BONUS REPLACEMENT RETIREMENT PLAN
OF ARMSTRONG WORLD INDUSTRIES, INC.
As Initially Adopted
Effective January 1, 1998
THIS WORKING COPY OF THE PLAN
INCORPORATES ALL AMENDMENTS ADOPTED
THROUGH FEBRUARY 28, 1999
BONUS REPLACEMENT RETIREMENT PLAN
OF ARMSTRONG WORLD INDUSTRIES, INC.
Foreword
Effective January 1, 1998, Armstrong World Industries, Inc. has adopted
the Bonus Replacement Retirement Plan of Armstrong World Industries, Inc. (the
"Plan") for the benefit of certain of its employees.
The Plan hereinafter set forth has been approved by the Board of
Directors of Armstrong World Industries, Inc. and is intended to conform to the
requirements of the Employee Retirement Income Security Act of 1974, as amended,
and to qualify as a profit sharing plan under Section 401(a) of the Internal
Revenue Code of 1986, as amended, or any other applicable sections thereof.
The rights to benefits of any eligible employee whose employment
terminates prior to any amendment to the Plan shall be determined solely by the
provisions of the Plan under which such eligible employee is covered, if any, as
in effect at the time of such termination of employment, unless otherwise
specifically provided herein.
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BONUS REPLACEMENT RETIREMENT PLAN
OF ARMSTRONG WORLD INDUSTRIES, INC.
Table of Contents
Page No.
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ARTICLE I - Definitions........................................................................................... 1
1.1 Account................................................................................................ 1
1.2 Affiliated Company..................................................................................... 1
1.3 Beneficiary............................................................................................ 1
1.4 Board of Directors..................................................................................... 1
1.5 Code................................................................................................... 1
1.6 Committee.............................................................................................. 1
1.7 Company................................................................................................ 1
1.8 Company Contributions.................................................................................. 1
1.9 Continuous Employment.................................................................................. 1
1.10 Effective Date......................................................................................... 2
1.11 Employee............................................................................................... 2
1.12 ERISA.................................................................................................. 2
1.13 Fund................................................................................................... 2
1.14 Hours of Service....................................................................................... 2
1.15 Insurance Company...................................................................................... 5
1.16 Insurance Contract..................................................................................... 5
1.17 Investing Institution.................................................................................. 5
1.18 Member................................................................................................. 5
1.19 Named Fiduciary........................................................................................ 5
1.20 Participating Company.................................................................................. 5
1.21 Plan................................................................................................... 5
1.22 Plan Year.............................................................................................. 5
1.23 Trust Agreement........................................................................................ 5
1.24 Trust Fund............................................................................................. 5
1.25 Trustee................................................................................................ 5
1.26 Valuation Date......................................................................................... 5
1.27 Year of Continuous Employment.......................................................................... 5
ARTICLE II - ELIGIBILITY, MEMBERSHIP, AND BENEFICIARY DESIGNATION................................................. 6
2.1 Eligibility............................................................................................ 6
2.2 Suspension of Membership due to Transfer to Non-Covered Employment..................................... 6
2.3 Beneficiary Designation................................................................................ 6
ARTICLE III - COMPANY CONTRIBUTIONS............................................................................... 8
3.1 Company Contributions.................................................................................. 8
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3.2 Return of Contributions............................................................................... 9
3.3 Vesting of Member's Account and Forfeitures........................................................... 9
ARTICLE IV - INVESTMENT OF CONTRIBUTIONS......................................................................... 10
4.1 Investment Funds...................................................................................... 10
4.2 Investment Elections.................................................................................. 11
4.3 Change in Investment Options.......................................................................... 11
4.4 Transfer Between Funds................................................................................ 11
4.5 Investment Options.................................................................................... 12
4.6 Voting Rights; Offer to Purchase Stock................................................................ 12
4.7 Limitations........................................................................................... 13
ARTICLE V - VALUATION OF A MEMBER'S ACCOUNT...................................................................... 14
ARTICLE VI -DISTRIBUTIONS........................................................................................ 15
6.1 Distributions on Termination of Employment Other than by Reason of a Member's Death................... 15
6.2 Distribution Upon a Member's Death.................................................................... 16
6.3 Lost Members or Beneficiaries......................................................................... 16
6.4 Required Distributions................................................................................ 17
6.5 Direct Rollover Distributions......................................................................... 17
6.6 Distributions on Sales of Businesses.................................................................. 18
6.7 Payments to Minors and Incompetents................................................................... 18
ARTICLE VII - MANAGEMENT OF FUNDS................................................................................ 19
7.1 General Responsibilities.............................................................................. 19
7.2 Funding Agreements.................................................................................... 19
7.3 Investment Managers................................................................................... 19
ARTICLE VIII - ADMINISTRATION OF THE PLAN........................................................................ 20
8.1 The Committee......................................................................................... 20
8.2 Duties of the Committee............................................................................... 20
8.3 Meetings.............................................................................................. 20
8.4 Action by Majority.................................................................................... 20
8.5 Compensation.......................................................................................... 20
8.6 Establishment of Rules................................................................................ 20
8.7 Prudent Conduct....................................................................................... 20
8.8 Indemnification....................................................................................... 21
ARTICLE IX - AMENDMENT AND TERMINATION........................................................................... 22
ARTICLE X - GENERAL PROVISIONS................................................................................... 23
10.1 Expenses.............................................................................................. 23
10.2 Source of Payment..................................................................................... 23
10.3 No Right of Employment................................................................................ 23
10.4 Non-Alienation of Benefits............................................................................ 23
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10.5 Qualified Domestic Relations Orders................................................................... 23
10.6 Invalidity of Provisions.............................................................................. 24
10.7 Failure to Initially Qualify Plan..................................................................... 24
10.8 Adoption of Plan by Subsidiary, Affiliated or Associated Company...................................... 24
10.9 Mergers and Transfers................................................................................. 24
10.10 Compliance with Securities Laws....................................................................... 24
10.11 Governing Law......................................................................................... 24
10.12 Trust-to-Trust Transfers.............................................................................. 24
10.13 Construction.......................................................................................... 25
10.14 Nondiscrimination Testing............................................................................. 25
ARTICLE XI - CONTRIBUTION LIMITATIONS............................................................................ 26
11.1 Annual Addition Limitation............................................................................ 26
11.2 Top-Heavy Provisions.................................................................................. 26
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ARTICLE I
DEFINITIONS
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As used herein, unless otherwise defined or required by the context, the
following words and phrases shall have the meanings indicated. Some of the words
and phrases used in the Plan are not defined in this Article I, but, for
convenience, are defined as they are introduced into the text.
1.1 "Account" means the Member's account into which shall be credited the
amounts in the Investment Funds attributable to contributions made by the
Company on the Member's behalf pursuant to Section 3.1.
1.2 "Affiliated Company" means any company which is related to the Company
as a member of a controlled group of corporations in accordance with Section
414(b) of the Code, or as a trade or business under common control in accordance
with Section 414(c) of the Code, or any other entity to the extent it is
required to be treated as an Affiliated Company in accordance with Section
414(o) of the Code and any regulations thereunder, or any organization which is
part of an affiliated service group in accordance with Section 414(m) of the
Code. For the purposes under the Plan of determining whether or not a person is
an employee and the period of employment of such person, each such company shall
be considered an Affiliated Company only for such period or periods during which
such other company is a member of the controlled group or under common control.
1.3 "Beneficiary" means such beneficiary as may be designated pursuant to
Section 2.3.
1.4 "Board of Directors" means the Board of Directors of the Company.
1.5 "Code" means the Internal Revenue Code of 1986, as amended.
1.6 "Committee" means the committee appointed in accordance with Section
8.1.
1.7 "Company" means Armstrong World Industries, Inc., a Pennsylvania
corporation, or any successor by merger, purchase or otherwise with respect to
its employees.
1.8 "Company Contributions" mean those contributions made by the Company
under Section 3.1.
1.9 "Continuous Employment" means, subject to all of the provisions set
forth herein, service with the Company or one or more Affiliated Companies,
including successive service with two or more Affiliated Companies.
(a) Notwithstanding the foregoing, periods while on an uncompensated leave
of absence or an uncompensated layoff shall be disregarded in the determination
of an Employee's Continuous Employment.
(b) Continuous Employment shall be deemed terminated on the earliest of
the following events:
(1) Death, retirement, resignation, or quit by the Employee;
(2) Discharge;
(3) Failure to return to work on:
(i) Expiration of approved leave of absence;
(ii) Recall after layoff;
(iii) Expiration of reemployment rights protected by law; or
(4) Elapse of 12 months following layoff without recall.
1.10 "Effective Date" means January 1, 1998, or such later date as of which
the Plan is made applicable in accordance with Section 10.8.
1.11 "Employee" means a person in the employ of the Company or an
Affiliated Company. The term "Employee" shall exclude any person who is (i) a
leased employee, (ii) a member of a bargaining unit, and (iii) a foreign
national or citizen of a territorial possession of the United States of America
whose employment relationship or contract of employment originates at, and whose
services are performed solely for and at, a branch facility of the Company
outside the United States. The term "leased employee" shall mean any person
(other than an Employee of the Company or an Affiliated Company) who pursuant to
an agreement between the Company or Affiliated Company and any other person
("leasing organization") has performed services for the Company or an Affiliated
Company on a substantially full-time basis for a period of at least one year,
and such services are performed under the primary direction or control by the
Company or an Affiliated Company. A leased employee shall not be considered an
Employee of the Company or an Affiliated Company if: (i) such individual is
covered by a money purchase pension plan providing (1) an employer contribution
of 10% of compensation as defined under Section 11.1, (2) immediate
participation, and (3) full and immediate vesting; and (ii) leased employees do
not constitute more than 20% of the Company's nonhighly compensated workforce.
1.12 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended .
1.13 "Fund" or "Investment Fund" means any of the separate funds in which
contributions to the Plan are invested in accordance with Article IV.
1.14 "Hours of Service" means:
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(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:
(1) Due to vacation, holiday, layoff, or leave of absence, and during
which he is paid or entitled to payment by the Company or an Affiliated Company.
(2) 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.
(3) Due to total or total and permanent 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.
(c) An Employee shall be credited with Hours of Service during periods he
is absent from the service of the Company or an Affiliated Company due to jury
duty or military duty in the Armed Forces of the United States, expiring with
the expiration of any reemployment rights protected by law.
(d) 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. Provided, however, that no
credit shall be given under this Section 1.14 during the period for which
payment is made solely to comply with unemployment compensation laws or for
which payment is made solely to reimburse an Employee for medical or medically-
related expenses incurred by the Employee or for the period following
retirement.
(e) 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. A 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.
(f) Hours of Service credited under Section (b), (c) or (d) hereof for a
period during which an 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:
(1) If payments made for a period of absence are computed with
specific reference to units of time, the number of Hours credited shall be the
number of regularly scheduled working hours included in the units of time on the
basis of which the payment is
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calculated, consistently determined with respect to all Employees within the
same job classification.
(2) If payments made for a period of absence are computed without
regard to units of time, the number of Hours of Service 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.
(3) 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 to pay back pay shall be
credited to the calendar year to which the award or agreement pertains.
(4) 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. No more than 501 Hours of Service
shall be credited by reason of an award or agreement to pay back pay. Nothing
contained herein shall result in double credit for the same period.
(g) The number of Hours of Service credited under the Plan for military
service or for any other period described in Section (c) hereof during which an
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.
(h) An Employee who is absent from work due to the pregnancy of the
Employee, the birth of a child of the Employee, the placement of a child with
the Employee in connection with the adoption of such child by the Employee, the
caring for such child for the period immediately following birth or placement, a
leave of absence under the Family and Medical Leave Act of 1993, as it may be
amended from time to time, and who is not entitled to credit for such absence
under any of the other provisions of this Section 1.14 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 continuous period of absence described in this Section 1.14(h). If in
the year in which the absence begins, the Employee has not yet been credited
with at least 501 Hours of Service, then the Hours of Service credited by reason
of this Section 1.14(h) 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.
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1.15 "Insurance Company" means the insurance company which issues a
contact, and any successor insurance company thereto.
1.16 "Insurance Contract" means a contract issued by an Insurance Company
to fund benefits under the Plan, and any successor contract thereto.
1.17 "Investing Institution" means a Trustee, or Insurance Company, mutual
fund or investment manager which is designated by the Committee, by Trust
Agreement or Insurance Contract, to manage the Funds.
1.18 "Member" means any Employee who becomes a Member of this Plan as
provided in Section 2.1.
1.19 "Named Fiduciary" means the Board of Directors, the Committee, and the
Trustee.
1.20 "Participating Company" means the Company or any other Affiliated
Company approved by the Committee.
1.21 "Plan" means the Bonus Replacement Retirement Plan of Armstrong World
Industries, Inc., as described herein.
1.22 "Plan Year" means the 12-month period beginning on January 1 and
ending on the following December 31.
1.23 "Trust Agreement" means the agreement entered into between the Company
and the Trustee to fund benefits under the Plan.
1.24 "Trust Fund" means the cash and other properties arising from
contributions made by the Company in accordance with the provisions of this Plan
and held and administered by the Trustee pursuant to the Trust Agreement.
1.25 "Trustee" means any bank or trust company designated by the Board of
Directors under a trust agreement to receive Company Contributions made in
accordance with Section 3.1.
1.26 "Valuation Date" means the date or dates, as applicable, on which the
Trust Fund is valued in accordance with Article V.
1.27 "Year of Continuous Employment" means a calendar year during which an
Employee completes not less than 1,000 Hours of Service, regardless of the
number of months of such service. For purposes of determining an Employee's
vested interest under the Plan, Years of Continuous Employment completed prior
to the date an Employee becomes a Member of the Plan shall be taken into
account, as shall all service with an Affiliated Company.
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ARTICLE II
----------
ELIGIBILITY, MEMBERSHIP, AND BENEFICIARY DESIGNATION
-----------------------------------------------------
2.1 Eligibility - Each Employee of a Participating Company who, on the
-----------
first day of the Plan Year, is (1) at a grade level of 1,200 or more on the
Company's organizational management system, and (2) eligible to participate in
the Company's Management Achievement Plan, shall become a Member on the later of
(A) the Effective Date of the Plan, or (B) the date the Employee first satisfies
the criteria for Plan eligibility. An Employee who has transferred from the
employment of a foreign subsidiary of the Company to the employment of a
Participating Company and who is accruing benefits under a retirement program
maintained by such foreign subsidiary shall not become a Member of the Plan
until the earliest of the date on which:
(a) He becomes a United States citizen;
(b) He is granted permanent resident alien status under the laws of the
United States; or
(c) He ceases to accrue benefits under such foreign subsidiary retirement
program.
2.2 Suspension of Membership due to Transfer to Non-Covered Employment -
------------------------------------------------------------------
If, in any Plan Year, a Member is not in a category of employment described in
Section 2.1 above as of the last day of such Plan Year, but continues in the
employment of the Company or an Affiliated Company, he shall be a suspended
Member for the entire such Plan Year subject to the following conditions:
(a) During the period of his suspension, the Member shall not be entitled
to share in any allocations of Company Contributions. If during the period of
his suspension his employment terminates or he retires or dies, there shall be a
distribution of his Account in accordance with Article VI.
(b) If and when a suspended Member again becomes employed by the Company
at a grade level of 1,200 or above, he shall again be an active Member as of
that date and may share in any allocations of Company Contributions (in
accordance with the terms of the Plan).
2.3 Beneficiary Designation - Subject to the rules set forth below with
-----------------------
respect to married Members, each Member has the right to name a Beneficiary to
receive any death benefits payable hereunder. Each Member also has the right,
from time to time, to change any designation of Beneficiary. A designation or
change of Beneficiary must be in writing on forms supplied by the Committee and
any change of Beneficiary will not become effective until such change of
Beneficiary is filed with the Committee or its designee whether or not the
Member is alive at the time of such filing; provided, however, that any such
change will not be effective with respect to any payments made by the Trustee in
accordance with the Member's last designation and prior to the time such change
was received by the Committee or its designee. In
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the case of any Member who is married on the date of his death, the Member's
spouse as of his date of death shall be his Beneficiary unless such spouse shall
have consented to a different Beneficiary on prescribed forms and before either
a notary public or an individual designated by the Committee. Such spousal
consent must acknowledge the effect of the Beneficiary designation. In the
absence of an effective Beneficiary designation or if a named Beneficiary shall
have died and no contingent Beneficiary shall have been properly designated, the
first of the following classes of successive preference beneficiaries shall be
the Beneficiary:
(a) the Member's surviving spouse;
(b) the Member's surviving children;
(c) the estate of the Member.
Any individual who is designated as an alternate payee under a "qualified
domestic relations order" (as defined in Code Section 414(p)) relating to a
Member's Account under this Plan shall be treated as a Beneficiary hereunder, to
the extent provided by such order. The Committee may require and rely upon such
proof of death and such evidence of the right of any Beneficiary or other person
to receive the undistributed value of a deceased Member's Account as the
Committee may deem proper, and its determination of death and of the right of
such Beneficiary or other person to receive payment shall be conclusive.
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ARTICLE III
------------
COMPANY CONTRIBUTIONS
---------------------
3.1 Company Contributions - The Company may contribute to the Plan the
---------------------
amounts necessary to make the following allocations.
(a) Allocations - Company Contributions for a Plan Year shall be allocated
-----------
to the Accounts of Members who are employed in a category described in Section
2.1 on the last day of such Plan Year in accordance with the following:
(1) If a Member's employment grade is at least grade 1,200 but not
more than grade 1,459 under the Company's organizational management system as of
January 1 of the Plan Year, the Company Contributions allocated on behalf of
such Member for the Plan Year shall be equal to the lesser of (i) 50% of the
actual "gross bonus" (as such term is defined under the Company's Management
Achievement Plan) awarded to the Employee under the Company's Management
Achievement Plan with respect to services performed by the Member for the
Company for the calendar year coinciding with such Plan Year, or (ii) $7,500.
(2) If a Member's employment grade is at least grade 1,460 but not
more than grade 1,929 under the Company's organizational management system as of
January 1 of the Plan Year, the Company Contributions allocated on behalf of
such Member for the Plan Year shall be equal to the lesser of (i) 50% of the
actual "gross bonus" awarded to the Employee under the Company's Management
Achievement Plan with respect to services performed by the Member for the
Company for the calendar year coinciding with such Plan Year, or (ii) $15,000.
(3) If a Member's employment grade is at least grade 1,930 under the
Company's organizational management system as of January 1 of the Plan Year, the
Company Contributions allocated on behalf of such Member for the Plan Year shall
be equal to the lesser of (i) 50% of the actual "gross bonus" awarded to the
Employee under the Company's Management Achievement Plan with respect to
services performed by the Member for the Company for the calendar year
coinciding with such Plan Year, or (ii) $20,000.
(b) Allocation and Payment to Trust - Company Contributions for a Plan
-------------------------------
Year shall be allocated to the Members' Accounts as of the last day of the Plan
Year for which such contributions are made. Company Contributions for any Plan
Year shall be paid to the Investing Institution not later than the date which is
prescribed by law for filing the Company's income tax return, including any
extension thereof.
(c) Additional Company Contributions or Reallocations Permitted to
--------------------------------------------------------------
Correct Administrative Error - If, with respect to a Plan Year, an
- ----------------------------
administrative error results in a Member's Account not being properly credited
with the amount of Company Contributions, or earnings on such contributions,
corrective Company Contributions or Account reallocations may
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be made in accordance with this subsection. Solely for the purpose of placing
any affected Member's Account in the position that it would have been in if no
error had been made:
(1) The Company may make additional contributions to such Member's
Account; or
(2) The Committee may reallocate existing Company Contributions
made under Section 3.1 among the Accounts of affected Members.
3.2 Return of Contributions - All Company Contributions are conditioned
-----------------------
on their being allowed as a deduction for federal income tax purposes.
Notwithstanding any provision of the Plan to the contrary, Company Contributions
made to the Plan may be returned to the Company if:
(a) the contribution is made by reason of mistake of fact; or
(b) the contribution is conditioned on its deductibility under Code
Section 404 and such deductibility is denied;
provided such return of contribution is made within one year of the mistaken
payment of the contribution or the disallowance of the deduction, as the case
may be. A contribution shall be considered to be made by reason of a mistake of
fact if, for example, it is based on incorrect information as to eligibility or
compensation of an Employee, a mathematical error or an erroneous belief that
such contribution is consistent with the limitations of Section 11.1. So much of
the contribution as is attributable to the mistake of fact shall be repaid by
the Trustee upon demand by the Company upon presentation of evidence of the
mistake of fact and calculation as to the impact of the mistake.
3.3 Vesting of Member's Account and Forfeitures - A Member shall have a
-------------------------------------------
vested and nonforfeitable interest in his Account upon (a) his completion of
five (5) Years of Continuous Employment, (b) his death, (c) his retirement, (d)
the sale of substantially all of the assets of a trade or business, unit or
location where the Member is employed, (e) the sale by the Company of its
interest in a subsidiary where the Member is employed, or (f) the transfer of
the Member to employment with WAVE, a Delaware general partnership. If a
Member's Continuous Employment is terminated prior to the time such Member has a
nonforfeitable interest in his Account, the amount in such Member's Account
shall be forfeited. If a former Member resumes employment with the Company or an
Affiliated Company, the amount forfeited shall be restored (without earnings) to
his Account.
Amounts forfeited under this Section shall be used, not later than as of
the last day of the Plan Year in which the forfeiture occurs, to reduce future
Company Contributions, to defray administrative expenses of the Plan, and to
restore Members' Accounts in accordance with the preceding paragraph of this
Section.
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ARTICLE IV
INVESTMENT OF CONTRIBUTIONS
---------------------------
4.1 Investment Funds - Contributions to the Plan shall be invested by the
----------------
Investing Institution in one or more of the following Investment Funds in
accordance with Section 4.2:
(a) "Equity Investment Fund" is 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 Investing Institution. 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" is 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 Investing Institution. 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, bankers, acceptances, certificates
of deposit, and obligations of the U.S. Government and any agency or
instrumentality thereof.
(c) "Money Market Fund" is one or more 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) "Company Stock Fund" is a fund designed solely to invest in Company
common stock or to hold Company common stock contributed to the Plan by the
Company. Up to 100% of the assets of the Plan may be invested in the Company
Stock Fund.
(e) "Balanced Fund" is 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.
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Any such common, collective or commingled trust funds referred to in connection
with the Funds referred to in Subsections 4.1(a), 4.1(b), 4.1(c), or 4.1(e)
shall satisfy such requirements of ERISA governing the establishment of such
funds for the investment of assets of employee benefit plans qualified under
Section 401(a) and exempt under Section 501(a) of the Code whereupon the
instrument or instruments establishing such common, collective or commingled
trust funds, as amended from time to time, shall constitute a part of this Plan
and the Trust Agreement with respect to any assets of the Investment Fund(s)
which are at the time invested in such funds. Any portion of an Investment Fund
may, pending permanent investment or distribution, be invested in short term
securities issued or guaranteed by the United States of America or any agency or
instrumentality thereof or any other investments of a short term nature,
including corporate obligations or participation's therein or through the medium
of any common, collective or commingled trust fund maintained by the Trustee
which is invested principally in property of the kind specified in this Section.
A portion of an Investment Fund may be maintained in cash.
4.2 Investment Elections - Company Contributions made on a Member's
--------------------
behalf under Section 3.1 will be invested in multiples of 1%, in any one or more
of the Investment Funds, as elected by the Member in accordance with such
uniform rules as the Committee may adopt from time to time. If Company
Contributions are made prior to the time that a Member has made an election
under this Section 4.2, such Company Contributions shall be invested in the
Fixed Income Investment Fund until such investment election is received.
4.3 Change in Investment Options - A Member may change his investment
----------------------------
elections pursuant to Section 4.2 at any time with respect to any subsequent
Company Contributions to be allocated on his behalf, by giving notice (including
telephonic notice) to the Committee in such manner and within the time limit
prescribed by the Committee.
4.4 Transfer Between Funds -
----------------------
(a) An active or inactive Member may elect to transfer all or any
portion of the value of his Account in one of the Investment Funds to any other
Investment Fund at the following times (and under such uniform rules as the
Committee may adopt from time to time):
(1) 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
(2) Any election to transfer to or from the Company Stock Fund
may be made at any time, to be effective as follows: elections initiated by the
fifteenth day of the month shall be effective as soon as practicable after the
fifteenth day of the month; elections initiated after the fifteenth day of the
month and by the last day of the month shall be effective as soon as practicable
after the last day of the month. For purposes of the preceding sentence, if the
-11-
fifteenth or last day of a month falls on a Saturday, Sunday or holiday, the
fifteenth or last day of such month shall be deemed to be the last business day
preceding the fifteenth or last day, respectively.
(b) Notwithstanding the foregoing,
(1) no direct transfers are permitted from the Fixed Income
Investment Fund to the Money Market Fund or the funds maintained in the Balanced
Fund that are designated by the Company as having goals and objectives
comparable to the Fixed Income Investment Fund (collectively the "Balanced
Income Fund"); and
(2) amounts transferred from the Fixed Income Investment Fund to
any other Fund may not thereafter be transferred to the Money Market Fund or any
Balanced Income Fund for three (3) months following such transfer.
(c) Except as otherwise provided, transfers pursuant to this Section
4.4 may be made by telephoning notice to the Investing Institution, and shall be
effective as soon as practicable following the Investing Institution's receipt
of the notice.
4.5 Investment Options - Each Member is solely responsible for the
------------------
selection of his investment option. The Investing Institutions, the Committee,
the Company or any of the officers or supervisors of the Company are not
empowered to advise a Member as to the manner in which his Account shall be
invested. The fact that a security is available to Members for investment under
the Plan shall not be construed as a recommendation for the purchase of that
security, nor shall the designation of any option impose any liability on the
Company, its directors, officers or employees, the Investing Institutions, the
Committee or any Member of the Plan.
4.6 Voting Rights; Offer to Purchase Stock -
--------------------------------------
(a) Voting - All Company stock (including fractional shares), the
------
value of which is allocated to Members' Accounts, shall be voted by the Trustee
of the Trust, in accordance with instructions from the Members. The Company
shall provide Members with notices and information statements when voting rights
are to be exercised, the content of which must generally be the same as for all
holders of interests in Company stock. Fractional shares may be voted by the
Trustee on a combined basis, in order to reflect the direction of the Members
holding such shares. The Trustee shall tabulate the instructions and shall
determine the ratio of votes for and against each proposition. The Trustee shall
then vote all stock held by it, including stock for which no instructions have
been received, in the ratios determined by the vote of those Members who
returned voting instructions.
(b) Tender Offer Procedure - In the event any offer is made to
----------------------
shareholders of the Company generally by any person corporation or other entity
(the "Offeror") to purchase any or all of the Company's outstanding stock
including the stock the value of which is then held in Members' Accounts, then
and in that event the Trustee shall promptly forward to each Member
-12-
all materials and written information furnished to the Trustee by the Offeror
and/or by the Company in connection therewith, and shall notify each Member in
writing of the number of shares of Company stock the value of which is then
credited to such Member's Account. Such notice shall also set forth the rights
afforded each Member by the following sentence and shall state that, absent
timely instructions from such Member to the Trustee, no tender to the Offeror
shall be made of any of the shares specified in such written notice. Each Member
shall be entitled to instruct the Trustee as to whether all (but not less than
all) of the shares of Company stock standing to his credit should be tendered by
the Trustee pursuant to such offer.
(c) Shares Tendered - The Trustee shall tender only those shares of
---------------
Company stock the value of which is held in a Member's Account for which it
receives instructions to so tender from such Member and shall not tender any
shares as to which such instructions are not so received.
(d) Proceeds - In the event that Company stock the value of which is
--------
held in a Member's Account is tendered, the proceeds received upon the
acceptance of such tender by the Offeror shall be credited to such Member's
Account. The Trustee shall invest amounts representing the proceeds of tendered
Company stock and any earnings thereon, in accordance with instructions from the
Committee.
4.7 Limitations - Provisions of this Article are subject to the
-----------
limitations of any contract with any Investing Institution.
-13-
ARTICLE V
VALUATION OF A MEMBER'S ACCOUNT
-------------------------------
"Valuation Date" shall mean any day that the New York Stock Exchange is
open for trading or such other date as may be designated by the Committee or its
delegate. The Investment Funds described in Section 4.1 shall be valued on each
Valuation Date in accordance with rules established by the Committee. Whenever a
distribution to a Member is made, the amount paid to the Member shall be based
on the value of the Member's Account determined as of the Valuation Date set
forth in Article VI.
Each Member's Account will be credited, as of the Valuation Date on
which such amounts are received by the Trustee, with all contributions made on
the Member's behalf and debited with the amount of any distribution made to the
Member or on the Member's behalf pursuant to Article VI. The Account of each
Member will also be adjusted, as of each Valuation Date, for increases
reflecting the Member's share of the net investment income and any realized and
unrealized capital gains of the Funds and decreases reflecting the Member's
share of any realized and unrealized losses, including capital losses, as well
as the payment of brokerage fees and transfer taxes applicable to purchases and
sales for each Investment Fund and all similar transactions, and any Plan
administrative expenses to the extent they are not paid by the Company, of the
Investment Funds that occurred since the last Valuation Date. Except to the
extent otherwise reflected in the value of mutual fund shares, such Member's
share of such income and losses will be that portion of the total net investment
income, capital gains and losses of each such Investment Fund which bears the
same ratio to such total as the balance of his Member Accounts attributable to
each such Investment Fund on the preceding Valuation Date bears to the aggregate
of the balances of all Member Accounts attributable to each such Investment Fund
as of the preceding Valuation Date.
-14-
ARTICLE VI
Distributions
-------------
6.1 Distributions on Termination of Employment Other than by Reason
---------------------------------------------------------------
of a Member's Death -
- -------------------
(a) A Member whose Continuous Employment is terminated prior to the
date such Member has a nonforfeitable interest in his Account in accordance with
Section 3.3 shall not be entitled to any benefits under the Plan, and instead
shall be deemed to have received a distribution of zero dollars upon his
termination of Continuous Employment; provided that if such Member is reemployed
by the Company or an Affiliated Company, such Member shall be deemed to have
repaid such zero dollar distribution.
(b) Subject to Section 6.4, if a Member terminates employment for any
reason other than death, he may elect (in the manner specified by the Committee)
at any time following his termination to receive a single sum cash payment of
the nonforfeitable portion of his Account as soon as practicable following the
Committee's receipt of the Member's election.
(c) If a Member is eligible to receive a distribution in accordance
with subsection (b), he may request in the manner prescribed by the Committee
(including telephonically) to have such distribution paid directly to him or
paid as a "direct rollover distribution" (as defined in Code Section 402(c) and
the regulations and other guidance issued thereunder).
(d) The amount of such distribution shall be determined as follows:
for any request made by the fifteenth day of the month, the amount of such
distribution shall be determined as of the next Valuation Date following 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 distribution shall be
determined as of the next Valuation Date following 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.
(e) Notwithstanding subsection (b), the portion of the Member's
Account that is invested in the Company Stock Fund shall be distributed in a
single sum in either cash or Company Stock (with cash for fractional shares), as
elected by the Member. If the Member fails to elect, prior to the time the time
such distribution is to be processed pursuant to the Member's election or
pursuant to the requirements of Section 6.4, to receive the portion of his
Account invested in the Company Stock Fund in shares of Company Stock, such
distribution shall be made in cash.
(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
-15-
with Section 6.5 below, and his right to receive a distribution of his Account
under this Section 6.1. Distribution of a Member's Account under the Plan may
occur prior to 30 days after the Committee or its designee provides such notice,
provided:
(1) 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
(2) the Member, after receiving the notice, requests to receive
an immediate distribution in the manner prescribed by the Committee (including
telephonically).
6.2 Distribution Upon a Member's Death -
----------------------------------
(a) In the event a Member dies prior to his receipt of a distribution
under Section 6.1, the entire value of his Account shall be paid in a single sum
cash payment to the Member's Beneficiary as soon as practicable following
receipt of proper payment instructions by the Trustee from the Committee. The
amount of such distribution shall be determined in accordance with Section
6.1(d), substituting "for payment instructions received" for the phrase "for any
request made" in such section. The Committee shall provide the Trustee payment
instructions as soon as practicable after the Member's death or notification of
the Member's death, if later. No benefits shall be payable under this Section
6.2 to any Beneficiary if the Member dies after commencing to receive a
distribution of his Accounts.
(b) Notwithstanding the foregoing, if the Member's Beneficiary is the
Member's spouse, such Beneficiary may elect to defer receipt of the single sum
payment beyond the date on which it normally would become payable, but in no
event later than December 31 of the calendar year in which the Member would have
attained age 70 1/2.
(c) In no event may a Beneficiary elect to receive a payment of a
Member's Account in any form of payment other than a single sum payment.
Further, if a spousal Beneficiary defers distribution of any amounts from the
Plan, then prior to the distribution of such Account, the Beneficiary may not
obtain any partial distributions. However, such Beneficiary may continue to
invest amounts in the Member's Account in accordance with Article IV.
(d) Notwithstanding subsection (a), the portion of the Member's Account
that is invested in the Company Stock Fund shall be distributed in a single sum
in either cash or Company Stock (with cash for fractional shares), as elected by
the Beneficiary. If the Beneficiary fails to elect to receive the portion of the
Member's Account invested in the Company Stock Fund in shares of Company Stock,
such distribution shall be made in cash.
6.3 Lost Members or Beneficiaries - 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 to reduce future
Company Contributions, defray administrative expenses of the Plan, and restore
Members' Accounts in accordance with this section; provided, however, that
-16-
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 shall, after furnishing proof of his identity and right to make
such claim to the Committee, file a written request for such benefit with the
Committee.
6.4 Required Distributions -
----------------------
(a) Notwithstanding anything to the contrary in this Plan, unless the
Member elects otherwise, in writing, payments under the Plan to a Member shall
begin not later than the 60th day after the latest of the close of the Plan Year
in which:
(1) the Member attains age 65;
(2) occurs the tenth anniversary of the year in which the Member
commences participation in the Plan; or
(3) the Member terminates employment.
(b) All payments under this Plan shall be adjusted to meet the
requirements of Section 401(a)(9) of the Code and the regulations and other
guidance issued thereunder, subject to the provisions of this Section 6.4. In
addition, all distributions under the Plan shall comply with the incidental
death benefit requirements of Section 401(a)(9)(G) of the Code.
(c) Payment of benefits to any Member who is not a 5% owner as
defined in Code Section 416 shall be paid in the form of a lump sum payment not
later than the April 1 following the later of: (i) the calendar year in which
such Member attains age 70 1/2, or (ii) the calendar year in which such Member
terminates employment. Payment of benefits to any Member who is a 5% owner as
defined in Code section 416 shall be paid in the form of a lump sum payment not
later than the April 1 following the calendar year in which such Member attains
age 70 1/2.
6.5 Direct Rollover Distributions - 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 under Section 10.5
(referred to as the "distributee") and upon receipt of the direction of the
Committee or its designee, the Trustee shall effectuate a direct rollover
distribution of the amount requested by the distributee, in accordance with Code
Section 401(a)(31), to an eligible retirement plan (as defined in Code Section
402(c)(8)(B)). 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 Code Section 402(c) Code and the regulations and other guidance
issued thereunder. All direct rollover distributions shall be made in accordance
with the following subsections (a) through (d):
(a) A direct rollover distribution may 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.
-17-
(b) Direct rollover distributions shall be made in cash to the
Trustee of the eligible retirement plan, in accordance with procedures
established by the Committee, plus shares of common stock otherwise
distributable under the Plan to the distributee, which shares shall be
registered in a manner necessary to effectuate a direct rollover under Code
Section 401(a)(31), provided, however, that the distributee may request that
such direct rollover distribution be made entirely in cash in the manner
described above.
(c) No direct rollover distribution shall be made unless the
distributee furnishes the Committee with such information as the Committee shall
require and deems to be sufficient.
(d) 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.
6.6 Distributions on Sales of Businesses - For the sole purpose of
------------------------------------
determining a Member's entitlement to a distribution under this Plan, no
distribution shall be permitted upon the sale or other business disposition by
the Company of a trade or business or the sale by the Company of its interest in
a subsidiary, with respect to a Member who is employed by such trade or business
or subsidiary immediately prior to such sale or disposition and who continues in
the employ of (i) the employer that acquires the assets of such trade or
business or acquires the interest of such subsidiary or (ii) any other entity
related to such employer.
6.7 Payments to Minors and Incompetents - If a Member or Beneficiary
-----------------------------------
entitled to receive any benefits hereunder is a minor or is deemed by the
Committee or is adjudged to be legally incapable of giving valid receipt and
discharge for such benefits, they will be paid to such persons as the Committee
might designate or to the duly appointed guardian. Any such payment shall be a
complete discharge of the liability of the Plan and the Trust therefor.
-18-
ARTICLE VII
Management of Funds
-------------------
7.1 General Responsibilities - All the funds of the Plan shall be
------------------------
held by a Trustee or Trustees appointed from time to time by the Board of
Directors, in one or more trusts under a trust instrument or instruments
approved or authorized by the Board of Directors for use in providing the
benefits of the Plan; provided that no part of the corpus or income of the Trust
Fund shall be used for, or diverted to, purposes other than for the exclusive
benefit of Members and their Beneficiaries.
7.2 Funding Agreements -
------------------
(a) All the funds of the Plan shall be held by one or more Investing
Institutions appointed from time to time by the Company under a Trust Agreement
or an Insurance Contract adopted, or as amended, by the Company for the
administration of the funds of the Plan. The Company shall have no liability for
the investment of the funds paid over to the Investing Institution.
(b) The Company retains the right to act on behalf of all persons
having an interest in any Trust Fund or under any Insurance Contract, and to
enter into additional Trust Agreements or Insurance Contracts.
7.3 Investment Managers - The Committee may appoint one or more
-------------------
Investment Managers to manage the investment of all or any part of one or more
of the Investment Funds. Every Investment Manager so appointed must meet the
requirements of ERISA Section 3(38). An Investment Manager shall acknowledge in
writing its appointment as a fiduciary of the Plan, and shall serve until a
proper resignation is received by the Committee, or until it is removed and/or
replaced by the Committee. The Committee and the Trustee shall be under no duty
to question any direction or lack of direction of any Investment Manager, but
shall act, and shall be fully protected in acting, in accordance with each such
direction. An Investment Manager shall have sole investment responsibility for
that portion of the Funds which it is appointed to manage, and no other Plan
fiduciary shall have any responsibility for the investment of any asset of the
Fund, the management of which has been delegated to an Investment Manager, or
liability for any loss or diminution in value of the Fund resulting from any
action directed, taken or omitted by an Investment Manager.
-19-
ARTICLE VIII
Administration of the Plan
--------------------------
8.1 The Committee - The administration of this Plan, the exclusive
-------------
power to interpret and construe it and the responsibility for carrying out its
provisions, shall be vested in the Committee, which shall consist of the same
persons as constitute 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 this
Committee. In the event no members of the Committee are in office, the Company
shall be deemed the Committee.
8.2 Duties of the Committee - The members of the Committee may
-----------------------
appoint from their number such subcommittees with such powers as they shall
determine; may authorize one or more of their number or any agent to execute or
deliver any instrument or make any payment on their behalf; may retain counsel,
employ agents and provide for such clerical, accounting and consulting services
as they may require in carrying out the provisions of the Plan; and may allocate
among themselves or delegate to other persons all or such portion of their
duties hereunder, other than those granted to any Investment Manager pursuant to
Section 7.3 or the Trust agreement adopted for use in implementing the Plan, as
they, in their sole discretion shall decide.
8.3 Meetings - The Committee shall hold meetings upon such notice, at
--------
such place or places, and at such time or times at it may from time to time
determine.
8.4 Action by Majority - Any act which the Plan authorizes or
------------------
requires the Committee to do may be done by a majority of its members. The
action of such majority expressed from time to time by a vote at a meeting or in
writing without a meeting shall constitute the action of the Committee and shall
have the same effect for all purposes as if assented to by all members of the
Committee at the time in office.
8.5 Compensation - No member of the Committee shall receive any
------------
compensation from the Plan for his services as such. However, all expenses of
the Committee shall be paid by the Company.
8.6 Establishment of Rules - Subject to the provisions of any
----------------------
Insurance Contract and the limitations of the Plan, the Committee from time to
time shall establish rules for the administration of the Plan and the
transaction of its business. The Committee shall have the full and exclusive
discretionary authority to interpret the Plan, to determine all benefits and to
resolve all questions arising from the administration, interpretation, and
application of 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. All decisions of the Committee shall be conclusive and binding upon
all affected persons.
8.7 Prudent Conduct - The members of the Committee shall use that
---------------
degree of care, skill, prudence and diligence that a prudent man acting in a
like capacity and familiar with such
-20-
matters would use in his conduct of a similar situation. A member of the
Committee shall not be liable for the breach of fiduciary responsibility of
another fiduciary unless (a) he participates knowingly in, or knowingly
undertakes to conceal, an act or omission of such other fiduciary, knowing such
act or omission is a breach; or (b) by his failure to discharge his duties
solely in the interest of the Members and Beneficiaries for the exclusive
purpose of providing their benefits and defraying reasonable expenses of
administering the Plan not met by the Company, he has enabled such other
fiduciary to commit a breach; or (c) he has knowledge of a breach by such other
fiduciary and does not make reasonable efforts to remedy the breach; or (d) the
Committee improperly allocates responsibilities among themselves or improperly
delegates responsibilities to others, or fails to properly review any allocation
or delegation of fiduciary responsibilities.
8.8 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.
-21-
ARTICLE IX
Amendment and Termination
-------------------------
This Plan may be terminated, modified, altered or amended by the
Retirement Committee by resolution at any time, provided that no such
termination, modification, alteration or amendment shall cause or permit the
Trust Fund to be used for, or diverted to, any purposes other than for the
exclusive benefit of the employees of the Company included in this Plan. In no
case shall any amendment of this Plan cause the reduction or elimination of any
Member's accrued benefit (including optional forms of benefit and the manner and
timing thereof) in violation of Code Section 411(d)(6) or ERISA Section 204(g).
Notwithstanding the foregoing, any modification or amendment of the Plan may be
made, retroactively if necessary, which the Retirement Committee 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. Further, notwithstanding the foregoing, in the
event of the complete or partial termination of the Plan (which partial
termination shall occur only in the event of a reduction of a substantial number
or percentage of participants due to employer-initiated actions, as determined
in accordance with applicable law), or the complete discontinuance of
contributions thereto, the Account balances of all affected Members shall become
fully vested. The Account balance of each affected Member shall continue to be
held in trust until the Member is entitled to a distribution under Article VI.
-22-
ARTICLE X
General Provisions
------------------
10.1 Expenses - All costs and expenses in administering the Plan and
--------
managing the Trust Fund shall be paid from the Trust Fund and charged within the
Trust Fund to the appropriate Investment Funds to which such costs and expenses
are attributable to the extent such expenses are not paid by the Company.
Notwithstanding the foregoing, brokerage fees, commissions, stock transfer taxes
and other charges and expenses in connection with the purchase and sale of
securities shall be paid from the Trust Fund and charged within the Trust Fund
to the Investment Fund to which such charges and expenses are attributable.
10.2 Source of Payment - Benefits under the Plan shall be payable only
-----------------
out of the Trust Fund and the Company shall not have any legal obligation or
liability to make any direct payment of benefits under the Plan. Neither the
Company nor the Trustee guarantees the Trust Fund against any loss or
depreciation, or guarantees the payment of any benefit hereunder. No persons
shall have any rights under the Plan with respect to the Trust Fund, or against
the Trustee or the Company, except as specifically provided for herein.
10.3 No Right of Employment - Nothing contained in the Plan shall be
----------------------
deemed to give any employee the right to be retained in the service of the
Company or to interfere with the right of the Company to discharge or to retire
any employee at any time.
10.4 Non-Alienation of Benefits - Except as specifically provided in
--------------------------
the Plan, no benefit payable at any time under this Plan shall be subject in any
manner to alienation, sale, transfer, assignment, pledge, attachment or
encumbrance of any kind. Any attempt to alienate, sell, transfer, assign,
pledge, attach or otherwise encumber any such benefit, whether presently or
thereafter payable, shall be void. Neither any benefit, nor the Trust Fund
shall, in any manner, be liable for or subject to the debts or liability of any
employee included in this Plan or any beneficiary. If any employee included in
this Plan or any Beneficiary shall attempt to or shall alienate, sell, transfer,
assign, pledge, attach or otherwise encumber his rights or benefits under this
Plan or any part thereof, or if by reason of bankruptcy or otherwise the rights
or benefits of any employee included in this Plan or of any beneficiary would
devolve upon anyone else or would not be enjoyed by him, then the Committee, in
its discretion and to the extent permitted by law, may terminate his interest in
any such right or benefit and direct the Trustee to hold or apply it for his use
or account or for the use or account of his spouse, children, or other
dependents or any of them in such manner as the Committee may deem proper.
10.5 Qualified Domestic Relations Orders - Notwithstanding any
-----------------------------------
provision in the Plan to the contrary, the Committee shall take such steps as
are necessary under the Plan to comply with the terms of any applicable
"qualified domestic relations order" (as defined by Code Section 414(p) and
ERISA Section 206(d)). The Account of any Member subject to such an order shall
be adjusted to reflect any payments made pursuant to such order. Payments may be
made from this Plan pursuant to such an order at any time prior to earliest
retirement age, as defined in the Code and ERISA. The Committee shall adopt such
procedures as it deems necessary and appropriate to carry out the provisions of
this Section.
-23-
10.6 Invalidity of Provisions - If any provision of this Plan is held
------------------------
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provisions hereof, and this Plan shall be construed and enforced as if
such invalid or unenforceable provision had not been included.
10.7 Failure to Initially Qualify Plan - In no event shall any part of
---------------------------------
the corpus or the income of the Plan be used for, or diverted to, any purpose
other than the exclusive benefit of Members, former Members and their
Beneficiaries hereunder. Notwithstanding the foregoing, in the event that the
Internal Revenue Service initially determines that the Plan does not qualify
under Code Section 401(a), all Company Contributions made prior to such initial
determination as to the qualification of the Plan may be returned to the Company
within one year of the denial of qualification.
10.8 Adoption of Plan by Subsidiary, Affiliated or Associated Company
----------------------------------------------------------------
- - The Company may, by resolution of the Board of Directors, exclude from
participation in this Plan any or all of the Employees of the Company or an
Affiliated Company. Any subsidiary company of the Company may, by action of its
board of directors with the approval of the Board of Directors of the Company,
adopt this Plan with respect to its Employees. The Company may, by resolution of
the Board of Directors, or by action of the appropriate officers of the Company,
make this Plan applicable to any Employees of the Company or an Affiliated
Company. With respect to any such Employees to which this Plan is made
applicable, Effective Date refers to the date as of which the Plan is made
applicable to such Employees. The Committee shall adopt such procedures as it
deems necessary and appropriate to carry out the provisions of this Section.
10.9 Mergers and Transfers - No merger or consolidation with, or
---------------------
transfer of assets or liabilities to, any profit sharing or retirement plan,
shall be made unless the benefit each Member in this Plan would receive if the
Plan were terminated immediately after such merger or consolidation, or transfer
of assets and liabilities, would be at least as great as the benefit he would
have received had the Plan terminated immediately before such merger,
consolidation or transfer.
10.10 Compliance with Securities Laws - Any other provisions in this
-------------------------------
Plan to the contrary notwithstanding, purchase or distribution of Company common
stock shall be subject to compliance with any applicable federal or state
securities laws or rules and regulations thereunder.
10.11 Governing Law - To the extent such laws are not preempted by
-------------
ERISA, the provisions of the Plan shall be interpreted in accordance with the
laws of the Commonwealth of Pennsylvania.
10.12 Trust-to-Trust Transfers - In the event of a transfer from a
------------------------
qualified plan (other than a plan subject to the requirements of Section 417 of
the Code), and at the discretion of the Committee, and pursuant to procedures
issued by the Committee, the individuals who were participants in such other
plan may be given the opportunity to elect to have their entire interests in
such plan transferred directly on a trust-to-trust basis into this Plan. Any
such transferred
-24-
amounts shall be allocated to Accounts of Members as determined by the
Committee.
10.13 Construction - The masculine pronoun includes the feminine and
------------
the singular includes the plural.
10.14 Nondiscrimination Testing - For purposes of satisfying the
-------------------------
nondiscrimination requirements under Code Section 401(a)(4), the term "highly
compensated employee" shall mean 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 (within the meaning
of Treasury Regulation section 1.415-2(d)(11)(i)) 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 year. If such election
is made, the foregoing provisions of subsection (b) shall be applied in
accordance with such election. The "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 six
(6) months of service; (ii) Employees who normally work less than 17 1/2 hours
per week; (iii) Employees who normally work not more than six (6) months during
any calendar year; (iv) Employees who have not attained age 21; 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.
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ARTICLE XI
Contribution Limitations
------------------------
11.1 Annual Addition Limitation -
--------------------------
(a) Notwithstanding any provision of the Plan to the contrary, in no
event shall the Annual Addition (as hereinafter defined) with respect to any
Member in any calendar year (which shall be the "Limitation Year") exceed the
lesser of (1) 25% of the Member's compensation (within the meaning of Treasury
Regulation section 1.415-2(d)(11)(i)) or (2) the dollar limit in effect for such
calendar year in accordance with Code Section 415(c)(1)(A).
(b) For purposes of this Section 11.1, the term "Annual Addition"
with respect to any Member means the Company Contributions made pursuant to
Section 3.1 allocated to the Member's Account and amounts described in Code
Sections 415(l)(1) and 419A(d)(2).
(c) If a Member is also participating in another tax-qualified
defined contribution plan maintained by the Company or an Affiliated Company (as
modified by application of Code Section 415(h)), the otherwise applicable
limitation on Annual Additions under this Plan shall be reduced by the amount of
annual additions (within the meaning of Code Section 415(c)(2)) under any such
other defined contribution plan.
(d) For Plan Years beginning prior to January 1, 2000, if a Member in
this Plan is a Member in any tax-qualified defined benefit plan maintained by
the Company or any Affiliated Company (as modified by application of Code
Section 415(h)), the overall limitation of Code Section 415(e) shall be complied
with by limiting the amount of contributions that may be made on behalf of a
Member under this Plan.
(e) Excess Company Contributions, as determined under subsections (a)
through (d) above, shall be used to reduce future Company 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.
11.2 Top-Heavy Provisions -
--------------------
(a) Special Top-Heavy Definitions - For purposes of this Section
-----------------------------
11.2, the following terms shall have the following meanings:
(1) "Determination Date" means, with respect to any Plan Year,
the last Valuation Date of the preceding Plan Year.
(2) "Key Employee" means a Member or former member who is a "key
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employee" as defined in Code Section 416(i).
(3) "Permissive Aggregation Group" means, with respect to a
given Plan Year, this Plan and all other plans of the Company and its Affiliated
Companies (other than those included in the Required Aggregation Group) which,
when aggregated with the plans in the Required Aggregation Group, continue to
meet the requirement of Code Sections 401(a)(4) and 410.
(4) "Present Value of Accounts" means, as of a given
Determination Date, the sum of the Members' Accounts under the Plan as of such
Valuation Date. The determination of the Present Value of Accounts shall take
into consideration distributions made to or on behalf of the Member in the Plan
Year ending on the Determination Date and the four preceding Plan Years, but
shall not take into consideration the Accounts of any Member who has not
performed any services for the Company during the five year period ending on the
Determination Date.
(5) "Required Aggregation Group" means with respect to a given
Plan Year, (i) this Plan, (ii) each other plan of the Company and its Affiliated
Companies in which a Key Employee is a participant (regardless of whether the
plan has terminated within the last five (5) Plan Years), and (iii) each other
plan of the Company and its Affiliated Companies which enables a plan described
in (i) or (ii) to meet the requirements of Code Sections 401(a)(4) or 410.
(6) "Top-Heavy" means, with respect to the Plan for a Plan Year:
(i) that the Present Value of Accounts of Key Employees
exceeds 60% of the Present Value of Accounts of all Members; or
(ii) the Plan is part of a Required Aggregation Group and
such Required Aggregation Group is a Top-Heavy Group, unless the Plan or such
Top-Heavy Group is itself part of a Permissive Aggregation Group which is not a
Top-Heavy Group.
(7) "Top-Heavy Group" means, with respect to a given Plan Year,
a group of Plans of the Company which, in the aggregate, meet the requirements
of the definition contained in Code Section 416(g)(2)(B). Solely for the purpose
of determining if the Plan, or any other Plan included in a required aggregation
group of which this Plan is a part, is top-heavy (within the meaning of Code
Section 416(g)) the accrued benefit of an Employee other than a key employee
(within the meaning of Code Section 416(i)(1)) shall be determined under (1) the
method, if any, that uniformly applies for accrual purposes under all Plans
maintained by the Company, or (ii) if there is no such method, as if such
benefit accrued not more rapidly than the slowest accrual rate permitted under
the fractional accrual rate of Code Section 411(b)(1)(C).
(b) Special Top-Heavy Rules - Notwithstanding any other provision of
-----------------------
the Plan to the contrary, the following provisions of this Section 11.2 shall
automatically become operative and shall supersede any conflicting provisions of
the Plan if, in any Plan Year, the Plan is Top-Heavy.
(1) The minimum Company Contribution during the Plan Year on
behalf of a
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Member who is not a Key Employee shall be equal to the lesser of (i) 3% of such
Member's compensation (within the meaning of Section 415 of the Code); or (ii)
the percentage of compensation at which Company Contributions are made (or
required to be made) under the Plan on behalf of the Key Employee for whom such
percentage is the highest.
(2) In order to comply with the requirements of Code Section
416(h), in the case of a Member who is or has also participated in a defined
benefit plan of the Company (or any Affiliated Company that is required to be
aggregated with the Company in accordance with Section 415(h) of the Code) in
any Plan Year in which the Plan is Top-Heavy, there shall be imposed under such
defined benefit plan the following limitation in addition to any limitation
which may be imposed as described in Section 11.1. In any such year, for
purposes of satisfying the aggregate limit on contributions and benefits imposed
by Section 415(e) of the Code, contributions to this Plan shall, except as
hereinafter described, be reduced so as to comply with a limit determined in
accordance with Section 415(e) of the Code, but with the number "1.0"
substituted for the number "1.25" in the "defined benefit plan fraction" (as
defined in Section 415(e)(2) of the Code) and in the "defined contribution plan
fraction" (as defined in Section 415(e)(3) of the Code). Notwithstanding the
foregoing, if the application of the additional limitation set forth in this
Subsection 11.2(b) would result in the reduction of accrued benefits of any
Member under the defined benefit plan, such additional limitation shall not
become operative, so long as (i) no additional Company Contributions,
forfeitures or voluntary nondeductible contributions are allocated to such
Member's accounts under any defined contribution plan maintained by the Company
including this Plan and (ii) no additional benefits accrue to such Member under
any defined benefit plan maintained by the Company. Accordingly, in any Plan
Year that the Plan is Top-Heavy, no additional benefits shall accrue under the
defined benefit plan on behalf of any Member whose overall benefits under the
defined benefit plan otherwise would be reduced in accordance with the
limitation described in this subsection (b)(2).
(3) A Member who is not a Key Employee and whose employment is
terminated prior to the completion of two (2) or more Years of Continuous
Employment shall not be entitled to any portion of his Account under the Plan. A
Member who is not a Key Employee and whose employment is terminated after the
completion of two (2) or more Years of Continuous Employment shall be entitled
to receive the vested portion of his Account, determined in accordance with the
following schedule:
Years of
Continuous Employment Vested Percentage
--------------------- -----------------
2 20%
3 40%
4 60%
5 or more 100%
The vesting schedule under this subsection (b)(3) shall apply to the portion of
the Account of a Member who is a non-Key Employee that represents contributions
made by the Company on the Member's behalf before or while the Plan is a
Top-Heavy Plan. In the event the Plan previously
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was a Top-Heavy Plan but subsequently is not a Top-Heavy Plan, the vesting
schedule under this subsection (b)(3) shall be changed to the vesting schedule
provided in Section 3.3 of the Plan; provided, however, that any non-Key
Employee who has completed at least three (3) or more Years of Continuous
Employment and who had at least one Hour of Service while the Plan was a Top-
Heavy Plan, shall be entitled to elect, within a reasonable period, which of the
above two vesting schedules is applicable to his Account.
(4) In the event that Congress should provide by statute, or the
Treasury Department should provide by regulation or ruling, that the limitations
provided in this Section 11.2 are no longer necessary for the Plan to meet the
requirements of Section 401 or other applicable law then in effect, such
limitations shall become void and shall no longer apply, without the necessity
of further amendment to the Plan.
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