Exhibit 10.56

The Pearson Inc.

Pension Plan

As amended and restated as of January 1, 2007

(with certain other effective dates as noted herein)

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THE PEARSON INC.

PENSION PLAN

TABLE OF CONTENTS

 

Article 1.

 

DEFINITIONS

   4

Article 2.

 

PARTICIPATION

   31

Article 3.

 

RETIREMENT BENEFITS

   34

Article 4 -

 

LIMITATIONS ON BENEFITS

   50

Article 5.

 

VESTING

   58

Article 6.

 

DISTRIBUTION

   59

Article 7.

 

PRERETIREMENT DEATH BENEFITS

   72

Article 8.

 

FUNDING

   80

Article 9.

 

ADMINISTRATION OF PLAN

   82

Article 10.

 

MANAGEMENT OF TRUST FUND

   85

Article 11.

 

BENEFIT CLAIMS PROCEDURE

   86

Article 12.

 

NON-ALIENATION OF BENEFITS

   88

Article 13.

 

DESIGNATION OF BENEFICIARY

   91

Article 14.

 

AMENDMENT

   92

Article 15.

 

TERMINATION; MERGER, CONSOLIDATION OR TRANSFER OF ASSETS

   94

Article 16.

 

ADOPTION/WITHDRAWAL BY AFFILIATED/ NON-AFFILIATED COMPANIES

   96

Article 17.

 

TOP HEAVY PROVISIONS

   97

Article 18.

 

MISCELLANEOUS

   103

Schedule A -

 

EFFECTIVE DATES

   106

Schedule B -

 

ACTUARIAL ASSUMPTIONS

   107

Schedule C -

 

PARTICIPATING EMPLOYERS

   111

Schedule D -

 

PEARSON PARTICIPANTS

   112

Schedule E -

 

AWL PARTICIPANT

   121

Schedule F -

 

BENEFITS FOR CERTAIN NON-RESIDENT ALIENS

   128

Appendix A

     133

Appendix B

     135

Appendix C

     137

Appendix D

     139

Appendix E

     140

Appendix F

     145

Appendix G

     151

Appendix H

     152

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The Pearson Inc.

Pension Plan

Pearson Inc., a Delaware corporation with its principal office at 1330 Avenue of
the Americas, New York, NY 10019, amends and restates, except as otherwise
provided in this Plan, effective as of January 1, 1998 and updated through
December 30, 2001, the retirement plan for its employees (which initially became
effective on January 1, 1944 and which was amended to a defined benefit plan on
May 1, 1965) as set forth below. Effective as of November 30, 1998 the Addison
Wesley Longman Retirement Plan (including employees of Simon & Schuster that
became covered under the AWL Plan on November 29, 1998) was merged into the
Plan. Effective as of February 29, 2000, the Plan became a multiple employer
plan as a result of the continued coverage of employees of the former
Interactive Data Corporation which as of this date was spunoff from the Pearson
Controlled Group and merged into Data Broadcasting Corporation (effective as of
June 15, 2001 renamed the Interactive Data Corporation).

The Penguin USA Pension Plan, the Pearson Inc. U.S. Retirement Plan and the FT
Publications Inc. Retirement Plan were merged as of January 1, 1994 and the
resulting plan was restated and renamed the Pearson Inc. Pension Plan. Pearson
Inc. is the sponsor of the merged plan. Penguin Books USA, Inc. sponsored the
Penguin USA Pension Plan. Penguin Books USA, Inc. was formed as a result of the
merger of Viking Penguin Inc. and NAL Penguin Inc. as of January 1, 1989.
Previously, employees of Viking Penguin Inc. participated in the Retirement Plan
of Viking Penguin Inc. and employees of New American Library (except those
employed by E.P. Dutton then a division of NAL Penguin Inc. and employees of NAL
Penguin Inc. who were members of a

 

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collective bargaining unit) participated in the New American Library Capital
Accumulation Plan, a defined contribution profit sharing plan. Prior to
January 1, 1985, New American Library sponsored a defined benefit pension plan,
the New American Library Pension Plan, which was terminated as of December 31,
1984. Prior to January 1, 1989, employees of E.P. Dutton participated in the
E.P. Dutton, a Division of New American Library, Pension Plan, a defined benefit
plan.

The Penguin Books USA Inc. Pension Plan was the continuation of the Retirement
Plan of Viking Penguin Inc. The Retirement Plan of Viking Penguin Inc. was
merged with the E.P. Dutton, a Division of New American Library, Pension Plan
effective as of December 31, 1988.

Effective as of December 31, 2001, the Plan was amended to freeze all benefit
accruals and Plan provisions that are based on the PEP formula specified in
Section 3.2 As a result of this amendment and notwithstanding anything contained
in the Plan to the contrary:

 

  •  

The Aggregate PEP Percentages, Average Annual Compensation and Benefit Accrual
Period of Service for Participants is to be determined as of December 31, 2001;

 

  •  

Each Participant’s December 31, 2001 frozen PEP lump sum amount for the period
from December 31, 2001 through the Participant’s Annuity Starting Date shall be
increased by the interest rate that would be applied to such amount for a
terminated employee;

 

  •  

Employees hired on or after December 31, 2001 shall not be eligible to
participate in the Plan; and

 

  •  

A Participant who is entitled to a benefit under one of the grandfathered
formulas in Section 3.5 shall, subject to Article 4 and Sections 3.6 and 3.8,
receive the greatest of (a) his grandfathered benefit accrued as of his
Termination of Employment as adjusted for the

 

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Defined Contribution Plan Offset, (b) the Section 3.2 Annuity attributable to
his December 31, 2001 frozen PEP lump sum amount, and (c) his grandfathered
benefit determined as of December 31, 2001.

 

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Article 1. Definitions

The following definitions and the definitions contained in Sections 4.1 and 17.1
apply for purposes of this Plan:

Accrued Benefit - the greater of a Participant’s Section 3.2 Annuity payable at
his Normal Retirement Date (or, if later, his Annuity Starting Date) or his
Retirement Benefit determined under Section 3.4 payable in the form of a life
annuity without ancillary benefits commencing on his Normal Retirement Date (or,
if later, his Annuity Starting Date).

Actuarial Equivalent - a benefit or amount that replaces another and has the
same value as the benefit or amount it replaces, based on actuarial assumptions
as set forth in Schedule B to this Plan.

Active Employee Death Benefit - the Preretirement Death Benefit payable to a
Participant’s Beneficiary under Section 7.2.

Actuary - a firm employing an “enrolled actuary” as defined in
Section 7701(a)(35) of the Internal Revenue Code appointed by the Administrator.

Administrative Committee - the committee appointed by the Board under
Section 9.1 to have authority and discretion to administer the Plan and take
such other actions as prescribed by the Board.

Affiliated Company - an Employer and all other entities included in an
Affiliated Group including that Employer.

Affiliated Group - a group of entities consisting of: (a) an Employer, and all
companies within the controlled group of corporations of which the Employer is a
member (including other Employers),

 

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(b) an unincorporated trade or business which is under common control with an
Employer as determined in accordance with Section 414(c) of the Internal Revenue
Code, (c) a member of an affiliated service group with any Employer, as defined
in Section 414(m) of the Internal Revenue Code or (d) any other entity that must
be aggregated with an Employer under Section 414(o) (and Income Tax Regulations
thereunder) of the Internal Revenue Code. A corporation or an unincorporated
trade or business shall not be considered an Affiliated Group during any period
it does not satisfy clause (a), (b), (c) or (d) of this definition. For purposes
of this definition, a “controlled group of corporations” is a controlled group
of corporations as defined in Section 1563(a) of the Internal Revenue Code
(without regard to Sections 1563(a)(4) and (e)(3) of the Internal Revenue Code).
In determining whether any limitations on benefits under Section 4.2 apply, the
percentage in Section 1563(a)(1) of the Internal Revenue Code or in the
regulations under Section 414(c) of the Internal Revenue Code shall be deemed to
be more than 50% instead of at least 80%. For purposes of determining an
Affiliated Group the following rules shall apply: (1) each Employer shall only
be included in one Affiliated Group, (2) an Affiliated Group may include more
than one Employer, (3) there shall be a separate Affiliated Group for each
Employer that is not included in an Affiliated Group of another Employer.

AGS Participant - a Participant who was (a) a participant in the Former AGS Plan
prior to July 1, 2002 and (b) an Employee of the Company or a deferred vested
participant under the Former AGS Plan on December 31, 2005.

Annuity Starting Date - the first date as of which distribution of Retirement
Benefits to a Participant is to begin under Section 6.4 or the first date as of
which distribution of Preretirement Death Benefits is to begin under
Section 7.2(c) or 7.3(c).

Average Annual Compensation - the amount determined under paragraph (a) or
(b) as set forth below:

 

  (a) Subject to Paragraph (b), a Participant’s average annual Compensation for
the five consecutive calendar years out of the most recent ten calendar years
during which the Participant received the highest Compensation. If a Participant
has not been employed for five full calendar years then Average Annual
Compensation shall be based on a Participant’s average annual Compensation for
the total number of his years and months of employment not in excess of five
years.

 

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  (b) In the case of a Pearson Participant, Average Annual Compensation
determined as of a date prior to January 1, 2000 shall be equal to the product
of 12 and the Participant’s average monthly Compensation during the 60
consecutive months in which the Participant received the greatest aggregate
amount of Compensation out of the 120 months immediately prior to such date (or,
if earlier, the Participant’s Termination of Employment). In the case of a
Participant who is employed for a period of less than 60 consecutive months
prior to January 1, 2000, the Participant’s Average Annual Compensation as of
this date shall be based on his entire period of service.

In determining Average Annual Compensation for this paragraph (b), any month
which is not included in the Participant’s Benefit Accrual Period of Service and
during which the Participant either (1) has a Termination of Employment,
Retirement or dies; or (2) does not perform any service (or performs service for
less than 75% of the time that an Employee performing the same services and
working on a full-time basis would perform) shall be disregarded.

 

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  (c) With respect to a determination of Average Annual Compensation for any
Plan Year beginning on or after January 1, 1994 and prior to January 1, 2002
(i) Compensation shall not exceed the limitations on compensation under
Section 401(a)(17) of the Internal Revenue Code (adjusted to reflect increases
in the cost of living applicable before January 1, 2002); and (ii) any
adjustments in the 401(a)(17) limitation to reflect increases in the cost of
living for a calendar year shall not apply to Compensation for the
12-consecutive month period prior to the 12-consecutive month period which
includes the first day of the calendar year.

 

  (d) With respect to a determination of Average Annual Compensation for any
Plan Year beginning on or after January 1, 2002, the following rules shall
apply: (i) for purposes of Sections 3.2 and 3.3, Compensation shall not be
recognized for Plan Years beginning on or after January 1, 2002; (ii) for
purposes other than Sections 3.2 and 3.3, Compensation for a Plan Year on or
after January 1, 2002, shall not exceed $200,000 (adjusted to reflect increases
in the cost of living) and Compensation for any Plan Year prior to January 1,
2002 shall not exceed the limitations on compensation under Section 401(a)(17)
of the Internal Revenue Code applicable to that Plan Year, and (iii) any
adjustments in the 401(a)(17) limitations to reflect increases in the cost of
living for a calendar year shall not apply to Compensation for the
12-consecutive month period prior to the 12-consecutive month period which
includes the first day of the calendar year.

AWL Participant - an individual who actively participated in the AWL Plan on
November 29, 1998.

AWL Plan - the former Addison Wesley Longman Retirement Plan in effect on
November 29, 1998.

 

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Beneficiary - a person who is entitled to receive distributions under this Plan
upon or after the death of a Participant.

Benefit Accrual Period of Service - except as otherwise required by Section 3.5,
the aggregate Periods of Service as of December 31, 2001 for an Employer of a
Participant beginning on or after his Employment Commencement Date (or, if
later, the date he satisfies the definition of an Eligible Employee other than
the service requirement in paragraph (a) of such definition) of an Eligible
Employee, except that the following periods included in the Participant’s
Periods of Service shall be disregarded:

 

  (a) any Periods of Service prior to the first day of the month coincident or
next following the date the Participant is first employed by the Employer;

 

  (b) any Periods of Severance or periods of Medical or Family Leave included in
the Participant’s Periods of Service;

 

  (c) any periods preceding a Period of Severance of at least 60 consecutive
months if the Participant has no Vested Interest and the number of months of the
Participant’s Period of Severance is equal to (or greater than) the number of
months of the Participant’s Periods of Service preceding that Period of
Severance;

 

  (d) any 12 month period (or fraction thereof) before an Employee becomes a
Participant, unless the Employee is credited with at least 1,000 Hours of
Service during that 12 month period (or, in the case of a Full-Time Employee, a
Period of Service of at least three months);

 

  (e) any periods disregarded under Section 3.10(d);

 

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  (f) in the case of a Pearson Participant for purposes of determining the
Transition Credits under Section 3.4(a)(1) and (b)(1) or the Minimum Retirement
Benefit under Section 3.5, Periods of Service in excess of 35 years;

 

  (g) Periods of Service credited to a Participant before January 1, 1976, if
those Periods of Service would have been disregarded under the rules then in
effect with respect to breaks in service under this Plan;

 

  (h) Service with the Former Interactive Data Corporation prior to September 1,
1995;

 

  (i) in the case of an AWL Participant, service with the Longman Division prior
to October 1, 1988, Dale Seymour Publications prior to July 1, 1989, Cuissenaire
prior to May 14, 1990, Peachpit prior to October 1, 1994, Harper Collins prior
to April 1, 1996, or McClanahan prior to July 2, 1997;

 

  (j) Service for Putnam Berkley prior to January 1, 1998;

 

  (k) in the case of a Former Simon & Schuster Participant, periods of service
prior to November 30, 1998 (or, if later, date of employment by an Affiliated
Company), except to the extent such service is specifically included under
Section 3.5;

 

  (l) in the case of an employee of Data Broadcasting Corporation (as renamed
effective as of June 15, 2001 the Interactive Data Corporation) who is not a DBC
Participant, service for Data Broadcasting Corporation prior to January 1, 2001;
and

 

  (m) except as otherwise specified in this Plan, any period during which the
Participant is covered by another qualified defined benefit plan maintained by
the Company or an Affiliated Company or a pension plan maintained by the Company
or an Affiliated Company outside the United States.

 

9

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The Administrative Committee shall determine and credit to the Participant the
additional Periods of Service necessary to provide the Participant with the
benefit accrual credit to which he is entitled under Section 414(u) of the
Internal Revenue Code for his military service.

For purposes of determining an Employee’s Benefit Accrual Period of Service, the
following rules shall apply (1) Periods of Service shall be aggregated on the
basis that 12 months of service are equal to one full year of service;
(2) months of service which are less than a year of service shall equal a
fraction of a year of service computed to the nearest .01% of a year; and
(3) the month in which the Participant has a Termination of Employment (or if
earlier, transfer from employment with an Employer) shall be credited as a full
month of service regardless of the period actually worked unless such
Termination of Employment occurs on the first day of the month.

Board - the board of directors of the Company.

Break in Service - a Plan Year in which an Employee (or former Employee) is not
credited with more than 500 Hours of Service. For purposes of determining
whether there has been a Break in Service an Employee shall be credited with
Hours of Service for the period during which he is on Medical or Family Leave as
follows: (a) the Employee shall be credited with the number of Hours of Service
he would normally be credited with but for the absence (or if the Employee’s
normal Hours of Service cannot be determined, eight Hours of Service for each
day of the absence), (b) the total number of Hours of Service credited for the
absence shall not exceed 501 and (c) the Hours of Service credited for the
absence shall be credited to the Plan Year in which the absence begins if the
Employee would be prevented from incurring a Break in Service in that Plan Year
solely because of the crediting of Hours of Service in accordance with clauses
(a) and (b) of this

 

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definition, or in any other case, the immediately following Plan Year. Solely
for purposes of determining whether there has been a Break in Service, an
Employee shall be credited with 40 Hours of Service for each week he is on
Permitted Leave.

For purposes of the definition of Eligible Employee, and determining
Participation upon Reemployment under Section 2.4, a Break in Service shall mean
any consecutive 12-month period commencing with an Employee’s first Hour of
Service or any anniversary thereof in which an Employee (or former Employee) is
not credited with more than 500 Hours of Service.

Committees - together, the Administrative Committee and the Investment
Committee.

Company - Pearson Inc. or any successor by merger, consolidation or sale of
assets.

Compensation - the applicable of (a), (b) or (c) below:

 

  (a)

The following definition shall apply for purposes of determining Compensation on
or after January 1, 1999, for an Employee who is credited with an Hour of
Service on or after September 1, 1999—a monthly amount equal to all remuneration
paid or made available for any calendar month by an Employer to an Employee for
the Employee’s services as salary, wages and including (1) sales related
incentive payments and bonuses, (2) non-sales related bonuses, but not in excess
of 50% of the amount of an Employee’s annual rate of base pay as of
December 31st of the prior year, (3) pay at premium rates (holiday, overtime or
other), (4) amounts contributed on behalf of the Employee to a cafeteria plan or
a cash or deferred arrangement and not includible in income under Section 125 or
402(g) of the Internal Revenue Code, (5) effective as of January 1, 1998,
amounts if any, not payable to the Participant in cash because the

 

11

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Participant is unable to certify that he has other health coverage as part of
the enrollment process provided that the Employer does not request or collect
information regarding the Participant’s other health coverage as part of the
enrollment process (“Deemed Section 125 Amounts”), (6) amounts excluded from
income under Section 132(f) of the Internal Revenue Code, (7) unused vacation
pay, (8) allowance for auto use, and (9) unused sick pay bonus, but excluding
(1) severance pay, (2) any amounts paid for that month on account of the
Employee under this Plan or under any other employee pension benefit plan (as
defined in Section 3(2) of ERISA), (3) any amounts realized upon exercise of
stock options granted by the Employer, and (4) any other amounts which are not
includible in the Employee’s income for federal income tax purposes.

 

  (b)

The following definition shall apply for purposes of determining Compensation
for either (1) periods prior to January 1, 1999 or (2) in the case of an
Employee who is not credited with an Hour of Service on or after September 1,
1999, all periods - compensation as defined in paragraph (a) except that the
amount of bonuses includable in compensation shall be determined as follows:
(1) in the case of bonuses paid to an AWL Participant or a Former Simon &
Schuster Participant for periods prior to December 31, 1990, 100% of the amount
of the bonus shall be includable in Compensation; (2) in the case of bonuses
paid to an AWL Participant or a Former Simon & Schuster Participant for periods
on or after January 1, 1991, annual bonus amounts which are not in excess of 50%
of the Participant’s base salary for that calendar year shall be includable in
Compensation; (3) in the case of bonuses paid to an Employee other than an AWL
Participant or a Former Simon &

 

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Schuster Participant, 100% of annual sales related incentive bonuses and annual
non-sales related bonus amounts which are not in excess of 20% of the Employee’s
annual rate of base pay on December 31st of the prior year shall be includable
in Compensation.

 

  (c) In the case of an AWL Participant or a Former Simon & Schuster Participant
Compensation for periods prior to January 1, 1986 shall be determined under
Schedule E.

 

  (d) In the case of an individual employed by The Economist, Compensation shall
include amounts paid by The Economist for any period during which the
individual’s service for The Economist is included in his Period of Service.

For purposes of Sections 4.1, 4.2, and 4.3, Compensation shall mean compensation
as that term is used in Section 415(b)(3) of the Internal Revenue Code except
such amounts shall not include Deemed Section 125 Amounts. For Plan Years
beginning on or after January 1, 1994 but before January 1, 2002, an Employee’s
Compensation shall not exceed $150,000 (or such higher amount as may be
determined by the Secretary of the Treasury in accordance with
Section 401(a)(17) of the Internal Revenue Code to reflect increase in the cost
of living). For Plan Years beginning on or after January 1, 2002, an Employer’s
compensation shall not exceed $200,000 (or such higher amount as may be
determined by the Secretary of the Treasury in accordance with
Section 401(a)(17) of the Internal Revenue Code to reflect increases in the cost
of living). Notwithstanding the foregoing, for purposes of Section 3.2 no
Compensation shall be recognized for Plan Years beginning on or after January 1,
2002.

 

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Credited Leave - an Employee’s leave of absence which has been approved in
writing by his Employer. In the case of an Employee who incurs a disability such
Credited Leave shall not exceed a short-term disability period of nine months
unless a longer period is specifically approved by his Employer.

DBC Participant - an individual who was an active Participant on February 29,
2000, and on March 1, 2000, was transferred to Interactive Data Corporation.

Defined Benefit Plan - a defined benefit plan, as defined in Section 3(35) of
ERISA, that (a) is maintained by one or more entities within an Affiliated
Group, (b) is qualified under Sections 401 and 501 of the Internal Revenue Code
and (c) is not a Defined Contribution Plan.

Defined Contribution Offset - the Actuarial Equivalent of a Participant’s
Hypothetical Defined Contribution Offset payable in the form of a single life
annuity without ancillary benefits commencing on a Participant’s Normal
Retirement Date (or, if later, the Participant’s Annuity Starting Date). A
Participant’s Hypothetical Defined Contribution Offset shall be an amount,
expressed as a lump sum, equal to the aggregate of the “Hypothetical Defined
Contribution Amounts” (as adjusted for interest) for each Plan Year beginning on
or after January 1, 2002 and during which the Participant is eligible to
participate in The Pearson Retirement Plan. For purposes of the foregoing, the
Hypothetical Defined Contribution Amount for a Plan Year beginning on or after
January 1, 2002 is equal to the sum of: (i) 1.5% of the Participant’s
“compensation” (as defined under the applicable grandfathered benefit formula
under Section 3.5 (“Grandfathered Compensation”)) for the Plan Year; (ii) in the
case of a Participant who is an active employee (or on an approved leave of
absence) on December 31 of such Plan Year, 1.25% of Grandfathered Compensation
for the Plan Year; and (iii) in the case of a Participant who (A) as of
December 31, 2001 has a Vesting Period of Service of at least 10 years and
(B) is an active employee (or on an

 

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approved leave of absence) on December 31 of the Plan Year, an amount determined
as follows: (1) if the Participant has not attained age 40 by December 31, 2001,
0% of his Grandfathered Compensation for that Plan Year; (2) if the Participant
has attained age 40 but not age 45 by December 31, 2001, 0.5% of his
Grandfathered Compensation for that Plan Year; (3) if the Participant has
attained age 45 but not age 55 by December 31, 2001, 1% of his Grandfathered
Compensation for that Plan Year; and (4) if the Participant has attained age 55
by December 31, 2001, 1.5% of his Grandfathered Compensation for that Plan Year.
At the end of each Plan Year (commencing with the 2003 Plan Year), the aggregate
Hypothetical Defined Contribution Amount will be adjusted for interest by
applying an interest rate of 7% (compounded annually) to the sum of the
aggregate of the Hypothetical Defined Contribution Amount s (as adjusted for
interest) as of December 31 of the prior Plan Year. In the year in which the
Participant has an Annuity Starting Date, an interest adjustment will be made
for the period beginning on the first day of that Plan Year and ending on the
Participant’s Annuity Starting Date by applying interest at the rate of 7%
(compounded annually) to the sum of the aggregate of the Hypothetical Defined
Contribution Amounts, as of December 31 of the prior Plan Year.

Defined Contribution Plan - a defined contribution plan, as defined in
Section 3(34) of ERISA, that (a) is maintained by one or more entities within an
Affiliated Group, and (b) is qualified under Sections 401 and 501 of the
Internal Revenue Code.

Early Retirement Date - Subject to the following sentence, the first day of the
month next following a Participant’s attainment of age 55 and being credited
with a Vesting Period of Service of five years. In the case of an Employee other
than an AWL Participant who is not credited with an Hour of Service on or after
September 1, 1999, the first day of the month next following the Participant’s
attainment of age 55 and being credited with a Vesting Period of Service of ten
years.

 

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Eligible Employee - an Employee employed by an Employer who (a) either (1) is
employed on a basis in which he customarily completes at least 20 Hours of
Service per week (“Full-Time Employee”) and has completed a Period of Service of
at least three months as a Full-Time Employee; or (2) is not a Full-Time
Employee but has been credited with at least 1,000 Hours of Service for the
12-consecutive month period commencing with the Employee’s first Hour of Service
or has been credited with at least 1,000 Hours of Service for any Plan Year
commencing on or after his first Hour of Service, (b) is not covered by a
collective bargaining agreement (unless the collective bargaining agreement as
defined in Section 410(b)(3)(A) of the Internal Revenue Code and related
regulations expressly provides for inclusion of the Employee as a Participant);
(c) subject to Schedule F to this Plan, is not a non-resident alien as defined
in Section 410(b)(3)(C) of the Internal Revenue Code, and (d) is not an Employee
who is actively covered by a pension plan maintained by an Affiliated Company
outside of the United States. Any Full-Time Employee who is not an Eligible
Employee on the Restatement Date shall become an Eligible Employee on the day
the Employee satisfies the conditions of clauses, (a), (b) and (c) above. Any
Employee who is not a Full-Time Employee and is not an Eligible Employee on the
Restatement Date shall become an Eligible Employee on the day he satisfies the
conditions of clauses (b) and (c) above or the last day of the 12-consecutive
month period during which the Employee satisfies the requirements of clause
(a) above, whichever is later.

A Rehired Employee shall be deemed to be an Eligible Employee as of the day his
employment recommences if the Employee has satisfied the requirements of this
definition by the day his employment recommences and the Employee’s most recent
period of service has not been disregarded under Section 2.4(c).An individual
shall not be included as an Eligible Employee for purposes of this Plan if he is
either: (i) a leased employee (as defined in Section 414(n) of the

 

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Internal Revenue Code) or (ii) any other individual classified by an Employer as
performing services for an Affiliated Employer under an agreement or arrangement
pursuant to which he is treated as an independent contractor or a leased
employee (whether or not meeting the definition under Section 414(n) of the
Internal Revenue Code) or an individual who is not classified by an Affiliated
Company as an employee for purposes of withholding federal employment taxes
(irrespective of whether the individual is subsequently reclassified or treated
as an employee of an Affiliated Company under common-law employment principles
by the Internal Revenue Service, any other governmental agency or authority, or
a court).

Notwithstanding anything contained herein to the contrary, no individual shall
become an Eligible Employee for the first time after December 31, 2001.

Employee - anyone who is employed by an Affiliated Company. A leased employee
(as defined in Section 414(n) of the Internal Revenue Code) and any other
individual required to be treated as an Employee under Section 414(o) of the
Internal Revenue Code shall be treated as an Employee for purposes of this Plan.

Employer - the Company or any other company which has adopted this Plan under
Article 16 as listed on Schedule C. In the case of a company that only adopts
the Plan with respect to a portion of its employees, the term Employer shall
only refer to the portion of the company that participates in the Plan.

Employment Commencement Date - (a) the day an Employee is first credited with an
Hour of Service or (b) if an Employee has a Period of Severance, the Employee’s
first Hour of Service after a Period of Severance.

ERISA - the Employee Retirement Income Security Act of 1974, as it may from time
to time be amended or supplemented, and the rulings issued and regulations
promulgated thereunder.

 

17

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Five Percent Owner - an Employee who owns more than five percent of an
Affiliated Group (within the meaning of Section 416(i)(1)(B)(i) of the Internal
Revenue Code).

Former AGS Plan - the former American Guidance Service Inc. Pension Plan.

Former Interactive Data Corporation - the Interactive Data Corporation in
existence on February 29, 2000, prior to merger with Data Broadcasting
Corporation (as renamed effective June 15, 2001, the Interactive Data
Corporation).

Former Simon & Schuster Plan - the qualified defined benefit plan in effect
prior to November 30, 1998, which covered Simon & Schuster employees transferred
to Addison Wesley Longman on November 30, 1998.

Former Simon & Schuster Benefit Service - service for the period during which a
Participant was receiving service credit for benefit accrual purposes under the
Former Simon & Schuster Plan for benefit accrual.

Former Simon & Schuster Participant - an individual who was a participant in the
Former Simon & Schuster Plan on November 29, 1998 and who either (a) became an
Employee of Addison Wesley Longman on November 30, 1998 or (b) transferred
employment from Simon & Schuster to an Affiliated Company after November 30,
1998 and who is listed on Schedule G.

Hour of Service - (a) an hour for which an Employee directly or indirectly
receives, or is entitled to receive, remuneration from an Affiliated Company in
relation to his employment, including hours credited for vacation, sickness or
disability and hours for which back pay has been paid, awarded or agreed to
(irrespective of mitigation of damages) by an Affiliated Company (which shall be
credited to an Employee with respect to the period for which remuneration is
paid). An

 

18

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Employee shall be credited with 35 Hours of Service for each week he is on
Credited Leave. In no event shall more than 501 Hours of Service be credited to
an Employee on account of any single period (other than a Credited Leave) during
which the Employee performs no duties. For purposes of determining an Employee’s
Employment Commencement Date, an “Hour of Service” shall mean an hour for which
an Employee receives or is entitled to receive remuneration from an Affiliated
Company in relation to his employment. Hours of Service shall be credited to an
Employee in accordance with the records of the Employee’s Affiliated Company and
Department of Labor Regulations Section 2530.200b-2.

 

  (b) Hours of Service shall also include the following:

 

  (1) In the case of a Participant who is an Employee on or after January 1,
1997, prior service with The Economist shall be included in Hours of Service
solely for purposes of determining the date on which such Participant became an
Eligible Employee; provided, that at the time such service was rendered, Pearson
PLC had at least a 50% ownership interest in The Economist.

 

  (2) In the case of an Employee who was employed by Putnam Berkley prior to
January 1, 1998, his Service for Putnam Berkley shall be included in determining
Hours of Service.

 

  (3) In the case of a Former Simon & Schuster Participant, service with Simon &
Schuster prior to November 30, 1998 (or, if later, the date the Participant
transferred to employment with an Affiliated Company) shall be included in
determining Hours of Service.

 

  (4)

In the case of an Employee who was employed by the Mueller Data Division

 

19

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of Thompson Financial Services Management Group (“Mueller Division”) who became
an Employee of the Former Interactive Data Corporation on August 1, 1999, his
service for Mueller Division shall be included in determining Hours of Service.

 

  (5) In the case of a Participant who was employed by Avery Publishing Company
on September 30, 1999 and transferred to Penguin Putnam on October 1, 1999, his
service rendered to Avery Publishing Company prior to October 1, 1999 shall be
included in determining Hours of Service.

 

  (6) In the case of an Employee of Data Broadcasting Corporation (renamed
effective June 15, 2001 the Interactive Data Corporation), his service prior to
January 1, 2001 if not already included in determining Hours of Service.

 

  (7) In the case of an individual who became an Employee as a result of the
Company’s acquisition of Pearson Broadband US, Inc. or OnDigital Media, Inc. his
service to Pearson Broadband US, Inc. or OnDigital Media, Inc. on and after
November 9, 2000 shall be included in determining Hours of Service.

Internal Revenue Code - the Internal Revenue Code of 1986, as it may from time
to time be amended or supplemented, and the rulings issued and regulations
promulgated thereunder.

Investment Committee - the committee appointed by the Board under Section 9.1 to
oversee the investment of assets for the Plan and take such other actions as
prescribed by the Board.

Investment Manager - anyone who (a) is granted the power to manage, acquire, or
dispose of any asset of the Plan, (b) acknowledges in writing that he is a
fiduciary with respect to the Plan and (c)

 

20

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is (1) an investment adviser registered under the Investment Advisers Act of
1940, (2) a bank (as defined in the Investment Advisers Act of 1940) or (3) an
insurance company qualified under the laws of more than one state to manage the
assets of employee benefit plans (as defined in Section 3(3) of ERISA).

Learning Network Participant - an individual who on or after June 30, 2000, was
an active Participant in the employ of an Employer other than Learning Network
and immediately thereafter transferred to Learning Network.

Limitation Year - the Plan Year.

Medical or Family Leave - an Employee’s leave of absence from employment with an
Affiliated Company because of (a) pregnancy, birth of the Employee’s child,
placement of a child with the Employee in connection with adoption of the child
or caring for a child immediately following birth or adoption or (b) any other
reason that would entitle the Employee to take a leave under the Family and
Medical Leave Act of 1993. The Affiliated Company shall determine the first and
last day of any Medical or Family Leave.

Merged Plan - any plan designated by the Board as a Merged Plan under
Section 18.4.

Normal Retirement Date

 

  (a) Subject to paragraph (b), the first day of the month coincident with or
next following the Participant’s 65th birthday.

 

  (b) in the case of an AWL Participant, his Normal Retirement Date shall not be
later than the first day of the month coincident with or immediately preceding
the later of the Participant’s 65th birthday and the Participant’s fifth
anniversary of participation in the Plan.

 

21

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Participant - a participant in this Plan under Article 2

Pearson Participant - a Participant who was a Participant in this Plan on
November 29, 1998.

PEP Percentage - the percentage of a Participant’s Average Annual Compensation
credited for each year of his Benefit Accrual Period of Service as determined
under Section 3.3(c).

Period of Service - a period (including any periods of Credited Leave) beginning
on a Participant’s Employment Commencement Date and ending on the Participant’s
Severance from Service Date (or, if earlier, the first anniversary of the
Participant’s Medical or Family Leave).

An Employee’s Period of Service shall include any Period of Severance which ends
with either of the following:

 

  (a) except as otherwise provided in clause (b), an Employment Commencement
Date within 12 months of the Employee’s prior Termination of Employment,
Retirement or incurrence of a Permanent Disability,

 

  (b) notwithstanding paragraph (a), an Employment Commencement Date within 12
months of the first day of a prior absence from service for any reason other
than quit, discharge, Retirement or death of 12 months or less during which the
Employee had a Termination of Employment, Retirement or incurred a Permanent
Disability.

 

  (c) The following additional service shall be included in a Participant’s
Period of Service:

 

  (1) In the case of a Participant who is an Employee on or after January 1,
1997, prior service with The Economist shall be included in a Participant’s
Period of Service solely for purposes of determining the date on which his
Retirement Benefit becomes nonforfeitable under Article 5 and the date on which
such Participant become an Eligible Employee; provided, that at the time such
service was rendered, Pearson PLC had at least a 50% ownership interests in The
Economist.

 

22

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  (2) In the case of an Employee who was employed by Putnam Berkley prior to
January 1, 1998, his Period of Service for purposes of determining the
Participant’s Vesting Period of Service and his eligibility service shall also
include service rendered to Putnam Berkley prior to January 1, 1998.

 

  (3) In the case of a Former Simon & Schuster Participant, his Period of
Service for purposes of determining his Vesting Period of Service, his
eligibility service and his Benefit Accrual Period of Service under Section 3.5
shall also include service rendered to Simon & Schuster prior to November 30,
1998 (or, if later, the date the Participant transferred to employment with an
Affiliated Company).

 

  (4) In the case of an individual who was employed by the Mueller Data Division
of Thompson Financial Services Management Group (“Mueller Division”) who became
an Employee of the Former Interactive Data Corporation on August 1, 1999, his
Period of Service for purposes of determining his Vesting Period of Service and
his eligibility service shall also include his service rendered to the Mueller
Division prior to August 1, 1999.

 

  (5)

In the case of a Participant who was employed by Avery Publishing Company on
September 30, 1999 and transferred to Penguin Putnam

 

23

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on October 1, 1999, his Period of Service for purposes of determining his
Vesting Period of Service and his eligibility service shall also include his
service rendered to Avery Publishing Company prior to October 1, 1999.

 

  (6) In the case of a DBC Participant, his Period of Service for purposes of
determining his Vesting Period of Service and his Benefit Accrual Period of
Service rendered to Data Broadcasting Corporation (renamed effective June 15,
2001 the Interactive Data Corporation) on or after March 1, 2000, except to the
extent that such service is already included in the Participant’s Period of
Service.

 

  (7) In the case of an Employee of Data Broadcasting Corporation (renamed
effective June 15, 2001 the Interactive Data Corporation) who is not a DBC
Participant, his Period of Service for purposes of determining his Vesting
Period of Service and his eligibility service shall include service rendered to
Data Broadcasting Corporation prior to January 1, 2001, except to the extent
such service is already included in the Participant’s Period of Service.

 

  (8) Any periods of military service not already included in his Period of
Service which are required to be credited under Section 414(u) of the Internal
Revenue Code.

 

  (9)

In the case of an individual who became an Employee as a result of the Company’s
acquisition of Pearson Broadband US, Inc. or OnDigital Media, Inc., his Period
of Service for purposes of

 

24

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determining the Participant’s Vesting Period of Service and his eligibility
service shall also include service to Pearson Broadband US, Inc. or OnDigital
Media, Inc. on and after November 9, 2000.

Period of Severance - a period commencing on a Participant’s Severance from
Service Date and ending on the Participant’s subsequent Employment Commencement
Date, if any.

Permanent Disability - a Participant’s termination of employment with an
Employer as the result of his disability which disability (a) entitles the
Participant to receive disability benefits under the Company’s long-term
disability plan or, (b) in the case of a Participant who is employed by an
Affiliated Company and is not covered by the Company’s long-term disability plan
would satisfy the requirements for disability benefits under that plan.

Permitted Leave - an Employee’s approved leave of absence from employment with
an Affiliated Company for any reason other than Retirement, Termination of
Employment, Permanent Disability or death, including but not limited to military
service, illness, disability, Medical or Family Leave, educational pursuits,
service as a juror, temporary employment with a government agency, or any other
leave of absence approved by that Affiliated Company. In approving a Permitted
Leave, an Employee’s Affiliated Company shall determine the date as of which the
Permitted Leave begins and ends.

Plan - the retirement plan set forth in this document as it may from time to
time be amended or supplemented.

Plan Administrator - the Company or such other entity as designated by the
Board.

Plan Year - the calendar year.

Preretirement Death Benefit - the death benefit payable under Article 7 to the
spouse or a Beneficiary of a Participant who dies before his Annuity Starting
Date.

 

25

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Qualified Joint and Survivor Annuity - an annuity for the life of a Participant
with a survivor annuity for the life of the Participant’s spouse where the
survivor annuity is 50% of the amount of the annuity payable during the joint
lives of the Participant and the Participant’s spouse and the joint and survivor
annuity is at least the Actuarial Equivalent of the most valuable form of
benefit under the Plan payable on his Annuity Starting Date.

Qualified Preretirement Survivor Annuity - an immediate survivor annuity for the
life of the Participant’s spouse. Each payment under the survivor annuity must
be equal to the Actuarial Equivalent value of the payment that would have been
made to the spouse under the survivor annuity described below:

 

  (a) in the case of a Participant who dies after his Early Retirement Date, the
survivor annuity the Participant’s spouse would have received if the Participant
had a Termination of Employment or Retirement on the day before his death and
received distribution of benefits in the form of a Qualified Joint and Survivor
Annuity commencing on the spouse’s Annuity Starting Date, or

 

  (b) in the case of a Participant who dies on or before his Early Retirement
Date, the survivor annuity the Participant’s spouse would have received if the
Participant had a Termination of Employment on the day of his death, survived to
the spouse’s Annuity Starting Date, and received distribution of benefits in the
form of an immediate Qualified Joint and Survivor Annuity.

Rehired Employee - an Employee who is rehired by an Affiliated Company after he
has had a Termination of Employment or Retirement.

 

26

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Restatement Date - except as otherwise provided in Schedule A to this Plan,
January 1, 2007

Retirement - a Participant’s termination of employment with an Affiliated
Company on or after his Normal Retirement Date or in the case of an Employee who
has incurred a Permanent Disability, his attainment of age 65.

Retirement Benefit - the monthly benefit that accrues to a Participant under
Article 3.

Section 3.2 Annuity - the Actuarial Equivalent of a Participant’s Lump Sum
Amount payable monthly in the form of a single life annuity without ancillary
benefits.

Service for Putnam Berkley - service rendered prior to January 1, 1998, to
Putnam Berkley. In the case of a Rehired Employee or an employee who terminated
employment with Putnam Berkley and was then rehired with Putnam Berkley or an
Affiliated Company, his service prior to his rehire shall not be included as
service under this definition if such service would have been disregarded under
the rules applicable to a Participant.

Severance from Service Date - subject to the following sentence, the earliest of
(a) the day of an Employee’s Retirement, Termination of Employment, or death,
(b) the second anniversary of an Employee’s absence for Medical or Family Leave,
and (c) the first anniversary of the first day of a period in which an Employee
remains absent from service for any reason other than quit, discharge, Medical
or Family Leave, Retirement or death.

In the case of an Employee who incurs a Permanent Disability, his Severance from
Service Date shall be the date on which the latest of the following occurs:
(a) his Benefit Accrual Period of Service ceases to be credited under
Section 3.6 (unless he recovers from the Permanent Disability and resumes
employment with an Affiliated Company); (b) he attains age 65; (c) he begins to
receive distributions of his Retirement Benefits; or (d) this Plan is terminated
(or the accrual of benefits under the Plan otherwise ceases).

 

27

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Former Simon & Schuster Employee - an Employee who was employed by Simon &
Schuster on November 29, 1998, and became employed by Addison Wesley Longman on
November 30, 1998.

Termination of Employment - a Participant’s termination of employment with an
Affiliated Company, whether voluntary or involuntary, for any reason, including
but not limited to quit or discharge, and other than for Medical or Family
Leave, Permitted Leave, Credited Leave, transfer to another Affiliated Company,
Retirement or death.

In the case of an Employee who incurs a Permanent Disability, his Termination of
Employment shall be the date on which the latest of the following occurs:
(a) his Benefit Accrual Period of Service ceases to be credited under
Section 3.6 (unless he recovers from the Permanent Disability and resumes
employment with an Affiliated Company); (b) he attains age 65; (c) he begins to
receive distributions of his Retirement Benefits; (d) he dies; or (e) this Plan
is terminated (or the accrual of benefits under the Plan otherwise ceases).

Trust - the trust established or maintained under the Trust Agreement.

Trust Agreement - the agreement which provides for the continuation of the
Trust, as that agreement may from time to time be amended or supplemented.

Trust Fund - the total of the assets held in the Trust.

Trustee - anyone serving as trustee under the Trust Agreement.

Valuation Date - the first day of each Plan Year or any other date specified in
the Plan or by the Investment Committee as a date for valuation of the Trust
Fund.

Vested Interest - the nonforfeitable portion of a Participant’s Retirement
Benefit determined under Article 5.

 

28

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Vesting Period of Service -

 

  (a) subject to paragraph (b), an Employee’s aggregate Periods of Service (and
any periods that are required be credited to the Employee for his period of
military service under Section 414(u) of the Internal Revenue Code), except that
the following periods included in the Employee’s Periods of Service shall be
disregarded:

 

  (1) any periods preceding a Period of Severance of at least 60 consecutive
months if the Employee has no Vested Interest and the number of months of his
Period of Severance is equal to (or greater than) the number of months of the
Employee’s Periods of Service preceding that Period of Severance;

 

  (2) any periods while the Employee’s Employer is not an Affiliated Company,
except (A) in the case of an Employee employed by New American Library, or a
limited partnership, or (B) in the case of service specifically included in a
Participant’s Period of Service under Article 1.

 

  (3) any periods preceding January 1, 1985, if these periods would have been
disregarded under the rules then in effect with respect to breaks in service of
the Plan.

For purposes of determining an Employee’s Vesting Period of Service, Periods of
Service shall be aggregated on the basis that 12 months of service are equal to
one full year of service and completed months of service which are less than one
year of service shall equal a fraction which shall be computed to the nearest
.01% of a year and 30 days of service are equal to one full month of service.

 

29

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  (b) in the case of either an AWL Participant in no event shall his Vesting
Period of Service as of November 30, 1999 be less than his years of Vesting
Service as of November 30, 1999, credited under the AWL Plan (as described in
Schedule E).

In the event an individual who was a leased employee within the meaning of
Section 414(n)(2) of the Internal Revenue Code becomes an Employee and an
Affiliated Company was the recipient of such individual’s services as a leased
employee, his prior employment as a leased employee shall be credited as a
Vesting Period of Service.

 

30

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Article 2. Participation

 

2.1 Participation on the Restatement Date. All Employees who were Participants
as of the Restatement Date shall remain as such.

 

2.2 Participation After December 31, 2001. As a result of the freezing of
benefit accruals under the Plan, effective as of December 31, 2001, no Employee
shall become a Participant after December 31, 2001.

 

2.3 Cessation of Participation. For purposes of Articles 2 and 3, a Participant
shall cease to be a Participant as of the day the Participant incurs a Period of
Severance of 12-consecutive months. For all other purposes under this Plan, a
Participant shall cease to be a Participant as of the day all distributions to
the Participant and the Participant’s Beneficiaries have been made.

 

2.4 Participation Upon Reemployment. A Rehired Employee whose date of rehire is
on or after January 1, 2002 shall not be eligible to participate in the Plan.
The following rules shall apply with respect to the participation of a Rehired
Employee whose date of rehire is prior to January 1, 2002:

 

  (a) Subject to Section 2.4(b), if the Rehired Employee is an Eligible Employee
as of the date he is reemployed by an Employer, the Rehired Employee shall again
become a Participant as of that day. If the Rehired Employee is not an Eligible
Employee as of the day he is reemployed, the Rehired Employee shall become a
Participant in accordance with Section 2.2.

 

  (b)

If the Rehired Employee incurred a Break in Service before his reemployment, the

 

31

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Rehired Employee shall not become a Participant as provided in Section 2.4(a)
until the earlier of the date that he (1) is employed as a Full-Time Employee
and completes a Period of Service of three months as a Full-Time Employee after
his reemployment or (2) is credited with at least 1,000 Hours of Service for the
12-consecutive month period commencing with his first Hour of Service after
reemployment or has been credited with at least 1,000 Hours of Service for any
subsequent 12-consecutive month period commencing on the anniversary of the day
of that first Hour of Service.

 

  (c) In determining whether a Rehired Employee is an Eligible Employee as of
the date the Rehired Employee is reemployed the following rules shall apply:

 

  (1) if the Rehired Employee is a Full-Time Employee, does not have a Vested
Interest and has a Period of Severance equal to (or greater than) the greater of
60 months and the number of months of his previous Period of Service (excluding
Periods of Service previously disregarded under this Section 2.4(c)), the
Rehired Employee’s previous service as an Employee shall be disregarded for
purposes of determining when he again becomes an Eligible Employee; or

 

  (2) if the Rehired Employee is not a Full-Time Employee, does not have a
Vested Interest and has a number of consecutive Breaks in Service equal to (or
greater than) the greater of five and the number of his previous Years of
Service (excluding Years of Service previously disregarded under this
Section 2.4(c)), the Rehired Employee’s previous service as an Employee shall be
disregarded for purposes of determining when he again becomes an Eligible
Employee.

 

32

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2.5 Effect of Change in Job Status Upon Eligibility. In the case of a
Participant who (a) ceases to be an Eligible Employee as a result of a change in
job status and then transfers to a job status in which he again becomes an
Eligible Employee and (b) does so without incurring a Break in Service he shall
become a Participant immediately upon again becoming an Eligible Employee. In
the case of a Participant described in clause (a) of the prior sentence but who
incurs a Break in Service before he again becomes an Eligible Employee, the
determination of when he shall become a Participant shall be made by applying
the rules under Section 2.4 as if the Employee was a Rehired Employee.

 

33

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Article 3. Retirement Benefits

 

3.1 General. Participants’ Retirement Benefits shall be determined under this
Article 3 (subject to the limitations set forth in Article 4); provided, that
the Retirement Benefit of an AGS Participant shall be determined under Schedule
H. Each Participant shall be entitled to the nonforfeitable portion, as
determined under Article 5, of his Retirement Benefit, and shall have no right
to any portion of his Retirement Benefit which is not nonforfeitable under
Article 5 (nor shall any such portion increase the Retirement Benefit of any
other Participant). The form and timing of distribution of the nonforfeitable
portion of a Participant’s Retirement Benefit shall be made in accordance with
Article 6.

 

3.2 Retirement Benefit Attributable to Lump Sum Amount. Subject to Article 4 and
Sections 3.5 - 3.8 and 6.8 and Schedule F, upon a Participant’s Retirement or
Termination of Employment, the Participant’s Lump Sum Amount shall be equal to
the sum of (a) and (b) as adjusted under paragraph (c) as follows:

 

  (a) the product of: (1) the Participant’s Aggregate PEP Percentages (as
determined under Section 3.3); and (2) his Average Annual Compensation as of
December 31, 2001 (or, if earlier, his Termination of Employment); and

 

  (b) in the case of a Participant described in Section 3.4 the product of
(1) his Transition Credits under Section 3.4; and (2) his Average Annual
Compensation.

 

  (c) The sum of (a) and (b) shall be increased by interest at the rate of 5%
(compounded monthly) (or, if lower, the rate specified in paragraph 2(a) of
Schedule B) for the period beginning with the earlier of (i) the Participant’s
Termination of Employment and (ii) January 1, 2002, and ending on the
Participant’s Annuity Starting Date.

 

34

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For purposes of determining a Participant’s Retirement Benefit under this
Section 3.2 it shall be assumed that payment of the Retirement Benefit will be
made in the form of a Section 3.2 Annuity commencing on the Participant’s Normal
Retirement Date (or, if later, the Participant’s Annuity Starting Date).

 

3.3 Aggregate PEP Percentages.

 

  (a) Subject to paragraph (b), a Participant’s Aggregate PEP Percentages shall
be equal to the sum of each of the applicable PEP Percentages set forth in the
table in Section 3.3(c) multiplied by the number of years (or partial years) of
his Benefit Accrual Period of Service prior to January 1, 2002 to which each
such PEP Percentage applies. The applicable PEP Percentage for a year (or
partial year) of a Participant’s Benefit Accrual Period of Service shall be
determined by crediting the Participant with one-twelfth of the PEP Percentage
corresponding to the Participant’s attained age as of the first day of each
month within such year (or partial year).

 

  (b) In the case of an AWL Participant, his Aggregate PEP Percentages shall be
equal to the sum of his Aggregate PEP Percentages for periods on or before
November 30, 1998 and his Aggregate PEP Percentages for periods after
November 30, 1998 determined as follows:

 

  (1) the Aggregate PEP Percentages for periods after November 30, 1998 is equal
to the sum of each of the applicable PEP Percentages set forth in the table in
Section 3.3(c) multiplied by the number of years (or partial years) of his
Benefit Accrual Period of Service to which each such PEP Percentage applies; and

 

35

--------------------------------------------------------------------------------

  (2) the Aggregate PEP Percentages for periods on or before November 30, 1998
is equal to the sum of each of the applicable PEP Percentages set forth in the
table in Section 3.3(c) multiplied by the number of years (or partial years) of
a Participant’s Benefit Accrual Period of Service on or after the Participant’s
Entry Date and on or before November 30, 1998 to which each such PEP Percentages
apply. For purposes of this Section 3.3(b)(2) an AWL Participant’s Entry Date
shall be the date that precedes November 30, 1998 by the number of years of the
Participant’s AWL Benefit Service, but in no event shall a AWL Participant’s
Entry Date be earlier then November 30, 1968.

 

  (c) A Participant’s PEP Percentages under this Section 3.3 shall be determined
under the following table:

 

Participant’s Attained Age

   PEP Percentages
(percentage of Average
Annual Compensation)  

Under 30

   3.00 % 

30-39

   4.00 % 

40-49

   5.00 % 

50-59

   6.00 % 

60 and above

   8.00 % 

 

3.4 Transition Credits. In the case of a Participant who is either an AWL
Participant, or a Pearson Participant, his Transition Credits, if any, for
purposes of Section 3.2(b) shall be determined as set forth below. A Participant
not described in the prior sentence shall not be entitled to any Transition
Credits.

 

  (a) In the case of a Pearson Participant, his Transition Credits shall be
equal to the excess, if any, of (1) over (2) as follows:

 

  (1) The Actuarial Equivalent lump sum value of a Pearson Participant’s accrued
benefit as of December 31, 1997 (as determined under Schedule D) divided by the
Pearson Participant’s Average Annual Compensation as of December 31, 1997; and

 

36

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  (2) The Participant’s Aggregate PEP Percentages determined under Section 3.3,
attributable to his Benefit Accrual Period of Service prior to January 1, 1998.

 

  (b) A Pearson Participant who satisfies the criteria specified in the
following sentence may be entitled to Transition Credits in addition to those
described in paragraph (a). In order to receive the additional Transition
Credits under this paragraph (b), a Participant must have attained age 50 and
have a Vesting Period of Service of at least five years as of January 1, 1998.
The Transitional Credits under this paragraph shall be equal to the excess, if
any, of (1) over (2) as follows:

 

  (1) The Actuarial Equivalent lump-sum value of the Pearson Participant’s
Grandfathered Pearson Benefit under Section 3.5(d) divided by the Pearson
Participant’s Average Annual Compensation as of December 31, 2002 (or, if
earlier, his Termination of Employment), and

 

  (2) The sum of: (A) the Participant’s PEP Percentages determined under
Section 3.3, attributable to his Benefit Accrual Period of Service prior to
January 1, 2003 and (B) Transition Credits, if any, to which the Participant is
entitled under Section 3.4(a).

 

  (c) In the case of a Participant who is an AWL Participant, his Transition
Credits, if any, shall be equal to the excess of (1) over (2) as follows:

 

  (1) The Actuarial Equivalent lump sum value of an AWL Participant’s accrued
benefit under the AWL Plan as of November 30, 1998 (as determined under Schedule
E) divided by the Participant’s AWL Average Annual Compensation as of
November 30, 1998, and

 

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  (2) The aggregate of an AWL Participant’s PEP Percentages determined under
Section 3.2, attributable to his Benefit Accrual Period of Service prior to
December 1, 1998.

 

  (d) For purposes of determining the Actuarial Equivalent lump sum value under
paragraphs (a) and (c) of this Section the following factors shall apply:
(1) the mortality factors specified in Paragraph 1(a) of Schedule B; and (2) an
interest rate equal to the annual rate of interest on 30-year Treasury
securities for the month of September, 1997.

 

3.5 Minimum Retirement Benefit. Subject to Article 4, and Sections 3.8 and 6.8,
in no event shall a Participant’s Retirement Benefit be less than the benefit
determined in the applicable of paragraphs (a) through (f) as follows; provided
however, that in each case, the aggregate amount of benefit accruals, as so
determined for periods on and after January 1, 2002, shall be reduced by a
Defined Contribution Offset:

 

  (a) December 31, 1997 Retirement Benefit. In the case of a Pearson
Participant, his accrued benefit as of December 31, 1997 (as set forth in
Schedule D to this Plan).

 

  (b) November 30, 1998 Retirement Benefit. In the case of a Participant who is
an AWL Participant, his accrued benefit as of November 30, 1998 under the AWL
Plan (as set forth in Schedule E to this Plan).

 

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  (c) December 31, 1999 Retirement Benefit. In the case of a Pearson Participant
his accrued benefit as of December 31, 1999 based on his Average Annual
Compensation as of this date.

 

  (d) Grandfathered Pearson Benefit. In the case of a Pearson Participant who
had attained age 50 and had been credited with a Vesting Period of Service of at
least five years as of December 31, 1997, a benefit equal to the Retirement
Benefit the Participant would have received under the Plan based on his Benefit
Accrual Period of Service and Compensation through December 31, 2002 (or, if
earlier, his Termination of Employment) if the benefit formula in effect under
the Plan on December 31, 1997 (as set forth in Schedule D to this Plan) had
continued until that date.

 

  (e) Grandfathered AWL Benefit. In the case of a Participant who is an AWL
Participant and who had attained age 45 and had a Benefit Accrual Period of
Service of at least ten years as of November 30, 1998, a benefit equal to the
Retirement Benefit the Participant would have received based on his Benefit
Accrual Period of Service and Compensation through his Termination of Employment
if the benefit formula in effect under the AWL Plan on November 29, 1998 (as set
forth in Schedule E to this Plan) had continued. Notwithstanding the foregoing,
an AWL Participant who was employed by Harper Collins prior to April 1, 1996 and
who was transferred to AWL as of April 1, 1996 will be deemed to satisfy the
requirements of the prior sentence if he had attained age 45 and had a Vesting
Period of Service of at least ten years as of November 30, 1998.

 

  (f) Grandfathered Former Simon & Schuster Benefit In the case of a Former
Simon & Schuster Participant who is at least age 45 and had a Vesting Period of
Service of at least ten years as of November 30, 1998, a benefit equal to the
excess, if any, of (1) over (2) as follows:

 

  (1) The benefit determined under paragraph (e), but based on (A) Benefit
Service equal to the sum of (i) the Participant’s Former Simon & Schuster
Benefit Service; and (ii) his AWL Benefit Service (as defined in Schedule E) on
and after November 30, 1998 (or, if later, the date the Participant transferred
employment to an Affiliated Company); and (B) Compensation equal to the sum of
(i) the Participant’s compensation earned prior to November 30, 1998 (or, if
later, the date the Participant transferred employment to an Affiliated
Company)and while covered under the Former Simon & Schuster Plan that would have
satisfied the definition of Compensation in Schedule E and (ii) Compensation
earned on or after November 30, 1998 (or, if later, the date the Participant
transferred employment to an Affiliated Company), and

 

39

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  (2) the Former Simon & Schuster Participant’s accrued benefit under the Former
Simon & Schuster Plan as of November 29, 1998 (or, if later, the date the
Participant transferred employment to an Affiliated Company).

 

  (g) Financial Times Participant’s Benefit – In the case of a Participant who
was (1) an active participant in the former Financial Times U.S. Retirement Plan
on December 31, 1993 and (2) who was an Eligible Employee on January 1, 2000,
the Retirement Benefit such Participant would have received if the provisions of
the former Financial Times U.S. Retirement Plan continued to apply. Such
Retirement Benefit shall be determined under Appendix E, except that all the
benefits shall continue to accrue on or after January 1, 1994, and shall be
determined as of the date of the Participant’s Termination of Employment.

 

40

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3.6 Retirement Benefit Upon Permanent Disability

 

  (a) Subject to Article 4 and Sections 3.7, 3.8 and 6.8 and paragraph (b) and
except with respect to the determination of a Participant’s Aggregate PEP
Percentages under Section 3.3, in the case of a Participant who incurs a
Permanent Disability, his Retirement Benefit shall not be less than an amount
equal to the Retirement Benefit determined under this Article 3 based upon his
Average Annual Compensation as of the date of his Permanent Disability (or
December 31, 2001, if earlier) and the Benefit Accrual Period of Service with
which the Participant would have been credited had he remained an Employee until
his Normal Retirement Date (or, if earlier, the day the Plan is terminated or
the accrual of benefits under the Plan otherwise cease, but in no event later
than December 31, 2001).

 

  (b) The Benefit Accrual Period of Service of a Participant who is otherwise
entitled to receive a Retirement Benefit under paragraph (a) shall end no later
than the earlier of (1) the day he ceases to be eligible for benefits under the
Company’s long-term disability plan as the result of his recovery from the
Permanent Disability, (2) in the case of a Participant who elects to receive a
distribution of benefits before his Normal Retirement Date under Section 6.5,
his Annuity Starting Date, or (3) December 31, 2001.

 

  (c)

For purposes of determining the Vested Interest of a Participant described in
paragraph (a) and who incurs a Permanent Disability, his Vesting Period of
Service shall end on the earliest of (1) his Normal Retirement Date, (2) the day
the Plan

 

41

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terminates (or the accrual of benefits under the Plan otherwise ceases), (3) the
day he ceases to be eligible for benefits under the Company’s long-term
disability plan as a result of his recovery from the Permanent Disability and
(4) in the case of a Participant who elects to receive a distribution of
benefits before his Normal Retirement Date under Section 6.5, his Annuity
Starting Date.

 

  (d) Distribution of the Retirement Benefit of a Participant who incurs a
Permanent Disability shall commence as of the Participant’s Normal Retirement
Date unless he elects to receive distribution of his benefits before that time
under Section 6.5.

For purposes of this Section 3.6, it shall be assumed that payment of the
Retirement Benefit will be made as monthly payments in the form of a single life
annuity without ancillary benefits, commencing on the Participant’s Normal
Retirement Date.

 

3.7 Maximum Retirement Benefit.

 

  (a) In the case of a Participant who (1) has a Termination of Employment
before his Normal Retirement Date and (2) does not receive a distribution upon
Termination of Employment, in no event shall the amount of his Retirement
Benefit determined under Section 3.2 (but, without regard to Section 3.8)
payable in the form of a single life annuity commencing at any time be greater
than the amount payable under a [single] life annuity commencing on his Normal
Retirement Date which is the Actuarial Equivalent of his age 65 Lump Sum Amount
determined under the following sentence. A Participant’s age 65 Lump Sum Amount
is the Lump Sum Amount which the Participant would be entitled to receive if he
had remained an Employee until his Normal Retirement Date, based on the
Aggregate PEP Percentages with which he would be credited upon his Normal
Retirement Date and his Average Annual Compensation at his actual Termination of
Employment.

 

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  (b) If a Participant (1) has a Termination of Employment before his Normal
Retirement Date, (2) does not elect an immediate distribution of his Retirement
Benefit and (3) elects a form of annuity under Section 6.1 other than a single
life annuity, the amount payable under that annuity shall not be greater than
the Actuarial Equivalent of the single life annuity described in Section 3.7(a).

 

3.8 Offsets for Certain Prior Plan Benefits.

 

  (a) Employees of New American Library. In the case of a Participant who was a
participant in either the New American Library Pension Plan or the New American
Library Capital Accumulation Plan the amount of his Retirement Benefit under
Sections 3.2, 3.5 and 3.6 shall be offset by the sum of (1) and (2) as follows:

 

  (1) The Participant’s accrued benefit under the terminated New American
Library Pension Plan, as set forth in Appendix A (regardless of whether the
Participant is entitled to any future payments under that plan), and

 

  (2) The Actuarial Equivalent of the Participant’s accumulated employer
contributions, other than employer matching contributions, made under the New
American Library Capital Accumulation Plan, as set forth in Appendix B.

For purposes of determining a Participant’s accrued benefit under the New
American Library Pension Plan (set forth in Appendix A) and the Actuarial
Equivalent of a Participant’s accumulated employer contributions under the New
American Library

 

43

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Capital Accumulation Plan (set forth in Appendix B) it shall be assumed that
payment of the benefit will be made in the form of a single life annuity without
ancillary benefits commencing on the Participant’s Normal Retirement Date.

 

  (b) Former District 65 Members. In the case of a Participant who was a member
of the District 65 Security Plan Pension Fund (“District 65 Plan”) prior to
April 1, 1991, the amount of his Retirement Benefit under Sections 3.2, 3.5 and
3.6 shall be offset in accordance with Section 3.9(e) by the vested benefit, if
any, payable under such District 65 Plan expressed as a single life annuity
without ancillary benefits commencing on the Participant’s Normal Retirement
Date, as set forth in Appendix G to this Plan.

 

3.9 Transferred Employee; Change in Status as Eligible Employee. The following
rules shall apply with respect to the determination of the Retirement Benefit of
a Participant (a “Transferred Employee”) who is either (a) transferred to or
from an Affiliated Company which is not an Employer or (b) otherwise ceases to
be or becomes an Eligible Employee as the result of a change in the terms of his
employment:

 

  (1) In the case of a Transferred Employee who is transferred from an Employer
to an Affiliated Company which is not an Employer (or otherwise ceases to be an
Eligible Employee), the amount of his Retirement Benefit shall be determined
based on the number of years of his Benefit Accrual Period of Service at the
time he is transferred (or otherwise ceases to be an Eligible Employee) and his
Average Annual Compensation up to the date of his transfer, but for purpose of
the adjustments under Section 3.2(d) he shall be treated as if he had a
Termination of Employment on the date of his transfer.

 

44

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  (2) Subject to paragraphs (3) and (4), in the case of a Transferred Employee
who is transferred from an Affiliated Company which is not an Employer to an
Employer (or otherwise becomes an Eligible Employee), the amount of his
Retirement Benefit shall be determined based on the number of years of his
Benefit Accrual Period of Service after the date of the transfer (or he
otherwise becomes an Eligible Employee) and his Compensation after the date of
the transfer.

 

  (3) In the case of a Transferred Employee who was a participant in the Penguin
Canada Retirement Plan and/or the Penguin Canada Supplemental Retirement Plan
and who is transferred to an Employer, the amount of his Retirement Benefit
shall be the greater of (A) and (B) as follows:

 

  (A) the Participant’s Retirement Benefit based on the number of years of his
Benefit Accrual Period of Service after the date of transfer and his
Compensation after the date of the transfer, and

 

  (B)

the difference between (i) the Participant’s Retirement Benefit determined by
including his service rendered and compensation received while an employee of
Penguin Canada in the Participant’s Benefit Accrual Period of Service and
Compensation, respectively and (ii) the value of the Participant’s vested
benefits, as of the date of his transfer, under the Penguin Canada Retirement
Plan and the Penguin Canada Supplemental Retirement Plan. In determining the
value of the vested benefit under the Penguin Canada Pension Plan and/or Penguin
Canada Supplemental Retirement Plan, it shall be assumed that payment of the
retirement benefit will be made in the form of a single life annuity without
ancillary benefits, commencing on the

 

45

--------------------------------------------------------------------------------

 

Participant’s Normal Retirement Date. The conversion of the benefit payable
under the Penguin Canada Pension Plan and/or Penguin Canada Supplemental
Retirement Plan to this form shall be based on the actuarial assumptions in
effect under the Penguin Canada Pension Plan on the first day of the month in
which the Participant’s transfer occurred. The amount of the benefit under the
Penguin Canada Pension Plan and/or Penguin Canada Supplemental Retirement Plan
shall be converted from Canadian currency to United States currency based on the
exchange rate in effect on the day of the Participant’s Termination of
Employment or Retirement.

 

  (4) In the case of an Employee who was not an Eligible Employee because he was
covered by a collective bargaining agreement which does not expressly provide
for the inclusion of the Employee as a Participant, and who subsequently becomes
an Eligible Employee because he is no longer a member of a group of Employees
covered by a collective bargaining agreement, the amount of his Retirement
Benefit shall be determined based on the number of years of his Benefit Accrual
Period of Service and his Compensation both before and after the date he becomes
an Eligible Employee. If such Employee is or becomes entitled to a pension
benefit from a Defined Benefit Plan covering any period which is included in his
Benefit Accrual Period of Service under this Plan then the Retirement Benefit
under this Plan shall be reduced by the pension payable from such other Defined
Benefit Plan. For purposes of determining the amount of the offset of a
Participant’s benefit under such other Defined Benefit Plan, the benefit payable
under such plan shall be converted using the actuarial factors expressed in that
plan (or if none the factors set forth in this Plan).

 

46

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3.10 Retirement Benefit of Rehired Employee. The following rules shall apply
with respect to the determination of the amount of the Retirement Benefit of a
Participant who is a Rehired Employee:

 

  (a) The Retirement Benefit payable upon the Participant’s subsequent
Termination of Employment, Retirement or Permanent Disability shall be an amount
determined under the applicable Section of this Article 3 as in effect at that
time.

 

  (b) The Rehired Employee’s Retirement Benefit that commenced on his prior
Annuity Starting Date (the “Prior Retirement Benefit”) shall continue to be paid
in accordance with Section 3.11.

 

  (c) For purposes of determining a Rehired Employee’s Retirement Benefit under
Article 3 the following rules shall apply:

 

  (1) Subject to paragraph (d), if the Rehired Employee is reemployed as an
Eligible Employee, then his Retirement Benefit under the applicable Section of
Article 3 upon his subsequent Termination of Employment shall be determined by
taking into account his Benefit Accrual Period of Service and Compensation
accrued both prior to his initial Termination of Employment, and after his
reemployment.

 

  (2) If the Rehired Employee has had an Annuity Starting Date, the Rehired
Employee’s additional Retirement Benefit (if any) at his subsequent Annuity
Starting Date shall be equal to the Actuarial Equivalent of (A) over (B) as
follows:

 

  (A) the Actuarial Equivalent lump sum value of the Rehired Employee’s
Retirement Benefit determined under paragraph (c)(1) as of his subsequent
Termination of Employment; over

 

47

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  (B) the Actuarial Equivalent of lump sum value of his Retirement Benefit as of
his prior Annuity Starting Date.

For purposes of this paragraph (c)(ii), Actuarial Equivalent value shall be
determined in accordance with the factors under Schedule A in effect on the date
of the Participant’s Termination of Employment.

 

  (d) Subject to the following sentence, in the case of a Participant who has no
Vested Interest on his Severance from Service Date: (1) he shall be deemed to
receive a distribution of his entire Vested Interest upon his Severance from
Service Date and (2) his Benefit Accrual Period of Service credited before his
original Severance from Service Date shall be disregarded. However, if such
Participant resumes covered Employment under the Plan no later than the day that
he would have incurred a Period of Severance of five consecutive years, then he
will be deemed to have repaid to the Plan his deemed distribution and
accordingly his Benefit Accrual Period of Service credited before his original
Termination of Employment or Retirement shall not be disregarded.

 

  3.11 Reemployment of an Eligible Employee who has had an Annuity Starting
Date. If a Participant who had a Termination of Employment and who is receiving
a Retirement Benefit from the Plan is reemployed by the Company or an Affiliated
Company, payment of his Retirement Benefit will continue and shall not be
suspended. Upon the Participant’s subsequent Termination of Employment, his
Retirement Benefit will be determined under the provisions of Section 3.10.

 

48

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3.12 Suspension of Benefit Payments For Employment After Normal Retirement Date.

Payment of the Retirement Benefit of a Participant who remains in employment
after his Normal Retirement Date shall be suspended during each calendar month
of the Participant’s continued employment during which the Participant receives
from an Affiliated Company payment for any Hours of Service on each of eight
days. The Plan Administrator shall notify any Participant who is affected by
this Section 3.12 in accordance with the notification requirements of Department
of Labor Regulations Section 2530.203-3(b)(4).

 

49

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Article 4 - Limitations on Benefits

 

4.1 Definitions. The following definitions apply for purposes of Section 4.2:

 

  (a) Annual Benefit—a benefit which is payable annually in the form of a single
life annuity with no ancillary benefits and determined without regard to any
contributions made by an Employee.

 

  (b) Defined Benefit Plan Fraction—a fraction for any Plan Year. The numerator
of the fraction is the Participant’s Projected Annual Benefit. The denominator
of the fraction is the lesser of:

 

  (i) the product of 1.25 and $90,000 (or such higher amount as may be permitted
under Section 415(d) of the Internal Revenue Code to reflect increases in the
cost of living); and

 

  (ii) the product of 1.4 and 100% of the Participant’s average Compensation
during the three consecutive Plan Years in which the Participant received the
greatest amount of Compensation.

 

  (c) Defined Contribution Plan Fraction—a fraction for any Plan Year. The
numerator of the fraction is the aggregate amount of annual additions, as
defined in Section 415(c)(2) of the Internal Revenue Code, to a Participant’s
accounts as of the close of that Plan Year in all Defined Contribution Plans
(whether or not terminated). The denominator of the fraction is the aggregate
amount described in the following sentence for all Plan Years the Participant
was an Employee (regardless of whether a Defined Contribution Plan was in
existence during those years). The amount for each such Plan Year is equal to
the lesser of:

 

  (i) the product of 1.25 and the dollar amount under Section 415(c)(1)(A) of
the Internal Revenue Code for that Plan Year and

 

50

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  (ii) the product of 1.4 and the amount determined under Section 415(c)(1)(B)
of the Internal Revenue Code for that Plan Year. In the case of a Participant
with respect to whom the sum of his Defined Benefit Plan Fraction and Defined
Contribution Plan Fraction exceeds 1.0 as of either (or both) December 31, 1982
or December 31, 1986 (computed as if the provisions of Section 415 of the
Internal Revenue Code, as amended by the Tax Equity and Fiscal Responsibility
Act of 1982 or the Tax Reform Act of 1986, respectively, were in effect on the
applicable of those dates and disregarding any changes to the plans made after
May 5, 1986, but using the Section 415 limitation applicable to the first Plan
Year beginning on or after January 1, 1987) the numerator of the Participant’s
Defined Contribution Plan Fraction shall be reduced so that the sum of those
fractions as of the applicable date does not exceed 1.0.

 

  (d) Projected Annual Benefit - the projected Retirement Benefit payable in the
form of an Annual Benefit to which a Participant would be entitled under all
Defined Benefit Plans assuming (a) that all relevant factors used to determine
benefits under each of those Plans remained constant from the last day of the
most recent Plan Year in which the Participant was credited with a Benefit
Accrual Period of Service until the Participant’s Normal Retirement Date and
(b) that distribution of those benefits commences on the Participant’s
attainment of his Normal Retirement Date (or current age if later).

 

51

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4.2 Maximum Retirement Benefit. Notwithstanding any other provisions of this
Plan:

 

  (a) Subject to Sections 4.2(b), (c) and (d), the Retirement Benefit of a
Participant shall be reduced to the extent that it (plus, if applicable, the
aggregate retirement benefit to which the Participant is entitled under all
other Defined Benefit Plans in which he was a participant) exceeds the lesser
of:

 

  (1) $160,000 (or such higher amount as may be permitted under Section 415(d)
of the Internal Revenue Code to reflect increases in the cost of living); and

 

  (2) 100% of the Participant’s average Compensation during the three
consecutive Plan Years in which the Participant received the greatest amount of
Compensation. No reduction shall be required under this Section 4.2(a) in the
case of a Participant who never participated in a Defined Contribution Plan if
the Participant’s Retirement Benefit (plus, if applicable, the Participant’s
retirement benefit under all other Defined Benefit Plans) does not exceed
$10,000.

 

  (b) The following adjustments shall be made in applying the limitations of
Sections 4.2(a):

 

  (1) If a Participant’s Retirement Benefit (or a retirement benefit to which
the Participant is entitled under any other Defined Benefit Plan) is payable in
a form other than an Annual Benefit, the Retirement Benefit shall be adjusted so
that it is the Actuarial Equivalent of an Annual Benefit, except that the
following shall not be taken into account: (A) any ancillary benefit that is not
related to retirement income benefits and (B) the survivor annuity provided
under the portion of any annuity that constitutes a Qualified Joint and Survivor
Annuity.

 

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  (2) Effective for a Participant with an Hour of Service on or after January 1,
2002, the dollar limitation set forth in Section 4.2(a)(1) shall be adjusted as
set forth below:

 

  (A) If distribution of a Participant’s Retirement Benefit begins before the
Participant’s attainment of age 62 then the limitation shall be reduced from the
limitation on an Annual Benefit beginning at the Participant’s attainment of age
62 to an Actuarial Equivalent Annual Benefit payable at the time the
Participant’s benefit commences.

 

  (B) If distribution of a Participant’s Retirement Benefit begins after the
Participant’s attainment of age 65 the limitation shall be increased (in
accordance with regulations promulgated by the Secretary of the Treasury) so
that it equals the amount of an Annual Benefit beginning at the time
distribution of the Participant’s Retirement Benefit begins, which is the
Actuarial Equivalent of an Annual Benefit equal to the dollar limitation set
forth in Section 4.2(a)(1) beginning as of the Participant’s attainment of age
65.

 

  (3) In the case of a Participant with less than ten years of participation in
the Plan or less than ten Vesting Years of Service:

 

  (A) the dollar limitation set forth in Section 4.2(a)(1) shall be multiplied
by a fraction the numerator of which is the aggregate number of the
Participant’s years of participation in the Plan at the time the determination
is made and the denominator of which is ten, and

 

53

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  (B) the percentage limitation set forth in Section 4.2(a)(2) and the $10,000
minimum benefit referred to in the last sentence of Section 4.2(a) shall be
multiplied by a fraction the numerator of which is the aggregate number of the
years of the Participant’s Vesting Years of Service at the time the
determination is made and the denominator of which is ten.

 

  (4)

For purposes of adjusting a Participant’s Retirement Benefit under
Section 4.2(b)(2), the adjusted limitation shall be the lesser of: (A) such
limitation determined by applicable factors based on the factors specified in
Schedule B, and (B) an amount computed based on the mortality table specified in
paragraph (1)(a) of Schedule B (“Applicable Mortality Table”) and an interest
rate of 5%. For purposes of adjusting a Participant’s Retirement Benefit under
Section 4.2(b)(1), in the case of a form of distribution that is not subject to
Section 417(e) of the Internal Revenue Code, the Actuarial Equivalent Annual
Benefit shall equal the greater of (A) the Annual Benefit payable to the
Participant under the Plan commencing at the same time as the Participant’s form
of benefit, or (B) the Actuarial Equivalent Annual Benefit commencing at the
same time as the form of benefit payable to the Participant, computed using a 5%
interest assumption and the Applicable Mortality Table. Except as otherwise
provided in the following sentence, for purposes of adjusting a Participant’s
Retirement Benefit under Section 4.2(b)(1), in the case of a form of
distribution that is subject to Section

 

54

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417(e) of the Internal Revenue Code, the Actuarial Equivalent Annual Benefit
shall equal the greatest of (A) the Actuarial Equivalent Annual Benefit
commencing at the same time as the form of benefit payable to the Participant,
computed using the Applicable Interest Rate and the Applicable Mortality Table,
(B) the Actuarial Equivalent Annual Benefit commencing at the same time as the
form of benefit payable to the Participant, computed using a 5.5% interest
assumption and the Applicable Mortality Table, or (C) the Actuarial Equivalent
Annual Benefit commencing at the same time as the form of benefit payable to the
Participant, computed using the Applicable Interest Rate and the Applicable
Mortality Table, divided by 1.05. If a Participant’s benefit is paid in a form
of distribution that is subject to Section 417(e) of the Internal Revenue Code
and has an Annuity Starting Date in a year beginning in 2004 or 2005, then the
prior sentence shall apply but without regard to clause (C).

 

  (c) The Retirement Benefit of a Participant who was a Participant in the Plan
or a participant in a Prior Plan before January 1, 1987 shall not be reduced
under any other provisions of this Section 4.2 to the extent that it does not
exceed the Participant’s Retirement Benefit accrued as of that date and
determined in accordance with the requirements of Section 415 of the Internal
Revenue Code in effect on that date and without regard to amendments to the Plan
after May 5, 1986. The Retirement Benefit of a Participant who was a Participant
in the Plan or a participant in a Prior Plan before January 1, 1983 shall be
similarly protected.

 

  (d)

Effective for Participants with Annuity Starting Dates that begin in Plan Years
prior to

 

55

--------------------------------------------------------------------------------

 

January 1, 2000, if a Participant is a participant in any Defined Contribution
Plan, the Participant’s Retirement Benefit shall be reduced to the extent that
it causes the sum of the Participant’s Defined Benefit Plan Fraction and the
Participant’s Defined Contribution Plan Fraction to exceed 1.0 for any Plan Year

 

4.3 Restrictions on Highly Compensated Employees.

 

  (a) The Retirement Benefit of a Participant who is among the 25 Highly
Compensated Employees or former Highly Compensated Employees (as defined in
Section 414(q) of the Internal Revenue Code) who have the greatest compensation
from all Affiliated Companies in any current or prior Plan Year shall be subject
to the restrictions set forth in Section 4.3(b) unless at least one of the
conditions in the following sentence is met. The conditions are: (1) the
aggregate value of the Retirement Benefit payable to Participant does not exceed
1% of the Plan’s current liabilities (as that term is defined in
Section 412(l)(7) of the Internal Revenue Code), (2) the Plan assets remaining
after the distribution of all benefits payable to the Participant under the Plan
equals or exceeds 110% of the Plan’s current liabilities, (3) the Actuarial
Equivalent present value of the benefits payable to or on behalf of the
Participant does not exceed $5,000 or (4) the Plan is terminated and the benefit
received by the Participant is nondiscriminatory under Section 401(a)(4) of the
Internal Revenue Code.

 

  (b) Subject to Section 4.3(e), the annual payments to a Participant described
in Section 4.3(a) shall not exceed the annual payment to which such Participant
is entitled if his Retirement Benefit (other than any Social Security Supplement
as defined in Treas. Reg. §1.411(a)-7(c)(4)(ii)) is distributed in the form of a
single life annuity, plus the payment to which such Participant is entitled to
receive under a Social Security Supplement.

 

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  (c) For purposes of Section 4.3(a), the term Retirement Benefit shall include
all loans in excess of the amount under Section 72(p)(2)(A) of the Internal
Revenue Code, any periodic income, any withdrawal values payable to an Employee
or former Employee and any death benefits on the Employee’s or former Employee’s
life which are not provided for by insurance.

 

  (d) In the event of the Plan’s termination, the benefit of any active or
former Highly Compensated Employee is limited to a benefit that is
nondiscriminatory under Section 401(a)(4) of the Internal Revenue Code.

 

  (e) A Participant to whom the restrictions of Section 4.3(a) apply may receive
payouts in excess of the amount described in Section 4.3(a) provided that an
agreement in accordance with Revenue Rulings and other guidance of the Internal
Revenue Service has been established to secure repayment to the Plan of any such
excess payment.

 

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Article 5. Vesting

A Participant’s right to receive his Retirement Benefit shall become
nonforfeitable upon the earliest of: (1) the Participant’s being credited with a
Vesting Period of Service of five years, (2) the Participant’s attainment of age
65 while an Employee, (3) in the case of an AWL Employee, his Normal Retirement
Date, or (4) a Participant’s death while an Employee.

 

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Article 6. Distribution

 

6.1 Election of Form of Distribution. Subject to Sections 6.2 and 6.8, a
Participant shall be entitled to elect to receive a distribution of his Vested
Interest either in one of the forms of annuity specified in paragraph (a) or in
a single cash payment described in paragraph (b). The election under this
Section 6.1 shall only be available if the Actuarial Equivalent present value as
of the Participant’s Annuity Starting Date (or, at the time of any prior
distribution) of the Participant’s Vested Interest is in excess of $5,000.

 

  (a) Annuity Options - A Participant may elect to receive the Actuarial
Equivalent of his Vested Interest in the form of an annuity as follows:

 

  (1) Life annuity - an annuity for the life of the Participant,

 

  (2) Qualified Joint and Survivor Annuity,

 

  (3) Life annuity with a 10-year period certain feature—in the case of a
Participant with an Hour of Service on or after September 1, 1999, or an AWL
Participant, an annuity for the life of the Participant, but if the Participant
dies within 10 years of his Annuity Starting Date, the annuity is payable to the
Participant’s Beneficiary for the remainder of that 10-year period, or

 

  (4) Joint and survivor annuity - in the case of a Participant with an Hour of
Service on or after September 1, 1999, or an AWL Participant, an annuity for the
life of the Participant, with a survivor annuity payable to a Beneficiary
designated by the Participant of either 50% or 100% of the amount payable during
the joint lives of the Participant and his Beneficiary.

 

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  (b) Single Cash Distribution Option. A Participant may elect to receive a
single cash distribution of the full amount payable under the Plan as of his
Annuity Starting Date under Section 6.4. The single cash distribution shall be
equal to the greater of (1) the Participant’s Lump Sum Amount (as adjusted under
Section 3.8), and (2) the Actuarial Equivalent of the Participant’s Vested
Retirement Benefit determined under Section 3.5 (as adjusted under Section 3.8).

A Participant’s election under this Section 6.1 (which includes the designation
of a contingent Beneficiary) must be made in accordance with the Provisions of
Section 6.8. Except in the case of a Participant who has an Annuity Starting
Date described in Section 6.4(d), this election may not be changed after the
Annuity Starting Date. In the case of a Participant who has an Annuity Starting
Date described in Section 6.4(d), he shall be entitled to elect another form of
distribution upon his Retirement. In the absence of an effective election under
this Section 6.1, subject to Section 6.8, a Participant shall be deemed to have
elected a distribution in the form of a single life annuity with no ancillary
benefits.

 

6.2

Vested Interest Not in Excess of $1,000 or $5,000. Subject to an election under
Section 6.3 of a direct transfer, if as of the Participant’s Annuity Starting
Date the Actuarial Equivalent present value of his Vested Interest payable as of
the Participant’s Normal Retirement Date (i) does not exceed $1,000, the method
of distribution as to that Participant shall be a single sum cash distribution
of that Vested Interest and (ii) exceeds $1,000 but does not exceed $5,000, the
method of distribution as to that Participant shall be a direct transfer (in the
manner contemplated by Section 401(a)(31)(B) of the Internal Revenue Code) to an
individual retirement plan of a designated custodian or insurer (as

 

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determined by the Plan Administrator in its discretion); provided, that the
Participant shall be entitled to elect, in accordance with Section 6.1,
distribution of such Vested Interest in a single sum cash distribution,.

 

6.3 Direct Transfer. Subject to Section 6.8 and the rules set forth below, a
Participant who receives distribution of his Vested Interest in a form which
qualifies as an eligible rollover distribution (as defined in Section 401(a)(31)
of the Internal Revenue Code) in accordance with Section 6.1(b) or 6.2 or under
Article 7 may elect, at the time and in the manner prescribed by the Plan
Administrator, to have all or any portion of that distribution paid directly to
any eligible retirement plan (as defined in Section 402(c)(8)(B) of the Internal
Revenue Code).

The Plan Administrator shall notify the Participant (or spouse) of the direct
transfer option in accordance with Section 402(f) of the Internal Revenue Code.

This notification shall be given no earlier than 90 days before distribution of
benefits is to commence and no later than 30 days before distribution of
benefits is to commence. However, the Participant may affirmatively elect that
distribution commence at least seven days after receipt of the notice, but
before the expiration of the 30-day period provided he has been informed of the
right to have at least 30 days to review the notice. This option shall apply
only to a Participant, his surviving spouse, or his former spouse who is
entitled to a distribution under the Plan as an alternate payee under a
qualified domestic relations order as defined in Section 414(p) of the Internal
Revenue Code. The following rules shall apply with respect to direct transfers
under this Section 6.3.

 

  (a) A Participant who is reasonably expected to have an eligible rollover
distribution during the calendar year that totals less than $200 may not elect a
direct transfer under this Section 6.3.

 

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  (b) If a Participant elects of a direct transfer of a portion of an eligible
rollover distribution, that portion must be equal to at least $500.

 

  (c) A Participant may not divide his eligible rollover distribution into
separate distributions to be transferred to two or more eligible retirement
plans.

 

  (d) A Participant’s election to make or not make a direct rollover with
respect to one payment in a series of periodic payments which qualify as an
eligible rollover distribution shall apply to all subsequent payments in the
series unless the Participant elects otherwise.

 

  (e) If a Participant does not make an election with respect to an eligible
rollover distribution as of his Annuity Starting Date he will be treated as not
having elected a direct transfer under this Section 6.3.

 

6.4 Timing of Distribution; Annuity Starting Date. Distribution of a
Participant’s Vested Interest shall commence as of the Participant’s Annuity
Starting Date. A Participant’s Annuity Starting Date shall be the earliest of:

 

  (a) the first day of the month coincident with or next following the day of
the Participant’s Retirement,

 

  (b) as soon as practicable, after the Participant’s Termination of Employment
if as of that date the Actuarial Equivalent present value of his Vested Interest
does not exceed $5,000,

 

  (c)

the first day of the month coincident with or next following the Participant’s
Normal Retirement Date if the Participant has a Termination of Employment or
prior to that

 

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time except that the Annuity Starting Date of a Participant who elects under
Section 6.5 to commence to receive distribution prior to his Normal Retirement
Date shall be made as soon as practicable on or after the date elected under
Section 6.6, and

 

  (d) subject to a deferral election under Section 6.7(a), for all participants
(other than a Participant who attained age 70-1/2 before January 1, 1988 and is
not a Five Percent Owner during the calendar year in which he attains age 66-1/2
or any subsequent Plan Year) the first day of April immediately following the
calendar year in which the Participant attains age 70-1/2, but not earlier than
April 1, 1990. In no event, unless the Participant elects otherwise, shall
distribution of a Participant’s Vested Interest commence later than 60 days
after the latest of the last day of the Plan Year in which occurs (1) the
Participant’s Retirement, (2) the earlier of the day the Participant attains age
65 or his Normal Retirement Date or (3) the tenth anniversary of the
Participant’s participation in the Plan.

Notwithstanding the foregoing, a Participant may elect, in a manner prescribed
by the Plan Administrator, to have distribution of his Vested Interest commence
as of the Participant’s Retroactive Annuity Starting Date provided that the
requirements of Section 417(a)(7) of the Internal Revenue Code and all of the
following requirements are satisfied: (i) future periodic payments with respect
to the Participant are the same as the future periodic payments, if any, that
would have been paid with respect to the Participant had payments actually
commenced on the Retroactive Annuity Starting Date; (ii) the Participant
receives a make-up payment to reflect any missed payments for the period from
the Retroactive Annuity Starting Date to the date of the actual make-up payment
(with an appropriate adjustment for interest) and such make-up payment (with an

 

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appropriate adjustment for interest) satisfies the limitations under Section 4.2
if the date payments commence is substituted for the Annuity Starting Date for
all purposes; and (iii) the Participant’s spouse (including an alternate payee
who is treated as the spouse under a qualified domestic relations order (as
defined in Section 414(p) of the Internal Revenue Code)) consents to the payment
in accordance with Section 6.10; provided, that such spousal consent shall not
be required if the amount of the spouse’s survivor payments under the
Retroactive Annuity Starting Date election is no less than the amount of the
survivor payments to such spouse which would have been under an optional form of
benefit that would satisfy the requirements to be a Qualified Joint and Survivor
Annuity and that has an Annuity Starting Date after the date the notification
described in Section 6.9 is provided. For purposes of the foregoing, a
Retroactive Annuity Starting Date is an Annuity Starting Date affirmatively
elected by a Participant that occurs on or before the date the notification
described in Section 6.9 is provided to the Participant.

 

6.5 Election to Receive Distribution Before Normal Retirement Date.

 

  (a) A Participant who (1) has a Termination of Employment or incurs a
Permanent Disability before his Normal Retirement Date, or (2) has a Vested
Interest, the Actuarial Equivalent present value of which exceeds $5,000 as of
the Participant’s Annuity Starting Date (or at the time of any prior
distribution), may elect to have distribution of the Actuarial Equivalent of his
Vested Interest commence prior to his Normal Retirement Date and as of a date
specified in Section 6.5(b).

 

  (b)

A Participant described in Section 6.5(a) may elect at any time during the six
month period following his Termination of Employment (or, if later, the date the
notice described in Section 6.9 is provided) to begin receiving a distribution
of his Vested

 

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Interest as of the first day of the month following his Termination of
Employment. If a Participant described in Section 6.5(a) does not elect
distribution of his benefit within six months after his Termination of
Employment (or, if later, the date the notice described in Section 6.9 is
provided), then such Participant may elect to begin receiving a distribution of
his benefits as of the first day of any month coincident with or next following
his Early Retirement Date, but before his Normal Retirement Date. See
Section 12.2(a) for special rules regarding the election of a distribution prior
to a Participant’s Early Retirement Date in the event that the Participant’s
Retirement Benefit is suspended as a result of a domestic relations order. A
Participant’s election under this Section 6.5 must be made during the period
specified in Section 6.9 for the waiver of a Qualified Joint and Survivor
Annuity.

 

  (c) Notwithstanding the foregoing provisions of this Section 6.5, in the event
that the benefit under the Plan of a Participant who meets the requirements of
Section 6.5(a), in the discretion of the Plan Administrator, becomes subject to
a domestic relations order (as defined in Section 414(p)(1)(B) of the Internal
Revenue Code):

(1) The six-month election period provided in Section 6.5(b) shall be suspended
while a determination is being made whether the order constitutes a qualified
domestic relations order (as defined in Section 414(p)(1)(A) of the Internal
Revenue Code); and

(2) An alternate payee under a qualified domestic relations order may elect to
receive distribution of his benefit in the form of a single cash payment at any
time, even prior to the Participant’s Termination of Employment, or after the
expiration of the Participant’s six-month election period.

 

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6.6 Reductions for Early Distribution. The Retirement Benefit of a Participant
who elects to receive distribution of his Vested Interest determined under
Section 3.5 and who elects to receive distribution of that benefit in the form
of an annuity under Section 6.1(a) before his Normal Retirement Date shall be
reduced by multiplying the amount of his Retirement Benefit under Section 3.5 by
the early retirement reduction described in the applicable of Paragraph IV of
Schedule D, or Paragraph V of Schedule E.

 

6.7 Rules for Participants Employed after Age 70-1/2. In the case of a
Participant who remains employed on or after his attainment of age 70-1/2 the
special rules of this Section 6.7 shall apply.

 

  (a) A Participant covered by this Section 6.7 who attains age 70-1/2 on or
after January 1, 1996 and before January 1, 1999, or on or after January 1,
2008, and who is not a Five Percent Owner may elect to defer distribution of his
Vested Interest until the first day of April immediately following the calendar
year in which his Termination of Employment occurs.

  (b) In the case of an Employee not described in paragraph (a) (and who was not
age 70-1/2 prior to January 1, 1988), such Employee may not elect to suspend
distributions of his benefits. In the case of such a Participant, his Annuity
Starting Date is the first day of April immediately following the calendar year
in which he attains age 70-1/2.

 

  (c) If a Participant elects to defer receipt of his benefit under paragraph
(a), then his Section 3.2 Annuity and his benefit determined under Section 3.5
shall be actuarially adjusted to reflect the delay in the benefit commencement.
This actuarial adjustment shall be made in accordance with the procedures set
forth in Internal Revenue Service Notice 97-75 and/or any subsequent guidance.

 

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  (d) With respect to distributions under the Plan made for calendar years
beginning on or after January 1, 2003, the Plan will apply the minimum
distribution requirements of Section 401(a)(9) of the Internal Revenue Code in
accordance with the final Income Tax Regulations under Section 401(a)(9) of the
Internal Revenue Code that were published on April 17, 2002.

 

6.8 Qualified Joint and Survivor Annuity for Married Participants.

 

  (a)

Subject to Section 6.8(b), a Participant who is married on his Annuity Starting
Date shall receive distribution of his Vested Interest in the form of a
Qualified Joint and Survivor Annuity, unless the Participant has previously
waived his right to receive distribution of benefits in this form. The waiver
must be executed and consented to by the Participant’s spouse in accordance with
Section 6.10 during the 90-day period ending on the Participant’s Annuity
Starting Date but not earlier than 30 days after the Participant receives notice
of his right to waive his Qualified Joint and Survivor Annuity or to receive a
distribution under Section 6.5, unless the Participant affirmatively elects a
distribution prior to the 30-day period. If a Participant elects a distribution
prior to the expiration of the 30-day period, the election will not be effective
until at least seven days after the Participant has received the notice and the
Participant must acknowledge that he has been informed of the right to have at
least 30 days to consider this notice. Both the Participant’s waiver and the
spouse’s consent must state the Participant’s optional form of benefit to be
distributed, the time of distribution and designate any non-spouse Beneficiary
including any contingent

 

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Beneficiaries, which can not be changed without the spouse’s consent.
Alternatively, the spouse’s consent may permit the Participant to elect any
optional form of benefit available under the Plan and to designate any
contingent Beneficiary without any further spousal consent. Such a general
consent must acknowledge that the spouse has voluntarily relinquished rights to
limit consent to a specific form of benefit or Beneficiaries or both. Such a
general consent must acknowledge that the spouse has voluntarily relinquished
rights to limit consent to a specific form of benefit or Beneficiaries or both.
A Participant’s waiver of a Qualified Joint and Survivor Annuity under this
Section 6.8 may be revoked with or without his spouse’s consent at any time
before the Participant’s Annuity Starting Date and, once revoked, may be made
again before that date. A spouse’s consent to the waiver once given may be
revoked before the Annuity Starting Date.

 

  (b) In the case of a Participant (1) who is married to his spouse for less
than one year on the Participant’s Annuity Starting Date, (2) receives
distribution of his Vested Interest in the form of a Qualified Joint and
Survivor Annuity and (3) does not remain married to his spouse for at least one
year, such spouse shall lose all survivor rights and the amount of the
Participant’s distribution shall be adjusted to reflect that loss.

 

6.9

Notification of Right to Waive Qualified Joint and Survivor Annuity or to
Receive a Distribution under Section 6.5. Within the period beginning no earlier
than 90 days before the Participant’s Annuity Starting Date and no later than 30
days before his Annuity Starting Date (except in the case of a Participant that
elects an Annuity Starting Date prior to the expiration of 30 days notice period
under Section 6.8), the Administrative Committee shall provide each Participant
(whether or not married) with a notice of the Participant’s

 

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right to elect to waive his right to receive distribution of his Vested Interest
in the form of a Qualified Joint and Survivor Annuity and the Participant’s
right to receive a distribution of his benefit before his Normal Retirement Date
under Section 6.5. The notice shall contain an explanation, in non-technical
language, of (a) the terms and conditions of the election and its effect upon
the Participant’s Retirement Benefit (in terms of dollars per annuity payment),
(b) the requirement that the Participant’s spouse must consent to the election
in accordance with Section 6.10, (c) the Participant’s right to revoke the
election in the manner prescribed in regulations promulgated by the Secretary of
the Treasury, (d) a general description of the eligibility conditions and other
features of the optional forms of benefit under the Plan and sufficient
information to explain the relative values of these optional forms of benefits,
and (e) information regarding a Participant’s right to consider his election to
waive the Qualified Joint and Survivor Annuity and/or elect an early
distribution under Section 6.5 for at least 30 days after receiving the notice.
For purposes of this Section 6.9, a Qualified Joint and Survivor Annuity for an
unmarried Participant shall be a single life annuity with no ancillary benefits.

 

6.10

Spousal Consent. A Participant’s waiver of a Qualified Joint and Survivor
Annuity described in Section 6.9 shall be valid only if the Participant’s spouse
executes a written consent to that election acknowledging the effect of the
election and the consent is witnessed by a notary public. The spouse’s consent
is not required if (a) the Participant establishes that the spouse’s consent
cannot be obtained because the Participant does not have a spouse, the
Participant’s spouse cannot be located or for such other circumstances as may be
provided in regulations promulgated by the Secretary of the Treasury, (b) the
Participant is legally separated from the spouse or (c) the Participant has been
abandoned by

 

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his spouse (within the meaning of local law) and the Participant has a court
order to that effect. A Participant’s waiver of a Qualified Joint and Survivor
Annuity shall be effective only with respect to the spouse who consents to it as
provided in this Section 6.10.

 

6.11 Minimum Distribution Requirements.

 

  (a) Notwithstanding any provision of this Plan to the contrary, all
distributions under the Plan shall be made in accordance with Section 401(a)(9)
of the Internal Revenue Code and the regulations promulgated by the Secretary of
the Treasury thereunder.

 

  (b) In the case of a Participant who (1) remains an Employee after attainment
of age 70-1/2 and (2) is receiving while an Employee distribution of benefits in
the form of an annuity, the payments under the annuity shall be increased as of
the first day of each calendar year to reflect any additional Retirement Benefit
accrued with respect to the Plan Year ending immediately before the first day of
that calendar year.

 

  (c) If a Participant dies after distribution of his benefit has commenced, the
remaining portion, if any, of the Participant’s benefit shall be distributed to
the Participant’s Beneficiary at least as rapidly as it would have been
distributed under the method of distribution in effect on the day of the
Participant’s death.

 

  (d) If a Participant’s Vested Interest is distributed in the form of an
annuity other than an annuity for the life of the Participant or an annuity for
the joint lives of the Participant and the Participant’s spouse, the
distribution must satisfy the minimum distribution incidental benefit
requirements under Section 1.401(a)(9)-6 of the Income Tax Regulations. In no
event may distribution of a Participant’s Vested Interest be made over a period
extending beyond the life expectancy of the Participant and his designated
beneficiary.

 

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6.12 Annuities. Any distribution of benefits in the form of an annuity may be
made directly from the Trust or by the purchase of a nontransferable immediate
or deferred payment annuity contract from an insurance company selected by the
Investment Committee. Any annuity contract so purchased shall be delivered to
the Participant or Beneficiary and distribution of benefits shall be considered
to have been completed when the annuity contract is delivered.

 

6.13 Release. Upon any distribution or payment, the Trustee, the Administrative
Committee, any Affiliated Company or the Plan Administrator may require
execution of a receipt and release, in form and substance satisfactory to it, of
all claims under this Plan.

 

6.14 Incapacity. If, in the judgment of the Administrative Committee, any person
is legally, physically or mentally incapable of personally receiving and
executing a receipt for any distribution or payment due him under this Plan, the
distribution or payment may be made to the person’s guardian or other legal
representative (or if none is known to the Company or the Administrative
Committee, to any other person or institution who has custody of the person) and
that distribution or payment shall constitute a full discharge of any obligation
with respect to the amount paid or distributed.

 

6.15 Lost Participant. Neither the Administrative Committee nor the Trustee
shall be obligated to search for or ascertain the whereabouts of any Participant
or Beneficiary (other than to write to the Participant at his last mailing
address shown in the Plan Administrator’s records). If a Participant or
Beneficiary cannot be located, the Participant’s Retirement Benefit or
Preretirement Death Benefit shall be forfeited, but shall be reinstated (without
interest) upon the Participant’s or Beneficiary’s claim for the benefit.

 

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Article 7. Preretirement Death Benefits

 

7.1 General. Upon the death of a Participant who has not had an Annuity Starting
Date, his Beneficiary shall be entitled to a Preretirement Death Benefit as
follows:

 

  (a) In the case of a Participant described in this Section 7.1 who dies while
an Employee or while Permanently Disabled, his Beneficiary shall be entitled to
receive the Active Employee Death Benefit described in Section 7.2. The
Beneficiary of a Participant who dies within six months of his Termination of
Employment (or, if later, the date notice described in Section 6.9 is provided)
and who has not already elected a form of distribution shall also be entitled to
an Active Employee Death Benefit.

 

  (b) In the case of a Participant described in this Section 7.1 who (i) has a
Termination of Employment before his death (ii) has a Vested Interest and
(iii) is married at the time of death, his spouse shall be entitled to receive
the Qualified Preretirement Survivor Annuity described in Section 7.3.

 

7.2 Active Employee Death Benefit. Upon the death of a Participant who (a) has
not yet had an Annuity Starting Date, and (b) dies while an Employee, his
Beneficiary shall be entitled to receive the Active Employee Death Benefit
described under the following provisions:

 

  (1) Amount of Active Employee Death Benefit. The Active Employee Death Benefit
shall be equal to the Participant’s Section 3.2 Annuity (as adjusted by
Section 3.8). In the case of a Beneficiary who is the Participant’s spouse, in
no event shall the value of the Active Employee Death Benefit be less than the
value of the Qualified Preretirement Survivor Annuity.

 

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  (2) Form of Active Employee Death Benefit. Different provisions apply for a
Beneficiary who is the Participant’s spouse and a Beneficiary who is not the
Participant’s spouse as follows:

 

  (A) Spousal Beneficiary. Subject to the following sentences, the Participant’s
Preretirement Death Benefit shall be paid to a Beneficiary who is the
Participant’s spouse in the form of an annuity for the spouse’s life. If the
Actuarial Equivalent present value of the Participant’s Active Employee Death
Benefit as of the Annuity Starting Date exceeds $5,000, the Participant’s spouse
may elect to receive the Active Employee Death Benefit in the form of a single
cash payment of the greater of (i) a Participant’s Lump Sum Amount (as adjusted
under Section 3.8) and (ii) the Actuarial Equivalent present value of the
Participant’s Vested Interest attributable to his Qualified Preretirement
Survivor Annuity (as adjusted by Section 3.8). If the Actuarial Equivalent
present value of the Participant’s Preretirement Death Benefit as of the Annuity
Starting Date does not exceed $5,000, the method of distribution to the
Participant’s spouse shall be as a single cash distribution of that value. In
the event that the spouse does not elect a form of distribution, the
Preretirement Death Benefit shall be paid as an annuity for the life of the
spouse.

 

  (B) Non-Spouse Beneficiary. If the Participant’s Beneficiary is not his
spouse, the Preretirement Death Benefit shall be paid in a single cash
distribution.

 

  (c) Timing of Distribution; Annuity Starting Date. Subject to Section 7.5,
distribution of a Participant’s Preretirement Death Benefit shall commence as of
the Annuity Starting Date of the Participant’s Beneficiary as follows:

 

  (1) Spouse Beneficiary. The Annuity Starting Date of a Participant’s
Beneficiary who is the Participant’s spouse shall be the earliest of:

 

  (A) In the case of a Participant who dies on or after his Normal Retirement
Date, the first day of the month coincident with or next following the
Participant’s death,

 

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  (B) in the case of a Participant for whom the Actuarial Equivalent present
value of the Participant’s Active Employee Death Benefit does not exceed $5,000,
as soon as practicable following the Participant’s death, and

 

  (C) in the case of a Participant not described in (A) or (B), the Actuarial
Equivalent present value of the Active Employee Death Benefit exceeds $5,000,
the date elected by the Participant’s spouse. The spouse may elect to receive
distribution as of (i) the first day of any month coincident with or next
following the date the Participant would have attained his Early Retirement Date
but, not later than the date the Participant would have attained his Normal
Retirement Date or (ii) if earlier, the first day of any month within the first
six months following the Participant’s death.

If the spouse does not elect a distribution date, the Annuity Starting Date will
be the first day of the month coincident with or next following the date the
Participant would have attained his Normal Retirement Date.

 

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Notwithstanding the previous sentence and subject to Section 7.5, distribution
of a Beneficiary’s Preretirement Death Benefit shall not commence before he
files a claim for benefits with the Plan Administrator.

 

  (ii) Non-Spouse Beneficiary. The Annuity Starting Date of the Participant’s
non-spouse Beneficiary shall be as soon as practicable following the
Participant’s death.

 

7.3 Qualified Preretirement Death Benefit for a Participant Who Dies After
Termination of Employment. Upon the death of a Participant who had a prior
Termination of Employment and who is eligible for the Qualified Preretirement
Survivor Annuity under Section 7.1(b), the following provisions shall apply:

 

  (a) Amount of Benefit. The benefit under this section shall be the Qualified
Preretirement Survivor Annuity payable to the Participant’s spouse.

 

  (b) Form of Distribution. Subject to the following sentence, the Qualified
Preretirement Survivor Annuity shall be paid to the Participant’s spouse in the
form of an annuity for the spouse’s life. If the Actuarial Equivalent present
value of a Participant’s Qualified Preretirement Survivor Annuity exceeds
$5,000, the Participant’s spouse may elect to receive the Qualified
Preretirement Survivor Annuity in the form of a single cash payment. If the
Actuarial Equivalent present value of a Participant’s Qualified Preretirement
Survivor Annuity as of the Annuity Starting Date does not exceed $5,000, the
method of distribution to the Participant’s spouse shall be a single cash
distribution of that value.

 

  (c) Timing of Distribution; Annuity Starting Date. Subject to Section 7.5,
distribution of the Qualified Preretirement Survivor Annuity shall commence as
of the Annuity Starting Date of the Participant’s spouse. The Annuity Starting
Date of the Participant’s spouse shall be the earlier of:

 

  (1) if the Actuarial Equivalent present value of the Qualified Preretirement
Survivor Annuity does not exceed $5,000, the first day of the month coincident
with or next following the Participant’s death; or

 

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  (2) if the Actuarial Equivalent present value of the Qualified Preretirement
Survivor Annuity exceeds $5,000, the date elected by the Participant’s spouse.
The spouse may elect to receive distribution as of: (A) the first day of any
month following the date the Participant would have attained his Early
Retirement Date, but not later than the date the Participant would have attained
his Normal Retirement Date or (B) if earlier, the first day of any month within
the first six months following the Participant’s death.

If the spouse does not elect a distribution date, the Annuity Starting Date will
be the first day of the month coincident or next following the date the
Participant would have attained his Normal Retirement Date.

Notwithstanding the previous sentence and subject to Section 7.5, distribution
of a Beneficiary’s death benefit shall not commence before he files a claim for
benefits with the Plan Administrator.

 

7.4 Election of Beneficiary for Active Employee Death Benefit.

 

  (a) Designation of Beneficiary. Subject to the following sentence, a
Participant may designate a Beneficiary as described in Article 13 for his
Active Employee Death Benefit. If a Participant is married at the time of his
death, the Participant’s designation of a non-spouse Beneficiary must comply
with the requirements of paragraphs (b) and (c).

 

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  (b) Procedure for Designating Non-Spouse Beneficiary. A Participant’s
designation of a non-spouse Beneficiary to receive his Preretirement Death
Benefit under Section 7.1 shall not be valid unless consented to by the
Participant’s spouse in accordance with Section 6.10. A Participant’s
designation of a non-spouse Beneficiary may not be changed without the
subsequent consent of the Participant’s spouse unless the spouse’s consent
permits the Participant to designate any other Beneficiary and acknowledges that
the spouse has voluntarily relinquished rights to limit consent to a specific
Beneficiary. A spouse’s consent to the designation of a non-spouse Beneficiary
for the Preretirement Death Benefit once given may not be revoked. Except as
otherwise provided in the following sentence, the period during which a
Participant may designate a non-spouse Beneficiary shall begin on the first day
of the Plan Year in which the Participant attains age 35 (or, if later, within a
reasonable period after he becomes a Participant) and shall end on the day of
the Participant’s death. A Participant may designate a non-spouse Beneficiary
for the Preretirement Death Benefit before the Participant attains age 35,
except that such a waiver or designation shall become invalid on the first day
of the Plan Year in which the Participant attains age 35. In order for such a
designation to be effective after the first day of the Plan Year in which the
Participant attains age 35, it must be made again.

 

  (c)

Notification of Right to Designate Non-Spouse Beneficiary. The Plan
Administrator shall give each Participant written notice of the Participant’s
right to designate a Beneficiary other than the Participant’s spouse to receive
the Participant’s Preretirement Death Benefit. In the case of an individual who
becomes a Participant

 

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prior to attaining age 35, notice of the Participant’s right to designate a
non-spouse beneficiary before his attainment of age 35, shall be given within
the period beginning one year before the individual becomes a Participant and
ending one year after the individual becomes a Participant. In addition, notice
of a Participant’s right to designate a non-spouse beneficiary after his
attainment of age 35 shall be given within whichever of the following periods
ends last: (1) the period beginning on the first day of the Plan Year in which
the Participant attains age 32 and ending on the last day of the Plan Year
preceding the Plan Year in which the Participant attains age 35 and (2) within
the period beginning one year before the individual becomes a Participant and
ending one year after the individual becomes a Participant. The notice, which
shall be given in the manner provided by the regulations promulgated by the
Secretary of the Treasury, shall contain an explanation of the terms and
conditions of the designation, the requirement that the Participant’s spouse
must consent to the election in accordance with Section 6.10 and the
Participant’s right to revoke the election in the manner provided in regulations
promulgated by the Secretary of the Treasury.

 

7.5

Required Distribution. If a Participant’s Preretirement Death Benefit is paid in
the form of a single cash payment, the Participant’s entire Preretirement Death
Benefit shall be distributed to his Beneficiary as of the December 31 of the
calendar year in which the fifth anniversary of the date of the Participant’s
death occurs, or, if later, in the case of a Beneficiary who is the
Participant’s spouse, the December 31 of the year the Participant would have
attained age 70-1/2. If a Participant’s Preretirement Death Benefit is
distributed in the form of an annuity (or installments), distribution shall
commence by the December 31 of the calendar year after the calendar year of the
Participant’s death, or, if

 

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later, in the case of a Beneficiary who is the Participant’s spouse, the
December 31 of the year the Participant would have attained age 70-1/2. Such
Preretirement Death Benefit must be distributed over a period not extending
beyond the life expectancy of the Beneficiary.

 

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Article 8. Funding

 

8.1 Funding Policy. The Plan’s funding policy is to make contributions (a) at
least sufficient to satisfy the minimum funding requirements of ERISA and
(b) not in excess of the amount currently deductible in computing the Affiliated
Companies federal income tax.

 

8.2 Employer Contributions. The Employer shall contribute to the Trust Fund with
respect to Participants for which this Plan has been adopted under Section 16.1
periodic payments under the funding policy established under Section 8.1. In the
case of an Employer who is not a member of the same Affiliated Group as the
Company, such Employer’s contributions to the Plan shall be separately
determined by the Actuary and contributed to the Trust Fund in accordance with
the preceding sentence.

 

8.3 Timing of Employer Contributions. Contributions by any Employer for each
Plan Year shall be paid to the Trustee no later than as may be permitted under
Section 412(c)(10) of the Internal Revenue Code.

 

8.4 Irrevocability of Employer Contributions. Subject to Sections 8.5 and 15.3,
any contribution made by an Employer shall be irrevocable and shall be held and
disposed of by the Trustee solely in accordance with the provisions of the Plan
and the Trust Agreement.

 

8.5

Exceptions to Irrevocability. Each contribution made by an Employer shall be
deemed to be conditioned upon the deductibility of the contribution under
Section 404 of the Internal Revenue Code. If a contribution is determined to be
nondeductible by the Internal Revenue Service, it will, to the extent disallowed
or otherwise determined to be nondeductible, be repaid within one year after the
date of such disallowance or determination. A contribution also will be repaid
to an Employer, within one year after the date made, to the extent it

 

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exceeded the full funding limitation or otherwise was made in error because of a
mistake of fact. A contribution returned as a result of being nondeductible or
being made as a result of a mistake of fact shall be adjusted to reflect its
proportionate share of the Trust Fund’s loss but not of the Trust Fund’s gain.

 

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Article 9. Administration of Plan

 

9.1 The Board. The Board shall appoint the members of the Administrative
Committee and the Investment Committee and, subject to Article 14, shall be
responsible for the establishment of the Trust and the amendment and termination
of this Plan and the Trust Agreement.

 

9.2 The Administrative Committee. This Plan shall be administered by the
Administrative Committee, which shall have the responsibilities and duties and
powers delegated to it in this Plan and any responsibilities and duties under
this Plan which are not specifically delegated to anyone else.

 

9.3 The Trustee and Investment Manager. The Trustee shall have exclusive
authority and discretion to manage and control the Trust Fund except to the
extent that authority to manage the assets held by the Trust is delegated by the
Investment Committee to an Investment Manager. The Trustee may designate agents
or others to carry out certain of the administrative responsibilities in
connection with management of the Trust.

The Investment Manager shall be appointed by the Investment Committee (or the
Trustee, if the Trustee is so authorized by the Investment Committee). The
Investment Manager shall act in accordance with the Plan, the Trust Agreement
and any applicable agreement it entered into with the Company. The Investment
Committee (or the Trustee, if the Trustee is so authorized by the Investment
Committee) may remove an Investment Manager.

 

9.4

The Plan Administrator. The Plan Administrator shall be the Company. The Plan
Administrator shall be responsible for (a) the maintenance of all records of
Participants and Beneficiaries necessary for the administration of this Plan and
(b) the taking of any action

 

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necessary to meet the reporting and disclosure requirements imposed by ERISA.
However, the Company may designate agents (including the Administrative
Committee and/or the Investment Committee) to carry out certain, or all of its
responsibilities.

 

9.5 Decision and Action of the Administrative Committee. The Administrative
Committee from time to time may establish rules for the administration of this
Plan. The Administrative Committee shall have the sole discretion to make
decisions and take any action with respect to questions arising in connection
with the Plan, including but not limited to, the construction and interpretation
of the Plan and the Trust Agreement and the determination of benefits. Any such
decision or action shall be final and binding upon all Participants and
Beneficiaries.

 

9.6 Liability of and Indemnification of the Committees. The members of the
Committees and the Employers shall have no liability or responsibility with
respect to any action or omission made by them in good faith in reliance upon
(a) the action of the Trustee, (b) the advice or opinion of any accountant,
actuary, legal counsel, medical adviser or other professional consultant or
(c) any resolutions of the Board certified by the secretary or assistant
secretary of the Company.

The Employers shall indemnify the members of the Committees against any claims,
losses, damages, expenses and liabilities, to the extent not covered by
insurance, which arise from any action or omission of such Committee member that
is not gross negligence or willful misconduct (as determined by a court of
competent jurisdiction).

 

9.7

Expenses of the Plan; Fidelity Bond. All expenses relating to this Plan
(including but not limited to premiums to the Pension Benefit Guaranty
Corporation under Section 4006 of

 

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ERISA) shall be an expense of the Plan and, except to the extent paid by an
Affiliated Company, shall be paid out of the Trust Fund. Any Employee who serves
as a Trustee or member of the Administrative Committee and/or the Investment
Committee shall receive no compensation for such service. The Company may
require any Trustee, Plan Administrator or member of the Administrative
Committee or the Investment Committee to furnish a fidelity bond satisfactory to
the Company; the premium for any fidelity bond shall be an expense of the Plan
except to the extent paid by an Affiliated Company.

 

9.8 Named Fiduciaries. The Trustee, the Committees, the Employer and the
Investment Manager, if any, shall be named fiduciaries under the Plan with
respect to the responsibilities allocated to each such party under the Plan.
Named fiduciaries shall only have the authorities or responsibilities delegated
under this Plan, under the Trust Agreement, any applicable agreement with the
Investment Manager or by operation of law and such responsibilities shall not be
shared by two fiduciaries unless specifically stated in any of the
above-mentioned documents. Whenever a named fiduciary is required by the Plan,
the Trust Agreement or any applicable investment management agreement, to follow
the directions of another named fiduciary, the two named fiduciaries shall not
be deemed to have been assigned a shared responsibility, but the responsibility
of the named fiduciary giving the directions shall be deemed his sole
responsibility, and the responsibility of the named fiduciary receiving those
directions shall be to follow them insofar as such instructions are on their
face proper under applicable law.

 

9.9 Service in More than One Capacity. Any person or group of persons may serve
the Plan in more than one capacity.

 

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Article 10. Management of Trust Fund

 

10.1 The Trust Fund. The Trust Fund shall be held in trust by the Trustee
appointed from time to time (before or after termination of the Plan) by the
Board pursuant to the Trust Agreement. The Trustee shall have the powers
specified in the Trust Agreement.

 

10.2 Exclusive Benefit. Except as provided in Sections 8.5 and 15.3, the Trust
Fund shall be used in accordance with the provisions of this Plan and for the
exclusive purpose of providing benefits for Participants and their Beneficiaries
and defraying reasonable expenses of the Plan and of the Trust.

 

10.3 Trustee’s Reports. As soon as practicable after each Valuation Date, the
Trustee shall submit to the Investment Committee an appropriate report stating
the net value of the Trust Fund as of that Valuation Date and containing such
other information relating to the Trust Fund as the Investment Committee from
time to time may request.

 

10.4 Trust Agreement. The Trust Agreement shall be a part of this Plan and any
rights or benefits under this Plan shall be subject to all the terms and
provisions of the Trust Agreement.

 

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Article 11. Benefit Claims Procedure

 

11.1 Claim for Benefits. Any claim for benefits under this Plan shall be made in
writing to the Administrative Committee. If a claim for benefits is wholly or
partially denied, the Administrative Committee shall so notify the Participant
or Beneficiary within 90 days after receipt of the claim (unless the Participant
is given written notification within the initial 90 days that an extension of
not more than 90 days is needed). The notice of denial shall be written in a
manner calculated to be understood by the Participant or Beneficiary and shall
contain (a) the specific reason or reasons for denial of the claim, (b) a
specific reference to the pertinent Plan provisions upon which the denial is
based, (c) a description of any additional material or information necessary to
perfect the claim together with an explanation of why such material or
information is necessary and (d) an explanation of the claims review procedure.

 

11.2 Review of Claim. Within 60 days after the receipt by the Participant or
Beneficiary of notice of denial of a claim (or at such later time as may be
reasonable in view of the nature of the benefit subject to claim and other
circumstances), the Participant or Beneficiary may (a) file a request with the
Administrative Committee that it conduct a full and fair review of the denial of
the claim, (b) review pertinent documents and (c) submit questions and comments
to the Administrative Committee in writing.

 

11.3

Decision After Review. Within 60 days after the receipt of a request for review
under Section 11.2, the Administrative Committee shall deliver to the
Participant or Beneficiary a written decision with respect to the claim, except
that if there are special circumstances

 

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(such as the need to hold a hearing) which require more time for processing, the
60-day period shall be extended to 120 days upon notice to the Participant or
Beneficiary to that effect. The decision shall be written in a manner calculated
to be understood by the Participant or Beneficiary and shall (a) include the
specific reason or reasons for the decision and (b) contain a specific reference
to the pertinent Plan provisions upon which the decision is based.

 

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Article 12. Non-Alienation of Benefits

 

12.1 Non-Alienation. Subject to Section 12.2, any benefits under or interests in
this Plan shall not be assignable or subject to alienation, hypothecation,
garnishment, attachment, execution or levy of any kind whether voluntary or
involuntary. Any action in violation of this provision shall be void.

 

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12.2 Exceptions to Non-Alienation

 

  (a) Qualified Domestic Relations Orders. Section 12.1 shall not apply to the
creation, assignment or recognition of a right to the Retirement Benefit of a
Participant pursuant to a qualified domestic relations order (as defined in
Section 414(p) of the Internal Revenue Code). The Administrative Committee shall
establish reasonable procedures for determining whether a domestic relations
order is a qualified domestic relations order and for administering
distributions under a qualified domestic relations order. The provisions of the
Plan regarding the form and timing of benefit distributions shall apply to
benefits subject to a qualified domestic relations order except as provided in
the following sentences. In the event that the benefit under the Plan of a
Participant who meets the requirements of Section 6.5(a), in the discretion of
the Plan Administrator, becomes subject to a domestic relations order (as
defined in Section 414(p)(1)(B) of the Internal Revenue Code), then the
six-month election period provided in Section 6.5(b) shall be suspended until
the date on which a final determination is made as to whether the order
constitutes a qualified domestic relations order (as defined in
Section 414(p)(1)(A) of the Internal Revenue Code). In the case of an alternate
payee under a qualified domestic relations order, the alternate payee may elect
to receive distribution of any benefit to which he is entitled in the form of a
single cash payment or any other available form at any time on or after the
Participant’s “earliest retirement age” (as defined in Section 414(p)(4) of the
Internal Revenue Code).

 

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  (b) Payments to Plan Pursuant to Court Order. Section 12.1 shall not apply to
an offset of a Participant’s benefits under or interest in this Plan for an
amount that the Participant is ordered or required to pay to the Plan provided
the conditions specified in Section 401(a)(13)(C) of the Internal Revenue Code
(including any applicable spousal consent) are satisfied.

 

  (c) Recovery of Erroneous Payments. Section 12.1 shall not apply to a
distribution or payment that is made to a Participant or Beneficiary in an
amount exceeding the amount properly payable under the Plan, for whatever
reason. The Plan may recover such excess amount by reducing future benefits
payable under the Plan to the Participant or Beneficiary.

 

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Article 13. Designation of Beneficiary

 

13.1 Designation of Beneficiary. Subject to Section 6.7 and Article 7, a
Participant may designate a Beneficiary on the form and in the manner prescribed
by the Retirement Committee. The Administrative Committee, in its discretion,
may specify conditions or other provisions with respect to the designation of a
Beneficiary. Subject to Section 6.7 and Article 7, any designation of a
Beneficiary may be revoked by filing a later designation or revocation. In the
absence of an effective designation of a Beneficiary by a Participant or upon
the death of all Beneficiaries, a Participant’s Retirement Benefit shall be paid
to the person or persons included in the first of the following categories who
survives the Participant: (a) the Participant’s spouse, (b) the Participant’s
issue by right of representation, or (c) the Participant’s estate.

 

13.2 Effective Date of Designation. Any designation or revocation of a
designation of a Beneficiary shall become effective when actually received by
the Administrative Committee but shall not affect any distribution previously
made pursuant to a prior designation.

 

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Article 14. Amendment

 

14.1 Amendment. The Board, in accordance with its normal procedures, may amend,
modify or terminate this Plan at any time, but no amendment may substantially
increase the duties or liabilities of the Trustee without its prior written
consent. In addition, no Plan amendment (including a change in the actuarial
basis for determining optional or early retirement benefits) shall have the
effect of decreasing the accrued Retirement Benefit (except as permitted under
Section 412(c)(8) of the Internal Revenue Code) of anyone who is a Participant
on the date the amendment is adopted or becomes effective, whichever is later.
For purposes of this paragraph, a Plan amendment which has the effect of
(a) eliminating or reducing an early retirement benefit or a retirement-type
subsidy, or (b) eliminating an optional form of benefit, with respect to
benefits attributable to service before the amendment shall be treated as
reducing accrued benefits. Notwithstanding the foregoing, the Administrative
Committee may make amendments to the Plan, provided that no such amendment
materially increases the cost of the Plan to the Employer.

 

14.2 Amendment to Vesting Provisions. If the vesting provisions set forth in
Article 5 are amended, (a) any Participant who, as of the end of the election
period described below had been credited with a Period of Service of at least
three years may irrevocably elect to have his nonforfeitable interest computed
without regard to the amendment and (b) a Participant’s nonforfeitable interest
shall not be less than his nonforfeitable percentage computed under the Plan
without regard to such amendment. Notice of the amendment and the availability
of the election shall be given to each such Participant, and the election may be
exercised by the Participant by notice to the Administrative Committee within 60
days after the later of (a) the Participant’s receipt of the notice, (b) the day
the amendment is adopted or (c) the effective date of the amendment.

 

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14.3 Amendment to Maintain Qualified Status. Notwithstanding anything to the
contrary in Section 14.1, the Board, in its discretion, may make any
modifications or amendments to the Plan, retroactively or prospectively, which
it deems appropriate to establish or maintain the Plan and the Trust Agreement
as a qualified employees’ plan and tax-exempt trust under Sections 401 and 501
of the Internal Revenue Code. Notwithstanding the foregoing, the Administrative
Committee may make amendments to the Plan under this Section, provided that no
such amendment materially increases the cost of the Plan to the Employer.

 

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Article 15. Termination; Merger, Consolidation or Transfer of Assets

 

15.1 Full Vesting Upon Plan Termination. Upon the termination (including a
partial termination) of this Plan, the Retirement Benefits as of the date of
termination of the Participants to whom the termination relates shall be
nonforfeitable (to the extent funded) without any formal action.

 

15.2 Payment of Benefits Upon Plan Termination. If this Plan is terminated,
subject to Section 6.8, benefits to Participants and their Beneficiaries shall
be paid in accordance with Section 4044 of ERISA and, if applicable,
Section 414(1) of the Internal Revenue Code. Upon termination of the Plan,
benefits payable to Participants who can not be located, shall be treated in
accordance with the provisions of Section 4050 of ERISA.

 

15.3 Reversion of Excess Assets. If this Plan is terminated and the value of the
Trust Fund exceeds the value of benefits allocable to Participants and their
Beneficiaries, the amount of the excess shall be repaid to the Employers in
accordance with the directions of the Investment Committee.

 

15.4 Retirement Committee and Trustee. If the Plan is terminated, the
Administrative Committee and the Investment Committee shall continue to function
and may fill any vacancies which may occur in their own memberships (if the
Board fails to do so) until the Trustee has rendered its final account and that
account has been approved (in the manner provided in the Trust Agreement).

 

15.5

Merger, Consolidation or Transfer of Assets. Neither this Plan nor the Trust may
be merged or consolidated with, nor may its assets or liabilities be transferred
to, any other plan

 

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or trust, unless each Participant would receive a benefit immediately after the
merger, consolidation or transfer, if the Plan then terminated, which is equal
to or greater than the benefit the Participant would have been entitled to
receive immediately before the merger, consolidation or transfer if this Plan
had then been terminated.

 

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Article 16. Adoption/Withdrawal by Affiliated/Non-Affiliated Companies

 

16.1 Adoption by Affiliated/ Non-Affiliated Companies. Any Affiliated Company,
whether or not presently existing, may, with the approval of the Board, adopt
this Plan by proper corporate action. This Plan may also be adopted by a
corporation or other entity which is not a member of the Company’s Affiliated
Group. Each entity which adopts the Plan in accordance with this Section is
referred to as a “Participating Employer.”

 

16.2 Withdrawal. Any Participating Employer may at any time withdraw from the
Plan upon giving the Board, the Administrative Committee and the Trustee at
least 30 days notice of its intention to withdraw. The Board in its discretion
may direct that any Participating Employer withdraw from the Plan.

 

16.3 Segregation of Assets Upon Withdrawal. Upon the withdrawal of a
Participating Employer under Section 16.2, the Trustee shall in accordance with
the directions of the Investment Committee and Section 4044 of ERISA and, if
applicable, Section 414(l) of the Internal Revenue Code, segregate a share of
the assets in the Trust Fund attributable to the Retirement Benefits of
Participants who are Employees of that Participating Employer.

 

16.4 Delegation of Authority. Each Participating Employer shall be deemed to
have appointed the Company as it agent to act on its behalf in all matters
relating to the administration, amendment, termination of the Plan, and
investment of the assets of the Plan.

 

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Article 17. Top Heavy Provisions

 

17.1 Definitions. The following definitions apply for purposes of this Article
17:

 

  (a) Average Compensation - a Participant’s average annual compensation (as
defined in Treas. Reg. § 1.415-2(d)(8) during the five consecutive Plan Years in
which the Participant received the greatest compensation, taking into account
only Plan Years (1) during which he was a Participant, (2) with respect to which
the Participant was credited with a Vesting Period of Service of one year and
(3) ending no later than the last day of the last Plan Year during which the
Plan was a Top Heavy Plan. A Participant’s annual compensation used in
determining his Average Compensation may not exceed $200,000 (or such higher
amount as may be determined by the Secretary of the Treasury in accordance with
Section 401(a)(17) of the Internal Revenue Code).

 

  (b) Determination Date - with respect to any plan year of the Plan, a Defined
Benefit Plan or a Defined Contribution Plan, the last day of the preceding plan
year (or in the case of the first plan year of a plan the last day of that plan
year).

 

  (c)

Key Employee - an Employee or former Employee (and the Beneficiaries of such
Employee) who at any time during a Plan Year is (1) an officer of an Affiliated
Company with compensation (as defined in Section 414(q)(7) of the Internal
Revenue Code) from an Affiliated Company greater than $130,000 (as adjusted
under Section 416(i)(1) of the Internal Revenue Code for years beginning after
December 31, 2002), (2) a Five Percent Owner and (3) an owner of more than one

 

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percent of an Employer with compensation from an Affiliated Company in excess of
$150,000. The determination of whether an Employee is a Key Employee shall be
made in accordance with Section 416(i) of the Internal Revenue Code. The
Beneficiary of a Key Employee shall be treated as a Key Employee.

Compensation means compensation as defined in Section 415(c)(3) of the Code, but
including amounts contributed by the employer pursuant to a salary reduction
agreement which are excludible from the employee’s gross income under
Section 125, 132(f)(4), 402(a)(8), 402(h) or 403(b) of the Internal Revenue
Code. The determination of who is a Key Employee will be made in accordance with
Section 416(i)(1) of the Internal Revenue Code and the regulations thereunder.

 

  (d) Permissive Aggregation Group of Plans - a group of employee benefit plans
maintained by an Affiliated Company including a Required Aggregation Group of
Plans and any other Defined Benefit Plans or Defined Contribution Plans which
when considered as a group meets the requirements of Sections 401(a)(4) and 410
of the Internal Revenue Code.

 

  (e) Required Aggregation Group of Plans - a group of employee benefit plans
maintained by an Affiliated Company including each Defined Benefit Plan and
Defined Contribution Plan (1) in which any Key Employee is or was a Participant
at any time during the determination period (regardless of whether a Defined
Contribution Plan or Defined Benefit Plan was in existence during those years)
or (2) which enables a plan described in clause (a) to meet the requirements of
Section 401(a)(4) or Section 410 of the Internal Revenue Code.

 

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  (f) Top Heavy Fraction - (1) with respect to the Plan, a fraction in a Plan
Year the numerator of which is the aggregate of the present values of the
accrued benefits as of a Determination Date of all Participants who are Key
Employees and the denominator of which is the aggregate of the present values of
the accrued benefits as of a Determination Date of all Participants or (2) with
respect to a Required Aggregation Group of Plans or a Permissive Aggregation
Group of Plans a fraction (A) the numerator of which is the sum of (i) the
aggregate of the present values of the accrued benefits as of the applicable
Determination Date of all participants who are Key Employees under all Defined
Benefit Plans included in that group and (ii) the aggregate credit balances as
of the applicable Determination Date in the accounts of all participants who are
Key Employees under all Defined Contribution Plans included in the group and
(B) the denominator of which is the sum of (i) the aggregate of the present
values of the accrued benefits as of the applicable Determination Date of all
participants under all Defined Benefit Plans included in the Group and (ii) the
aggregate credit balances as of the applicable Determination Date in the
accounts of all participants under all Defined Contribution Plans included in
the group.

In computing a Top Heavy Fraction for a Plan Year, the following rules shall
apply: (I) the present value of accrued benefits as of a Determination Date
under each Defined Benefit Plan and the aggregate account balances as of a
Determination Date under each Defined Contribution Plan shall be increased by
the aggregate distributions made from that plan to participants during the
one-year period ending on the Determination Date) (or in the case of
distributions made

 

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other than as a result of termination of employment, or death with the five year
period ending on the Determination Date). The preceding sentence shall also
apply to distributions under a terminated plan which, had it not been
terminated, would have been aggregated with the Plan under
Section 416(g)(2)(A)(i) of the Code, (II) the accrued benefit under any Defined
Benefit Plan and the account balance under any Defined Contribution Plan of a
participant who has not performed services for an Affiliated Company at any time
during the one-year period ending on the Determination Date shall be
disregarded, (III) the present value of accrued benefits under a Defined Benefit
Plan as of a Determination Date and the credit balance under a Defined
Contribution Plan shall be determined as of that plan's valuation date which
occurs during the 12-month period ending on the Determination Date, (IV) in the
case of a Required Aggregation Group or a Permissive Aggregation Group, the
Determination Date of each Plan included in the group shall be the Determination
Date that occurs in the same calendar year as the Determination Date of the
Plan, (V) in the case of a Required Aggregation Group or a Permissive
Aggregation Group, in determining the present value of accrued benefits the
actuarial assumptions set forth in Schedule B shall be used for all Defined
Benefit Plans, and (VI) in the case of a Required Aggregation Group or
Permissive Aggregation Group the present value of the accrued benefits under all
Defined Benefit Plans of participants other than Key Employees shall be
determined based upon the method used uniformly for accrual purposes for all
Defined Benefit Plans but if there is no uniform method, based upon the benefit
accrual rate which does not exceed the slowest accrual rate permitted under the
fractional accrual rule of Section 411(b)(1)(C) of the Internal Revenue Code.

 

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  (g) Top Heavy Plan - the Plan for any Plan Year if the Top Heavy Fraction for
that Plan Year exceeds 60% (1) for the Plan, if the Plan is not part of a
Required Aggregation Group of Plans, (2) for the Required Aggregation Group of
Plans, if the Plan is part of a Required Aggregation Group of Plans, or (3) for
the Permissive Aggregation Group of Plans, if the Plan is part of a Permissive
Aggregation Group of Plans and a Required Aggregation Group of Plans.

 

17.2 When Top Heavy Provisions Apply. Notwithstanding any other provision of
this Plan, the provisions of this Article 17 shall apply with respect to any
Plan Year for which the Plan is a Top Heavy Plan.

 

17.3 Minimum Benefit. Subject to Article 4, upon the Retirement or Termination
of Employment of a Participant, his Retirement Benefit shall be equal to the
excess, if any, of the greater of (a) the Retirement Benefit that otherwise
would be determined for the Participant under Article 3 if no effect were given
to this Article 17 and (b) the product of 2% of the Participant's Average
Compensation and the number of years in his Vesting Period of Service (not in
excess of ten) credited with respect to Plan Years in which the Plan is a Top
Heavy Plan, he is a Participant and he is not a Key Employee. For purposes of
this Section 17.3 a Participant’s vesting period of service shall exclude any
Plan Year in which neither a Key Employee nor a former Key Employee benefits
(within the meaning of Section 410(b) of the Internal Revenue Code) for that
year. For purposes of determining a Participant’s Retirement Benefit under this
Section 17.3 it shall be assumed that payment of the Retirement Benefit shall be
in the form of a single life annuity without ancillary benefits, commencing on
the Participant’s Normal Retirement Date.

 

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17.4 Vesting. For any Plan Year the Plan is a Top Heavy Plan, the nonforfeitable
portion of the Retirement Benefit of a Participant who is credited with at least
one Hour of Service during that Plan Year shall be the greater of (a) 100% after
the Participant is credited with Vesting Period of Service of three years and
(b) in the case of an AWL Participant who is credited with at least on Hour of
Service during that Plan Year, 20% after the Participant is credited with a
Vesting Period of Service of two years.

 

17.5 Change From Top Heavy Vesting. If the Plan is a Top Heavy Plan for a Plan
Year and ceases to be a Top Heavy Plan for the subsequent Plan Year, the change
in the vesting provision under this Section 17.5 to the vesting provision under
Article 5 shall for purposes of Section 14.2 be treated as an amendment of the
vesting provisions of the Plan.

 

17.6 Combined Limitation. For any Plan Year prior to January 1, 2000, in which
the Plan is a Top Heavy Plan, 1.0 shall be substituted for 1.25 in clause (1) of
the definition of Defined Benefit Plan Fraction (Section 4.1(b)) and clause
(1) of the definition of Defined Contribution Plan Fraction (Section 4.1(c)).

 

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Article 18. Miscellaneous

 

18.1 No Employment Rights. Nothing in this Plan shall be construed as a contract
of employment between an Affiliated Company and any Employee, nor as a guarantee
of any Employee to be continued in the employment of the Company, nor as a
limitation on the right of an Affiliated Company to discharge any of its
Employees with or without cause or with or without notice at any time at the
option of the Company.

 

18.2 Discretion. Any discretionary acts under this Plan by an Employer or by the
Administrative Committee shall be uniform and applicable to all persons
similarly situated. No discretionary act shall be taken which constitutes
prohibited discrimination under the provisions of Section 401(a) of the Internal
Revenue Code.

 

18.3 Prior Service. The Administrator may, in its discretion and under rules
applicable to all Employees similarly situated, credit Employees with service
prior to becoming Employees or Participants for determining (a) whether an
Employee is an Eligible Employee, (b) Vesting Period of Service or (c) Benefit
Accrual Period of Service.

 

18.4 Merged Plan. The Company may for purposes of this Plan (a) designate any
employee pension benefit plan (as defined in Section 3(2) of ERISA) as a Merged
Plan and (b) give credit for participation in a Merged Plan to the extent the
Board determines desirable. The Board shall notify the Administrative Committee
of the designation of any Merged Plan, and of credit to be given for
participation in the Merged Plan.

Notwithstanding any provision of this Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with section 414(u) of the Code, effective for
reemployments initiated after December 12, 1994.

 

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18.5 No Interest in Trust Fund. Irrespective of the amount of a Participant’s
Vested Interest, neither the Participant nor the Participant’s Beneficiary or
any other person shall have any interest or right to any of the assets of the
Trust Fund except as and to the extent expressly provided in this Plan.

 

18.6 Governing Law. The provisions of this Plan shall be governed by and
construed and administered in accordance with ERISA, the Internal Revenue Code,
and, where not inconsistent, the laws of the State of New York.

 

18.7 Participant Information. Each Participant shall notify the Administrative
Committee of (a) his mailing address and each change of mailing address, (b) the
Participant’s, the Participant’s Beneficiary’s and, if applicable, the
Participant's spouse's date of birth, (c) the Participant's marital status and
any change of his marital status, and (d) any other information required by the
Administrative Committee. The information provided by the Participant under this
Section 18.7 shall be binding upon the Participant and the Participant's
Beneficiary for all purposes of the Plan.

 

18.8 Statement of Retirement Benefits. Upon a Participant's written request to
the Plan Administrator, no more frequently than once in a twelve-month period,
the Administrative Committee shall furnish him or her with a statement of his
Retirement Benefits.

 

18.9 Severability. If any provision of this Plan is held illegal or invalid for
any reason, the other provisions of this Plan shall not be affected.

 

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18.10 Notices. Any notice, request, election, designation, revocation or other
communication under this Plan shall be in writing and shall be considered given
when delivered personally or mailed by certified or registered mail, return
receipt requested, except that any statement furnished pursuant to Section 18.8
or any other communication to all Participants shall be considered given when
delivered personally or mailed first class.

 

18.11 Headings. The headings in this Plan are for convenience of reference and
shall not be given substantive effect.

 

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Schedule A

The provisions of this amended and restated Plan are effective as of January 1,
2007, except as otherwise provided in the Plan or below:

 

  (a) Section 6.2 – Vested Interest Not in Excess of $1,000 or $5,000: Effective
with respect to mandatory distributions made on and after March 28, 2005.

 

  (b) Section 6.4 – Provision permitting payment of benefits under the Plan to
commence as of a retroactive annuity starting date: Effective as of January 1,
1994.

 

  (c) Schedule B(1) and (2) – Changes in Mortality and Interest Assumptions:
Effective with respect to Plan Years beginning after December 31, 2007.

 

  (d) Sections 17.1, 17.2, and 17.3 – Changes made to the Top Heavy provisions
of the Plan: Effective as of January 1, 2002.

 

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Schedule B - Actuarial Assumptions

 

  (1) Mortality

 

  (a) General Unisex table derived from the 1983 Group Annuity Mortality Table
by taking the arithmetic average of the male and female mortality rates, or any
other table prescribed by the Secretary of Treasury as the applicable mortality
table under Section 417(e)(3) of the Internal Revenue Code. Notwithstanding the
prior sentence, for Annuity Starting Dates prior to December 31, 2002, the
unisex table derived from the 1983 Group Annuity Mortality Table by taking the
arithmetic average of the male and female mortality rates shall be used.
Notwithstanding anything contained herein to the contrary, for purposes of
adjusting the benefit limitation for purposes of Section 415(b)(2)(B) of the
Internal Revenue Code under Section 4.2(b)(4), the applicable mortality table
under Section 417(e)(3) of the Internal Revenue Code in effect prior to
January 1, 2008.

 

  (b) Computation of Minimum Benefits Under Section 3.5. For purposes of
determining the Actuarial Equivalent of a Participant’s Vested Interest
determined under Section 3.5(a) or (b) which is paid in the form of an annuity
under Section 6.1(a), the factors as specified in the Schedule D and Schedule E,
respectively shall apply.

 

  (c) Computation of Certain Annuities for Annuity Starting Dates on or After
January 1, 2001. In the case of a Participant with an Annuity Staring Date on or
after January 1, 2001, for purposes of converting a joint and 100% survivor
annuity, a joint and 50% survivor annuity or a life annuity with a 10-year
period certain, the factors specified in paragraph (3).

 

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  (2) Interest –

 

  (a)

General The annual rate of interest on 30-year Treasury securities for the month
of September of the Plan Year immediately preceding the Plan Year in which the
Participant’s Annuity Starting Date occurs (the “30-Year Treasury Rate”), or any
other applicable interest rate specified under Section 417(e)(3) of the Internal
Revenue Code); provided, that for purposes of Section 3.2(c) of the Plan, the
annual rate of interest shall be the 30 Year Treasury Rate. However, in no event
shall the rate for purposes of the definition of a Section 3.2 Annuity be more
than 10%. Notwithstanding anything contained herein to the contrary, for
purposes of adjusting the benefit limitation for purposes of
Section 415(b)(2)(B) of the Internal Revenue Code under Section 4.2(b)(4),
(i) for Plan Years beginning in 2004 and 2005, an interest rate of 5 1/2%, and
(ii) for distributions made in Plan Years beginning after December 31, 2005, an
interest rate not less than the greater of (A) 5 1/2 %, (B) the rate that
provides a benefit of not more than 105% of the benefit that would be provided
if the applicable interest rate (as defined in Section 417(e)(3) of the Internal
Revenue Code were the interest rate assumption, and (C) the rate otherwise in
effect under the Plan.

 

  (b) Computation of Minimum Benefits Under Section 3.5. For purposes of
determining the Actuarial Equivalent of a Participant’s Vested Interest
determined under Section 3.5(a) or (b) which is paid in the form of an annuity
under Section 6.1(a), the factors as specified in the Schedule D and Schedule E,
respectively shall apply.

 

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  (c) In the case of a Participant with an Annuity Staring Date on or after
January 1, 2001, for purposes of converting a Joint and 100% Survivor Annuity, a
Joint and 50% Survivor annuity or a life annuity with a 10-year period certain
the factors specified in paragraph (3).

 

  (d) Certain Participants with Annuity Starting Dates Prior to December 1,
1999. (1) In the case of an AWL Participant who has an Annuity Starting Date on
or after December 1, 1998 and before December 1, 1999, in no event shall the
rate in paragraph (a) be greater than the annual rate of interest on 30-year
Treasury securities for December 1, 1998. (2) In the case of a Pearson
Participant who has attained his Normal Retirement Date or Early Retirement Date
on or before December 31, 1995 and who has an Annuity Starting Date before
January 1, 1996, the interest rate which would be used, as of the first day of
the Plan Year in which the Participant’s Annuity Starting Date occurs, by the
Pension Benefit Guaranty Corporation for determining the present value of a
lump-sum distribution on plan termination for a trusteed single employer plan.
(3) In the case of a Pearson Participant who has an Annuity Starting Date on or
after October 1, 1995 and before October 1, 1996, the lower of (A) annual
interest rate on 30-year Treasury securities on the first day of the Plan Year
in which the Participant’s Annuity Starting Date occurs or (B) the annual rate
of interest on 30-year Treasury securities for the month of September of the
Plan Year immediately preceding the Plan Year in which the Participant's Annuity
Starting Date occurs.

 

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  (3) Annuity Factors –

In the case of a Participant with an Annuity Starting Date on or after
January 1, 2001, for purposes of converting a benefit payable as a life annuity
to a Joint and 100% survivor annuity, a Joint and 50% Survivor annuity or a life
annuity with a 10-year period certain the following factors:

 

(a) If the Participant’s Beneficiary is his spouse, the following factors shall
be used to convert a life annuity to other annuity forms:

 

      Simplified Conversion Factors  

Employee Age at Annuity Commencement Date

   Joint and
100% Option     Joint and
50% Option     10-Year Certain
and Life  

Under 30

   98 %    99 %    99 % 

30-39

   96 %    98 %    99 % 

40-49

   94 %    97 %    99 % 

50-59

   90 %    95 %    98 % 

60 and over

   86 %    93 %    96 % 

 

(b) if the Participant has a non-spouse Beneficiary, the following adjustment to
the spousal factors for the joint and 100% annuity option specified in (a):

 

     Percent to subtract from standard spousal factor if
non-spouse beneficiary is at least:  

Participant Age

   10 years younger     20 years younger     30 years younger  

Under 40

   1 %    1 %    1 % 

Age 40 – Age 49

   3 %    4 %    4 % 

Age 50 – Age 59

   5 %    7 %    8 % 

Age 60 and older

   10 %    14 %    16 % 

 

(c) If the Participant has a non-spouse Beneficiary, the following adjustment to
the spousal factors, for a joint and 50% annuity option specified in (a):

 

     Percent to subtract from standard spousal factor if
non-spouse beneficiary is at least:  

Participant Age

   10 years younger     20 years younger     30 years younger  

Under 40

   1 %    1 %    1 % 

Age 40 – Age 49

   2 %    2 %    2 % 

Age 50 – Age 59

   3 %    4 %    5 % 

Age 60 and older

   6 %    9 %    11 % 

 

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Schedule C - Participating Employers

FT Publications Inc.

Former Interactive Data Corporation on or after September 1, 1995 and prior to
February 29, 2000.

Pearson Education Inc.

Pearson Inc.

Penguin Putnam Inc.

Pearson Technology Center, L.L.C.

Data Broadcasting Corporation (as renamed Interactive Data Corporation effective
as of June 15, 2001)

 

  (e) effective as of February 29, 2000, but only with respect to IDC
Participants

 

  (f) effective as of January 1, 2001 for all employees

Learning Network – effective as of July 1, 2000, but only with respect to
Learning Network Participants.

 

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Schedule D - Pearson Participants

This Schedule D provides special provisions for Pearson Participants for
purposes of determining the minimum and grandfathered benefits specified in
Sections 3.5(a) and 3.5(c), respectively. For purposes of determining the
minimum Retirement Benefit in this Schedule D, the definitions specified in the
Plan shall apply except to the extent modified by Paragraph VII of this
Schedule.

I. December 31, 1997 Benefit. For purposes of Section 3.5(a), the December 31,
1997 Retirement Benefit of a Pearson Participant shall be the greater of the
amount determined under paragraph (a) or (b) as follows:

 

  (a) Minimum Prior Plan Retirement Benefit as defined in paragraph V, or

 

  (b) A Participant’s Retirement Benefit accrued as of December 31, 1997 as
determined under paragraph II.

II. Retirement Benefit Accrued as of December 31, 1997. Subject to Article 4 and
Sections 3.8 and 6.8, upon a Pearson Participant’s Retirement or Termination of
Employment, the Participant's Retirement Benefit accrued as of December 31, 1997
shall be equal to one-twelfth of the sum of (a) and (b) as follows:

(a) The product of (1) the Participant's Base Percentage, (2) the portion of his
Average Annual Compensation (as of December 31, 1997) which is not in excess of
his Covered Compensation as of December 31, 1997 and (3) the number of years of
the Participant's Benefit Accrual Period of Service as of December 31, 1997
which is not in excess of 35; and

 

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(b) The product of (1) 1.5% of the portion of the Participant’s Average Annual
Compensation as of December 31, 1997 in excess of his Covered Compensation (as
of December 31, 1997) and (2) the number of years of the Participant’s Benefit
Accrual Period of Service as of December 31, 1997 which is not in excess of 35.

(c) For purposes of the computation under this paragraph II, in no event shall
the Participant’s overall permitted disparity for a Plan Year exceed the limit
on overall permitted disparity under Section 1.401(l)-5 of the Treasury
Regulations. In the event that a Participant’s overall permitted disparity limit
for a Plan Year is exceeded because a Participant’s annual overall permitted
disparity exceeds the annual overall permitted disparity limit in
Section 1.401(l)-5 of the Treasury Regulations for that Plan Year, then the
difference between the Participant’s excess benefit percentage and the
Participant’s base benefit percentage shall be reduced so that this limit is not
exceeded. This reduction shall be made in a uniform manner for all similarly
situated Participants. In the event that a Participant’s overall permitted
disparity limit for a Plan Year is exceeded because the Participant’s cumulative
overall permitted disparity exceeds the cumulative overall permitted disparity
limit in Section 1.401(l)-5 of the Treasury Regulations for that Plan Year, then
with respect to that Plan Year his benefits shall be determined as described in
the following sentence. The benefit for that Plan Year shall be based on the
Participant’s Average Annual Compensation and credited at a rate equal to the
lesser of (1) the excess benefit percentage applicable to a Participant with the
same number of years in his Benefit Accrual Period of Service or (2) the highest
percentage permitted under the 133- 1/3 percent accrual rule under
Section 411(b)(1)(B) of the Internal Revenue Code.

For purposes of determining a Participant’s Retirement Benefit under this
Paragraph II, it shall be assumed that payment of the Retirement Benefit will be
made in the form of a single life annuity without ancillary benefits, commencing
on the first day of the month coincident with or following the Participant’s
Retirement.

 

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III. Grandfathered Pearson Benefit. In the case of a Pearson Participant
entitled to the Grandfathered Pearson Benefit under Section 3.5(d), such benefit
shall be determined in accordance with Paragraph II of this Schedule D, except
that the benefit shall be determined as of the earlier of the Participant’s
Termination of Employment or December 31, 2002, but in no event shall a
Participant’s Benefit Accrual Period of Service exceed 35 years.

IV. Early Retirement Benefit. In the case of a Pearson Participant who:
(a) receives a benefit determined under paragraph II or III of this Schedule D;
(b) has a Termination of Employment on or after his Early Retirement Date;
(c) has an Annuity Starting Date before his Normal Retirement Date; and
(d) elects to receive his distribution in the form of an annuity under
Section 6.1(a), the Participant’s Retirement Benefit shall be reduced by the
Early Retirement Reduction Factor as set forth in Appendix H.

V. Minimum Prior Plan Retirement Benefit. A Pearson Participant’s Minimum Prior
Plan Retirement Benefit shall be the greatest of the following:

(a) Minimum Benefit under Former Retirement Plan of Viking Penguin Inc. The
Prior Plan Minimum Benefit for a Participant who participated in the Retirement
Plan of Viking Penguin Inc. on December 31, 1988 shall be the accrued retirement
benefit as of December 31, 1988 (determined without the annual limit on
compensation under Section 401(a)(17) of the Internal Revenue Code) under the
Retirement Plan of Viking Penguin Inc. (as set forth in Appendix C to this
Plan).

 

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(b) Minimum Benefit for Former E.P. Dutton Pension Plan Participants. The Prior
Plan Minimum Retirement Benefit for a Participant in the E.P. Dutton, a Division
of New American Library, Pension Plan on December 31, 1988 shall be his accrued
retirement benefit as of December 31, 1988 under the E.P. Dutton, a Division of
New American Library, Pension Plan as set forth in Appendix D to this Plan.

(c) Minimum 1988 Prior Benefit. The minimum 1988 Prior Benefit shall be equal to
the actuarial equivalent of the Participant’s accrued benefit as of December 31,
1988 under the Pearson Inc. U.S. Retirement Plan (under Appendix F). For
purposes of determining the actuarial equivalent amount of the benefit in this
paragraph, the factors specified in the definition of Pearson Actuarial
Equivalent shall apply except that the factors for determining the lump sum
present value shall be as follows:

Mortality - The 1971 Group Annuity Mortality Table for males.

Interest - 6% per annum compounded annually.

Interpolation - Determinations made shall be based on the Participant’s age in
completed years and months at the date of the determination and factors shall be
interpolated to such age and rounded to nearest 1% of a year.

(d) Minimum 1993 Prior Benefit. The Minimum 1993 Prior Benefit for a Participant
who was a participant in the Pearson Inc. U.S. Retirement Plan on December 31,
1993, shall be the greater of (1) or (2) as follows:

(1) 1988 Prior Formula Amount & Post 1988 Accruals. The sum of (A) his accrued
benefit under the Pearson Inc. U.S. Retirement Plan as of December 31, 1988
under Appendix F (determined without the annual limit on compensation under
Section 401(a)(17) of the

 

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Internal Revenue Code) (“1988 Prior Formula Amount”) and as adjusted for
Compensation increases as determined under paragraph (d)(3) and (B) his benefit
under the Plan based on the formula in paragraph II of this Schedule D and based
on his Benefit Accrual Period of Service credited for the period beginning on or
after January 1, 1989 and ending as of December 31, 1997 (or, if earlier, the
earliest of his Termination of Employment, Retirement, incurrence of a Permanent
Disability or, in the case of a Highly Compensated Employee, December 31, 1993),
and

(2) 1993 Prior Formula Amount. His accrued benefit under the Pearson Inc. U.S.
Retirement Plan as of December 31, 1993 (or, if earlier, the date in the
following sentence) as determined under Appendix F. In the case of a Participant
who is a “super highly compensated employee” for the 1989, 1990, 1991 or 1992
Plan Year (as defined in IRS Notice 89-92 for purposes of Alternative IID), his
minimum Retirement Benefit under the prior sentence shall be based on his
accrued Retirement Benefit as determined under Appendix F as of the later of the
last day of the 1988 Plan Year and the last day of the Plan Year immediately
preceding the Plan Year in which he first becomes a “super highly compensated
employee.”

(3) Compensation Adjustment for 1988 Prior Formula Amount The 1988 Prior Formula
Amount adjusted by compensation shall be equal to the product of (A) and (B) as
follows:

(A) the Participant’s 1988 Prior Formula Amount but limited so that the base
benefit percentage is at least 50% of the excess benefit percentage, and

(B) A fraction not less than one. The numerator of the fraction is the
Participant’s Average Annual Compensation determined as of December 31, 1997
(or, if earlier, the earliest of the date of his Retirement, Termination of
Employment, death or incurrence of a Permanent Disability, or in the case of a
Highly Compensated Employee, December 31, 1993). The denominator of the fraction
is the Participant’s Average Annual Compensation as of January 1,

 

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1989. The definition of Average Annual Compensation shall be based on the
definition of Pension Compensation Base in Appendix F.

(e) Minimum Retirement Benefit for Former Participants of the Financial Times
U.S. Retirement Plan. Subject to the following sentence, the Prior Plan Minimum
Retirement Benefit for a Participant who was a Participant in the Financial
Times U.S. Retirement Plan on December 31, 1993, shall be equal to his accrued
benefit as of December 31, 1993 under the Financial Times U.S. Retirement Plan
as determined in Appendix E determined without regard to the applicable limits
on compensation under Section 401(a)(17) of the Internal Revenue Code in effect
after December 31, 1988 but before January 1, 1991. In the case of a Participant
who is a “super highly compensated employee” for the 1989, 1990, 1991 or 1992
Plan Year (as defined in IRS Notice 89-92 for purposes of Alternative IID) his
minimum Retirement Benefit under this Paragraph (e) shall be based on his
accrued Retirement Benefit as determined under Appendix E as of the later of the
last day of the 1988 Plan Year and the last day of the Plan Year immediately
preceding the Plan Year in which he becomes a super highly compensated employee.

In the case of a Participant described in this paragraph (e) whose Compensation
for any Plan Year commencing prior to January 1, 1989 is in excess of $200,000,
his minimum Retirement Benefit under this paragraph (e) shall in no event be
less than his Retirement Benefit as of December 31, 1988 as determined under
Appendix E of the Plan based on Compensation as defined in Appendix E but
without the limitation under Section 401(a)(17) of the Internal Revenue Code
that would otherwise apply.

 

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(f) Section 401(a)(17) Employees Minimum Post OBRA Retirement Benefit. In no
event shall a Section 401(a)(17) Employee’s Retirement Benefit determined on or
after January 1, 1994 be less than the sum of (1) and (2) as follows:

(1) the Section 401(a)(17) Employee’s accrued Retirement Benefit as of
December 31, 1993 as determined under Paragraph II of this Schedule C based on
the Compensation and Average Annual Compensation as of December 31, 1993 but by
taking into account the annual limit on compensation under Section 401(a)(17) of
the Internal Revenue Code in effect as of the first day of the Plan Year
beginning on or after January 1, 1989 but before January 1, 1994 ($200,000 as
indexed) that would otherwise apply , and

(2) the Participant’s Retirement Benefit accrued with respect to the number of
years of his Benefit Accrual Period of Service credited on or after January 1,
1994 and prior to January 1, 1998, based on Compensation and Average Annual
Compensation as of January 1, 1998 (or, if earlier his Termination of
Employment, Retirement, incurrence of a Permanent Disability or death)

VI. Actuarial Equivalent. Subject to paragraphs IV and V, for purposes of
determining the Actuarial Equivalent Value of (a) a Retirement Benefit under
paragraph I, the Pearson Actuarial Equivalent factors shall apply and (b) a
Retirement Benefit under paragraph III, the Actuarial Equivalent factors
specified in Schedule B shall apply.

VII. Definitions. The following definitions shall apply for purposes of this
Schedule D

(a) Pearson Actuarial Equivalent –

(1) General

Interest – except for determining Actuarial Equivalent present value of a lump
sum distribution paid on or after October 1, 1995, the immediate interest rate
which would be used, as of the first day of the Plan Year in which the
Participant’s

 

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Annuity Date occurs, by the Pension Benefit Guaranty Corporation for purposes of
determining the present value of a lump-sum distribution on plan termination for
a trusteed single employer plan.

Mortality – Unisex table derived form the 1983 Group Annuity Mortality Table by
taking the arithmetic average of the male and female mortality rates.

(2) Present Value if Annuity Starting Date on or after October 1, 1995. For
purposes of defining the Actuarial Equivalent present value of the Vested
Interest of a Participant with an Annuity Starting Date on or after October 1,
1995, the factors set forth in Schedule B.

(3) Early Retirement Reduction Factors. The factors set forth in Appendix H.

(b) Base Percentage - a percentage equal to: (1) 0.75% for Participants born
before January 1, 1938; (2) 0.80% for Participants born after December 31, 1937
and before January 1, 1955, and (3) 0.85% for Participants born after
December 31, 1954.

(c) Covered Compensation - with respect to an Employee, the average of the
taxable wage bases in effect under Section 230 of the Social Security Act for
each year during the 35-year period ending with the year the Employee attains
(or will attain) the later of age 65 or social security retirement age (as
defined in Section 415(b)(8) of the Internal Revenue Code). In determining a
Participant’s Covered Compensation for a Plan Year, the taxable wage bases for
that Plan Year and any subsequent Plan Year shall be assumed to be the same as
the taxable wage base in effect for that Plan Year. A Participant’s Covered
Compensation shall be adjusted each Plan Year.

(d) Section 401(a)(17) Employee - a Participant whose Retirement Benefit for any
Plan Year before January 1, 1994 was determined by taking into account
Compensation that exceeded $150,000.

 

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(e) Social Security Wage Base - the social security taxable wage base as
provided in Section 3121(a)(1) of the Internal Revenue Code in effect on the
first day of the Plan Year.

 

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Schedule E - AWL Participant

This Schedule E provides special provisions for AWL Participants for purposes of
determining the minimum benefits specified in Sections 3.5 (b), the
grandfathered benefit specified in Sections 3.5 (d) and 3.5 (e), an AWL
Participant’s Compensation prior to January 1, 1986, and an AWL Participant’s
Minimum Vesting Period of Service as of November 30, 1998. For purposes of
determining the Retirement Benefits in this Schedule E, the definitions
specified in the Plan shall apply except to the extent modified by Paragraph VII
of this Schedule E.

I. November 30, 1998 Retirement Benefit.

For purposes of Section 3.5(b), the November 30, 1998 Retirement Benefit of an
AWL Participant shall be the greater of the amount determined under paragraph II
or III.

II. Retirement Benefit as of November 30, 1998 Under the AWL Plan

Subject to Article 4 and Sections 3.8 and 6.8, an AWL Participant’s Retirement
Benefit as of November 30, 1998 under the AWL Plan shall be equal to one-twelfth
of the sum of (a) and (b) as follows:

(a) the product of (1) 1% of the Participant’s Average Annual Compensation as of
November 30, 1998 not in excess of Covered Compensation as of November 30, 1998,
and (2) the Participant’s number of years of AWL Benefit Service as of
November 30, 1998 which is not in excess of thirty years; and

 

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(b) the product of (1) 1.5% of the Participant’s Average Annual Compensation as
of November 30, 1998 in excess of Covered Compensation as of November 30, 1998,
and (2) the Participant’s number of years of AWL Benefit Service as of
November 30, 1998 which is not in excess of thirty years.

III. Other Minimum Benefit

In the case of an AWL Participant, in no event shall his Retirement Benefit be
less than the amount under (a) or (b) as follows:

(a) Subject to the following sentence, the benefit accrued under the terms of
the AWL Plan in effect on November 30, 1989, determined as of November 30, 1990
or, if earlier, the Participant’s Termination of Employment. In the case of
either (1) a Participant who is a super highly compensated employee for the Plan
Year ending November 30, 1990, and (2) any other Participant whose accrued
benefit as of November 30, 1989 is greater than his benefit as of November 30,
1990, the Retirement Benefit in the prior sentence will be determined as of
November 30, 1989; and

(b) the sum of (1) the Participant’s benefit determined as of November 30, 1994
(under the formula specified in paragraph II), and (2) the Participant’s benefit
determined under the formula specified in paragraph II based on AWL Benefit
Service after November 30, 1994 and Compensation as limited by the provisions of
Section 401(a)(17) of the Internal Revenue Code in effect on or after January 1,
1994.

IV. Grandfathered AWL Benefit

In the case of an AWL Participant entitled to the Grandfathered AWL Benefit
under Section 3.5(c), such benefit shall be determined in accordance with
Paragraph II of this Schedule E,

 

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except that the benefit shall be determined as of the Participant’s Termination
of Employment. In addition, in the case of a Former Simon & Schuster Participant
entitled to the Grandfathered Former Simon & Schuster Benefit under
Section 3.5(e), such benefit shall be determined in accordance with Paragraph II
of this Schedule E, except that the benefit shall be determined as of the
Participant’s Termination of Employment and based on the sum of (a) the
Participant’s Simon & Schuster Benefit Service; and (b) his Benefit Accrual
Period of Service on and after November 30, 1998 (or, if later, the date the
Participant transferred employment with an Affiliated Company).

V. Early Retirement Benefit. In the case of a Participant who: (a) receives a
benefit determined under Paragraph I or IV of this Schedule E; (b) has a
Termination of Employment on or after his Early Retirement Date; (c) has an
Annuity Starting Date before his Normal Retirement Date; and (d) elects to
receive his distribution in the form of an annuity under Section 6.1(a), the
Participant’s Retirement Benefit determined under Paragraph I or IV shall be
reduced by the early retirement reduction factors set forth in the following
sentence. Such benefit shall be reduced by  2/12 of 1% for each of the first 35
months by which the Annuity Starting Date precedes the Participant's Normal
Retirement Date and by  5/12 of 1% for each month thereafter; provided however,
that a Participant who retires on or after age 62 and after completing a Vesting
Period of Service of 30 or more years shall receive an unreduced benefit.

VI. Actuarial Equivalent Factors. Subject to paragraph V, for purposes of
determining the Actuarial Equivalent Value of a Retirement Benefit determined
under (a) Paragraph II or III and payable in the form of an annuity under
Section 6.1(a), the factors specified under the definition of AWL Actuarial
Equivalent shall apply, and (b) Paragraph IV and payable in the form of an
annuity under Section 6.1(a), the factors specified under Schedule B shall
apply.

 

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VII. Definitions

 

A. AWL Actuarial Equivalent - a benefit of equivalent value determined using a
7% interest rate and the UP-1984 Mortality Table (males), set back two years for
Participants, spouses, contingent annuitants and Beneficiaries.

 

B. AWL Benefit Service. The sum of (1) and (2) as follows:

(1) a Participant’s Benefit Accrual Period of Service on or after December 1,
1999; and

 

  (2)(a)

Subject to Paragraph (b), service for a 12-month period beginning as of
December 1st of any calendar year and ending prior to December 1, 1999. A
Participant will not be credited with any Service for any such 12-month period
in which he does not have 1,000 Hours of Service; provided, however, that in the
event that a Participant who either:

 

  (i) enters or, following a Break in Service, re-enters employment with the
Company on a date other than the first day of any Plan Year, and thereafter
fails to complete at least 1,000 Hours of Service during such Plan Year; or

 

  (ii)

terminates his employment or retires on a date other than the last day of any
Plan Year and prior to completing at least 1,000 Hours of Service during such
Plan Year, such Participant shall, solely for

 

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purposes of computing the amount of his benefit, if any, under the Plan, be
deemed to have accrued a partial year of Service on account of such Plan Year,
which part shall be determined by multiplying the number one (1) by a fraction
of which the numerator is the number of Hours of Service actually completed by
such Participant during the Plan Year (rounded to the next highest 100 Hours of
Service) and of which the denominator is 1,000.

 

(b) The following Periods of Service shall be disregarded:

 

  (i) Periods of employment with the Longman Division of the Company, Dale
Seymour Publications, Cuisenaire, Peachpit and Harper Collins prior to such
entities becoming Affiliated Companies (Longman Division - October 1, 1988, Dale
Seymour Publications - July 1, 1989, Cuisenaire - May 14, 1990, Peachpit -
October 1, 1994 and Harper Collins, April 1, 1996.)

 

  (ii)

Service preceding Breaks in Service if the Participant has no Vested Interest
and has a number of consecutive Breaks in Service equal to (or greater than) the
greater of five and the number of the Participant’s AWL Benefit Service
(excluding AWL Benefit Service previously disregarded under this paragraph
preceding the Breaks in Service). For purposes of this Section, a Break in
Service will be determined in accordance with the Plan, but the applicable
measurement period shall be based on 12-month periods beginning on December 1st.

 

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The Administrative Committee shall determine and credit to a Participant the
additional AWL Benefit Service necessary to provide the Participant with the
benefit accrual credit to which the Participant is entitled under Section 414(u)
of the Internal Revenue Code for his period of military service.

 

C. Compensation - For periods prior to January 1, 1986, the basic rate of
compensation in effect as of December 1 of each year, adjusted to an annual
basis, exclusive of all overtime, bonus and other irregular payments. For
purposes of the definition of Average Annual Compensation below, such basic rate
of compensation shall be considered the Annual Earnings for the calendar year in
which the December 1 date occurs and the Employee shall be considered as having
completed a full calendar year of employment. For purposes of periods on or
after January 1, 1986, the definition of Compensation specified in Article 1 of
the Plan shall apply.

 

D. Covered Compensation - With respect to a Participant, the average of the
Social Security Taxable Wage Bases for the 35-year period ending with the
calendar year during which the Participant attains Social Security Retirement
Age. In the case of a Participant who terminates employment with the Company
prior to his Social Security Retirement Age, the Social Security Taxable Wage
Base in effect for the calendar year during which the Participant terminates
shall be assumed to remain in effect for each year thereafter. In the case of a
Participant who terminates employment with the Company after his Social Security
Retirement Age, his Covered Compensation shall be determined as if he terminated
on his Social Security Retirement Age.

 

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E. AWL Vesting Service as of November 30, 1998 - AWL Benefit Service as of
November 30, 1998, except that the exclusions under Paragraph B(2)(b) relating
to service prior to becoming employed by an Affiliated Company shall be
disregarded.

 

F. Social Security Taxable Wage Base - The amount of income or wages,
established each year by the Social Security Administration, subject to Social
Security taxes.

 

G. Social Security Retirement Age - With respect to an Employee born prior to
1938, the date on which he attains age sixty-five; with respect to an Employee
born after 1937 and prior to 1955, the date on which he attains age sixty-six;
and with respect to an Employee born after 1954, the date on which he attains
age sixty-seven. Notwithstanding the foregoing, such dates shall be adjusted as
necessary to comply with the definition of Social Security Retirement Age
contained in Section 415(b)(8) of the Internal Revenue Code.

 

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B. Annual Earnings - The Participant's base compensation, plus bonus amounts up
to 50% of the Participant's base compensation, which is paid to the Participant
by the Company during the Plan Year which would be includible in income for
Federal Income Tax purposes if such income were U.S. source income. In no event
shall such amount exceed the limitations on compensation under
Section 401(a)(17) of the Internal Revenue Code (as adjusted by the Secretary of
Treasury for increases in the cost of living before January 1, 2002).

C. Other Company Funded Benefits -

(a) the portion of the benefit determined by the Plan Administrator payable to
the Participant under the Social Security System of the Participant's country of
residence commencing on the Participant's Normal Retirement Date which is
attributable to the contributions made to such System by the Company on behalf
of the Participant during his Years of Benefit Service;

(b) any benefit payable to the Participant by the Company on account of the
Participant's Termination of Employment with the Company which is mandated by
the laws of the Participant's country of residence; and

(c) any benefit payable to the Participant under a retirement benefit plan which
is voluntarily established by the Company in the Participant's country of
residence to the extent such benefit is attributable to contributions made by
the Company to such plan.

In the event that any benefit described above is paid in a form other than the
normal form of payment under the Plan at the Participant's Normal Retirement
Date, such benefit shall be actuarially adjusted to the normal form of benefit
payable at Normal Retirement Date in order to determine the reduction applicable
under this paragraph C.

D. Years of Benefit Service - The total of the Participant's period of service
from his initial date of employment with the Company to his date of Termination
of Employment determined in accordance with the rules for determining Benefit
Accrual Period of Service.

 

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Schedule H – Benefits for Certain AGS Participants

This Schedule provides special provisions applicable to a Participant who was
(a) a participant in the former American Guidance Service Inc. Pension Plan (the
“Former AGS Plan”) prior to July 1, 2002 and (b) an employee of the Company on
December 31, 2005 (an “AGS Participant”), and describes the benefit formula and
service crediting rules for determining the benefits, and the timing and the
form of distributions, under the Plan for AGS Participants.

The benefit of an AGS Participant under this Schedule G is a monthly benefit
amount based on the formula set forth in the former American Guidance Service
Inc. Pension Plan (the “Former AGS Plan”) prior to July 1, 2002, the terms and
provisions of which are incorporated herein by reference.

For purposes of the Former AGS Plan, “Actuarially Equivalent” or “Actuarial
Equivalent” shall be determined by the Actuary on the basis of the following:

 

  (a) Except as provided elsewhere in the Former AGS Plan, Actuarially
Equivalent shall be determined on the basis of a 9% interest rate assumption and
the mortality assumptions of the 1971 Group Annuity Mortality Table (male rates)
with a three year age setback.

 

  (b) Prior to July 1, 1995, the lump sum value of a benefit which would
otherwise be payable as a monthly annuity shall be determined by the Actuary as
the greater of (i) the lump sum benefit determined by using the interest rate
set forth in (a), above, or (ii) the lump sum benefit determined by using an
interest rate equal to the rate (immediate or deferred, as applicable) that
would be used by the Pension Benefit Guaranty Corporation (“PBGC”), as of the
date of distribution, in valuing a benefit upon termination of an insufficient
trusteed single-employer plan. Notwithstanding the foregoing, if the present
value of the benefit using the applicable PBGC rate exceeds $25,000, the
applicable PBGC interest rates are 120% of the PBGC immediate and deferred
annuity rates referred to in the foregoing sentence; provided however, that the
use of 120% of the PBGC rates may not reduce the present value below $25,000.

 

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Appendix E

Former Participants of the Financial Times U.S. Retirement Plan.

 

1. Definitions. The following definitions apply for purposes of this Appendix E:

 

  a) Actuarial Equivalent - A benefit of equivalent value to an otherwise
payable benefit on the basis of:

 

  (i) Mortality in accordance with the Unisex Pension Mortality Table (UP-84).

 

  (ii) Interest at the rate specified by the Pension Benefit Guaranty
Corporation to value immediate annuities for plans terminating as of the
October 1 preceding the Plan Year in which the determination is being made.

 

  b) Compensation - Regular base salary or wages paid for services performed by
an Employee excluding overtime pay, bonuses, commissions, amounts paid for
insurance or other welfare plans or benefits, or other special remuneration. For
Plan Years beginning after December 31, 1988 but before January 1, 1994, an
Employee’s Compensation shall not exceed the limitation on Earnings under
Section 401(a)(17) of the Internal Revenue Code (or such higher amount as may be
determined by the Secretary of the Treasury in accordance with
Section 401(a)(17) of the Internal Revenue Code to reflect increases in the cost
of living before January 1, 2002). For Plan Years beginning on or after
January 1, 1994, an Employee’s Compensation shall not exceed $150,000 (or such
higher amount as may be determined by the Secretary of the Treasury in
accordance with Section 401(a)(17) of the Internal Revenue Code to reflect
increases in the cost of living before January 1, 2002). For Plan Years
beginning on or after January 1, 2002, for purposes of Section 3.5(g), an
Employee’s Compensation shall not exceed $200,000 (or such higher amount as may
be determined by the Secretary of Treasury in accordance with Section 401(a)(17)
the Internal Revenue Code).

 

c) Final Average Compensation -

 

  (i) the average monthly Compensation (as defined in paragraph (b) of this
Section) received by a Former FT Participant during the highest sixty
(60) consecutive calendar months (or such shorter period if the Former FT
Participant had not completed sixty (60) consecutive calendar months) during the
one hundred twenty (120) calendar months (or such shorter period if the former
FT Participant had not completed one hundred twenty (120) consecutive calendar
months) immediately preceding the earlier to occur of the Former FT
Participant’s Severance from Service Date or; December 31, 1993.

 

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  (ii) with respect to a determination of Average Annual Compensation for any
Plan Year beginning on or after December 31, 1988 but before January 1, 1994,
Compensation shall not exceed the limitations on compensation under
Section 401(a)(17) of the Internal Revenue Code, (adjusted to reflect increases
in the cost of living before January 1, 2002);

 

d) Former FT Participant - A Participant in the Former FT Plan who is credited
with an Hour of Service after December 31, 1988.

 

e) Former FT Plan - The Financial Times U.S. Retirement Plan as amended through
December 31, 1993.

 

f) Period of Service - Each period of time commencing on an Employment
Commencement Date as an employee of Financial Times Publications, Inc. F.T.
American Advertising Ltd., or the Editorial offices of N.Y. or Washington and
ending on a Severance from Service Date.

 

g) Primary Social Security Benefit - The monthly old-age benefit to which the
Former FT Participant would be entitled under the Federal Social Security Act
under the following rules:

 

  (i) The Primary Social Security Benefit as herein defined shall be the amount
payable at age 65 under the Social Security Act.

 

  (ii) The Primary Social Security Benefit shall be the amount estimated to be
payable excluding any family benefits.

 

  (iii) The amount of Primary Social Security Benefit shall be estimated on the
basis of tables approved by the Committee, taking into account the Employee’s
actual compensation in the calendar year prior to termination of service and
assuming that compensation increased prior thereto at the rate of increase in
average wages as determined by Social Security Administration.

 

  (iv)

A written notice shall be provided to each terminating Participant which shall
indicate that the amount of Primary Social Security Benefit is estimated and
that, in the event the Participant obtains a documented record of his earnings
history, then the amount of Primary Social Security Benefit based on such record
of actual earnings shall be used if the amount of estimated Primary Social
Security Benefit is lower than the amount determined using the above described
table; provided, however, that such record of Social Security earnings shall be
utilized only if such record is submitted to

 

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the Committee by the Participant no later than 120 days following the later of
the date of the Participant’s termination of service and the time the
Participant receives written notice of the benefit to which he is entitled.

 

  (v) In the event that the Primary Social Security Benefit is being determined
as of a date prior to the Participant’s Normal Retirement Date, the amount of
such Primary Social Security Benefit shall be based upon the assumption that the
Participant will continue to receive until age 65 compensation which would be
treated as wages for purposes of such Social Security Act at the same rate as he
received such compensation at the time of his Severance from Service Date.

 

  (vi) Notwithstanding the foregoing, if a Participant receives Years of Benefit
Accrual Period of Service during a period in which he was covered or entitled to
be covered by a foreign social security system (other that a period in which he
elected United States Social Security coverage in lieu thereof), his Primary
Social Security Benefit shall include the amount of old-age benefits to which
the Participant would be entitled under the applicable foreign social security
system as determined, in a non-discriminatory manner, by the Committee with the
advice of the Actuary. The determination of the amount of the foreign social
security benefit by the Committee shall be conclusive and binding on all
parties; provided such determination shall be made in a manner which satisfies
all applicable regulations and filings of the Internal Revenue Service
concerning the integration of pension plans with social security benefit.

 

h) Years of Benefit Accrual Period of Service. An Employee shall be credited
with Years of Benefit Accrual Period of Service equal to the aggregate of his
Periods of Service, as defined in Paragraph (f), subject to the following rules:

 

  (i) For purposes of aggregation, years, months and days in Periods of Service
shall be added together and the resulting Years of Benefit Accrual Period of
Service shall be computed in years and a fraction thereof, counting only
completed months.

 

  (ii) Years of Benefit Accrual Period of Service shall include periods during
which an Employee is Disabled. For purposes of this Section, Disabled is the
state of mental or physical incapacity which qualifies a Participant for any
long-term disability benefit sponsored by an Employer.

 

  (iii) Years of Benefit Accrual Period of Service shall exclude Periods of
Service as provided in Paragraph (i).

 

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  (iv) For Employees who became Participants on January 1, 1993, Years of
Benefit Accrual Period of Service shall include all Periods of Service rendered
by such Employees with an Affiliated Company prior to January 1, 1983.

 

i) Exclusions from Benefit Accrual Period of Service. The following Periods of
Service shall be disregarded in computing the total Years of Benefit Accrual
Period of Service to be credited to a Participant:

 

  (i) In the event that a Participant who incurs a Break in Service on or after
January 1, 1983, subsequently becomes an Employee again, any Period of Service
of the Participant prior to the Break in Service shall not be includable as part
of the Participant’s total Years of Benefit Accrual Period of Service and Years
of Vesting Service unless such Participant acquires a Period of Service of at
least one year after such Break in Service.

 

  (ii) In the case of any Participant who incurs a Break in Service on or after
January 1, 1985, prior to his becoming entitled to a deferred vested benefit,
his Period of Service prior to said Break in Service shall not be taken into
account if his last Period of Severance equals or exceeds the greater of five
years or such prior Period of Service or portion thereof which is not excluded
under this Section by reason of any prior Break in Service.

 

2. Retirement Benefit for Former FT Participants

 

  a) Normal Retirement Benefit. In no event shall a Former FT Participant
receive a Normal Retirement Benefit that is less than the benefit described in
this Section 2 of Appendix E. The retirement benefit under this Section of the
Plan shall be payable monthly as a single life annuity in an amount which is
equal to (1) plus(2) minus (3) below:

 

  (i) 2% of the Participant’s Final Average Compensation, multiplied by his
Years of Benefit Accrual Period of Service up to twenty years, plus

 

  (ii) 1% of the Participant’s Final Average Compensation multiplied by his
Years of Benefit Accrual Period of Service in excess of twenty years, but not in
excess of forty years, minus

 

  (iii) 1.25% of the Participants Primary Social Security Benefit multiplied by
his Years of Benefit Accrual Period of Service up to forty such years.

 

  b) Termination of Employment and Early Retirement Benefits. Any Former FT
Participant who terminated employment after attaining 100% vested rights shall
be eligible to receive a Retirement Benefit, payable monthly during his life, in
an amount calculated pursuant to either (i) or (ii) below, whichever is
applicable.

 

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  (i) The Participant is entitled to receive a deferred pension, commencing as
of the Participant’s Normal Retirement Date, equal to his Accrued Benefit.

 

  (ii)

If the Participant terminates employment after attaining age fifty five, he is
entitled to retirement benefits equal to his Accrued Benefit but reduced by
 5/12 of 1% for each month by which the date on which he commences receipt of
his Benefit precedes his Normal Retirement Date.

For purposes of this Appendix E, a former FT Participant’s Accrued Benefit at
any date is the Normal Retirement Benefit that would be provided in paragraph
(2)(a) of this Appendix if the Participant remained a Participant until his
Normal Retirement Date with Final Average Compensation equal to his Final
Average Compensation at the date of determination multiplied by a fraction the
numerator of which is his Years of Benefit Accrual Period of Service at the date
of determination and the denominator is the Years of Benefit Accrual Period of
Service he would have at his Normal Retirement Date.

 

3. Optional Forms of Payment. Subject to Section 6.8, a Former FT Participant
may elect to receive the benefit determined under this Appendix E under any of
the optional forms permitted under Section 6.1 or under a life annuity with a
5-year period certain feature. The amount to be paid under any optional form
other than a single lump sum payment shall be the Actuarial Equivalent (as
defined in this Appendix E) of a single life annuity determined under Paragraph
2.

 

4. Preretirement Death Benefits. In the event of the death of a Former FT
Participant who meets the requirements for a Preretirement Death Benefit under
Article 7, the amount to be paid to the Participant’s spouse shall not be less
than the amount that would be paid if his Accrued Benefit under this Appendix E
were substituted for the benefit earned under this Plan without regard to
Appendix E.

 

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Appendix F

Former Participants of the Pearson Inc. Pension Plan

1. Definitions. The following definitions apply for purposes of this Appendix F:

 

  a) Accrued Benefit shall mean the Participant’s Basic Annual Pension
calculated pursuant to Paragraph 2 as though the Participant had continued his
employment uninterrupted until Normal Retirement Date with the Participant’s
Pension Compensation Base determined as of the date of the Participant’s
termination of employment and with the pension formula based on the
Participant’s Primary Social Security Benefit. Such Basic Annual Pension shall
be multiplied by a fraction, not exceeding one, (a) the numerator of which is
the Participant’s Years of Service at the date of termination of employment and
(b) the denominator of which is the Years of Service the Participant would have
had at his Normal Retirement Date if he had continued in the service of the
Employer until such date with no Breaks in Service.

 

  b) Actuarial Equivalent shall mean a benefit of value equivalent to the value
of the benefit which would otherwise have been provided, determined at the time
benefit payments commence, on the basis of actuarial assumptions as follows:

 

  (i) Mortality Table: the UP-1984 Mortality Table, with no adjustment to ages.

 

  (ii) Interest Rate: The rate specified by the Pension Benefit Guaranty
Corporation for immediate annuities as of the first day of the Plan Year in
which the determination is made.

 

  c) Basic Pension and Basic Annual Pension shall mean the annual retirement
income derived by application of the applicable pension formula set forth in
Paragraph 2, as opposed to an optional pension elected pursuant to Article 6,
which such Basic Pension shall be payable for the life of the Retired
Participant, and if 120 monthly installments have not been paid prior to his
death, shall continue thereafter to his Beneficiary until the number of monthly
installments paid to him and his Beneficiary total 120.

 

  d)

Eligible Earnings shall mean a Participant’s Total Compensation excluding
discretionary bonuses. For Plan Years beginning after December 31, 1988 but
before January 1, 1994, an Employee’s Compensation shall not exceed the
limitation on Earnings under Section 401(a)(17) of the Internal Revenue Code (or
such higher amount as may be determined by the Secretary of the Treasury in
accordance with Section 401(a)(17) of the Internal Revenue Code to reflect
increases in the cost of living before January 1, 2002). For

 

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Plan Years beginning on or after January 1, 1994, an Employee’s Compensation
shall not exceed $150,000 (or such higher amount as may be determined by the
Secretary of the Treasury in accordance with Section 401(a)(17) of the Internal
Revenue Code to reflect increases in the cost of living before January 1, 2002).
For Plan Years beginning on or after January 1, 2002, for purposes of
Section 3.5, – an Employee’s Compensation shall not exceed $200,000 (or such
higher amount as may be determined by the Secretary of Treasury in accordance
with Section 401(a)(17) of the Internal Revenue Code.)

 

  e) Former Pearson Participant A Participant in the former Pearson Plan who is
credited with an Hour of Service after December 31, 1988.

 

  f) Former Pearson Plan The Pearson Inc. Pension Plan (prior to its merger with
the Penguin Books USA Inc. Pension Plan and the renaming of the merged plan) as
amended through December 31, 1993.

 

  g) Pension Compensation Base shall mean a Participant’s Average Monthly
Eligible Earnings during his 60 highest-compensated consecutive months of
employment with the Employer within the 120 months immediately preceding his
Normal Retirement Date, Early Retirement Date or earliest termination of
service; provided, however, that if his longest period of consecutive employment
within such 120-month period consists of fewer than 60 months, the Pension
Compensation Base shall be his Average Monthly Earnings during his longest
period of consecutive employment within such 120 month period. For purposes of
this definition, Average Monthly Eligible Earnings, when used with respect to
any period, shall mean the total Eligible Earnings received from the Employer
during such period divided by the number of months of paid employment in such
period.

 

  With respect to a determination of Average Annual Compensation for any Plan
Year beginning on or after December 31, 1988 but before January 1, 1994,
Compensation shall not exceed the limitations on compensation under
Section 401(a)(17) of the Internal Revenue Code,(adjusted to reflect increases
in the cost of living before January 1, 2002). For Plan Years beginning on or
after January 1, 2002, for purposes of Section 3.5 an Employee’s Compensation
shall not exceed $200,000 (or such higher amount as may be determined by the
Secretary of Treasury in accordance with Section 401(a)(17) of the Internal
Revenue Code).

 

  h)

Primary Social Security Benefit shall mean the amount of monthly benefits which
a Participant would be entitled to receive as his “primary insurance amount”
assuming: (a) that he has made or will make appropriate application for such
benefit, (b) that no event occurs to delay or forfeit any part of such benefit
or (c) that if he dies or retires (except for disability) before his Normal
Retirement Date, he will continue to receive until his Normal Retirement Date,
remuneration (which would be treated as taxable wages for purposes of the
Federal Social Security Act) at the same rate as at

 

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the time of retirement or death. As used in this Section, the term “primary
insurance amount” shall have the meaning ascribed to it in the Federal Social
Security Act as amended and in effect on the affected employee’s date of
retirement, death, severance or Normal Retirement Date, as the case may be. For
purposes of computing the Participant’s primary insurance amount, the
Participant's pre-separation or preretirement compensation history shall be
estimated by applying a salary scale, projected backwards, to the Participant’s
Total Compensation at separation or retirement, where the salary scale is the
actual change in the average wages from year to year as determined by the Social
Security Administration. Future compensation will be estimated using the same
compensation earned by the Participant as of the date of separation or
retirement. The Participant has the right to supply, within a reasonable time,
his actual compensation history, in which case such compensation history will be
used for the years in which it is supplied. Each Participant must be notified of
his rights to supply such information and the consequences of doing so and
failing to do so.

 

  i) Total Compensation shall mean a Participant’s total wages, salaries and
other amounts received for personal services actually rendered in the course of
employment with the Employer, but excluding Employer contributions to this Plan
or any welfare or deferred compensation plan other than compensation deferred at
the Participant’s election and contributed to a plan meeting the requirements of
Section 401(k) of the Code (provided such contribution is not taxable when made
to the Participant under the provisions of Section 401(k) of the Code), any
benefits arising under this plan and any deferred benefits otherwise provided to
a Participant (other than amounts received pursuant to an unfunded nonqualified
deferred compensation plan, which amounts shall be included in the Plan Year in
which they are included in the income of the Participant), and any stock options
or other distributions which receive special tax treatment. For the purpose of
determining the amount of Total Compensation, the books and records of the
Employer shall be conclusive.

 

  j) Computation Period. The applicable “Computation Period” for crediting
service under the Plan shall be the 12-consecutive-month period beginning with
an Employee’s “Employment Commencement Date” or “Re-employment Commencement
Date”, whichever is applicable, and the succeeding 12- consecutive month periods
beginning on the anniversaries of his Employment Commencement Date or
Re-employment Commencement Date. The term “Employment Commencement Date” shall
mean the date on which an Employee first performs an Hour of Service for the
Employer. The term “Re-employment Commencement Date” shall mean the first date
on which an Employee completes an Hour of Services for the Employer following
the last Computation Period in which a Break in Service occurred.

 

  k) Years of Service.

 

  (i) General Rule. An Employee shall be credited with a Year of Service for
each Computation Period during which he is credited with 1000 or more Hours of
Service.

 

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  (ii) Exceptions. For purposes of this Paragraph, all Years of Service with the
Employer shall be taken into account except the following:

  a. In the case of any Employee who has a Break in Service, Years of Service
before such break shall not be required to be taken into account until such
Employee has completed one Year of Service subsequent to his Reemployment
Commencement Date. An Employee's Reemployment Commencement Date shall be the
first date on which the Employee completes an Hour of Service following the last
Computation Period in which a Break in Service occurred.

 

  b. In the case of any Participant who has no nonforfeitable right to any
benefit derived from Employer contributions hereunder, Years of Service with the
Employer before a period of consecutive Breaks in Service shall not be required
to be taken into account if the number of consecutive Breaks in Service in such
period equals or exceeds the greater of (i) five or (ii) the aggregate number of
such Years of Service before such break. Such aggregate number of Years of
Service before such break shall be deemed not to include any Years of Service
not required to be taken into account by reason of any prior Break in Service.
For purposes of this Subsection, the Computation Periods used in computing the
Years of Service before such break shall be the Computation Periods beginning at
the Participant’s Employment Commencement Date.

 

  c. Years of Service before May 1, 1976, if such years of Service would have
been disregarded under the break in service rules of the Plan as in effect prior
to May 1, 1976, which rules provided that service must be continuous with the
Employer and that service of an Employee whose employment by the Employer ceased
and who is later re-employed shall be computed from the most recent date of
re-employment.

 

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2. Retirement Benefits for Former Pearson Participants

 

  a) Pension Commencing at Normal Retirement Date. A former Pearson Participant
who retires on or after his Normal Retirement Date shall be entitled to receive
the Basic Annual Pension provided for under this Section or an optional pension
in accordance with Paragraph 3. The Basic Annual Pension payable to a
Participant who retires at or after his Normal Retirement Date shall be equal to
(i) plus (ii) minus (iii) where (i) is 2% of the Participant’s Pension
Compensation Base multiplied by his Years of Service not in excess of 20 Years,
(ii) is 1.25% of the Participant’s Pension Compensation Base multiplied by his
Years of Service in excess of 20 Years, and (iii) is 1.25% of the Participant’s
Primary Social Security Benefit multiplied by his Years of Service not in excess
of 40 Years.

 

  b) Pension Commencing at Early Retirement Date. The Basic Annual Pension
payable to a Participant who retires on his Early Retirement Date shall be equal
to his Accrued Benefit, reduced according to the following rules: (i) the
portion specified in Paragraph 2(a)(i) and 2(a)(ii) shall be reduced by 3% for
each year by which the Participant’s Annuity Starting Date precedes his Normal
Retirement Date, and (ii) the portion specified in Paragraph 2(b)(iii) shall be
reduced by 1/15 for each of the first five years and by 1/30 for each of the
next five years by which the Annuity Starting Date precedes his Normal
Retirement Date.

 

  c) Eligibility for Early Retirement after Termination of Employment. A
Participant who terminates his service prior to satisfying the age requirement
for early retirement set forth in Paragraph 1.21 shall be entitled upon
satisfying such age requirement, by written notice to the Committee, to receive
a pension benefit commencing upon his Early Retirement Date (or on the first day
of any month thereafter, but no later than his Normal Retirement Date) equal to
his Accrued Benefit, reduced by 1/15 for each of the first five years and by
1/30 for each of the next five years by which the Annuity Starting Date precedes
his Normal Retirement Date.

 

3. Option Available. Subject to the provisions of Article 6, a Participant
entitled to a pension hereunder may elect a pension which is the Actuarial
Equivalent of his Basic Annual Pension accrued as of December 31, 1993, limited,
however, to one of the following options:

 

  a) A 60-month-certain option, which shall be a monthly pension payable for the
life of the Participant, and, if 60 monthly installments have not been paid
prior to his death, such monthly installments shall continue thereafter to his
Beneficiary until the number of monthly installments paid to him and his
Beneficiary total 60.

 

  b) A life-only option, which shall be a pension payable for the life of a
Participant only without guarantee of a minimum number of payments.

 

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  c) A Qualified Joint and Survivor Annuity. This option shall be automatic
unless the Participant elects in writing not to receive his benefits in the form
of a Qualified Joint and Survivor Annuity. Such election must be made within the
period specified in Section 6.9.

 

4. Preretirement Death Benefits. In the event of the death of a Former Pearson
Participant who meets the requirements for a Preretirement Death Benefit under
Article 7, the amount to be paid to the Participant’s spouse shall not be less
than the amount that would be paid if his Accrued Benefit under this Appendix F
were substituted for the benefit earned under this Plan without regard to
Appendix F.

 

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Appendix H

Early Retirement Reduction Factors.

 

Age at Date on which Distribution Commences

   Factor

65

   1.0000

64

   .9200

63

   .8400

62

   .7600

61

   .7000

60

   .6500

59

   .6100

58

   .5700

57

   .5400

56

   .5100

55

   .4800

If the distribution of the Participant’s benefit occurs at a date other than his
birthday then his Early Retirement Reduction Factor shall be determined by
linearly interpolating to the appropriate retirement reduction factor for the
Participant’s current age at the time of distribution (based on full years and
months completed) from the retirement factors corresponding to the Participant’s
age at his last and next birthday.

 

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