon Retirement or Other Termination of Employment.............84
9.03 Distribution on Account of Death............................................91
9.04 Latest Commencement of Payments.............................................92
9.05 Forfeitures.................................................................93
9.06 Direct Rollover Distributions...............................................95
9.07 Inability to Locate Payee...................................................96
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Article 10. Management of Funds.........................................................98
10.01 Trust Funds.................................................................98
10.02 Investment of Stock Ownership Contributions.................................99
10.03 Member Accounts............................................................100
10.04 Transfer of Trust Assets...................................................101
10.05 Voting Rights for Company Stock............................................102
10.06 Tender Offer Rights with Respect to Company Stock..........................103
Article 11. Administration of Plan.....................................................106
11.01 Appointment of Committee...................................................106
11.02 Organization and Operation of the Committee................................106
11.03 Duties and Responsibilities of the Committee...............................107
11.04 Required Information.......................................................108
11.05 Indemnification............................................................109
11.06 Claims and Appeal Procedure................................................109
11.07 Expenses of the Plan.......................................................111
Article 12. General Provisions.........................................................112
12.01 Exclusiveness of Benefits..................................................112
12.02 Limitation of Rights.......................................................112
12.03 Non-Assignability..........................................................112
12.04 Construction of Agreement..................................................113
12.05 Severability...............................................................113
12.06 Titles and Headings........................................................114
12.07 Counterparts as Original...................................................114
12.08 Construction...............................................................114
12.09 Source of Benefits.........................................................114
12.10 Top-Heavy Provisions.......................................................115
Article 13. Amendment, Merger And Termination..........................................121
13.01 Amendment..................................................................121
13.02 Termination, Sale of Assets or Sale of Subsidiary..........................121
13.03 Merger of Plans............................................................123
13.04 Additional Participating Companies, Locations, or Divisions................123
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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 and 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 the
Company'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 the common stock of
Armstrong Holdings, Inc. 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.
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
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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 was amended and restated
effective October 1, 1996 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 Plan was amended effective May 1, 2000
to reflect the establishment of Armstrong Holdings, Inc. and the investment,
beginning May 1, 2000, in the common stock of Armstrong Holdings Inc.
The Plan is amended effective December 1, 2000 (or as soon thereafter as
administratively practicable) to cease all future contributions and allocations
to the employee stock ownership portion of the Plan. The provisions of the Plan
as in effect immediately prior to December 1, 2000 reflected the Exchange
Contributions, Matching Allocations, Equity Allocations and Additional ESOP
Contributions that were made under the employee stock ownership portion of the
Plan before December 1, 2000.
2
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.
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 Sheltered Contributions made on the Employee's
behalf pursuant to Section 4.01 for the Plan Year plus the amount of any
qualified nonelective contributions made on the Employee's behalf pursuant to
Section 6.01(d) for the Plan Year, to (2) the Employee's Compensation for that
Plan Year. The percentage is determined by multiplying the ratio by one hundred
(100). In determining the Actual Deferral Percentages for a Plan Year, any
Member who is suspended from participation pursuant to Section 8.02(b) shall be
treated as an eligible Member. 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. Effective
for Plan Years beginning before October 1, 1997, 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 Sheltered Contributions, Compensation, and amounts treated as
Sheltered Contributions that are paid to the Trust Fund on behalf of all
eligible family members for such Plan Year.
4
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.
Notwithstanding the foregoing, Armacell, LLC (the successor to the
Company's insulation business operated through Armstrong Insulation Products,
LLC) and any company with which it is affiliated under Code Section 414(b), (c),
(m), or (o) shall be treated as an Affiliated Company separate from the Company
and its Affiliated Companies beginning June 1, 2000 and ending December 31, 2000
(or such earlier date as determined by the Committee). Further, notwithstanding
the foregoing, Ardex Engineered Cements, Inc. (the successor to the Company's
installation products group) and any company with which it is affiliated under
Code Section 414(b), (c), (m), or (o) shall be treated as an Affiliated Company
separate from the Company and its Affiliated Companies beginning August 1, 2000
and ending December 31, 2000 (or such earlier date as determined by the
Committee).
5
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.
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 Armstrong Holdings, Inc. and
within five years thereafter, "disinterested directors" cease to constitute a
majority of the entire Board of Directors of Armstrong Holdings, Inc.; 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 Articles of Incorporation of Armstrong Holdings, Inc. as in
effect on May 1, 2000.
6
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 Armstrong Holdings, Inc., which
shall constitute employer securities within the meaning of Section 409(l) of the
Code. As of May 1, 2000, each share of Company Stock held by the Plan will be
converted into a share of common stock of Armstrong Holdings, Inc. Prior to May
1, 2000 and after July 31, 1996, Company Stock under the Plan referred to shares
of common stock of the Company. Prior to August 1, 1996, Company Stock under the
Stock Ownership Plan included shares of 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 Section 5.02.
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
7
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 6.04,
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). For limitation years beginning on and after January 1, 1998,
Compensation for purposes of Section 6.04 shall include 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. Further, notwithstanding the foregoing, for purposes of
Sections 1.02 and 1.50, Compensation shall be as defined above for purposes of
Section 6.04; provided, however, for any Plan Year beginning prior to October 1,
1998, Compensation shall include any elective deferrals made on behalf of the
Member under this Plan or under any other qualified cash
8
or deferred arrangement, or under a cafeteria plan 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 and the
Standard and Retirement Savings Matching Contributions Percentage is the amount
of Compensation received by the Member during the entire Plan Year. Further, for
purposes of Sections 1.02 and 1.50, 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). 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.
Effective for Plan Years beginning before October 1, 1997, in determining a
Member's Compensation for purposes of the annual Compensation limit, 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 19 before the
close of the Plan Year.
1.14 "Effective Date" means August 1, 1983.
1.15 "Eligible Employee" means an Employee who has satisfied the applicable
eligibility requirements of Section 2.01.
9
1.16 "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 "Employee" shall not include leased employees (as
defined in Section 414(n)(2) of the Code) 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.
1.17 "Equity Account" means the subaccount established for each Eligible
Member under his Stock Ownership Account to hold Equity Allocations made before
December 1, 2000.
1.18 "Equity Allocations" means Company Stock allocated on behalf of an
Eligible Member to his Stock Ownership Account before December 1, 2000.
1.19 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.20 "Excess Sheltered Contributions" means, with respect to each Highly
Compensated Employee, the amount of Sheltered Contributions (including any
Transferred Exchange Contributions) made to the Plan on his behalf during the
Plan Year (determined after the application of Section 6.01(c) and prior to the
application of the leveling procedure described below) minus the product of the
Member's Actual Deferral Percentage (determined after the application of Section
6.01(c) 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
10
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 6.01(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 with the next highest Actual Deferral Percentage. This
leveling procedure shall be repeated until the limitation of Section 6.01(a) is
first satisfied. Once the leveling procedure has been completed, the total
dollar amounts of Excess Sheltered Contributions shall be determined. This
amount shall be distributed as required by Section 6.01(e) and in accordance
with a distribution procedure under which the dollar amount of Sheltered
Contributions of the Highly Compensated Employee with the highest dollar amount
of Sheltered Contributions shall be reduced to the extent required to distribute
the total amount of Excess Sheltered Contributions, or if it results in a lower
reduction, to the extent required to cause the Highly Compensated Employee's
dollar amount of Sheltered Contributions to equal the dollar amount of Sheltered
Contributions of the Highly Compensated Employee with the next highest dollar
amount of Sheltered Contributions. This distribution process shall be repeated
until all Excess Sheltered Contributions have been distributed. For Plan Years
beginning before October 1, 1997, 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) is accomplished by reducing the family unit's
Actual Deferral Percentage under the leveling procedure that was in effect for
Plan Years beginning prior to October 1, 1997 and allocating the Excess
Sheltered
11
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.
1.21 "Excess Standard and Retirement Savings Matching Contributions"
means, effective for Plan Years beginning on and after October 1, 2000 with
respect to each Highly Compensated Employee, the amount equal to the sum of (i)
his Standard Contributions (including the amount of any Sheltered Contributions
recharacterized pursuant to Section 6.03(d)) during the Plan Year plus (ii) any
Retirement Savings Matching Contributions made on his behalf for the Plan Year
(determined after the application of Section 6.03(c) and prior to the
application of the leveling procedure described below), minus the product of the
Member's Standard and Retirement Savings Matching Contributions Percentage
(determined after the application of both Section 6.03(c) and the leveling
procedure described below) multiplied by the Member's Compensation (as such term
is defined for purposes of Section 1.50). In accordance with the regulations
issued under Section 401(m) of the Code, Excess Standard and Retirement Savings
Matching Contributions shall be determined by a leveling procedure under which
the Standard and Retirement Savings Matching Contributions 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 Standard and Retirement Savings Matching Contributions Percentage to
equal that of the Highly Compensated Employee with the next highest Standard and
Retirement Savings Matching Contributions Percentage. This leveling procedure
shall be repeated until the
12
limitation of Section 6.03(a) is first satisfied. Once the leveling procedure
has been completed, the total dollar amounts of Excess Standard and Retirement
Savings Matching Contributions shall be determined. This amount shall be
forfeited or distributed as required by Section 6.03(f) and (g) and in
accordance with a forfeiture or distribution procedure under which the dollar
amount of Standard Contributions (including recharacterized Sheltered
Contributions) and Retirement Savings Matching Contributions of the Highly
Compensated Employee with the highest dollar amount of Standard Contributions
and Retirement Savings Matching Contributions shall be reduced to the extent
required to forfeit or distribute the total amount of Excess Standard and
Retirement Savings Matching Contributions, or if it results in a lower
reduction, to the extent required to cause the Highly Compensated Employee's
dollar amount of Standard Contributions and Retirement Savings Matching
Contributions to equal the dollar amount of Standard Contributions and
Retirement Savings Matching Contributions of the Highly Compensated Employee
with the next highest dollar amount of Standard Contributions and Retirement
Savings Matching Contributions. This distribution process shall be repeated
until all Excess Standard and Retirement Savings Matching Contributions have
been distributed or forfeited. For Plan Years beginning before October 1, 1997,
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(k) and 414(q)(6) is
accomplished by reducing the family unit's Actual Deferral Percentage under the
leveling procedure that was in effect for Plan Years beginning prior to October
1, 1997 and allocating the Excess Standard Contributions among the family group
in proportion to the Standard
13
Contributions made on behalf of each family member that are combined to
determine the family unit's Standard Contribution Percentage.
1.22 "Exchange Contribution Account" means the subaccount established for each
Member under his Stock Ownership Account to hold Exchange Contributions and
Stock Ownership Contributions made before December 1, 2000.
1.23 "Exchange Contributions" means that portion of a Member's Compensation
which was deferred and contributed to his Stock Ownership Account before
December 1, 2000 (or as soon thereafter as is administratively practicable), in
accordance with Section 401(k) of the Code.
1.24 "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.
1.25 "Highly Compensated Employee" means an Employee of the Company or an
Affiliated Company who:
(a) was a 5% owner, as defined in Section 416(i)(1) of the Code, at any
time during the Plan Year or the preceding Plan Year; or
(b) for the preceding Plan Year performed services for the Company or
an Affiliated Company and received Compensation in excess of $80,000 (adjusted
at the same time and in the same manner as under Section 415(d) of the Code).
Notwithstanding the foregoing, the Committee may make a "top-paid group"
election under the regulations or other guidance issued pursuant to Section
414(q) of the Code with respect to any preceding Plan Year. If such election is
made, the foregoing provisions of this Section 1.25 shall be applied in
accordance with such election. The
14
"top-paid group" shall include all Employees who are in the top 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 6 months of service by the end of the year;
(ii) Employees who normally work less than 17 1/2 hours per week for the year;
(iii) Employees who normally work during not more than 6 months during any year;
(iv) Employees who have not attained age 21 by the end of such year; and (v)
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.
Solely for purposes of determining whether an Employee is a Highly
Compensated Employee for the Plan Year beginning October 1, 1997 the foregoing
provisions of this Section 1.25 are treated as having been in effect for the
Plan Year beginning October 1, 1996.
Further, notwithstanding the foregoing, the determination of Highly
Compensated Employees may be made under the calendar year calculation election
under the regulations and other guidance issued pursuant to Code Section 414(q).
In accordance with such election, if it is made by the Committee or its
designee, the "preceding Plan Year" as used in subsection (b) above shall be the
calendar year beginning with or within the applicable preceding Plan 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. In accordance with the foregoing, the Committee has elected to apply
the calendar year election with respect to each Plan Year beginning with the
Plan Year that commenced October 1, 1997.
15
Further, for purposes of applying the definition of "Highly Compensated
Employee" for the period beginning June 1, 2000 and ending December 31, 2000 (or
such earlier date as determined by the Committee), Code Section 414(q) and the
rules set forth herein shall be applied separately to the Employees of Armacell,
LLC and any company with which it is affiliated under Code Section 414(b), (c),
(m), or (o). Further, for purposes of applying the definition of "Highly
Compensated Employee" for the period beginning August 1, 2000 and ending
December 31, 2000 (or such earlier date as determined by the Committee), Code
Section 414(q) and the rules set forth herein shall be applied separately to the
Employees of Ardex Engineered Cements, Inc. and any company with which it is
affiliated under Code Section 414(b), (c), (m), or (o).
1.26 "Hour of Service" means each hour credited under Section 3.02.
1.27 "Investment Fund" means any of the separate funds in which contributions to
the Plan are invested in accordance with Article 7.
1.28 "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.
1.29 "Match Account" means the subaccount established for each Eligible Member
under his Stock Ownership Account to hold Matching Allocations made before
16
December 1, 2000 and to hold bonus allocations made under the Stock Ownership
Plan before October 1, 1996.
1.30 "Matching Allocations" means Company Stock allocated on behalf of an
Eligible Member to his Stock Ownership Account before December 1, 2000.
1.31 "Member" means any Eligible Employee included in the membership of the
Plan, as provided in Article 2.
1.32 "Member Account" or "Account" means, as of any Valuation Date, the total
value of each Member's Retirement Savings Account and Stock Ownership Account.
1.33 "Non-Leveraged Shares" means any shares of Company Stock held in the Stock
Ownership Trust that are not Leveraged Shares, whether or not released.
1.34 "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.
1.35 "Participating Company" means the Company and any other Affiliated Company
which adopts the Plan as provided in Section 13.04.
1.36 "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.
17
1.37 "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.
1.38 "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.
1.39 "Plan Year" means a period of twelve consecutive months commencing on each
October 1 and ending on September 30.
1.40 "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.
1.41 "Released Leveraged Shares" means the Leveraged Shares that are released
from the Company Suspense Account as a result of loan amortization payments.
1.42 "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.
18
1.43 "Retirement Savings Account" means the portion of a Member's Account that
is attributable to Sheltered Contributions, Transferred Exchange Contributions,
Standard Contributions, Rollover Contributions, Tax Deductible Contributions,
and Retirement Savings Matching Contributions, determined as of any Valuation
Date.
1.44 "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 and those matching
contributions to the Plan made on and after December 1, 2000 by Participating
Companies pursuant to Section 4.04.
1.45 "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
made before December 1, 2000 that were temporarily invested in a Money Market
Fund; amounts attributable to the shares of Company Stock that are diversified
in accordance with Section 7.08; amounts attributable to Transferred Exchange
Contributions; and amounts attributable to Retirement Savings Matching
Contributions made on and after December 1, 2000, as provided in Article 10.
1.46 "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.
1.47 "Service" means service credited pursuant to Article 3 of the Plan.
19
1.48 "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(a)
and which were referred to as "Tax Deferred Contributions" prior to October 1,
1996. A Member's Sheltered Contributions shall include Transferred Exchange
Contributions attributable to such Member.
1.49 "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.
1.50 "Standard and Retirement Savings Matching Contributions Percentage"
means, effective for Plan Years beginning on and after October 1, 2000 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 sum of (a) the 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 6.03(d) for such Plan Year; (c) any Sheltered Contributions
that are utilized in satisfying the requirements of Section 6.03(a) for such
Plan Year; (d) any qualified nonelective contributions made on the Employee's
behalf pursuant to Section 6.03(e) for the Plan Year; and (e) any Retirement
Savings Matching Contributions made on the Employee's behalf pursuant to Section
4.04 for the Plan Year, to (2) the Employee's Compensation for that Plan Year.
The
20
percentage is determined by multiplying the ratio by one hundred (100). In
determining the Standard and Retirement Savings Matching Contributions
Percentages for a Plan Year, any Member who is suspended from participation
pursuant to Section 8.02(b) shall be treated as an Eligible Member. In all
events, Standard and Retirement Savings Matching Contributions 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(m) of the Code, and the regulations issued thereunder. Effective
for Plan Years beginning before October 1, 1997, 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.
1.51 "Stock Ownership Account" means, as of any Valuation Date, all Released
Leveraged Shares, all Non-Leveraged Shares and all other assets held by the
Stock Ownership Trustee under the Plan and allocated for the benefit of a
Member, including amounts attributable to Exchange Contributions; provided,
however, a Member's Transferred Exchange Contributions shall not be part of such
Member's Stock Ownership Account.
1.52 "Stock Ownership Allocation Period" means the period for which an
allocation of Released Leveraged Shares or Non-Leveraged Shares is made to
Members'
21
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.
1.53 "Stock Ownership Plan" means the Armstrong World Industries, Inc. Employee
Stock Ownership Plan, which was merged into this Plan on September 30, 1996.
1.54 "Stock Ownership Trustee" means the party or parties, individual or
corporate, named in a Trust Agreement that hold the funds of the employee stock
ownership portion of the Plan (other than amounts attributable to the shares of
Company Stock that are diversified in accordance with Section 7.08, and amounts
attributable to Transferred Exchange Contributions), as provided in Article 10.
1.55 "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 October 1, 1996.
1.56 "Transferred Exchange Contributions" means any Exchange Contributions made
by a Member for the Stock Ownership Allocation Period ending December 13, 2000
that are transferred from the Money Market Fund in which such Exchange
Contributions are temporarily invested pursuant to Section 7.01(f) to the
Investment Fund or Funds (other than the Stock Ownership Fund) the Member has
designated for the investment of his Sheltered Contributions pursuant to Section
7.02.
22
1.57 "Trust" means the legal entity resulting from the Trust Agreements between
the Company and the Stock Ownership and Retirement Savings Trustees.
1.58 "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.
1.59 "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.
1.60 "Valuation Date" means each day that the New York Stock Exchange is open
for trading.
1.61 "Year of Service" means any calendar year in which an Employee has
completed 1,000 or more Hours of Service. For purposes of determining a Member's
vested interest in his Equity Account, his Match Account and the portion of his
Retirement Savings Matching Account attributable to Retirement Savings Matching
Contributions made on or after December 1, 2000 under Section 9.01(b), the
following years shall be recognized: (a) the Member's service with Triangle
Pacific Corp. before such entity became an Affiliated Company but only to the
extent such service would otherwise be recognized under the Plan; and (b) the
Member's service with Worthington Armstrong Venture ("WAVE") provided the Member
commences employment with the Company or an Affiliated Company directly
following his termination of employment with WAVE.
23
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) An 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.
24
(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) and/or 4.02(a). Any
designation under the preceding sentence shall become effective as soon as
practicable after it is made, 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 Section 4.02;
25
(b) an investment election with respect to Sheltered Contributions
under Section 4.01(a), Standard Contributions under Section 4.02(a), Retirement
Savings Matching Contributions under Section 4.04, and the remaining portion of
his Retirement Savings Account, if any; and
(c) a designation of Beneficiary.
2.04 Events Affecting Membership
---------------------------
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 any contributions
made under Section 4.01, 4.02 or 4.04.
2.05 Membership Upon Reemployment
----------------------------
(a) Each individual described in Section 2.04 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) 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
26
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.
27
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;
28
(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:
29
(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.
30
(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
31
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.
3.04 Credit for Military Leave Required Under USERRA
-----------------------------------------------
Notwithstanding any provision of this Plan to the contrary,
contributions, benefits and service credits with respect to a Member's qualified
military service will be provided in accordance with Section 414(u) of the Code.
32
Article 4. Contributions
-------------
4.01 Member Sheltered Contributions
------------------------------
(a) 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 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 6.01 and
6.02. 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.
(b) In the event that Sheltered Contributions made under this
Section are returned to the Employer in accordance with Section 4.08, 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.
(c) 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) above. The
duration of such reduction shall be determined by the Committee at such time.
(d) Notwithstanding any other provision of the Plan to the
contrary, in no event may the Sheltered Contributions under Subsection (a) above
by any Member
33
exceed in a Plan Year an amount equal to 15% (or such lower maximum percentage
as set by the Committee pursuant to Sections 6.01) 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 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) 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 6.03.
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.
(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 6.03) multiplied
by the Member's Compensation not in excess of $150,000 (adjusted in accordance
with Section 401(a)(17) of the Code and
34
the regulations and other guidance 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.
4.03 Change or Suspension in Member 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
practicable following the end of such 12-month
35
period.
4.04 Retirement Savings Matching Contributions
-----------------------------------------
(a) Each Participating Company that is an Affiliated Company with
the Company shall contribute to the Retirement Savings Trust on behalf of each
Eligible Member (as such term was defined under Section 6.01(c) of the Plan as
in effect immediately prior to December 1, 2000) it employs, a Retirement
Savings Matching Contribution equal to 50% of the Exchange Contributions made by
or on behalf of such Member during the Stock Ownership Allocation Period ending
December 13, 2000.
(b) Effective for pay periods ending on or after March 1, 2001,
each Participating Company that is an Affiliated Company with the Company shall
make a Retirement Savings Matching Contribution on behalf of each Member it
employs for the pay period in an amount equal to 50% of the first 6% of the
Member's Sheltered Contributions for such pay period (i.e., the Retirement
Savings Matching Contributions made on behalf of the Member shall not exceed 3%
of the Member's Compensation).
(c) All such Retirement Savings Matching Contributions made on
behalf of a Member under this Section 4.04 shall be credited to the Member's
Retirement Savings Matching Account.
4.05 Stock Ownership Contributions
-----------------------------
Effective December 1, 2000 (or as soon thereafter as is
administratively practicable), all contributions and allocations to the employee
stock ownership portion of the Plan shall cease. Any Exchange Contributions made
by a Member during the Stock Ownership Allocation Period ending December 13,
2000 shall be transferred from the Money Market Fund in which the Member's
Exchange Contributions have been
36
temporarily invested pursuant to Section 7.01(f) to the Investment Fund or Funds
(other than the Stock Ownership Fund or the Company Stock Fund) the Member has
designated for the investment of his Sheltered Contributions pursuant to Section
7.02. Further, for the Stock Ownership Allocation Period ending December 13,
2000, the Company shall make on behalf of each Eligible Member (as such term is
defined under Section 6.01(b) of the Plan as in effect immediately prior to
December 1, 2000) a cash contribution equal to the dollar value of the shares of
Company Stock that would otherwise have been allocated to such Member's Equity
Account under Section 6.02(c) of the Plan as in effect immediately prior to
December 1, 2000 for such Stock Ownership Allocation Period. Any such
contribution made on behalf of an Eligible Member under the preceding sentence
shall be credited to the Member's Retirement Savings Account.
4.06 Deductible Contributions
------------------------
All contributions to the Plan made by a Participating Company on
behalf of the Members it employs (including but not limited to Sheltered
Contributions and Retirement Savings Matching Contributions) are conditioned
upon such amounts being deductible from the Participating Company's income tax
return for the tax year that ends with or within the Plan Year under Section 404
of the Code.
4.07 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;
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.
37
4.08 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.
4.09 Dividends on Company Stock
--------------------------
The Retirement Committee, in its sole discretion, shall determine
whether the cash dividends on Company Stock held in the Stock Ownership Fund and
earnings thereon are to be utilized to repay an Acquisition Loan. Accordingly,
the cash dividends on Company Stock held in the Stock Ownership Fund and
earnings thereon and allocated to a Member's Stock Ownership Account during the
Stock Ownership Allocation Period ending December 13, 2000 shall not be used to
repay any Acquisition Loan, but instead shall be transferred from the Stock
Ownership Fund to the Retirement Savings Trust for investment in the Investment
Fund or Funds such Member has designated, pursuant to Section 7.02, in
accordance with the following rules: (i) to the extent such dividends are
attributable to the Member's Exchange Contributions, the dividends shall be
invested in the manner designated by the Member for the investment of his
Sheltered Account; and (ii) to the extent such dividends are attributable to
Equity Account Allocations or Match Allocations made on the Member's behalf
under Section 6.02(c) and (d), respectively, of the Plan as in effect
immediately prior to December 1, 2000, the dividends shall be invested in the
manner designated by the Member for the investment of his Retirement Savings
Matching Account. Further, any unallocated cash dividends on Company Stock
38
(and earnings thereon) held in the Stock Ownership Trust declared during the
Stock Ownership Allocations and ending December 13, 2000 shall be transferred
from the Stock Ownership Fund to the Retirement Savings Trust to be used for
purposes of making the Retirement Savings Matching Contribution under Section
4.04 by reducing the amount to be paid by the Participating Companies.
4.10 Correction of Errors in Contributions
-------------------------------------
If, with respect to any Plan Year, any Member's Retirement Savings
Account is not credited with the Member's designated amount of Sheltered
Contributions or Standard Contributions, or the Retirement Savings Matching
Contributions payable on behalf of such Member under Section 4.04, 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' Retirement Savings Accounts
and/or the Participating Company may make additional contributions to the
Retirement Savings Account of any affected Member to place the affected Member's
Retirement Savings Account 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
39
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 that any such reallocations or additional contributions are
made on a uniform and nondiscriminatory basis.
4.11 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
40
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
(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 4.11 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 6.01 through 6.04 shall not apply to
Rollover Contributions. All Rollover Contributions shall be made in cash and
shall be fully vested.
41
4.12 Other Matching Contributions
----------------------------
(a) Armacell, LLC shall make matching contributions on behalf of
each Member who is actively employed by Armacell, LLC on September 30, 2000 in
an amount equal to 50% of the Member's Sheltered Contributions from June 1, 2000
through September 30, 2000, to the extent such matching contributions do not
exceed 6% of the Member's Compensation for such period. Further, Armacell, LLC
shall make matching contributions on behalf of each Member who is actively
employed by Armacell, LLC on December 31, 2000 in an amount equal to 50% of the
Member's Sheltered Contributions from October 1, 2000 through December 31, 2000,
to the extent such matching contributions do not exceed 6% of the Member's
Compensation for such period. Any matching contributions made on behalf of a
Member shall be allocated to a newly established subaccount in the Member's
Retirement Savings Account. Notwithstanding anything herein to the contrary, in
determining the Standard and Retirement Savings Matching Contributions
Percentage with respect to Members who are employed by Armacell, LLC and
applying the limitation described in Section 6.03(a) (including the
determination of any Excess Standard and Retirement Savings Matching
Contributions), the matching contributions made under this Section 4.12(a) shall
be taken into account as required by Code Section 401(m) and the regulations
issued thereunder.
(b) Ardex Engineered Cements, Inc. ("Ardex") shall make matching
contributions on behalf of each Member who is actively employed by Ardex on
September 30, 2000 in an amount equal to 50% of the Member's Sheltered
Contributions from August 1, 2000 through September 30, 2000, to the extent such
matching contributions do not exceed 6% of the Member's Compensation for such
period. Further,
42
Ardex shall make matching contributions on behalf of each Member who is actively
employed by Ardex on December 31, 2000 in an amount equal to 50% of the Member's
Sheltered Contributions from October 1, 2000 through December 31, 2000, to the
extent such matching contributions do not exceed 6% of the Member's Compensation
for such period. Any matching contributions made on behalf of a Member shall be
allocated to a newly established subaccount in the Member's Retirement Savings
Account. Notwithstanding anything herein to the contrary, in determining the
Standard and Retirement Savings Matching Contributions Percentage with respect
to Members who are employed by Ardex and applying the limitation described in
Section 6.03(a) (including the determination of any Excess Standard and
Retirement Savings Matching Contributions), the matching contributions made
under this Section 4.12(b) shall be taken into account as required by Code
Section 401(m) and the regulations issued thereunder.
43
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 Stock Ownership
Trustee and such Released Leveraged Shares shall be allocated to Members' Stock
Ownership Accounts as provided under Section 6.02 of the Plan as in effect
immediately prior to December 1, 2000. Except upon termination of the Plan or
the employee stock ownership portion 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, Exchange Contributions (and earnings thereon), any cash
44
dividends received by the Stock Ownership Trustee on Company Stock held by the
Stock Ownership Trustee and earnings thereon, and from another Acquisition Loan
that refinances such Acquisition Loan. The Committee, in its sole discretion,
may determine that Exchange Contributions (and earnings thereon) and/or any such
cash dividends for a Stock Ownership Allocation Period shall not be applied to
the payment of principal and interest on any 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 sum of: (i) the Stock Ownership Contributions made for the Stock Ownership
Allocation Period, (ii) the Exchange
45
Contributions (and earnings thereon) made during the Stock Ownership Allocation
Period that the Committee determines, in its sole discretion, are to be applied
to the payment of the Acquisition Loan, and (iii) any dividends on Company Stock
declared during the Stock Ownership Allocation Period that the Committee, in its
sole discretion, determines are to be applied to the payment of the Acquisition
Loan. 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 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 of the Plan as in effect
immediately prior to December 1, 2000.
(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
46
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 make the loan
amortization payment bears to the total amount of such Allocated Dividends, in
accordance with Section 6.02(a) of the Plan as in effect immediately prior to
December 1, 2000.
47
Article 6. Limitations on Contributions
----------------------------
6.01 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
who are eligible to participate in the Plan 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 the preceding Plan Year of all Employees other than Highly
Compensated Employees who were eligible to participate in the Plan during such
preceding Plan Year; or
(ii) an amount equal to the sum of the Actual Deferral
Percentage for the preceding Plan Year of all Employees other than Highly
Compensated Employees who were eligible to participate in the Plan during such
preceding Plan Year and two percent (2%), provided that such amount does not
exceed 200% of the Actual Deferral Percentage for the preceding Plan Year of all
Employees other than Highly Compensated Employees who were eligible to
participate in the Plan during such preceding Plan Year.
(b) Notwithstanding the foregoing, the Committee may elect to
determine the permissible Actual Deferral Percentage for Highly Compensated
Employees who are eligible to participate in the Plan for any Plan Year
beginning on or after October 1, 1997 on the basis of the Actual Deferral
Percentage for the current Plan Year rather than the preceding Plan Year, of all
other Employees who are eligible to participate in the Plan, in accordance with
such regulations, notices or other guidelines issued under Section 401(k)
48
of the Code (the "current year testing election"). Pursuant to such election
right, the Committee has elected to make the current year testing election for
Plan Years commencing October 1, 1997, 1998 and 1999.
(c) 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 6.01(a) is satisfied.
(d) Notwithstanding any reductions pursuant to Section 6.01(c), if
the limitation under Section 6.01(a) is exceeded in any Plan Year, a
Participating Company may, in the sole discretion of the Committee (in the case
of Armacell, LLC, in the discretion of its board of directors or similar
governing body and in the case of Ardex Engineered Cements, Inc., in the
discretion of its board of directors) 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 necessary to assure that the limitation under
Section 6.01(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.
(e) To the extent the limitation under Section 6.01(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
49
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 6.01(e) shall be reduced by the amount of any excess
deferrals attributable to Sheltered Contributions previously distributed to such
Member pursuant to Section 6.02, if any, for such Plan Year. Any amount returned
to a Member pursuant to this Section 6.01(e) shall be withdrawn from the
Investment Fund or Funds in which the Member's Sheltered Contributions are
invested in accordance with such uniform rules as the Committee shall adopt from
time to time.
(f) The Committee is authorized to implement rules under which it may
utilize any combination of the foregoing methods in Sections 6.01(c), (d) or (e)
to assure that the limitation of Section 6.01(a) is satisfied.
6.02 Maximum Sheltered Contributions
-------------------------------
Notwithstanding any other provision of the Plan including the
limitations of Section 6.01(a), in no event may the total of 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 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
50
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 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 Sheltered Contributions
were made, provided that the Member notifies the Committee of the amount of the
excess deferral that is attributable to 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 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 6.02 with respect to any
Member for any Plan Year shall be reduced by the amount of any Excess Sheltered
Contributions previously distributed pursuant to Section 6.01(a), if any, for
such Plan Year.
6.03 Limitation on Standard and Retirement Savings Matching
------------------------------------------------------
Contributions Affecting Highly Compensated Employees
----------------------------------------------------
(a) Notwithstanding anything herein to the contrary, in no event
shall the Standard Contributions and Retirement Savings Matching Contributions
made on behalf of Highly Compensated Employees who are eligible to participate
in the Plan with respect to any Plan Year beginning on or after October 1, 2000
result in a Standard and
51
Retirement Savings Matching Contributions Percentage for such group of Highly
Compensated Employees that exceeds the greater of:
(i) an amount equal to 125% of the Standard and Retirement
Savings Matching Contributions Percentage for the preceding Plan Year of all
Employees other than Highly Compensated Employees who were eligible to
participate in the Plan during such preceding Plan Year; or
(ii) an amount equal to the sum of the Standard and Retirement
Savings Matching Contributions Percentage for the preceding Plan Year of all
Employees other than Highly Compensated Employees who were eligible to
participate in the Plan during such preceding Plan Year and two percent (2%),
provided that such amount does not exceed 200% of the Standard and Retirement
Savings Matching Contributions Percentage for the preceding Plan Year of all
Employees other than Highly Compensated Employees who were eligible to
participate in the Plan during such preceding Plan Year.
(b) Notwithstanding the foregoing, the Committee may elect to
determine the permissible Standard and Retirement Savings Matching Contributions
Percentage for Highly Compensated Employees who are eligible to participate in
the Plan for any Plan Year on the basis of the Standard and Retirement Savings
Matching Contributions Percentage for the current Plan Year rather than the
preceding Plan Year, of all other Employees who are eligible to participate in
the Plan, in accordance with such regulations, notices or other guidelines
issued under Section 401(m) of the Code (the "current year testing election").
Pursuant to such election right, the Committee has elected to make the current
year testing election for Plan Years commencing October 1, 1997, 1998 and 1999.
52
(c) 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 6.03a) is
satisfied.
(d) Notwithstanding any reductions pursuant to Section 6.03(c), if
the limitation under Section 6.03(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 6.03(a).
(e) Notwithstanding any reductions pursuant to Section 6.03(c), 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 (in the case
of Armacell, LLC, in the discretion of its board of directors or similar
governing body and in the case of Ardex Engineered Cements, Inc., in the
discretion of its board of directors) 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 6.03(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 Sheltered Contributions under the Plan.
53
(f) To the extent the limitation under Section 6.03(a) continues to
be exceeded following the contribution of such additional contributions, if any,
the amount of Excess Standard and Retirement Savings Matching Contributions
attributable to 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, 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 such Excess
Standard Contributions shall be determined in accordance with the regulations
issued under Code Section 401(m). Any amount returned to a Member pursuant to
this Section 6.03(f) shall be withdrawn from the Investment Fund or Funds in
which the Member's Standard Contributions are invested in accordance with such
uniform rules as the Committee shall adopt from time to time.
(g) If the limitation under Section 6.03(a) continues to be
exceeded following the application of Section 6.03(d) and (e) and after any
distributions under Section 6.03(f), the amount of Excess Standard and
Retirement Savings Matching Contributions attributable to Retirement Savings
Matching Contributions made with respect to Highly Compensated Employees with
respect to the Plan Year and income allocable thereto shall be distributed to
Highly Compensated Employees to the extent vested pursuant to Section 9.01, or
if not vested, forfeited to the extent of the remaining Excess Standard and
Retirement Savings Matching Contributions. Any such forfeitures shall be applied
in accordance with Section 9.05(a). Such distribution or forfeiture shall occur
as soon as practicable after the close of the Plan Year in which the Excess
Standard
54
and Retirement Savings Matching Contributions occur, but no later than twelve
months after the close of such Plan Year. The amount of income allocable to such
Retirement Savings Matching Contributions shall be determined in accordance with
the regulations issued under Code Section 401(m). Any amount forfeited by or
distributed to a Member pursuant to this Section 6.03(g) shall be withdrawn from
the Investment Fund or Funds in which the Member's Retirement Savings Matching
Contributions are invested in accordance with such uniform rules as the
Committee shall adopt from time to time.
(h) The Committee is authorized to implement rules under which it
may utilize any combination of the foregoing methods described in Section
6.03(c), (d), (e), (f) and (g) to assure that the limitation of Section 6.03(a)
is satisfied.
(i) Notwithstanding anything to the contrary in Section 6.01 or
this Section 6.03, Sheltered Contributions, Standard Contributions and
Retirement Savings Matching 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 such multiple use occurs, the Standard and
Retirement Savings Matching Contributions Percentages for all Highly Compensated
Employees (determined after applying the foregoing provisions of Sections 6.01
and 6.03) 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.
(j) Notwithstanding anything in the Plan to the contrary, if the
rate of Retirement Savings Matching Contributions (determined after application
of the
55
corrective mechanisms described in the foregoing provisions of Section 6.01,
Section 6.02 or this Section 6.03) discriminates in favor of Highly Compensated
Employees, the Retirement Savings Matching Contributions attributable to any
Excess Standard and Retirement Savings Matching Contributions, Excess Sheltered
Contributions or excess deferrals (as described in Section 6.02) of each
affected Highly Compensated Employee shall be forfeited so that the rate of
Retirement Savings Matching Contributions is nondiscriminatory. Any such
forfeitures shall be made no later than the end of the Plan Year following the
Plan Year for which the Retirement Savings Matching Contributions were made.
Forfeitures, if any, shall be applied as set forth in Section 9.05(a).
6.04 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
56
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.
(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
6.04(a) to be exceeded with respect to this Plan when combined with any other
defined contribution plan pursuant to Section 6.04(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.
57
(iii) Notwithstanding Paragraph (i) above, if the
combination limitation prescribed under Section 6.04(b) hereof would be exceeded
in any Limitation Year that begins prior to January 1, 2000, benefits under the
defined benefit plan shall be 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 6.04.
(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 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 6.04(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 6.03. To the extent
58
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 6.01 and 6.02. 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 6.04, 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:
(i) Retirement Savings Matching Contributions, Stock
Ownership Contributions before December 1, 2000, and any other Company or
Affiliated Company contributions allocated to the Member's account under any
defined contribution plan
59
maintained by the Company or an Affiliated Company and qualified under Section
401(a) of the Code;
(ii) Sheltered Contributions, Standard Contributions,
and any other contributions (including Exchange Contributions before December 1,
2000) 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 Annual Additions with respect to the Leveraged Shares that are
released and allocated to a Member's Account for the Limitation Year shall be
based on the fair market value of such released and allocated Leveraged Shares
(with such fair market value being determined as of the date the Leveraged
Shares are allocated to the Member's Account) to the extent the Annual Additions
as so calculated are lower than the Annual Additions
60
calculated on the basis of the contributions which are used to repay principal
on the Acquisition Loan to release such Leveraged Shares during such Limitation
Year.
61
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
62
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. Notwithstanding the foregoing, effective with respect to any
contributions to a Member's Retirement Savings Account that are processed on and
after December 27, 2000, the Company Stock Fund shall not be available as an
Investment Fund with respect to an
63
initial investment designation under Section 7.02 or a change in the election of
Investment Funds under Section 7.03. Further, effective with respect to any
transfers among Investment Funds under Section 7.04 on and after January 1,
2001, the Company Stock Fund shall not be available as an Investment 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 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 Released
Leveraged Shares and Non-Leveraged Shares for such Stock Ownership Allocation
Period under Section 6.02(b) of the Plan as in effect immediately preceding
December 1, 2000) and may not be transferred from such fund to any of the other
Investment Funds, except as provided in Section 7.08. Notwithstanding the
preceding sentence, a Member's Exchange Contributions and earnings thereon made
during the Stock Ownership Allocation Period ending December 13, 2000 shall be
transferred from the Money Market Fund to the Investment Fund or Funds (other
than this Stock Ownership Fund) that each such Member has designated for the
investment of his Sheltered Contributions, subject to the rules of Section 7.02
in the event such Member fails to designate the investment of his Sheltered
Contributions.
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
64
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 and effective with respect to contributions processed on and
after December 27, 2000, the Company Stock Fund) in which his Sheltered
Contributions, Standard Contributions, Retirement Savings Matching
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 Contributions, Standard Contributions,
Retirement Savings Matching Contributions, and Rollover Contributions 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 Released Leveraged Shares and Non-
65
Leveraged Shares under Section 6.02(b) of the Plan as in effect immediately
before December 1, 2000 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. Notwithstanding the preceding
sentence, a Member's Exchange Contributions and earnings thereon made during the
Stock Ownership Allocation Period ending December 13, 2000 shall be transferred
from the Money Market Fund to the Investment Fund or Funds (other than the Stock
Ownership Fund) that each such Member has designated for the investment of his
Sheltered Contributions, subject to the rules of this Section 7.02 in the event
such Member fails to designate the investment of his Sheltered Contributions.
Notwithstanding anything herein to the contrary, any contributions to a Member's
Retirement Savings Account that are designated by the Member to be invested in
the Company Stock Fund shall be invested in a Money Market Fund until the Member
properly designates the investment of such Retirement Savings Account
contributions in and among the other Investment Funds available under Section
7.01 (other than the Stock Ownership Fund).
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
(other than the Company Stock Fund with respect to contributions processed on
and after December 27, 2000) in which future contributions to his Retirement
Savings Account shall be invested. A Member may change the election of the
Investment Funds (other than the Company Stock Fund with respect to
contributions processed on and after December 27, 2000) in which such
contributions are to be invested by designating the percentage of
66
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 and
effective with respect to transfer requests processed on and after January 1,
2001, the Company Stock 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, 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 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.
67
(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, the Money
Market Fund with respect to transfer requests processed prior to May 1, 2001,
and the Company Stock Fund, effective with respect to transfer requests
processed on an after January 1, 2001) 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, 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 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.
68
(c) Notwithstanding the foregoing:
(i) no direct transfers are permitted from (A) the
Fixed Income Investment Fund to the Money Market Fund, or (B) from the Fixed
Income Investment Fund to any fund maintained in the Balanced Fund that is
designated by the Company as having goals and objectives comparable to the Fixed
Income Investment Fund (referred to as a "Balanced Income Fund"); provided,
however, effective May 1, 2001, direct transfers are permitted from the Fixed
Income Investment Fund to the Fidelity Asset Manager: Income Fund; and
(ii) 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 (other than the Fidelity Asset Manager:
Income Fund with respect to transfers occurring on and after May 1, 2000) for
three (3) months following such transfer.
(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.
69
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 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.
70
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
-------------------------------
Effective before January 1, 2001, 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
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), (c), or (d).
Maximum Percentage of Stock
Ownership Account Eligible for
Diversification
Age Before January 1, 2001
--- ----------------------
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), (c), or (d).
71
Effective on and after January 1, 2001, each Member who
has a Stock Ownership Account shall be permitted to
direct the investment of up to 100% of the number of shares of Company Stock in
his Stock Ownership Account, in any of the Investment Funds described in Section
7.01(a), (b), (c), 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 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
72
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), (c), or (d) as a result of such direction shall continue
to be part of the Member's Stock Ownership Account.
73
Article 8. In-Service Withdrawals and Loans
--------------------------------
8.01 In-Service Withdrawals
----------------------
(a) 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 (but shall not be
permitted to withdraw any portion of his Retirement Savings Match Account or
Stock Ownership Account while he is actively employed). Any such cash
withdrawals shall be made according to the order in which the following
Subsections are presented, as the amounts described in each successive
Subsection 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.
(iii) An amount equal to all or part of the Member's Tax
Deductible Contributions Account.
74
(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,
provided:
(A) the Member has attained age 59 1/2;
(B) 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
(b) A Member who is no longer actively employed due to
becoming disabled in accordance with Code Section 401(k)(2)(B)(i)(A) shall be
permitted to make the following in-service withdrawals:
(i) If the Member has not been determined by the
Social Security Administration to be permanently and totally disabled, the
Member shall be permitted to withdraw in cash a portion or all of his 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.
(ii) If the Member has been determined by the Social
Security Administration to be permanently and totally disabled, the Member shall
be permitted to withdraw in cash a portion or all of his Standard Contributions
Account, Tax Deductible Contributions Account, Rollover Account, Sheltered
Account, Retirement Savings Matching Account and Stock Ownership Account, less
the amount of any outstanding
75
loan, according to the order presented in Subsections (a)(i) through (v), and
with the Retirement Savings Matching Account being withdrawn after his Sheltered
Account but before his Stock Ownership Account, as the amounts described in each
successive Subsection and his Retirement Savings Matching Account balance are
exhausted.
8.02 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.
8.03 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 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
76
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, amounts
attributable to a Member's Tax Deductible Contributions or amounts attributable
to the portion of a Member's Retirement Savings Matching Account that is not
vested under Section 9.01.
(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 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.
77
(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.
(ii) Loans will be adequately secured, as determined by
the Committee as of the date the loan is originated.
78
(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. Notwithstanding the foregoing, Plan loan
repayments may, in the sole discretion of the Committee, be suspended during
periods that the Member is performing service in the uniformed service, whether
or not qualified military service, in accordance with Section 414(u)(4) of the
Code.
(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.
79
(viii) Outstanding loans may be subject to an annual loan
administration fee, as determined by the Committee from time to time. Loan
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
80
Eligible Borrower must repay any loan prior to distribution of the Eligible
Borrower's Retirement Savings Account.
(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.
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Article 9. Vesting and Distributions
-------------------------
9.01 Vesting
-------
(a) A Member shall always have a vested and nonforfeitable
interest in his Sheltered Account, Standard Account, Exchange Contribution
Account, and the portion of his Retirement Savings Matching Account attributable
to any matching contributions made before December 1, 2000.
(b) A Member shall have a vested and nonforfeitable interest
in his Equity Account, Match Account, and the portion of his Retirement Savings
Matching Account attributable to Retirement Savings Matching Contributions made
on or after December 1, 2000, 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,
Match Account, and the portion of his Retirement Savings Matching Account
attributable to Retirement Savings Matching Contributions made on or after
December 1, 2000 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
82
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. Further, notwithstanding anything in the Plan to
the contrary, a Member who is employed by Interface Solutions, Inc. on the date
the Plan ceases to be a multiple employer plan in which Interface Solutions,
Inc. participates, shall have a vested and nonforfeitable interest in his Equity
Account and Match Account as of such date.
(d) Notwithstanding the preceding provisions of this Section
9.01, a Member shall have a vested and nonforfeitable interest in the subaccount
established under his Retirement Savings Account with respect to any matching
contributions made under Section 4.12(a) only upon (i) attaining age 65 provided
he is actively employed by Armacell, LLC or an Affiliated Company of Armacell,
LLC on that date; (ii) his death while in active employment with Armacell, LLC
or an Affiliated Company of Armacell, LLC; or (iii) the completion of five (5)
Years of Service. Further, notwithstanding the preceding provisions of this
Section 9.01, a Member shall have a vested and nonforfeitable interest in the
subaccount established under his Retirement Savings Account with respect to any
matching contributions made under Section 4.12(b) only upon (i) attaining age 65
provided he is actively employed by Ardex Engineered Cements, Inc. ("Ardex") or
an Affiliated Company of Ardex on that date; (ii) his death
83
while in active employment with Ardex or an Affiliated Company of Ardex; or
(iii) the completion of five (5) Years of Service.
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
84
Stock (with cash for fractional shares), as elected by the Member. If the Member
fails to 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
85
interest, if any) equals $5,000 or less as of such Valuation Date, the Committee
or its 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
86
the consent of his spouse (which consent shall be in writing and notarized or
witnessed by a member of the 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
87
Committee shall furnish to the Member a written explanation of the effect of
such an 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
88
Member with respect to the initial distribution) as soon as practicable
following the 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.
89
(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 current
value of the Member's Retirement Savings Matching Account.
(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 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).
90
(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 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
91
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,
effective with respect to with respect to any Member who turns age 70 1/2 after
1999, distribution of the Member's Account shall commence not later than the
April 1 following the later of the calendar year in which the Member attains age
70 1/2 or retires; provided, however, if a Member is a 5% owner (as defined in
Code Section 416(i)(1), distribution shall
92
commence not later than the April 1 following the calendar year in which the
Member attains age 70 1/2. Prior to the required commencement of payments, 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 the manner indicated in the preceding sentence or in accordance with the
other provisions of this Article IX. 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.
Notwithstanding the foregoing provisions of this Subsection (b), effective with
respect to distributions under the Plan made for calendar years beginning on or
after January 1, 2001, the Plan will apply the minimum distribution requirements
of Code Section 401(a)(9) in accordance with the regulations under Section
401(a)(9) that were proposed on January 17, 2001. This amendment shall continue
in effect until the end of the last calendar year beginning before the effective
date of final regulations under Section 401(a)(9) or such other date as may be
specified in guidance published by the Internal Revenue Service.
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
93
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 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/or his Retirement Savings Matching
Account, as the case may be, 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. Any amounts to be restored to a Member's Stock
Ownership Account and/or Retirement Savings Matching Account, as the case may
be, shall be taken first from any forfeitures which have not been
94
used to reduce future Participating Company contributions or to pay
administrative expenses. 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.
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.
(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.
95
(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.
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 and/or
96
Retirement Savings Matching Accounts, as the case may be, 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, (iii) the initial investment of Transferred Exchange
Contributions in the Investment Fund or Investment Funds (other than the Stock
Ownership Fund), pursuant to Section 7.02, and (iv) 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, the
investment of Transferred Exchange Contributions 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
98
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.
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, the investment of Transferred Exchange Contributions in the
Investment Fund or Funds (other than the Stock Ownership Fund), 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 Armstrong Holdings, Inc., 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 Armstrong Holdings, Inc. 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.
99
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:
(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 as in effect immediately before
December 1, 2000:
(i) Exchange Contribution Account.
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(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 proceeds of the sale of Released
Leveraged Shares and Non-Leveraged Shares. Funds in this Account may be invested
only in the Stock Ownership Fund, subject to the initial temporary investment of
Exchange Contributions in a Money Market Fund pursuant to Section 7.02, the
investment of Transferred Exchange Contributions 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
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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 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 Armstrong Holdings,
Inc. Before each such meeting of stockholders, Armstrong Holdings, Inc. 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
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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, including Armstrong Holdings, Inc. 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
-------------------------------------------------
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
103
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. Armstrong Holdings, Inc. shall use its best
efforts to timely distribute or cause to be distributed to each Member (or
Beneficiary) such information as will be distributed to stockholders of
Armstrong Holdings, Inc. 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, including Armstrong
Holdings, Inc. 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')
104
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.
105
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.
106
(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
107
Plan 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
108
Committee 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;
109
(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
110
be understood by the claimant, and include specific references to the pertinent
Plan 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.
111
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,
112
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.
113
(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.
114
12.10 Top-Heavy Provisions
--------------------
(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
115
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
116
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.
117
(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 6.04, 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.
118
(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.
119
(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.
120
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,
121
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 the employee
stock ownership portion 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.
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13.03 Merger of Plans
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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 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
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Any domestic corporation or other business entity which is now or
becomes an Affiliated Company of the Company shall become a Participating
Company upon appropriate action by the board of directors of such corporation or
other entity necessary to adopt the Plan with respect to its employees. In order
for a domestic corporation or other business entity 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. Notwithstanding anything to the contrary, Armacell, LLC shall become a
Participating Company separate from the Company and its Affiliated Companies
effective for the period beginning June 1, 2000 and ending December 31, 2000 (or
such earlier date as determined by the Committee). In addition, Ardex Engineered
Cements, Inc. shall become a Participating Company separate from the Company and
its Affiliated Companies effective for the period beginning August 1, 2000 and
ending December 31, 2000 (or such earlier date as determined by the Committee).
The Committee shall determine to what extent, if any, credit for eligibility and
vesting
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purposes shall be granted for previous service with the corporation or other
entity, location or division, but subject to the continued qualification of the
Trust for the Plan as tax-exempt under the Code.
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