The Exhibit Index is on page ___9___ of ___69__ total pages
As filed with the Securities and Exchange Commission on November 29, 1995
Registration No. 33-__________________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
---------------------
PHH CORPORATION
(Exact name of issuer as specified in its charter)
Maryland 52-0551284
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11333 McCormick Road 21031
Hunt Valley, Maryland (Zip Code)
(Address of principal executive offices)
-------------------------
AMENDED AND RESTATED EMPLOYEE INVESTMENT PLAN
(Full title of the plan)
-------------------------
GORDON W. PRIEST, JR., Esquire
Assistant General Counsel & Securities Counsel
PHH Corporation
11333 McCormick Road
Hunt Valley, Maryland 21031
(410) 771-1900
(Name, address and telephone number,
including area code, of agent for service)
-------------------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Title of Amount Proposed maxi- Proposed maxi- Amount of
securities to to be mum offering mum aggregate registration
be registered registered price per share offering price fee
- ------------- ---------- --------------- ----------------- ---
<S> <C> <C> <C> <C>
Common Stock 450,000 shares $45.8125(1) $20,615,625 (1) $7,109.00 (1)
(no par value) ------- --------- -------------- ------------
- --------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rule 457(c) and (h), the proposed maximum offering price per
share, proposed maximum aggregate offering price, and the amount of
registration fee are based upon the average high and low prices reported
by the New York Stock Exchange on November 21, 1995
(2) Pursuant to Rule 416(c), the issuer is registering an indeterminate
amount of interests in the Plan for which no registration fee is required.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
- ------------------
*Information required by Part I to be contained in the Section
10(a) prospectus is omitted from the registration statement in
accordance with Rule 428 under the Securities Act of 1933 and
the Note to Part I of Form S-8.
-----------------
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents have been filed by PHH Corporation (the
"Registrant") with the Securities and Exchange Commission (the "SEC") and are
incorporated herein by reference: (a) Company's Annual Report on Form 10-K for
the year ended April 30, 1995; (b) the Company's Quarterly Report on Form 10-Q
for the period ending July 31, 1995; the Plan's Annual Report on Form 11-K for
the Plan year ending December 31, 1994, and all other reports filed with the SEC
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") since April 30, 1995.
All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which deregisters
all securities remaining unsold shall be deemed to be incorporated by reference
into this Registration Statement and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. The documents required to be so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
[Not required].
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
[Not Required]
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Directors and officers of the Registrant are indemnified under Section
2-418 of the Corporations and Associations Article of the Annotated Code of
Maryland, and under Article SIXTH, Section 4 of the Registrant's charter.
As permitted by Maryland law, Article SIXTH, Section 3 of the
Registrant's Charter limits the monetary liability of its directors and officers
to the Registrant and its stockholder to the maximum extent permitted by
Maryland law in effect from time to time. Section 3 of the Article SIXTH
provides as follows:
<PAGE>
Section 3. To the fullest extent permitted by Maryland
statutory or decisional law, as amended or interpreted, no director or
officer of the Corporation shall be personally liable to the
Corporation or its stockholders for money damages. No amendments of the
charter of the Corporation or repeal of any of its provisions shall
limit or eliminate the benefits provided to directors and officers
under this provision with respect to any act or omission which occurred
prior to such amendment or repeal.
As permitted under Subsection (k) of Section 2-418 of the Corporations
and Associations Article of the Annotated Code of Maryland, the Registrant has
purchased and maintains insurance on behalf of its directors and officers
against any liability asserted against such directors and officers in their
capacities as such whether or not the Registrant would have the power to
indemnify such persons under the provisions of the Maryland law governing
indemnification.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
[Not applicable].
ITEM 8. EXHIBITS.
Exhibit
Number Description
4 Amended and Restated Employee Investment Plan of the Registrant.
5 Opinion of Counsel*
23 Consent of Independent Certified Public Accountants.
24 Power of Attorney.
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of Securities Act of 1933;
- ------------------
*The Opinion of Counsel required by Item 601(b)(5) is omitted from the
registration statement in accordance with Item 8 of Form S-8. The
Registrant has submitted the plan and all amendments thereto to the
Internal Revenue Service ("IRS") in a timely manner and has made or
will make all changes required by the IRS in order to qualify the plan.
<PAGE>
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof), which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement; provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the registration statement is on Form S-3 or Form
S-8, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means
of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d) if the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes to deliver or
cause to be delivered with the prospectus, to each person to whom the prospectus
is sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the prospectus, to
deliver, or cause to be delivered to each person to whom the prospectus is sent
or given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
<PAGE>
(d) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Hunt Valley, and the State of Maryland on this
28th day of November, 1995.
PHH CORPORATION
By /s/Robert D. Kunisch
Robert D. Kunisch
Chairman of the Board,
Chief Executive Officer
and President
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
Principal Executive Officer:
/s/ Robert D. Kunisch Chairman of the Date: November 28, 1995
- -----------------------
Robert D. Kunisch Board, Chief
Executive Officer
and President
Principal Financial Officer:
/s/ Roy A. Meierhenry Senior Vice Date: November 28, 1995
- -----------------------
Roy A. Meierhenry President and
Chief Financial
Officer
Principal Accounting Officer:
/s/ Nan A. Grant Controller Date: November 28, 1995
- ------------------
Nan A. Grant
<PAGE>
A Majority of the Board of Directors:
James S. Beard, Andrew F. Brimmer, George L. Bunting, Jr., Alan P.
Hoblitzell, Jr., Paul X. Kelley, Robert D. Kunisch, Francis P. Lucier, Kent C.
Nelson, Donald J. Shepard, Anne M. Tatlock, Alexander B. Trowbridge.
By /s/ Robert D. Kunisch For himself Date: November 28, 1995
- --------------------------
Robert D. Kunisch and as
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933,
the trustee (or other persons who administer the employee benefit plan) has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Hunt Valley, State of
Maryland on this 28th day of November, 1995.
PHH Corporation
Amended and Restated Employee Investment Plan
By: /s/ Roy A. Meierhenry
Roy A. Meierhenry, Trustee
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page Number
<S> <C> <C>
4 Amended and Restated Employee
Investment Plan 10
23 Consent of Independent
Certified Public Accountants 66
24 Power of Attorney 67-69
</TABLE>
EXHIBIT 4
PHH CORPORATION
EMPLOYEE INVESTMENT PLAN AND TRUST AGREEMENT
Amendment and Restatement
Generally Effective January 1, 1987
<PAGE>
PHH CORPORATION
EMPLOYEE INVESTMENT PLAN AND TRUST AGREEMENT
Amendment and Restatement
Generally Effective January 1, 1987
TABLE OF CONTENTS
Page
ARTICLE I
NAME AND PURPOSE
1.1 Name and Purpose 2
ARTICLE II
DEFINITIONS
2.1 Account 2
2.2 Act 2
2.3 Adjustment Factor 2
2.4 Affiliated Employer 2
2.5 Board of Directors 3
2.6 Break in Service 3
2.7 Code 3
2.8 Committee 3
2.9 Common Stock 3
2.10 Company 3
2.11 Company Account 3
2.12 Compensation 3
2.13 Contributions 4
2.14 Designated Beneficiary 4
2.15 Early Retirement Date 4
2.16 Effective Date 4
2.17 Eligible Earnings 4
2.18 Eligible Employee 5
2.19 Employee Account 6
2.20 Employee Contribution 6
2.21 Employer 6
2.22 Family Member 6
2.23 Highly Compensated Employee 6
2.24 Hour of Service 10
2.25 Inactive Participant 10
2.26 Insider 11
2.27 Investment Fund(s) 11
2.28 Matchable Portion 11
2.29 Matching Contribution 11
2.30 Non-Highly Compensated Employee 11
2.31 Normal Retirement Date 11
2.32 Participant 11
2.33 PHH Common Stock Fund 11
2.34 Plan 11
2.35 Plan Year 11
2.36 Pension Plan 12
2.37 Prior Plan 12
2.38 Prior Plan Employee Account 12
2.39 Prior Plan Matching Account 12
2.40 Qualified Domestic Relations Order 12
2.41 Qualified Nonelective Contributions 12
2.42 Rollover Account 12
2.43 Rollover Contribution 12
2.44 Salary Deferral Agreement 13
2.45 Salary Deferral Contributions 13
2.46 Salary Deferral Rate 13
2.47 Surviving Spouse 13
2.48 Trust Agreement 14
2.49 Trust Property 14
2.50 Trustee 14
2.51 Valuation Date 14
2.52 Voluntary Employee Contributions 14
2.53 Withdrawal Election Form 14
2.54 Year of Vesting Service 14
ARTICLE III
PARTICIPATION
3.1 Participation 15
3.2 Submission of Salary Deferral Agreements 15
3.3 Collective Bargaining Employees 15
3.4 Participation by Insiders 16
<PAGE>
ARTICLE IV
CONTRIBUTIONS
4.1 Rollover Contributions 16
4.2 Salary Deferrals and Investment Designations 17
4.3 Salary Deferral Contributions 17
4.4 Changes in Eligible Earnings 17
4.5 Changes in Elections 18
4.6 Employer Matching Contributions 19
4.7 Time for Contributions 19
4.8 Average Actual Deferral Percentage Tests 19
4.9 Maximum Amount of Salary Deferral Contributions 20
4.10 Special Rules Concerning Actual Deferral
Percentages 21
4.11 Limitations on Employee Contributions and
Matching Contributions 22
4.12 Distribution of Excess Deferrals 26
4.13 Distribution of Excess Contributions 27
4.14 Distribution of Excess Aggregate Contributions 29
4.15 Employer's Right to Make Additional Contribution 31
4.16 Exclusive Benefit 31
ARTICLE V
INVESTMENT OF FUNDS
5.1 Investment of Employee Accounts 32
5.2 Committee Changes in Investment Funds 32
5.3 Investment of Company Accounts 32
5.4 Participant Designations of Investments 33
5.5 Temporary Investments by the Trustee 33
5.6 Procedures for Investments 33
5.7 No Guarantees of Investments 34
ARTICLE VI
VESTING
6.1 Prior Plan Employee, Rollover, Prior Plan Matching and
Employee Accounts Fully Vested 34
6.2 Vesting of Company Accounts 34
6.3 Amendment of Vesting Schedule 36
ARTICLE VII
VOLUNTARY WITHDRAWALS FROM PRIOR PLAN ACCOUNTS
7.1 Voluntary Withdrawals 37
7.2 Effective Date of Withdrawal 37
7.3 Distribution of Interests 37
ARTICLE VIII
HARDSHIP WITHDRAWALS, POST AGE 59-1/2 WITHDRAWALS
AND ROLLOVER ACCOUNT WITHDRAWALS
8.1 Hardship Withdrawals 38
8.2 Post Age 59-1/2 Withdrawals 41
8.3 Rollover Account Withdrawals 41
8.4 Distribution of Interests 42
ARTICLE IX
VALUATION OF FUNDS AND ACCOUNTS
9.1 Valuation of Funds and Accounts 42
9.2 Valuations for Withdrawals or Distributions 42
9.3 Method of Valuations of Investment Funds 43
ARTICLE X
TERMINATION OF PARTICIPATION AND DISTRIBUTIONS
10.1 Discontinuance of Participation by Participants 43
10.2 Termination of Employment 44
10.3 Medium of Distribution 44
10.4 Optional Distributions Forms 44
10.5 Time of Distribution; Small Distributions;
Notice Requirements 45
10.6 Distribution of a Participant's Interest at Death46
10.7 Distribution Requirements 46
10.8 Direct Rollover Elections 51
<PAGE>
ARTICLE XI
VOTING OF STOCK
11.1 Voting of Stock by Trustee 52
11.2 Offers for Common Stock 53
ARTICLE XII
THE COMMITTEE
12.1 Appointment of Committee 54
12.2 Officers and Subcommittees 54
12.3 Committee Procedures 54
12.4 Committee Powers 54
12.5 Information for Committee 55
12.6 Plan Records 55
12.7 Instructions to Trustees 55
12.8 Allocation of Duties, Etc. Among
Committee Members 56
12.9 Delegation by Committee 56
12.10 Investment Managers 57
12.11 Costs and Expenses 57
12.12 Standard of Care 57
12.13 Indemnification and Insurance 57
12.14 Disputes 58
12.15 Committee Members as Participants 58
ARTICLE XIII
CLAIMS PROCEDURE
13.1 Claims Procedure 58
13.2 Compliance with Regulations 59
ARTICLE XIV
TRUSTS
14.1 Establishment of Trusts; Appointment and
Removal of Trustee 60
14.2 Standard of Care 60
ARTICLE XV
DISCONTINUANCE OF PLAN
15.1 Termination and Amendment 60
15.2 Time for Distributions Upon Plan Termination 60
15.3 Distributions Upon Sale of Assets - Time for
Distributions 61
15.4 Distributions Upon Sale of Subsidiary - Time
for Distributions 61
ARTICLE XVI
PROHIBITION OF ASSIGNMENT OF INTEREST
16.1 Anti-Assignment Provision 61
16.2 Qualified Domestic Relations Orders 62
ARTICLE XVII
GOVERNING LAW
17.1 Governing Law 62
ARTICLE XVIII
TOP HEAVY PROVISIONS
18.1 Top Heavy Requirements 62
18.2 Top Heavy Plan Definitions 64
ARTICLE XIX
LIMITATION ON CONTRIBUTIONS
19.1 Maximum Annual Additions and Benefits 67
19.2 Disposition of Excess Annual Additions 67
<PAGE>
ARTICLE XX
PLAN MERGERS, CONSOLIDATION AND TRANSFERS
20.1 Mergers, Consolidations and Transfers 68
ARTICLE XXI
LOANS TO PARTICIPANTS
21.1 Loan Administration 68
21.2 Frequency, Number 69
21.3 Amount, Availability 69
21.4 Non-Discrimination 69
21.5 Loan Approval 70
21.6 Interest Rate 70
21.7 Collateral 71
21.8 Repayment 71
21.9 Participant Consent to Loan Set-Offs 73
21.10 Distributions Prohibited 73
21.11 No Alienation 73
21.12 Disclosure 73
ARTICLE XXII
TRUST AND TRUSTEE
22.1 Trust Fund 73
22.2 Trustee Control 74
22.3 Investment Funds 74
22.4 Trustee Appointment and Resignation; Removal
and Succession of Trustees 74
22.5 Prudent Person Rule 75
22.6 Liability; Expenses; Compensation 75
22.7 Management of Assets 76
22.8 Reliance by Trustee 79
22.9 Changes in Committee Membership 79
22.10 Legal Counsel 80
22.11 Accounting of Funds and Transactions 80
22.12 Reliance on Trustee 80
22.13 Legal Action 81
<PAGE>
PHH CORPORATION
EMPLOYEE INVESTMENT PLAN AND TRUST AGREEMENT
AMENDMENT AND RESTATEMENT
GENERALLY EFFECTIVE JANUARY 1, 1987
R E C I T A L S
This Amendment and Restatement of the PHH Corporation Employee
Investment Plan (the "Plan"), formerly called the PHH Group, Inc. Employee
Savings and Investment Plan, generally effective as of January 1, 1987, by PHH
CORPORATION, a Maryland corporation (the "Company"), and Trust Agreement by and
between the Trustee and the Company,
W I T N E S S E T H:
The Company has heretofore established and maintains the Plan.
The Company reserved the right pursuant to the provisions of
the Plan to alter the Plan at any time and from time to time.
The Company amended and restated the Plan, effective January
1, 1987, among other things, to have such Plan comply with the requirements of
the Tax Reform Act of 1986, with the amended and restated Plan being considered
a continuation of the Plan as in existence prior hereto. The Company adopted the
amended and restated Plan subject to such changes as the Internal Revenue
Service might require in order for the Plan to be ruled tax-exempt under the
Code and in compliance with section 401(k) of the Code, with any such changes to
be made retroactively effective if necessary or desirable.
In order to incorporate the changes required by the Internal
Revenue Service, the Plan is again amended and restated in its entirety,
effective, except as specifically provided to the contrary herein, as of January
1, 1987, to provide as follows.
ARTICLE I
NAME AND PURPOSE
1.1 NAME AND PURPOSE. This Plan, which shall be known as the PHH
Corporation Employee Investment Plan, is designed to enable eligible employees
of the Company and certain of its subsidiaries to save for retirement in a
convenient way and to share in the ownership of the Company. Participation in
the Plan is entirely voluntary.
ARTICLE II
DEFINITIONS
2.1 ACCOUNT means, with respect to a Participant, any of the ledger
accounts or sub-accounts maintained to set out such Participant's proportionate
interest in the Trust Property. The Committee or its designee shall maintain as
appropriate for each Participant the following Accounts: (i) Prior Plan Employee
Account, (ii) Employee Account, (iii) Prior Plan Matching Account, (iv) Company
Account, (v) Rollover Account, (vi) Qualified Nonelective Contribution Account
and (vii) Qualified Matching Contribution Account.
2.2 ACT means the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time, or any successor statute.
2.3 ADJUSTMENT FACTOR means the cost of living adjustment factor
prescribed by the Secretary of the Treasury under section 415(d) of the Code for
years beginning after December 31, 1987, as applied to such items and in such
manner as the Secretary of the Treasury shall provide.
2.4 AFFILIATED EMPLOYER means the Company and any corporation which is
a member of a controlled group of corporations (as defined in section 414(b) of
the Code) which includes the Company, any trade or business (whether or not
incorporated) which is under common control (as defined in section 414(c) of the
Code) with the Company, any organization (whether or not incorporated) which is
a member of an affiliated service group (as defined in section 414(m) of the
Code) which includes the Company and any other entity required to be aggregated
with the Company pursuant to regulations under section 414(o) of the Code.
2.5 BOARD OF DIRECTORS means the Board of Directors of the
Company.
2.6 BREAK IN SERVICE means a Plan Year during which a Participant
does not complete more than five hundred (500) Hours of
Service.
2.7 CODE means the Internal Revenue Code of 1986, as it may be
amended from time to time, or any successor statute.
2.8 COMMITTEE means the Committee as defined in Article XII.
2.9 COMMON STOCK means the Company's common stock.
2.10 COMPANY means PHH Corporation (formerly PHH Group, Inc.), a
Maryland corporation, and any successor corporation.
2.11 COMPANY ACCOUNT means an account established for each Participant
in (i) the PHH Common Stock Fund into which shares of Common Stock are purchased
or acquired by the Trustee with Matching Contributions and/or (ii) any other
Fund into which an interest is purchased or acquired by the Trustee with
Matching Contributions, together with appreciation, depreciation and earnings
thereon, are allocated.
2.12 COMPENSATION means the compensation paid by the Employer to the
Participant during the Plan Year which is required to be reported as wages on
the Participant's Form W-2 and shall also include compensation which is not
currently includible in the Participant's gross income by reason of the
application of sections 125, 402(a)(8) or 402(h)(1)(B) of the Code.
Notwithstanding the preceding, for purposes of the applicable nondiscrimination
tests, the Committee (to the extent permitted, or required, by applicable law)
may designate from year to year any definition of Compensation which is
permitted under Code section 414(s) and may designate as the applicable period
for determining Compensation the calendar year ending within the applicable Plan
Year or that portion of the Plan Year during which the Participant is eligible
to participate in the Plan.
Effective as of the first day of the first Plan Year beginning
on or after January 1, 1989, Compensation taken into account under the Plan for
any year may not exceed the annual compensation limit as set forth under section
401(a)(17) of the Code. The annual compensation limit will be adjusted for
increases in the cost-of-living in accordance with section 401(a)(7) of the
Code. In determining the Compensation of a Participant for purposes of the Code
section 401(a)(17) compensation limitation, the rules of section 414(q)(6) of
the Code shall apply, except in applying such rules, the term "family" shall
include only the spouse of the Participant and any lineal descendants of the
Participant who have not attained age nineteen (19) before the close of the
year.
2.13 CONTRIBUTIONS means, as the context requires, any or all of the
following: Salary Deferral Contributions, Matching Contributions, Voluntary
Employee Contributions, Rollover Contributions, Employer contributions to
satisfy the applicable nondiscrimination tests and payments made by Participants
to repay loans made hereunder.
2.14 DESIGNATED BENEFICIARY means the person designated as a
beneficiary by the Participant under the Plan.
2.15 EARLY RETIREMENT DATE means the first day of the month that
coincides with or next follows the Participant's (1) attainment of age
fifty-five (55) and (2) completion of three (3) Years of Vesting Service.
2.16 EFFECTIVE DATE means the effective date of this amendment and
restatement, generally January 1, 1987, unless otherwise expressly indicated.
2.17 ELIGIBLE EARNINGS means the gross compensation paid to the
Employee or Participant by the Employer, excluding pay for overtime or other
extra work, bonuses and profit sharing payments, except that, in the case of
commissioned salespersons, one hundred percent (100%) of the commissions as and
when paid to the Participant during each Plan Year shall be included in Eligible
Earnings. Notwithstanding the foregoing, amounts representing salary reductions
by an Employee or Participant under any flexible benefits plan maintained by the
Employer under section 125 of the Code will be considered Eligible Earnings of
that Employee or Participant. Prior to January 1, 1988 (and prior to July 9,
1987 for employees of Avis Leasing, Inc.), the phrase "fifty percent (50%)"
shall be substituted for the phrase "one hundred percent (100%)" in this
Section.
Effective as of the first day of the first Plan Year beginning
on or after January 1, 1989, Compensation taken into account under the Plan for
any year may not exceed the annual compensation limit as set forth under section
401(a)(17) of the Code. The annual compensation limit will be adjusted for
increases in the cost-of-living in accordance with section 401(a)(17) of the
Code. In determining the Compensation of a Participant for purposes of the Code
section 401(a)(17) compensation limitation, the rules of section 414(q)(6) of
the Code shall apply, except in applying such rules, the term "family" shall
include only the spouse of the Participant and any lineal descendants of the
Participant who have not attained age nineteen (19) before the close of the
year.
2.18 ELIGIBLE EMPLOYEE means any employee who has been hired by the
Employer to work on a regular schedule of at least one thousand (1,000) hours in
a twelve (12) month period and who is employed and has been employed by the
Employer for six (6) months. The term "employed" in the preceding sentence shall
include (a) at the discretion of the Committee, previous employment by any
corporation which has been acquired or all or substantially all of the assets
and business of which have been acquired by the Company or (b) employment by a
majority owned subsidiary of the Company.
An employee who does not become an Eligible Employee pursuant
to the foregoing will become an Eligible Employee when the employee is credited
with at least 1,000 Hours of Service in an eligibility computation period. For
purposes of the preceding sentence, an "eligibility computation period" shall
mean the twelve consecutive month period commencing with the employee's
employment commencement date and each Plan Year beginning after the employee's
employment commencement date.
The term "employee" in the preceding paragraphs excludes
leased employees within the meaning of section 414(n)(2) of the Code.
2.19 EMPLOYEE ACCOUNT means a ledger account maintained for each
Participant in any Investment Fund(s) designated under this Plan by the
Participant into which all Salary Deferral Contributions together with
appreciation, depreciation and earnings thereon are allocated.
2.20 EMPLOYEE CONTRIBUTION means, as described in Section 4.11,
any contribution to the Plan made by the Employee for the Plan Year.
2.21 EMPLOYER means the Company and any other corporation which, with
the consent of the Company, adopts the Plan by action of its board of directors.
2.22 FAMILY MEMBER means an individual described in section
414(q)(6) of the Code.
2.23 HIGHLY COMPENSATED EMPLOYEE. The term Highly Compensated
Employee includes active Highly Compensated Employees and former Highly
Compensated Employees.
An active Highly Compensated Employee includes any Employee
who performs service for the Employer during the determination year and who,
during the "look-back year" (i) received compensation (as defined below) from
the Employer in excess of seventy-five thousand dollars ($75,000) (as adjusted
pursuant to section 415(d) of the Code); (ii) received compensation (as defined
below) from the Employer in excess of fifty thousand dollars ($50,000) (as
adjusted pursuant to section 415(d) of the Code) and was a member of the
top-paid group (top twenty percent (20%) of non-excludable employees ranked by
compensation (as defined below)) for such year; or (iii) was an officer of the
Employer and received compensation (as defined below) during such year that is
greater than fifty percent (50%) of the dollar limitation in effect under
section 415(b)(1)(A) of the Code. The term Highly Compensated Employee also
includes: (i) Employees who are both described in the preceding sentence if the
term "determination year" is substituted for the term "look-back year" and the
Employee is one (1) of the one hundred (100) Employees who received the most
compensation (as defined below) from the Employer during the determination year;
and (ii) Employees who are five percent (5%) owners at any time during the
look-back year or determination year.
If no officer has satisfied the compensation requirement of (iii) above during
either a determination year or look-back year, the highest paid officer for
such year shall be treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan Year. Except as
otherwise elected, as provided below, the look-back year shall be the
twelve (12) month period immediately preceding the determination year.
A former Highly Compensated Employee includes any Employee who separated from
service (or was deemed to have separated) prior to the determination year,
performs no service for the Employer during the determination year, and was an
active Highly Compensated Employee for either the separation year or any
determination year ending on or after the Employee's fifty-fifth (55th)
birthday.
If an Employee is, during a determination year or look-back year, a family
member of either a five percent (5%) owner who is an active or former
Employee or a Highly Compensated Employee who is one (1) of the ten (10)
most highly compensated Employees ranked on the basis of compensation (as
defined below) paid by the Employer during such year, then the family
member and the five percent (5%) owner or top ten (10) highly compensated
employee shall be aggregated. In such case, the family member and five
percent (5%) owner or top ten (10) highly compensated employee shall be
treated as a single Employee receiving compensation (as defined below) and
Plan contributions or benefits equal to the sum of such compensation (as
defined below) and contributions or benefits of the family member and five
percent (5%) owner or top ten (10) highly compensated employee. For
purposes of this section, family member includes the spouse, lineal
ascendants and descendants of the Employee or former Employee and the
spouses of such lineal ascendants and descendants.
The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of Employees in the top-paid
group, the top one hundred (100) Employees, the number of Employees treated
as officers and the compensation that is considered, will be made in
accordance with section 414(q) of the Code and the regulations thereunder.
In determining whether an individual is a Highly Compensated Employee, the
term "compensation" means compensation as defined for purposes of Article
XIX, which is received by the individual during the determination year or
during the look-back year, including, however, elective or salary reduction
contributions to a cafeteria plan under section 125 of the Code, a cash or
deferred arrangement under section 401(k) of the Code, a simplified
employee pension under section 402(h) of the Code, or a tax-sheltered
annuity under section 403(b) of the Code.
Notwithstanding the preceding, in determining whether an individual is a Highly
Compensated Employee, the Employer may make the following elections:
(a) The Employer may elect to apply the alternative definition set forth
below to determine whether an Employee separated from service before
January 1, 1987 is a former Highly Compensated Employee. The election,
once made, cannot be changed without the consent of the Commissioner of
the Internal Revenue Service. Under the alternative definition, a
former Highly Compensated Employee includes any former Employee who
separated from service with the Employer prior to January 1, 1987, and
was described in any one or more of the following groups during either
the Employee's separation year (as defined in Treasury Regulations
under section 414(q) of the Code) (or the year preceding such separation
year) or any year ending on or after such Employee's fifty-fifth (55th)
birthday (or the last year ending before such Employee's fifty-fifth
(55th) birthday): (i) the Employee was a five percent (5%) owner of the
Employer at any time during the year; (ii) the Employee received
compensation from the Employer in excess of fifty thousand dollars
($50,000) during the year. The determinations provided for in this
alternative definition may be made on the basis of the calendar year,
the Plan Year, or any other twelve (12) month period selected by the
Employer and applied on a reasonable and consistent basis.
(b) In a determination of the top paid twenty percent (20%) group for
purposes of determining whether an individual is a Highly Compensated
Employee, the Employer may elect, on a consistent and uniform basis, to
modify the permissible exclusions for months of service, hours per week,
months per year, and age by substituting a shorter period of service or
lower age than that specified in section 414(q) of the Code and
regulations thereunder. In addition, the Employer may elect not to
exclude those Employees who may be excluded because (i) they are
covered by a bona fide collective bargaining agreement, (ii) ninety
percent (90%) or more of all Employees are covered by bona fide collective
bargaining agreements, and (iii) the plan being tested does not
cover Employees covered by the collective bargaining agreements. If
any of these elections are made by the Employer, the Employer must apply
the test uniformly for purposes of determining its top paid twenty
percent (20%) group with respect to all its qualified plans and
employee benefit plans and for purposes of the line of business rules
set forth in section 414(r) of the Code.
(c) The Employer may elect to use the calendar year to determine whether an
Employee is a Highly Compensated Employee in the look-back year (as defined
in Treasury Regulations under section 414(q) of the Code) calculation. The
calendar year used will be the calendar year ending with or within the
determination year (as defined in the regulations under section 414(q) of
the Code). The determination year shall be the months (if any) in the
current Plan Year which follow the end of the calendar look-back year. If
the Employer elects to make the calendar year calculation election with
respect to any plan, entity or arrangement, such election must apply with
respect to all plans, entities and arrangements of the Employer.
(d) If, at all times during the applicable year, the Employer maintained
significant business activity (and employed Employees) in at least two
(2) significantly separate geographic areas, and the Employer
satisfies such other conditions as the Secretary of the Treasury may
prescribe in regulations, the Employer may elect to determine whether an
Employee is a Highly Compensated Employee by applying the category of
Highly Compensated Employees in section 414(q)(1)(B) of the Code (which
includes any Employee who receives compensation from the Employer in
excess of seventy-five thousand dollars ($75,000) (as indexed) for the
year) by substituting fifty thousand dollars ($50,000) for
seventy-five thousand dollars ($75,000), and by disregarding the
category of Highly Compensated Employees in section 414(q)(1)(C) (which
includes any Employee who receives compensation from the Employer in
excess of fifty thousand dollars ($50,000) (as indexed) and was a member
of the top-paid twenty percent (20%) group of all non-excludable Employees
for the year).
2.24 HOUR OF SERVICE means each Hour of Service for which an Employee
is paid or entitled to payment for the performance or nonperformance of duties
for the Employer, or for which back pay is awarded or agreed to by the Employer,
regardless of mitigation of damages. A salaried employee will receive credit for
Hours of Service equal to the number of hours in his or her Employer's regular
work week for which he or she is absent on full pay status. An hourly paid
employee who is absent on pay status shall be credited with Hours of Service for
the number of hours for which he or she is paid at his or her regular hourly
rate. Any employee absent on non-pay status where he or she is credited with
continuous service shall receive credit for Hours of Service equal to the number
of hours included in his or her normal work week for each week of such absence.
In any event, Hours of Service shall be computed and credited in accordance with
section 2530.200b-2 of the Department of Labor Regulations, as the same may be
amended from time to time.
2.25 INACTIVE PARTICIPANT means any Employee or former Employee who has
ceased to be a Participant and on whose behalf an Account is maintained under
the Plan.
2.26 INSIDER means, an officer of the Company subject to Section 16
of the Securities Exchange Act of 1934.
2.27 INVESTMENT FUND(S) means, depending upon the context in which it
is used, any of the investment funds which may be made available under the Plan
as provided in Section 5.2.
2.28 MATCHABLE PORTION means each Participant's Salary Deferral
Contribution, after application of Sections 4.12 and 4.13, in an amount equal to
up to six percent (6%) of the Participant's Eligible Earnings.
2.29 MATCHING CONTRIBUTION means, as described in Section 4.6, any
contribution to the Plan made by the Employer for the Plan Year and allocated to
a Participant's Account by reason of the Matchable Portion of the Participant's
Salary Deferral Contributions.
2.30 NON-HIGHLY COMPENSATED EMPLOYEE means an Employee of the Employer
who is neither a Highly Compensated Employee nor a Family Member of a Highly
Compensated Employee.
2.31 NORMAL RETIREMENT DATE means the first day of the month
following the Participant's attainment of age sixty-five (65).
2.32 PARTICIPANT means any person who has a vested or unvested interest
in any Trust Property.
2.33 PHH COMMON STOCK FUND means the Investment Fund under the Plan
composed of shares of Common Stock purchased by the Trustee or otherwise
acquired by the Plan.
2.34 PLAN means the PHH Corporation Employee Investment Plan as amended
and restated herein.
2.35 PLAN YEAR means each calendar year that the Plan has been and
remains in effect.
2.36 PENSION PLAN means the Company's qualified defined benefit
pension plan in effect from time to time.
2.37 PRIOR PLAN means the Plan as in effect prior to January 1, 1987.
2.38 PRIOR PLAN EMPLOYEE ACCOUNT means the Participant's After Tax
Savings Account as defined in the Prior Plan.
2.39 PRIOR PLAN MATCHING ACCOUNT means the Participant's Company
After Tax Matching Account as defined in the Prior Plan.
2.40 QUALIFIED DOMESTIC RELATIONS ORDER means a domestic relations
order as defined in and meeting the requirements of section 206(d) of the Act
and the regulations thereunder, as amended from time to time.
2.41 QUALIFIED NONELECTIVE CONTRIBUTIONS means contributions (other
than Matching Contributions) made by the Employer and allocated to Participants'
accounts that the Participants may not elect to receive in cash until
distributed from the Plan, that are one hundred percent (100%) vested and
nonforfeitable when made and that are not distributable under the terms of the
Plan to Participants or their Beneficiaries earlier than the earlier of:
(i) the separation from service, death or disability of the Participant;
(ii) the attainment of age fifty-nine and one-half (59-1/2) by the Participant;
(iii) the termination of the Plan without establishment of a successor plan;
(iv) the events specified in Article XVI; or
(v) for Qualified Nonelective Contributions for Plan Years beginning before
January 1, 1989 (and earnings thereon credited before January 1, 1989),
upon the hardship of the Participant.
2.42 ROLLOVER ACCOUNT means the Participant's account hereunder
which is attributable to Rollover Contributions.
2.43 ROLLOVER CONTRIBUTION means a cash amount representing some
portion or all of the employee's interest in a plan qualified under section
401(a) or 403(a) of the Code which, prior to March 1, 1987, is contributed by an
employee to the Trustee, provided the Committee or the Trustee determines that
the amount is a qualifying rollover contribution pursuant to applicable
provisions of the Code.
The term Rollover Contribution shall also refer to amounts which the Trustee
receives on behalf of an employee directly from a plan described in section
401(a) of the Code which is or has been maintained by the employee's
previous employer.
The Trustee and the Committee may make all investigations necessary to
determine whether any amounts submitted as a Rollover Contribution may be
received, and the Trustee or the Committee shall be entitled to refuse any
such amounts if, in its discretion, it determines that such amounts do not
qualify as a rollover contribution. The Trustee or the Committee may
establish reasonable rules and regulations regarding the acceptance and
maintenance of Rollover Contributions.
Notwithstanding the foregoing, Rollover Contributions to this Plan shall be
accepted only if they comply in all respects with the applicable provisions
of sections 402 and 408 of the Code.
2.44 SALARY DEFERRAL AGREEMENT means the agreement described in
Section 3.2.
2.45 SALARY DEFERRAL CONTRIBUTIONS means contributions made to the Plan
by the Employer, both as to amount and manner as provided in Section 4.3, on
behalf of an Eligible Employee and resulting from an election by such Eligible
Employee to reduce by a designated percentage his or her Eligible Earnings for
federal and, if applicable, state and local income tax purposes.
2.46 SALARY DEFERRAL RATE means the percentage selected by an
Eligible Employee in accordance with Section 4.2.
2.47 SURVIVING SPOUSE means the person to whom the Participant is
married on the date of the Participant's death.
2.48 TRUST AGREEMENT means the Trust Agreement, as stated in a separate
document or as provided in Article XXII, by and between the Trustee and the
Company, together with any and all amendments or supplements thereto.
2.49 TRUST PROPERTY means the cash, stock and other properties
attributable to Contributions held by the Trustee.
2.50 TRUSTEE means the fiduciary agent or agents, individually and
collectively, provided for in Article XIV hereof.
2.51 VALUATION DATE means the day or days during each calendar year on
which the Company determines that the assets of the Plan or any particular
account should be valued.
2.52 VOLUNTARY EMPLOYEE CONTRIBUTIONS means voluntary after-tax
contributions made to the Prior Plan by a Participant.
2.53 WITHDRAWAL ELECTION FORM means a form prescribed by the Committee
for use by a Participant to make an election under Section 7.2 or Section 8.2 of
the Plan.
2.54 YEAR OF VESTING SERVICE means each calendar year in which an
Eligible Employee or Participant is credited with at least one thousand (1,000)
Hours of Service. Notwithstanding the foregoing, except as specified on the
Schedule attached hereto, no Years of Vesting Service will be credited to a
Participant for periods prior to the date on which the Participant's employer
became an Affiliated Employer.
For purposes of determining Years of Vesting Service, Years of Service with
entities which are Affiliated Employers, during periods during which those
entities are Affiliated Employers and during other periods as provided on
Schedule A, will be included as Years of Service with the Employer.
In addition, leased employees (as defined in Code section 414(n)) of the
Employer will be credited with Years of Service with the Employer, for
vesting purposes, for periods during which they were leased employees of
the Employer.
ARTICLE III
PARTICIPATION
3.1 PARTICIPATION.
(a) In General. A person who on the Effective Date is an Eligible Employee or
who is an Eligible Employee on the first day of the first payroll period
beginning in any month after the Effective Date may, unless otherwise
provided herein and as provided herein, become a Participant in the Plan as
of such applicable date.
(b) Re-Employed Individuals. An Eligible Employee or Participant who terminates
employment and is rehired shall be deemed to be an Eligible Employee as of
the date of his or her re-employment. For purposes of this paragraph, an
individual's date of re-employment shall be the date on which he or she
first receives credit for an Hour of Service because of the performance of
duties for the Employer.
3.2 SUBMISSION OF SALARY DEFERRAL AGREEMENTS. Each Eligible Employee
shall, as a condition of participation in the Plan, be required to complete,
execute and file with the Committee or its designee a Salary Deferral Agreement
prior to the date on which he or she may become a Participant. Any such Salary
Deferral Agreement shall be an agreement in a form satisfactory to the Committee
which provides for the Eligible Employee to receive compensation from the
Employer in a reduced amount (which form may specify a maximum reduction in
compensation, as determined from time to time by the Committee), and for the
Employer to pay Salary Deferral Contributions, in an amount equal to the amount
as determined under Sections 4.2 and 4.3, to the Trustee on behalf of the
Participant. Any such Salary Deferral Agreement shall be revocable in accordance
with its terms, provided that no revocation shall be retroactive or permit
payment to the Eligible Employee of the amount required to be contributed to the
Trust.
3.3 COLLECTIVE BARGAINING EMPLOYEES. If an individual's employment with
the Employer is covered by a collective bargaining agreement and if retirement
benefits were a subject of good faith bargaining between the Employer and the
individual's collective bargaining representative, the individual shall not be
eligible to be a Participant hereunder unless so specified in the collective
bargaining agreement.
3.4 PARTICIPATION BY INSIDERS. The Committee shall establish guidelines
for assisting an Insider to minimize the extent to which transactions under the
Plan by him or her, including, but not limited to, investment designations and
the method and timing of deferrals to and withdrawals from the Plan, constitute
"purchases" or "sales" of Common Stock within the meaning of Section 16 of the
Securities Exchange Act of 1934 and the rules thereunder; provided, however,
that, (i) the establishment of guidelines shall not be construed as allowing the
Committee to prohibit the Insider from exercising any rights as a Participant in
the Plan or be construed to impose upon the Committee or the Employer
responsibility for the Insider's compliance with Section 16, and (ii) the
Insider shall have the sole responsibility for complying with Section 16 with
respect to his or her participation in the Plan and otherwise.
ARTICLE IV
CONTRIBUTIONS
4.1 ROLLOVER CONTRIBUTIONS. Notwithstanding the following provisions of
this Section, no Rollover Contributions may be made to the Plan after February
28, 1987 except by direct transfer from a plan described in section 401(a) of
the Code. The opportunity to make Rollover Contributions shall be made available
to all employees upon an equal basis. For the limited purpose of being eligible
to make a Rollover Contribution, all employees of the Employer will be
considered to be Participants of the Plan. Such an employee shall not, however,
otherwise be entitled to contribute to the Plan unless and until the employee
meets all requirements for participation in the Plan. Any such Rollover
Contribution made by a Participant shall be held in a separate Rollover Account
for such Participant which will share in any income or losses and/or
appreciation or depreciation of the Trust Property. Rollover Contributions shall
not be considered part of a Participant's Salary Deferral Contributions under
this Plan and shall have no effect upon any limitation under this Plan based
upon a Participant's contributions. A Participant shall, at the time of making a
Rollover Contribution, designate in writing the Investment Fund(s) in which the
Rollover Contribution is to be invested and the Trustee shall make investments
in accordance therewith as soon as practicable after its receipt of the Rollover
Contributions. A Participant's Rollover Account shall be invested in the same
manner as the Participant's Employee Account.
4.2 SALARY DEFERRALS AND INVESTMENT DESIGNATIONS. At the time of filing
with the Committee of a Salary Deferral Agreement, the Eligible Employee shall
select a Salary Deferral Rate which shall be in any percentage of his or her
Eligible Earnings from zero percent (0%) to and including ten percent (10%). At
the same time, such Eligible Employee shall, as provided in Section 5.4,
designate what percentage of the Salary Deferral Rate is to be invested by the
Trustee in each of the Investment Funds.
If, prior to the beginning of the Plan Year or during the Plan Year, it appears
that the tests in Sections 4.8 or 4.11 will not be met for the Plan Year,
the Committee may amend or revoke the Salary Deferral Agreements of Highly
Compensated Employees.
4.3 SALARY DEFERRAL CONTRIBUTIONS. Beginning as soon as practicable
after the filing of the Salary Deferral Agreement pursuant to Section 3.2 or a
modification thereto as provided in Section 4.5(a), there shall be contributed
by each Employer to the Plan Salary Deferral Contributions in an amount equal to
the Salary Deferral Rate each Participant has selected times each Participant's
Eligible Earnings rounded down to the nearest whole dollar.
4.4 CHANGES IN ELIGIBLE EARNINGS. If a Participant's Eligible Earnings
increase or decrease, his or her Salary Deferral Contribution determined under
Section 4.3 shall at such time be automatically and commensurately increased or
decreased. During any period for which a Participant receives no Eligible
Earnings there shall be no Salary Deferral Contributions or Matching
Contributions made to the Plan in respect of such Participant.
4.5 CHANGES IN ELECTIONS.
(a) Salary Deferral Rates and Investment Fund Choices. Subject to such
administrative rules as are established by the Committee, a Participant may
file a written request with the Committee to effect any or all of the
following:
(1) To change his or her Salary Deferral Rate from one permitted rate to
another permitted rate;
(2) To change the apportionment of his or her Salary Deferral Contributions
among Investment Funds and in respect of his or her Employee Account
balance and Rollover Account balance. Any such apportionment must be done
in the percentage multiples set forth in Section 5.4 and may be done by
telephonic instructions from the Participant to the extent permitted under
the administrative rules or policy established by the Committee.
Such administrative rules as are to be established by the Committee
pursuant to this Section 4.5(a) shall provide the Participant with the
opportunity to change his or her Salary Deferral Rate and any of his
Investment Fund options with a frequency appropriate in light of the market
volatility of the Investment Funds, but in no event less frequently than
once within any three month period. The Committee shall promptly carry out
such instructions changing the Salary deferral Rate and Investment Fund
options; provided, however, that the Committee may decline to carry out any
of the Participant's instructions that would jeopardize the Plan's tax
qualification or result in a prohibited transaction under ERISA.
(b) Liquidation of "Election Stock". A Participant may make elections, at any
time after his or her attainment of age fifty (50) and pursuant and subject
to such administrative rules as are established by the Committee, to
liquidate his or her "Election Stock" (as hereafter defined). For purposes
of this subsection, Election Stock means the Participant's vested interest,
determined under Article VI, in the Participant's Prior Plan Employee
Account, Company Account and Prior Plan Matching Account balance in the PHH
Common Stock Fund as valued under Article IX on the date of the
liquidation.
4.6 EMPLOYER MATCHING CONTRIBUTIONS. The Employer shall contribute to
the Plan out of its current or accumulated earnings and profits an amount equal
to a percentage of the Matchable Portion. The Board of Directors shall establish
the percentage of the Matchable Portion which shall be applicable from time to
time hereunder.
4.7 TIME FOR CONTRIBUTIONS. At such times as are established by the
Company, each Employer shall pay over to the Trustee the amount of all Salary
Deferral Contributions deducted by it pursuant to Section 4.3 plus the amount of
the Matching Contributions required pursuant to Section 4.6 (after reduction for
any forfeiture credits) which are attributable to the Salary Deferral
Contributions being contributed for all Participants employed by it.
4.8 AVERAGE ACTUAL DEFERRAL PERCENTAGE TESTS.
(a) The Average Deferral Percentage test set forth below shall be satisfied each
Plan Year:
(i) The Average Actual Deferral Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall not exceed the
Average Actual Deferral Percentage for Eligible Participants who are
Non-Highly Compensated Employees for the Plan Year multiplied by 1.25; or
(ii)the Average Actual Deferral Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall not exceed the
Average Actual Deferral Percentage for Eligible Participants who are
Non-Highly Compensated Employees for the Plan Year multiplied by two (2),
and the Average Actual Deferral Percentage for Eligible Participants who
are Highly Compensated Employees shall not exceed the Average Actual
Deferral Percentage for Eligible Participants who are Non-Highly
Compensated Employees by more than two (2) percentage points.
(b) For purposes of this Section, the following definitions apply:
(i) "Actual Deferral Percentage" means the ratio (calculated separately
for each Eligible Participant) (expressed as a percentage) of (i)
Elective Deferrals including Excess Elective Deferrals, but excluding
Elective Deferrals that are taken into account in the contribution
percentage test under section 401(m) of the Code (provided the test in
this Section is met both with and without the exclusion of these Elective
Deferrals) and (ii) at the election of the Employer in the manner
prescribed by the Secretary of the Treasury (and subject to such
other requirements as may be prescribed by the Secretary of the
Treasury) "qualified non-elective contributions" and "qualified
matching contributions" (as defined in sections 401(k) and (m) of the
Code and regulations thereunder) on behalf of the Eligible Participant
for the Plan Year to the Eligible Participant's Compensation.
(ii) "Average Actual Deferral Percentage" means the average (expressed as
a percentage) of the Actual Deferral Percentages of the Eligible
Participants in a group.
(iii) "Eligible Participant" means any Employee who is otherwise authorized
under the terms of the Plan to have contributions which are taken into
account to determine the Employee's Actual Deferral Percentage, allocated
to his or her account for the Plan Year, including any Employee who is
temporarily prohibited from making salary reduction contributions by reason
of hardship withdrawal.
4.9 MAXIMUM AMOUNT OF SALARY DEFERRAL CONTRIBUTIONS. A Participant's
salary reduction contributions to the Plan, and all other Employer plans,
contracts or arrangements subject to section 402(g) of the Code, during any
calendar year may not exceed seven thousand dollars ($7,000). This seven
thousand dollar ($7,000) limit shall be automatically adjusted by the
cost-of-living adjustment factor prescribed by the Secretary of the Treasury at
the same time and in the same manner as the cost-of-living adjustment applied
under section 415(d) of the Code. The foregoing limit shall not apply to Salary
Deferral Contributions of amounts attributable to service performed in 1986 and
described in section 1105(c)(5) of the Tax Reform Act of 1986.
4.10 SPECIAL RULES CONCERNING ACTUAL DEFERRAL PERCENTAGES.
For purposes of this Section, the Actual Deferral Percentage for any Eligible
Participant who is a Highly Compensated Employee for the Plan Year and who
is eligible to have contributions which are taken into account to determine
the Employee's Actual Deferral Percentage, allocated to his or her account
under two or more plans or arrangements described in section 401(k) of the
Code that are maintained by the Employer or an affiliate of the Employer
shall be determined as if all such contributions were made under a single
arrangement. If a Highly Compensated Employee participates in two or more
plans or arrangements described in section 401(k) of the Code that have
different plan years, all such plans or arrangements ending with or within
the same calendar year shall be treated as a single arrangement.
In the event that this Plan satisfies the requirements of sections 401(k),
401(a)(4), or 410(b) of the Code only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of such
sections of the Code only if aggregated with the Plan, then this Section
shall be applied by determining the Actual Deferral Percentage of Employees
as if all such plans were a single plan. For Plan Years beginning after
December 31, 1989, plans may be aggregated in order to satisfy section
401(k) of the Code only if they have the same plan year.
For purposes of determining the Actual Deferral Percentage of a Participant who
is a five percent (5%) owner or one of the ten (10) most highly paid Highly
Compensated Employees, the contributions which are taken into account to
determine the Actual Deferral Percentage and Compensation of such
Participant shall include the contributions which are taken into account to
determine the Actual Deferral Percentage and Compensation of Family
Members, and such Family Members shall be disregarded in determining the
Actual Deferral Percentage for all other Participants.
The Employer shall maintain records sufficient to demonstrate satisfaction of
the test under this Section and the amount of "qualified non-elective
contributions" or "qualified matching contributions" (as defined in
sections 401(k) and (m) of the Code and regulations thereunder), or both,
used to satisfy the test in this Section.
The determination and treatment of the Elective Deferrals and Actual Deferral
Percentage of any Participant shall satisfy such other requirements as may
be prescribed by the Secretary of the Treasury.
4.11 LIMITATIONS ON EMPLOYEE CONTRIBUTIONS AND MATCHING CONTRIBUTIONS.
(a) The Average Contribution Percentage test set forth below shall be satisfied
each Plan Year:
(i) The Average Contribution Percentage for Eligible Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the Average
Contribution Percentage for Eligible Participants who are Non-Highly
Compensated Employees for the Plan Year multiplied by 1.25, or
(ii) The Average Contribution Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall not exceed the
Average Contribution Percentage for Eligible Participants who are
Non-Highly Compensated Employees for the Plan Year multiplied by 2, and
the Average Contribution Percentage for Eligible Participants who
are Highly Compensated Employees shall not exceed the Average Contribution
Percentage for Eligible Participants who are Non-Highly Compensated
Employees by more than two (2) percentage points.
(b) Multiple Use of Alternative Limitation. If one or more Highly
Compensated Employees participate in both a plan
subject to the Average Deferral Percentage test and a plan subject to
the Average Contribution Percentage test maintained by the Employer
and the sum of the Average Actual Deferral Percentage and Average
Contribution Percentage of those Highly Compensated Employees subject to
either or both tests exceeds the Aggregate Limit, then the Contribution
Percentage of those Highly Compensated Employees who also participate
in a plan subject to the Average Deferral Percentage test will be
reduced (beginning with such Highly Compensated Employee whose
Contribution Percentage is the highest) so that the Aggregate Limit is
not exceeded. The amount by which each Highly Compensated Employee's
Contribution Percentage Amount is reduced shall be treated as an Excess
Aggregate Contribution. The Average Actual Deferral Percentage and Actual
Contribution Percentage of the Highly Compensated Employees are
determined after any corrections required to meet the Average Deferral
Percentage and Average Contribution Percentage tests. Multiple use of
the alternative limitation does not occur if both the Average Actual
Deferral Percentage and Average Contribution Percentage of the Highly
Compensated Employees does not exceed 1.25 multiplied by the Average
Actual Deferral Percentage and Average Contribution Percentage of the
Non-Highly Compensated Employees.
(c) Definitions. For purposes of this Section, the following definitions shall
apply.
(i) "Aggregate Limit" means the sum of (A) one hundred twenty-five percent
(125%) of the greater of the Average Actual Deferral Percentage of the
Non-Highly Compensated Employees for the Plan Year or the Average
Contribution Percentage of Non-Highly Compensated Employees under the Plan
subject to section 401(m) of the Code for the Plan Year beginning with or
within the Plan Year of the plan subject to the Average Deferral Percentage
test, and (B) the lesser of two hundred percent (200%) of or two (2) plus
the lesser of such Average Actual Deferral Percentage or Average
Contribution Percentage of Non-Highly Compensated Employees.
Notwithstanding the preceding, for Plan Years beginning before the later of
January 1, 1992 or such later date provided in regulations or other
guidance under section 401(m) of the Code, Aggregate Limit means the
greater of the Aggregate Limit described above or the sum of (A) one
hundred twenty-five percent (125%) of the lesser of the Average Actual
Deferral Percentage of the Non-Highly Compensated Employees for the Plan
Year or the Average Contribution Percentage of Non-Highly Compensated
Employees under the Plan subject to section 401(m) of the Code for the Plan
Year beginning with or within the Plan Year of the plan subject to the
Average Deferral Percentage test, and (B) the lesser of two hundred percent
(200%) of or two (2) plus the greater of such Average Actual Deferral
Percentage or Average Contribution Percentage of Non-Highly Compensated
Employees.
(ii) "Average Contribution Percentage" means the average (expressed as
a percentage) of the Contribution Percentages of the Eligible Participants
in a group.
(iii) "Contribution Percentage" means the ratio of each Eligible
Participant's Contribution Percentage Amounts for the Plan Year to the
Eligible Participant's Compensation.
(iv) "Contribution Percentage Amounts" means the sum of the
Employee Contributions, Employer matching contributions, and to the extent
not taken into account for purposes of the Average Deferral
Percentage test, "qualified non-elective contributions" and
"qualified matching contributions" (as defined in sections 401(k)
and (m) of the Code and regulations thereunder) made under the Plan on
behalf of the Participant for the Plan Year. Such Contribution
Percentage Amounts shall include forfeitures of Excess Aggregate
Contributions or Employer matching contributions allocated to the
Participant's account and shall be taken into account in the Plan Year in
which such forfeiture is allocated. At the election of the Employer in the
manner prescribed by the Secretary of the Treasury (and subject to such
other requirements as may be prescribed by the Secretary of the
Treasury), Elective Deferrals may also be included in the Contribution
Percentage Amounts so long as the Average Deferral Percentage test
is met before the Elective Deferrals are used in the Average
Contribution Percentage test and continues to be met following the
exclusion of those Elective Deferrals that are used to meet the Average
Contribution Percentage test.
(v) "Eligible Participant" means any Employee who is eligible to make an
Employee Contribution, or an Elective Deferral (if the Employer takes such
contributions into account in the calculation of the Contribution
Percentage), or to receive a Matching Contribution (including forfeitures)
or a "qualified matching contribution" (as defined in sections 401(k) and
(m) of the Code and regulations thereunder). If an Employee Contribution is
required as a condition of participation in the Plan, any Employee who
would be a Participant in the Plan if such Employee made such a
contribution shall be treated as an Eligible Participant on behalf of whom
no Employee Contributions are made.
(vi) "Employee Contribution" means any contribution made to the Plan by
or on behalf of a Participant that is included in the Participant's
gross income in the year in which made and that is maintained under a
separate account to which earnings and losses are allocated.
(d) Special Rules. For purposes of this Section, the Contribution Percentage
for any Eligible Participant who is a Highly Compensated Employee for
the Plan Year and who is eligible to have Contribution Percentage Amounts
allocated to his or her account under two or more plans described in
section 401(a) of the Code or arrangements described in section 401(k) of
the Code that are maintained by the Employer or an affiliate of the
Employer shall be determined as if all such Contribution Percentage
Amounts were made under a single plan. If a Highly Compensated Employee
participates in two or more plans or arrangements described in section
401(k) of the Code that have different plan years, all such plans or
arrangements ending with or within the same calendar year shall be
treated as a single arrangement.
(i) In the event that the Plan satisfies the requirements of sections
401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one or more
other plans, or if one or more other plans satisfy the requirements of
sections 401(m), 401(a)(4) or 410(b) of the Code only if aggregated with
the Plan, then this Section shall be applied by determining the
Contribution Percentages of Eligible Participants as if all such plans were
a single plan. For Plan Years beginning after December 31, 1989, plans may
be aggregated in order to satisfy section 401(m) of the Code only if they
have the same plan year.
(ii) For purposes of determining the Contribution Percentage of an
Eligible Participant who is a five percent (5%) owner or one of the ten
(10) most highly paid Highly Compensated Employees, the Contribution
Percentage Amounts and Compensation of such Participant shall include the
Contribution Percentage Amounts and Compensation of Family Members,
and such Family Members shall be disregarded as separate Employees in
determining the Contribution Percentage for Eligible Participants.
(iii) The Employer shall maintain records sufficient to demonstrate
satisfaction of the test under this Section and the amount of "qualified
non-elective contributions" or "qualified matching contributions" (as
defined in sections 401(k) and (m) of the Code and regulations thereunder),
or both, used to satisfy the test in this Section.
(iv) The determination and treatment of the Contribution Percentage of
any Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
4.12 DISTRIBUTION OF EXCESS DEFERRALS.
(a) In General. Notwithstanding any other provision of the Plan, Excess
Deferral Amounts and income and loss allocable thereto shall be distributed
no later than April 15, 1988, and each April 15 thereafter, to Participants
who claim such allocable Excess Deferral Amounts for the preceding calendar
year. A Participant is deemed to have claimed the Excess Deferral Amount to
the extent that the Participant's Excess Deferral Amount is calculated by
taking into account only Salary Deferral Contributions to this Plan.
(b) Definitions. For purposes of this Section, "Excess Deferral Amount" means
the amount of Salary Deferral Contributions for a calendar year that the
Participant allocates to this Plan pursuant to the claim procedure set
forth below.
(c) Claims. The Participant's claim shall be in writing, shall be submitted to
the Committee no later than March 1, shall specify the Participant's Excess
Deferral Amount for the preceding calendar year and shall be accompanied by
the Participant's written statement that if such amounts are not
distributed, such Excess Deferral Amount, when added to amounts deferred
under other plans or arrangements described in sections 401(k), 408(k) or
403(b) of the Code, exceeds the limit imposed on the Participant by section
402(g) of the Code for the year in which the deferral occurred.
(d) Maximum Distribution Amount. The Excess Deferral Amount distributed to
a Participant with respect to a calendar year shall be adjusted for
income and loss during the taxable year and, if elected by the
Committee, during the period from the end of the taxable year to the
date of distribution. The income or loss allocable to the Excess
Deferral Amount for the taxable year (and, if elected, from
the end of the taxable year to the date of distribution) shall
be determined by the Committee using any reasonable method
permitted by regulations under section 402(g) of the Code. If
there is a loss allocable to the Excess Deferral Amount, the
amount distributed shall in no event be less than the lesser of the
Participant's account under the Plan or the Participant's Salary
Deferral Contributions for the Plan Year.
4.13 DISTRIBUTION OF EXCESS CONTRIBUTIONS.
(a) In General. Notwithstanding any other provision of the Plan, Excess
Contributions, plus any income and minus any loss allocable thereto,
shall be distributed to the appropriate Highly Compensated Employees after
the last day of the Plan Year in which the Excess Contributions arose and,
if possible, within two and one-half (2-1/2) months after the last day
of such Plan Year. (If Excess Contributions are distributed more than
two and one-half (2-1/2) months after the last day of the Plan Year in
which such Excess Contributions arose, a ten percent (10%) excise tax
will be imposed on the Employer with respect to such amounts.) Excess
Contributions, plus any income and minus any loss allocable thereto,
shall be distributed no later than the last day of the twelfth (12th) month
after the last day of the Plan Year in which the Excess Contributions
arose. Excess Contributions shall be treated as annual additions under
the Plan for purposes of the limitations under section 415 of the Code.
(b) Excess Contributions. "Excess Contributions" means, with respect to any
Plan Year, the excess of (i) the aggregate amount of Employer
contributions actually taken into account in computing the Actual Deferral
Percentage of Highly Compensated Employees for such Plan Year, over (ii)
the maximum amount of such contributions permitted by the Average
Deferral Percentage test. The maximum amount of contributions
permitted for each Highly Compensated Employee shall be determined by
a leveling method under which the actual deferral percentage of the
Highly Compensated Employee with the highest actual deferral percentage
is reduced to the extent required to (i) enable the Plan to satisfy the
Average Deferral Percentage Test under Section 4.8 or (ii) cause such
Highly Compensated Employee's actual deferral percentage to equal the
actual deferral percentage of the Highly Compensated Employee with the
next highest actual deferral percentage. This process is continued
until the Plan satisfies the Average Deferral Percentage Test under
Section 4.8 and the maximum amount of contributions permitted for each
Highly Compensated Employee is determined.
(c) Determination of Income. Excess Contributions shall be adjusted for
income or loss during the Plan Year and, if elected by the Committee,
during the period from the end of the Plan Year to the date of
distribution. The income or loss allocable to Excess Contributions for the
Plan Year shall be determined (i) by multiplying income allocable to the
Participant's Elective Deferrals, and contributions treated as
Elective Deferrals to determine the Participant's Actual Deferral
Percentage, for the Plan Year by a fraction, the numerator of which is
the Excess Contribution on behalf of the Participant for the Plan Year
and the denominator of which is the Participant's account balance
attributable to such contributions on the last day of the Plan Year,
reduced by the gain allocable to such account balance for the Plan Year
and increased by the loss allocable to such account balance for the Plan
Year or (ii) by any other method permitted by regulations under section
401(k) of the Code. The income allocable to Excess Contributions for the
period between the end of the Plan Year and the date of distribution is
determined (i) by multiplying the income for such period which is allocable
to Elective Deferrals, and contributions treated as Elective Deferrals
to determine the Participant's Actual Deferral Percentage, by a fraction
determined under the method described in the preceding sentence, (ii) by
multiplying ten percent (10%) of the amount determined in the preceding
sentence by the number of whole calendar months between the end of
the Plan Year and the date of distribution, counting the month of
distribution as a whole calendar month if distribution occurs after the
15th of such month, or (iii) by any other method permitted by regulations
under section 401(k) of the Code.
(d) Accounting for Excess Contributions. Amounts distributed under this Section
shall first be treated as distributions from the Participant's Salary
Deferral Contribution account and shall be treated as distributed from the
Participant's Qualified Employer Deferral Contributions account only to the
extent such Excess Contributions exceed the balance in the Participant's
Salary Deferral Contribution account.
4.14 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS.
(a) In General. Notwithstanding any other provision of the Plan, Excess
Aggregate Contributions, plus income and minus any loss allocable
thereto, shall be distributed to the appropriate Highly Compensated
Employees after the last day of the Plan Year in which the Excess
Aggregate Contributions arose and, if possible, within two and
one-half (2-1/2) months after the last day of such Plan Year. (If Excess
Aggregate Contributions are distributed more than two and one-half
(2-1/2) months after the last day of the Plan Year in which such Excess
Aggregate Contributions arose, a ten percent (10%) excise tax will be
imposed on the Employer with respect to such amounts.) Excess
Aggregate Contributions, plus income and minus any loss allocable
thereto, shall be distributed no later than the last day of the twelfth
(12th) month after the last day of the Plan Year in which the
Excess Aggregate Contributions arose. Excess Aggregate Contributions
shall be treated as annual additions under the Plan for purposes of
the limitations under section 415 of the Code.
(b) Excess Aggregate Contributions. "Excess Aggregate Contributions" means,
with respect to any Plan Year, the excess of (i) the aggregate Contribution
Percentage Amounts taken into account in computing the numerators of the
Contribution Percentages of Highly Compensated Employees for such Plan
Year, over (ii) the maximum Contribution Percentage Amounts permitted by
the Average Contribution Percentage test.
(c) Determination of Income. Excess Aggregate Contributions shall be
adjusted for any income or loss during the Plan Year and, if elected by
the Committee, during the period from the end of the Plan Year to
the date of distribution. The income or loss allocable to Excess
Aggregate Contributions for the Plan Year shall be determined (i) by
multiplying the income allocable to Contribution Percentage Amounts for
the Plan Year by a fraction, the numerator of which is the Excess
Aggregate Contributions on behalf of the Participant for the Plan Year
and the denominator of which is the sum of the Participant's account
balances attributable to Contribution Percentage Amounts for all Plan
Years on the last day of the Plan Year reduced by the gain allocable to
such account balances for the Plan Year and increased by the loss
allocable to such account balances for the Plan Year or (ii) by any
other method permitted by regulations under section 401(m) of the Code.
The income allocable to Excess Aggregate Contributions for the period
between the end of the Plan Year and the date of distribution is
determined (i) by multiplying the income for such period which is
allocable to the Contribution Percentage Amounts by a fraction
determined under the method described in the preceding sentence, (ii)
by multiplying ten percent (10%) of the amount determined in the
preceding sentence by the number of whole calendar months between the end
of the Plan Year and the date of distribution, counting the month of
distribution as a whole calendar month if distribution occurs after the
15th of such month, or (iii) by any other method permitted by regulations
under section 401(m) of the Code.
4.15 EMPLOYER'S RIGHT TO MAKE ADDITIONAL CONTRIBUTION. If at the end of
any Plan Year it appears to the Employer that the Average Deferral Percentage
test of section 401(k)(3) of the Code or the Average Contribution Percentage
test of section 401(m)(2) of the Code will not be met, the Employer, in lieu of
amending or revoking Salary Deferral Agreements as permitted by Section 4.2 or
distributing Excess Contributions as permitted in Section 4.13 or distributing
Excess Aggregate Contributions as permitted in Section 4.14, may elect to make
an additional contribution for Participants who are Non-Highly Compensated
Employees. The additional contribution shall be allocated in any manner
determined by the Committee. If the additional contribution is not allocated as
an Employer Matching Contribution, it shall be added to the Qualified
Nonelective Contribution Accounts of Participants on whose behalf it is made and
shall be immediately one hundred percent (100%) vested and, except as otherwise
provided herein, shall be subject to the distribution provisions and limitations
which are applicable to salary reduction contributions to the Plan. If the
additional contribution is allocated as an Employer Matching Contribution, it
shall be added to the Qualified Matching Contribution Accounts of Participants
on whose behalf it is made and shall be immediately one hundred percent (100%)
vested and, except as otherwise provided herein, shall be subject to the
distribution provisions and limitations which are applicable to salary reduction
contributions to the Plan. The amount of the additional contribution shall be
such that the deferral percentage test of section 401(k)(3) or the contribution
percentage test of section 401(m) of the Code will be met. The additional
contribution shall be deposited to Participants' Accounts not later than the
earlier of (i) the date which is prescribed by law for filing the Employer's
income tax return (including any extension thereof) for the taxable year to
which the contribution relates, or (ii) the last day of the twelve (12) month
period immediately following the Plan Year to which the contribution relates.
4.16 EXCLUSIVE BENEFIT. Subject to the terms hereof, no part of the
corpus or income of the Trust Property shall revert to any Employer or be used
or diverted for purposes other than the exclusive benefit of Participants,
former Participants and their Beneficiaries, or their legal representatives, or
the payment of the reasonable expenses of the Plan, until such time as all
liabilities under the Plan with respect to Participants, former Participants and
their Beneficiaries, and legal representatives, are satisfied.
ARTICLE V
INVESTMENT OF FUNDS
5.1 INVESTMENT OF EMPLOYEE ACCOUNTS. A Participant may, as provided
herein, select from time to time one or more of the Investment Funds for the
investment by the Trustee of a Participant's Salary Deferral Contributions
received by the Trustee and credited to a Participant's Employee Account and for
the investment by the Trustee of any other cash received by the Trustee and
credited to a Participant's Employee Account.
5.2 COMMITTEE CHANGES IN INVESTMENT FUNDS. The Committee may, in its
discretion: (i) add additional Investment Funds to the Plan or delete existing
Investment Funds from the Plan and (ii) add or delete funds from any Investment
Fund, and any Committee actions taken under (i) or (ii) hereof may affect
Contributions made or to be made to the Plan. Notwithstanding the preceding,
there shall at all times be available to Participants the opportunity to select
from a broad range of investment alternatives, which consist of no less than
three diversified Investment Funds, each of which has materially different risk
and return characteristics.
5.3 INVESTMENT OF COMPANY ACCOUNTS. Matching Contributions related to
Salary Deferral Contributions received by the Trustee and for credit to the
Participant's Company Account shall be initially invested by the Trustee as
follows: (i) the Matching Contributions related to each Participant's Salary
Deferral Contributions of up to three percent (3%) of Eligible Earnings shall be
invested in the PHH Common Stock Fund; and (ii) any additional Matching
Contributions shall be invested in the Money Market Fund. After the initial
investment as provided above, the Participant may direct the portion of the
Company Account initially invested in the Money Market Fund into other
investment options provided under the Plan as the Committee may determine.
5.4 PARTICIPANT DESIGNATIONS OF INVESTMENTS. A Participant shall
designate on his or her original Salary Deferral Agreement and any modifications
thereto the percentage of his or her Salary Deferral Rate to be invested in each
Investment Fund. The percentage to be invested in any Investment Fund must be in
such increments as the Committee may determine; provided that the total of the
percentages selected for the Investment Fund(s) must equal one hundred percent
(100%). A Participant shall have the right as provided in Section 4.5(a) to
change the percentage of his or her Salary Deferral Rate to be invested in the
respective Investment Fund(s). Participant investment designations will be
implemented by the Committee and the Trustee as soon as administratively
practicable.
5.5 TEMPORARY INVESTMENTS BY THE TRUSTEE. All Rollover Contributions,
Salary Deferral Contributions and Matching Contributions received by the Trustee
pursuant to Sections 4.1 and 4.7 and loan repayments made by Participants under
Article XXI shall be held and invested by the Trustee in a short term investment
fund for the benefit of Participants until such time as such contributions shall
be invested by the Trustee in accordance with the provisions of this Plan.
5.6 PROCEDURES FOR INVESTMENTS. The investment of all Participant
Contributions and the crediting to the Account(s) of each Participant of
investments made shall be done as follows:
(a) As soon as practicable following its receipt of Contributions from the
Employer, the Trustee shall make investments as required herein;
(b) Promptly following each Valuation Date, the Account(s) of each
Participant who made contributions or for whom Contributions were made
during the calendar quarter ended just prior to such Valuation Date shall
be credited with a proportionate share of the investments made in each
Investment Fund during such calendar quarter. For purposes of this Section,
a Participant's Accounts' proportionate share of the investments made in an
Investment Fund during any calendar quarter shall be the proportion that
the Contributions made by or on behalf of a Participant and to be invested
in any Investment Fund in accordance with the Participant's Salary Deferral
Agreement bears to Contributions made by or on behalf of all Participants
and to be invested in such Investment Fund in accordance with the Salary
Deferral Agreements for all Participants. The cost of making investments
for the Account(s) of a Participant -- which may, in the discretion of the
Company, be charged against the Participant's Account(s) -- shall be
determined on a reasonable basis by the Committee.
5.7 NO GUARANTEES OF INVESTMENTS. Neither the Company, the
Employer, the Trustee nor the Committee guarantees any Investment Fund
against any increase or decrease in value.
ARTICLE VI
VESTING
6.1 PRIOR PLAN EMPLOYEE, ROLLOVER, PRIOR PLAN MATCHING AND EMPLOYEE
ACCOUNTS FULLY VESTED. A Participant's interest in his or her Prior Plan
Employee Account, Rollover Account, Employee Account, Prior Plan Matching
Account, Qualified Nonelective Contribution Account and Qualified Matching
Contribution Account shall in each case be fully vested and non-forfeitable at
all times, subject only to the withdrawal restrictions, if any, imposed by this
Plan or the Code as the case may be.
6.2 VESTING OF COMPANY ACCOUNTS.
(a) In General.
(1) A Participant's vested interest in his or her Company Account shall be
calculated based upon a Participant's Years of Vesting Service in
accordance with the following schedule:
Years of Vesting Service Vested Interest
Less than one 0%
One but less than two 33 1/3%
Two but less than three 66 2/3%
Three or more 100%
(2) If a Participant terminates employment for any reason other than (i)
death, (ii) retirement after his early retirement date or (iii) disability
which qualifies as total and permanent disability under the Employer's
long-term disability plan, the non-vested portion, if any, of the
Participant's Company Account shall be forfeited when the Participant
receives a distribution of his or her entire vested Account. Forfeitures
hereunder shall be applied to reduce Matching Contributions thereafter
payable to the Trustee under the Plan, to pay Plan expenses payable out of
the Plan or to meet other contribution requirements under the Plan, such as
a restoration of a forfeiture or a correction of an administrative error.
If a Participant shall terminate employment because of one of the three (3)
circumstances listed in (i) through (iii), any non-vested portion of the
Participant's Company Account shall, to the extent not already so vested,
become one hundred percent (100%) vested in the Participant.
If the Participant is subsequently rehired before he or she incurs five
(5) one year Breaks in Service and before the Participant receives a
distribution of his or her entire vested Account, any unvested portion of
his or her Account existing when payment was made shall be restored and
shall be separately accounted for on the books of the Plan. If the
Participant received a distribution of his or her entire vested Account on
account of his or her separation from service, any forfeiture will be
restored if the Participant is reemployed by the Employer and the
Participant repays the amount distributed before the earlier of the date
which is five (5) years after the first date on which the Participant is
reemployed by the Employer, or the date upon which the Participant incurs a
fifth (5th) consecutive Break in Service. Notwithstanding the above, a
forfeiture as the result of five (5) consecutive Breaks in Service will not
be restored upon repayment of the amount distributed. In any event, a
Participant will be vested in his or her Company Account upon the
attainment of age sixty-five (65) if the Participant is an Employee on that
date.
(b) Crediting of Prior Service to Rehired Employees. If an Eligible Employee or
Participant terminates employment with the Employer and is thereafter
re-employed, he or she shall be credited with all Years of Vesting Service
prior to his or her termination.
6.3 AMENDMENT OF VESTING SCHEDULE. Although the Company reserves the
right to amend the aforesaid vesting provisions at any time, the Company shall
not amend such provisions (and no such amendment shall be effective) if the
amendment would reduce the nonforfeitable percentage of any Participant's
account value derived from Matching Contributions (determined as of the later of
the date the Company adopts the amendment, or the date the amendment becomes
effective) to a percentage less than the nonforfeitable percentage computed
under the Plan without regard to such amendment.
If the Company shall amend the vesting schedule, each Participant having at
least three (3) years of Vesting Service with the Employer may elect to
have the percentage of his or her nonforfeitable accrued benefit computed
under the Plan without regard to the amendment. The Committee, as soon as
practicable, shall communicate an explanation of the effect of the
amendment to the vesting provisions to each Participant, together with, if
applicable, the appropriate form upon which a Participant so entitled under
the provisions of this Section may make an election to remain under the
vesting provisions provided under the Plan prior to the amendment and
notice of the time within which such Participant must make an election to
remain under the prior vesting provisions. The Participant must file his or
her election in writing with the Committee within sixty (60) days after his
or her receipt of the notice of the amendment changing the vesting
provisions. Notwithstanding the provisions of this Section, no election
need be provided for any Participant whose nonforfeitable percentage under
the Plan, as amended, at any time cannot be less than such percentage
determined without regard to such amendment.
ARTICLE VII
VOLUNTARY WITHDRAWALS FROM PRIOR PLAN ACCOUNTS
7.1 VOLUNTARY WITHDRAWALS. Effective May 1, 1991 and subject to Section
21.10, a Participant may elect, in a manner and on a form prescribed by the
Committee, to withdraw any amount in his or her Prior Plan Employee Account and
any vested amount in his or her Prior Plan Matching Account and his or her
Company Account. Withdrawals prior to May 1, 1991 from a Participant's Prior
Plan Accounts shall be governed by the provisions of Article VII in the Plan
prior to this Amendment and Restatement of the Plan. Withdrawals on or after May
1, 1991 from a Participant's Company Account are limited to amounts which were
not allocated to the Participant's Company Account during the two-year period
preceding the withdrawal.
7.2 EFFECTIVE DATE OF WITHDRAWAL. Any withdrawal made pursuant to this
Article shall be made as soon as practicable following the date on which the
Participant's Withdrawal Election Form is filed with the Committee. Not more
than one withdrawal under this Article may be made by a Participant in any
twelve (12) month period.
7.3 DISTRIBUTION OF INTERESTS.
(a) Form of Distribution. Unless otherwise directed by the Participant,
distribution of Trust Property made as a result of a withdrawal being made
under this Article shall be made in whole shares of the Company's Common
Stock. A Participant's distribution of interest under such Section in a
fraction of a share of such stock shall be satisfied by payment in cash
based on the market price of such stock as determined by the Trustee.
Distributions pursuant to this Article shall be made as soon as practicable
following the effective date of any withdrawal.
(b) Participant Directed Sale of Stock. A Participant may, at the time of
electing to make a withdrawal under this Article, elect, pursuant to
administrative procedures established by the Committee, to receive cash in
lieu of receiving Common Stock under Section 7.3(a) above.
<PAGE>
ARTICLE VIII
HARDSHIP WITHDRAWALS, POST AGE 59-1/2
WITHDRAWALS AND ROLLOVER ACCOUNT WITHDRAWALS
8.1 HARDSHIP WITHDRAWALS.
(a) Application for Hardship Withdrawal Prior to January 1, 1989. For Plan
Years beginning before January 1, 1989, a Participant who is an Eligible
Employee and who is suffering a qualifying financial hardship may apply for
a hardship distribution from his or her Accounts by filing a written
application for the same with the Committee stating the amount of the
distribution requested and the qualifying financial hardship.
Such application may be approved by the Committee only if the Committee
determines that the distribution applied for is necessary in light of a
financial need of the Participant which (A) is currently payable, (B) is
extraordinary, (C) threatens the financial security of the Participant, and
(D) is caused by the qualifying financial hardship cited in the
application.
The amount approved hereunder may not exceed (but may be less than) the
amount the Committee determines is required to meet the immediate financial
need created by the qualifying financial hardship cited in the application
and which is not reasonably available from other resources of the
Participant and shall not exceed any limit on hardship withdrawals
established by the Committee in its discretion to protect the benefits of
Participants. The Committee's determination of the existence of immediate
and heavy financial need caused by a qualifying financial hardship and the
amount required to meet the need created by such hardship shall be made in
a uniform and nondiscriminatory manner with respect to all Participants
applying for a distribution under this Section.
For purposes of this Section, the term "qualifying financial hardship"
means a financial hardship resulting from (i) the unexpected expenses
incurred in connection with the illness or death of the Participant, the
Participant's spouse, the children or grandchildren of either the
Participant or the Participant's spouse, or the parents of either the
Participant or the Participant's spouse, (ii) post-secondary school
educational expenses for the coming semester incurred with respect to the
Participant, the Participant's spouse or the Participant's dependents, for
which purposes off-campus room and board expenses shall only be allowable
up to the amount which would have been charged by the educational
institution (or, if the educational institution does not provide room and
board, which would have been charged by a comparable educational
institution offering room and board) had the student lived on-campus, or
(iii) the expenses incurred in connection with purchasing, adding an
addition to, or making structural modifications to the Participant's
primary residence.
(b) Hardship Withdrawals After December 31, 1988. Subject to Article XXI, and
for Plan Years beginning after December 31, 1988, hardship withdrawals
shall be limited to Rollover Accounts, Prior Plan Matching Accounts, Prior
Plan Employee Accounts, the December 31, 1988 account balance of Qualified
Nonelective Contribution Accounts and Qualified Matching Accounts and
amounts, exclusive of earnings credited after December 31, 1988, in
Employee Accounts. In addition, for Plan Years beginning after December 31,
1988, hardship withdrawals shall be subject to the following guidelines.
A Participant who is an Eligible Employee and who is suffering a qualifying
financial hardship may apply for a hardship distribution from his or her
Accounts by filing a written application for the same with the Committee
stating the amount of the distribution requested and the qualifying
financial hardship. Such written application shall be accompanied by
documentary evidence as required by the Committee.
Such application may be approved by the Committee only if the Committee
determines that the requested distribution is necessary in light of a
financial need of the Participant which is immediate and heavy and is
caused by the qualifying financial hardship cited in the application.
The amount of the hardship distribution may be approved by the Committee
only to the extent that it is necessary to satisfy the immediate and heavy
financial need caused by the qualifying financial hardship. An amount will
be considered necessary to satisfy the qualifying financial hardship if (i)
it does not exceed the amount of the qualifying financial hardship and (ii)
cannot be obtained from other distributions and nontaxable loans currently
available under the Plan and any other plans maintained by either the
Company or the Participant's Employer, including without limitation the
loans available under Article XXI of the Plan. In addition, the amount
shall not exceed any limit on hardship withdrawals established by the
Committee in its discretion to protect the benefits of Participants.
The Committee's determination of the existence of immediate and heavy
financial need caused by a qualifying financial hardship and the amount
required to meet the need created by such hardship shall be made in a
uniform and nondiscriminatory manner with respect to all Participants
applying for a distribution under this Section. The Committee shall have no
duty or obligation to verify or investigate the Participant's
representations regarding his immediate and heavy financial need, but may
rely on these representations where it is reasonable to do so.
If the Participant's hardship withdrawal request is approved, the
Participant is precluded from making any Salary Deferral Contributions to
the Plan for 12 months following receipt of the hardship distribution and
the amount of Participant's Salary Deferral Contributions for the following
taxable year may not exceed the difference between the maximum amount of
Salary Deferral Contributions for such year as determined in accordance
with Section 4.9 of the Plan and the amount of the Salary Deferral
Contribution contributed by the Participant's Employer on behalf of the
Participant for the year in which the hardship distribution was made.
For purposes of this Section, the term "qualifying financial hardship"
means a financial hardship resulting from (i) costs directly related to the
purchase of a principal residence for the Participant (excluding mortgage
payments); (ii) the payment of tuition and related educational fees for the
next twelve (12) months of post-secondary school education for the
Participant, the Participant's spouse or the Participant's children; (iii)
incurred expenses for uninsured medical expenses for the Participant, the
Participant's spouse or his dependents or expenses necessary for these
persons to obtain medical care described in Code section 213(d); or (iv)
payment of amounts necessary to prevent eviction from the Participant's
principal residence or foreclosure of the mortgage on the Participant's
principal residence; and (v) any federal, state or local income taxes or
penalties reasonably anticipated to result from the hardship distribution.
(c) Distributions by Reason of Hardship Withdrawals. If the hardship
application is approved by the Committee, the Committee will cause the
Participant's Accounts to be valued in accordance with Section 9.2 or in
such other manner that the Committee establishes for valuing accounts to
facilitate hardship distributions. Following completion of the aforesaid
valuation, the Trustee shall, as soon as is practicable thereafter, make
the distribution in cash or in Common Stock to the Participant by
liquidating the Participant's Account balance in the Investment Fund(s) as
determined by the aforesaid valuation in the order of priority established
under guidelines of the Committee.
8.2 POST AGE 59-1/2 WITHDRAWALS.
(a) A Participant who is an Eligible Employee and who has attained age
fifty-nine and one-half (59-1/2) may withdraw his or her entire aggregate
vested interest in his or her Accounts.
(b) In order for a Participant to effect a withdrawal under Section 8.2(a), he
or she must file a written request with the Committee which will be deemed
effective as soon as practicable following the date on which such written
request is filed with the Committee.
8.3 ROLLOVER ACCOUNT WITHDRAWALS. A Participant may elect to
withdraw amounts in his or her Rollover Account pursuant to rules and
procedures established by the Committee.
8.4 DISTRIBUTION OF INTERESTS. A Participant may elect to receive his
or her distribution of Common Stock of the Company resulting from the
withdrawals described in this Article in whole shares of such stock with a cash
payment for fractional shares or, pursuant to administrative procedures
established by the Committee, may elect to receive cash in lieu of such stock.
ARTICLE IX
VALUATION OF FUNDS AND ACCOUNTS
9.1 VALUATION OF FUNDS AND ACCOUNTS. As of each Valuation Date, the
Committee shall determine or caused to be determined and reported to the Company
the fair market value of each Investment Fund. Similarly the fair market value
of each Participant's Account balance in any such Investment Fund shall also be
determined as of each Valuation Date. For purposes of this Section, a
Participant's Account balance in any Investment Fund as of the current Valuation
Date shall be (A) minus (B) plus (C) plus (D), where (A) equals the Account
balance in any such Investment Fund as of the immediately preceding Valuation
Date, where (B) equals the sum of any distributions made to the Participant
after the immediately preceding Valuation Date, where (C) equals the Account's
proportionate share of the investment gain or loss or earnings experienced by
each Investment Fund after the immediately preceding Valuation Date, and where
(D) equals Contributions allocated to each Account after the immediately
preceding Valuation Date. For purposes of this Section, an Account's
proportionate share of the investment gain or loss experienced by an Investment
Fund shall be the proportion which the Account balance as of the immediately
preceding Valuation Date bears to the total of all Account balances as of such
immediately preceding Valuation Date.
9.2 VALUATIONS FOR WITHDRAWALS OR DISTRIBUTIONS. The amount subject to
any withdrawal or distribution from any Account of a Participant shall be based
upon the vested portion of the amount as established for each such Account under
Section 9.1 as of:
(a) for hardship withdrawals, the "hardship withdrawal valuation date" for
the Plan or for any particular account or accounts as determined from time
to time by the Committee; and
(b) for all other withdrawals and distributions, the Valuation Date next
following the date of the Committee's receipt of the request for the
withdrawal or distribution.
From time to time, the Committee, in its discretion, may alter the
foregoing valuation rules with respect to any Account or Accounts.
9.3 METHOD OF VALUATIONS OF INVESTMENT FUNDS. Each valuation made under
this Article shall be made to reflect separately the value of the different
Investment Funds provided for in Article V. For each Investment Fund, the
Committee shall establish the method for valuing each Fund and shall cause such
methods to be applied in a consistent manner.
ARTICLE X
TERMINATION OF PARTICIPATION AND DISTRIBUTIONS
10.1 DISCONTINUANCE OF PARTICIPATION BY PARTICIPANTS. A Participant
may, as regards Contributions only, discontinue participation in the Plan by
revoking in writing, on a form designated by the Committee, the Participant's
Salary Deferral Agreement. A Participant's reduction under Section 4.5(a)(1) of
his or her Salary Deferral Rate to zero (0) shall constitute a written
revocation of a Salary Deferral Agreement. Upon the effective date of either the
written revocation made under this Section, which may not be later than thirty
(30) days after the date such form is signed and filed with the Committee by the
Participant, or the reduction made under Section 4.5(a)(1), (i) no further
Contributions shall be made by or on behalf of the Participant and (ii) the
Participant may not resume making or having Contributions made on his or her
behalf until the earlier of either the January 1 or July 1 immediately following
the effective date of such written revocation or reduction. Notwithstanding the
preceding, effective on or after May 1, 1991, the Participant may resume making
or having contributions made on his or her behalf at any time following a
suspension of such contributions. A Participant shall, notwithstanding the
revocation of his or her Salary Deferral Agreement as to Contributions, continue
to be a Participant in the Plan.
10.2 TERMINATION OF EMPLOYMENT. If a Participant's employment with the
Employer terminates for any reason, or if the Participant becomes totally and
permanently disabled under the Employer's long term disability plan, then such
Participant's Salary Deferral Agreement shall be deemed automatically revoked,
without any action on the part of the Participant, effective as of the date that
employment terminates, except in the case of a Participant whose employment
terminates due to retirement, in which case the effective date shall be the date
such Participant last receives pay for any unused vacation benefit. Any
severance payments received by the Participant may not be deferred into the Plan
under the Participant's Salary Deferral Agreement. Upon termination of a
Participant's employment, the Participant is entitled to a distribution of his
or her vested Account.
10.3 MEDIUM OF DISTRIBUTION. Except as provided in Section 10.4, any
distribution from any Account required to be made under Section 10.2 shall: (i)
in the case of a distribution of Common Stock, unless the Participant elects as
provided for in this Section, be made only in whole shares of Common Stock with
a cash payment being made for any fractional shares and (ii) in the case of a
distribution from any other Investment Fund, be made only in one lump-sum cash
payment. A Participant entitled to receive a distribution under Section 10.2 may
direct the Trustee in writing to sell the whole shares of Common Stock the
Participant would be entitled to receive and in such case shall be treated as a
Participant making the election provided in Section 7.4(b).
10.4 OPTIONAL DISTRIBUTIONS FORMS. Any lump-sum cash distribution
required to be made under Section 10.3 may, in the case of a Participant whose
employment with the Employer terminates because of the Participant's Early
Retirement Date or Normal Retirement Date, be made under, subject to Section
10.5, any one or a combination of the payment options listed below. The payment
options available under the Plan are as follows:
(1) A lump-sum payment; or
(2) Periodic installment payments.
The amount payable to a Participant under option (2) shall be paid in
substantially equal monthly, quarterly or annual installments for a period
of time not to exceed ten (10) years. The Participant's Account from which
such installments are payable shall continue to be invested as directed by
the Participant, pursuant to the terms hereof effective for active
Participants.
10.5 TIME OF DISTRIBUTION; SMALL DISTRIBUTIONS; NOTICE REQUIREMENTS.
(a) Distributions under Section 10.2 shall be made as soon as practicable after
the Valuation Date immediately following the date of the event requiring
the distribution. Any distribution under the Plan must be made or begin to
be made not later than the sixtieth (60th) day after the latest of the
close of the Plan Year in which: (i) the Participant attains age sixty-five
(65) or (ii) the Participant terminates employment with an Employer.
(b) Notwithstanding any other provision of the Plan to the contrary, if, upon
termination of employment, the present value of the vested Plan Account of
a Participant does not exceed three thousand five hundred dollars ($3,500),
such Participant's vested Plan Account will be distributed in a lump sum as
soon as practicable after the Participant's termination of employment. For
purposes of this determination, if at the time of any distribution the
present value of the vested Plan Account of the Participant exceeds three
thousand five hundred dollars ($3,500), then the present value of the
vested Plan Account of the Participant at any subsequent time shall be
deemed to exceed three thousand five hundred dollars ($3,500).
(c) No less than thirty (30) days and no more than ninety (90) days before the
date of any distribution to a Participant which is prior to the
Participant's Normal Retirement Age, the Participant must receive (i) a
general description of the material features, and an explanation of the
relative values, of optional forms of benefit available under the Plan, and
(ii) notice of the Participant's right to defer the distribution until the
Participant's attainment of Normal Retirement Age. The preceding notice
requirement is not applicable if the Participant's vested Account may be
distributed in a lump sum without the Participant's consent because the
present value of the Participant's vested Account is three thousand five
hundred dollars ($3,500) or less.
10.6 DISTRIBUTION OF A PARTICIPANT'S INTEREST AT DEATH. If a
Participant dies before the Participant's entire Plan Account has been
distributed, the full value of the Plan Account (reduced, if applicable, by any
security interest held by the Plan by reason of a loan outstanding to the
Participant) shall become payable to the Participant's Surviving Spouse, but if
there is no such Surviving Spouse, or if such Surviving Spouse who would
otherwise receive the distribution has joined in a qualified election, then
payment shall be made to the Participant's Designated Beneficiary or Designated
Beneficiaries. For purposes of this Section, a "qualified election" is the
written waiver by the Participant's spouse of his or her right to receive
benefits payable on the death of the Participant and the spouse's consent to the
Designated Beneficiary or Designated Beneficiaries who will receive benefits
payable on the death of the Participant. The waiver must acknowledge the affect
of the waiver and consent and must be notarized. A Participant who has elected
an alternate death benefit Designated Beneficiary or alternate death benefit
Designated Beneficiaries with the consent of his or her spouse may not change
that Designated Beneficiary or those Designated Beneficiaries without the
consent of his or her spouse, given in the manner specified above, unless the
previous spousal consent permitted the Participant to make future designations
of Beneficiaries without any requirement of further spousal consent. A spouse
may not revoke his or her written consent.
10.7 DISTRIBUTION REQUIREMENTS.
(a) General Rule. This Section is included in the Plan to comply with Code
section 401(a)(9) and the Regulations thereunder. To the extent that there
is any conflict between the provisions of Code section 401(a)(9) and the
Regulations thereunder and any other provision in the Plan, the provisions
of Code section 401(a)(9) and the Regulations thereunder will control.
(b) Limits on Settlement Options. Distributions, if not made in a lump-sum,
may only be made over one of the following periods (or a combination
thereof):
(1) the life of the Participant,
(2) the life of the Participant and a designated beneficiary,
(3) a period certain not extending beyond the life expectancy of the
Participant, or
(4) a period certain not extending beyond the joint and last survivor life
expectancy of the Participant and a designated beneficiary.
(c) Minimum Amounts to be Distributed. If the Participant's retirement
allowance is to be distributed in other than a lump-sum, the amount to be
distributed each year must not be less than the quotient obtained by
dividing the Participant's entire interest by the life expectancy of
the Participant or by the joint and last survivor life expectancy of the
Participant and the designated beneficiary. Life expectancy and joint
and last survivor life expectancy shall be computed by the use of the
return multiples contained in Tables V and VI of section 1.72-9 of the
Income Tax Regulations as amended from time to time. For purposes of this
computation, the life expectancy of a Participant and his spouse may be
recalculated no more frequently than annually. The life expectancy of
a nonspouse beneficiary may not be recalculated. If the Participant's
spouse is not the beneficiary, the method of distribution must satisfy
the incidental death benefit requirements specified in section
401(a)(9)(G) of the Code and Treasury Regulation section 1.401(a)(9)-2.
(d) Commencement of Benefits. A Participant's distribution must begin by the
first day of April following the calendar year in which the Participant
attains age seventy and one-half (70-1/2). Notwithstanding the
preceding, if the Participant attained age seventy and one-half (70-1/2)
before January 1, 1988, and such Participant was not a five percent (5%)
owner (as defined in section 416(i) of the Code) at any time during
the Plan Year in which such Participant attained age sixty-six and
one-half (66-1/2), or during any subsequent Plan Year, the required
distribution commencement date is the first day of April following the
later of the calendar year in which the Participant terminates
employment or the calendar year in which the Participant attains age
seventy and one-half (70-1/2). Notwithstanding the preceding, if the
Participant attained age seventy and one-half (70-1/2) in 1988, and such
Participant was not a five percent (5%) owner (as defined in section
416(i) of the Code) at any time during the Plan Year in which such
Participant attained age sixty-six and one-half (66-1/2), or during
any subsequent Plan Year, and such Participant had not retired by
January 1, 1989, the required distribution commencement date is April
1, 1990.
(e) Death Distribution Provisions
(1) Death After Distribution. If the Participant dies after distribution of
his or her interest has commenced, the remaining portion of such interest
will continue to be distributed pursuant to the method of distribution
being used prior to the Participant's death.
(2) Death Before Distribution. If the Participant dies before distribution
of his or her interest commences, any benefits payable because of the
Participant's death will be distributed no later than the December 31
coincident with or next following the date which is five (5) years after
the Participant's death, except to the extent that the recipient of such
benefits elects to receive distributions in accordance with (A) and (B)
below:
(A) any portion of the Participant's interest which is payable to a
designated beneficiary may be distributed in substantially equal
installments over the life of the designated beneficiary, or over a period
not extending beyond the life expectancy of the designated beneficiary,
commencing no later than the December 31 coincident with or next following
the date which is one (1) year after the Participant's death;
(B) if the designated beneficiary is the Participant's surviving
spouse, the date distributions are required to begin in accordance with (A)
above shall not be earlier than the December 31 coincident with or next
following the date on which the Participant would have attained age seventy
and one-half (70-1/2), and, if the spouse dies before payments begin,
subsequent distributions shall be made as if the spouse had been the
Participant.
(3) For purposes of subsection (2) above, payments will be calculated by
use of the return multiples specified in Tables V and VI of section 1.72-9
of the Income Tax Regulations, as amended from time to time. The life
expectancy of a surviving spouse may be recalculated annually. However, in
the case of any other designated beneficiary, such life expectancy will be
calculated at the time payment first commences without further
recalculation.
(4) Payments to a Child of the Participant. For purposes of this subsection
(e), any amount paid to a child of the Participant will be treated as if it
had been paid to the surviving spouse of the Participant if the amount
becomes payable to the surviving spouse when the child reaches the age of
majority.
(f) Distribution Elections Under Section 242(b)(2) of TEFRA.
(1) Distribution Requirements. Notwith- standing the other requirements of
this Section and subject to the requirements of Section 10.5, distributions
on behalf of any Participant may be made in accordance with all of the
following requirements (regardless of when such distribution commences):
(A) The distribution is one which would not have disqualified the Plan
under section 401(a)(9) of the Code as in effect prior to amendment by the
Deficit Reduction Act of 1984.
(B) The distribution is in accordance with a method of distribution
designated by the Participant or, if the Participant is deceased, by a
beneficiary of such Participant.
(C) Such designation was in writing, was signed by the Participant or
the beneficiary, as applicable, and was made before January 1, 1984.
(D) The Participant had accrued a benefit under the Plan as of December
31, 1983.
(E) The method of distribution designated by the Participant or the
beneficiary specifies the time at which the distributions will commence,
the period over which distributions will be made, and in the case of any
distribution upon the Participant's death, the beneficiaries of the
Participant listed in order of priority. The method of distribution
selected must assure that at least fifty percent (50%) of the present value
of the amount available for distribution is paid within the life expectancy
of the Participant.
(2) Distribution Upon Death. Distributions upon death of the Participant
will not be covered by this transitional rule unless the information in the
designation contains the required information described above with respect
to the distributions to be made upon the death of the Participant.
(3) Distribution Commenced Before January 1, 1984 But Continuing After
December 31, 1983. For any distribution which commences before January 1,
1984 and which continues after December 31, 1983, the Participant or the
beneficiary to whom such distribution is being made will be presumed to
have designated the method of distribution under which the distribution is
being made if the method of distribution was specified in writing and the
distribution satisfies the requirements in subsections (1)(A) and (1)(E).
(4) Method of Payment Revoked or Changed. If a designation of a method of
payment is revoked, any subsequent distribution must satisfy the
requirements of Code section 401(a)(9) as amended. Any change in a
designation will be considered to be a revocation of the designation.
However, the mere substitution or addition of another beneficiary (i.e.,
one not named in the designation) under the designation will not be
considered to be a revocation of the designation, so long as such
substitution or addition does not directly or indirectly affect the period
over which distributions are to be made under the designation (for example,
by changing the relevant measuring life).
10.8 DIRECT ROLLOVER ELECTIONS.
(a) In General. This Section is intended to comply with Code section 401(a)(31)
and will be so administered and construed. Notwithstanding any provision of
the Plan to the contrary, a Distributee may elect, at the time and in the
manner prescribed by the Committee, to have any portion of an Eligible
Rollover Distribution paid in a Direct Rollover to an Eligible Retirement
Plan specified by the Distributee. A Distributee's election to make or not
to make a Direct Rollover with respect to one payment in a series of
periodic payments will be deemed to apply to all subsequent payments,
unless the Distributee changes such election in writing.
(b) Definitions. The following definitions apply to this Section:
(1) "Direct Rollover" means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
(2) "Distributee" means a Participant, the Participant's surviving spouse
or the Participant's spouse or former spouse who is an alternate payee
under a qualified domestic relations order, as defined in Code section
414(p).
(3) "Eligible Retirement Plan" means an individual retirement account
described in section 408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code, an annuity plan described in
section 403(a) of the Code or a qualified trust described in section 401(a)
of the Code that accepts the Distributee's Eligible Rollover Distribution,
provided, however, that in the case of an Eligible Rollover Distribution to
the surviving spouse, an Eligible Retirement Plan is limited to an
individual retirement account or individual retirement annuity.
(4) "Eligible Rollover Distribution" means any distribution of all or any
portion of the balance to the credit of the Distributee, excluding
distributions that are one of a series of substantially equal periodic
payments (and not less frequently than annually) made for the life (or
joint life expectancy) of the Distributee or the joint lives (or joint life
expectancies of the Distributee and the Distributee's designated
beneficiary or for a specified period of ten years or more; any
distributions to the extent such distribution is required under section
401(a)(9) of the Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer securities).
ARTICLE XI
VOTING OF STOCK
11.1 VOTING OF STOCK BY TRUSTEE. The Trustee shall vote, itself or by
proxy, all shares of Common Stock of the Company held in trust under the Plan as
follows:
(a) The Committee shall forward to each Participant all quarterly, annual
and other reports generally distributed to stockholders of the Company.
In addition, the Committee shall adopt reasonable measures to notify
Participants on the date and purpose of each meeting of stockholders of
the Company where holders of shares of Common Stock of the Company shall
be entitled to vote, to furnish each Participant a copy of the proxy
statement with respect to such meeting and to request instructions from
each Participant regarding the voting at such meeting of the whole shares
held by the Trustee attributable to the vested and nonvested interest of
such Participant in the Common Stock of the Company constituting the
Trust Property. The Committee may direct that each Participant's voting
instructions be tabulated by an independent fiduciary on a confidential
basis, which independent fiduciary will direct the Trustee as to the
number of shares held by Participants instructing a vote for the
particular matter to be acted upon and the Trustee shall vote in
accordance with such instructions. In addition, the Committee may
designated an independent fiduciary to carry out, on a confidential
basis, all other activities relating to the purchase, sale and exercise
of voting and similar rights with respect to the Common Stock of the
Company.
(b) The Trustee shall vote any other shares held in trust under the Plan at the
direction of the Committee.
11.2 OFFERS FOR COMMON STOCK. As soon as practicable after the
commencement of a tender offer or exchange offer ("Offer") for shares of Common
Stock, the Committee shall use its reasonable best efforts to cause each
Participant to be advised in writing of the terms of the Offer, together with
forms by which the Participant may instruct the Trustee, or revoke such
instruction, whether or not to tender whole shares held by the Trustee
attributable to the vested or unvested interest of such Participant in the Trust
Property to the extent permitted under the terms of any such Offer and of the
Participant's right to withdraw Trust Property pursuant to Article VII. The
Trustee shall follow the directions of each Participant, but the Trustee shall
not tender shares for which no instructions are received unless the Trustee
determines that it must do so to meet its fiduciary obligations under the Act.
In advising Participants of the terms of the Offer, the Committee may include
statements from the management of the Company setting forth its position with
respect to the Offer. The giving of instructions to the Trustee whether or not
to tender shares and the tender thereof shall not be deemed a withdrawal or
suspension from the Plan or a forfeiture of any portion of the Participant's
interest in the Plan. The number of shares for which each Participant may
provide instructions shall be the total number of whole shares held by the
Trustee attributable to the vested and unvested interest of such Participant in
the Common Stock held in trust under the Plan as of the close of business on the
day preceding the date on which the Offer commences or such earlier date which
shall be designated by the Committee which the Committee, in its sole
discretion, deems appropriate for reasons of administrative convenience. Any
securities received by the Trustee as a result of a tender of shares hereunder
shall be held, and any cash so received shall be invested in short-term
investments, for the account of each Participant with respect to whom shares
were tendered pending any reinvestment by the Trustee, as it may deem
appropriate, consistent with the purposes of the Plan.
ARTICLE XII
THE COMMITTEE
12.1 APPOINTMENT OF COMMITTEE. The administration of the Plan, as
provided herein, including the supervision of the payment of all benefits to
Participants and Designated Beneficiaries, shall be vested in and be the
responsibility of the Employee Benefits Committee of the Company which shall be
called the "Committee" herein. The Committee shall be the "plan administrator"
and a "named fiduciary" of the Plan for purposes of the Act. The Committee shall
consist of such number of persons, not less than three (3), as shall from time
to time be determined by the Compensation Committee of the Board of Directors.
The members of the Committee and their successors shall be appointed from time
to time by the Compensation Committee of the Board of Directors.
12.2 OFFICERS AND SUBCOMMITTEES. The Committee shall elect a
Chairman and shall appoint such subcommittees as it shall deem necessary and
appropriate.
12.3 COMMITTEE PROCEDURES. A majority of the members of the Committee
then serving shall constitute a quorum for the transaction of business. All
resolutions or other action taken by the Committee shall be by vote of a
majority of those present at such meeting and entitled to vote. Resolutions may
be adopted or other action taken without a meeting of the Committee. Subject to
the foregoing, the Chairman of the Committee may act on the Committee's behalf
and may contract for actuarial, legal, investment, advisory, medical,
accounting, clerical, and other services determined by it to be necessary or
appropriate for the administration of the Plan and the Funds.
12.4 COMMITTEE POWERS. The Committee shall have all powers
necessary or appropriate to carry out its duties hereunder, including, but
not limited to, the power to:
(a) Determine all questions affecting the eligibility of any Employee to
participate herein;
(b) Compute the amount of benefits payable hereunder to any Participant or
Designated Beneficiary;
(c) Make rules and regulations for the implementation, administration and
interpretation of the Plan, which are not inconsistent with the terms and
provisions of the Plan. Such rules and regulations as are adopted by the
Committee shall be binding upon any persons having an interest in or under
the Plan.
In carrying out its duties herein, the Committee shall have discretionary
authority to exercise all powers and to make all determinations, consistent
with the terms of the Plan, in all matters entrusted to it, and its
determinations shall be given deference and shall be final and binding on
all interested parties.
12.5 INFORMATION FOR COMMITTEE. The members of the Committee may
inspect the records of any Employer to the extent that it may reasonably be
necessary or appropriate for them to determine any fact in connection with acts
to be performed by them under this Plan, but the members of the Committee shall
not be required to make such inspection but may rely upon any written statement
or other communication believed by them to be genuine and to be signed by an
authorized officer of an Employer. In this connection, each Employer agrees to
furnish the Committee with such information and data relative to the Plan as is
necessary for the proper administration thereof.
12.6 PLAN RECORDS. The Committee, or the Secretary of the Committee
shall keep or cause to be kept records reflecting administration of the Plan,
which records shall be subject to audit by any Employer. A Participant may
examine only those records pertaining directly to him.
12.7 INSTRUCTIONS TO TRUSTEES. The Committee shall provide appropriate
written instructions to the Trustee signed by an authorized member, members or
agent of the Committee to enable it to make the distributions provided for in
the Plan. The Trustee shall be entitled to rely upon any written notice,
instruction, direction, certificate or other communication reasonably believed
by it to be genuine and to be signed by an authorized member or agent of the
Committee or an officer of the Company, and the Trustee shall be under no duty
to make investigation or inquiry as to the truth or accuracy of any statement
contained therein, unless it knows or has reason to know that the direction or
instruction constitutes a breach of the Committee's or an Employer's fiduciary
responsibility with respect to the Plan.
12.8 ALLOCATION OF DUTIES, ETC. AMONG COMMITTEE MEMBERS. The duties,
powers and responsibilities reserved to the Committee may be allocated among its
respective members so long as such allocation is pursuant to action of a
majority of its respective members or by written agreement executed by a
majority of its respective members, in which case, except as may be required by
the Act, no member of the Committee shall have any responsibility or liability
with respect to any duties, powers or responsibilities not allocated to him or
her or for the acts or omissions of any other member.
12.9 DELEGATION BY COMMITTEE. The Committee shall have full power and
authority to delegate powers and duties to any persons or firms (including, but
not limited to, corporate resource departments, accountants, trustee(s),
counsel, investment manager(s), actuaries, physicians, appraisers, consultants,
professional plan administrators, insurers and other specialists), or otherwise
act to secure specialized advice or assistance, as it deems necessary or
appropriate in connection with the management of the Plan; to the extent not
prohibited by the Act, the Committee shall be entitled to rely conclusively
upon, and shall be fully protected in any action or omission taken by it in good
faith reliance upon, the advice or opinion of such persons or firms provided
such persons or firms were prudently chosen by the Committee, taking into
account the interests of the Participants and Designated Beneficiaries and with
due regard to the ability of the persons or firms to perform their assigned
functions.
12.10 INVESTMENT MANAGERS. The Committee's power to retain the services
of any investment manager(s) for the management of (including the power to
acquire and dispose of) all or any part of the Trust Property's assets, shall be
limited to the retention of such persons or firms that are registered as
investment advisers under the Investment Advisers Act of 1940, as Banks (as
defined in that statute), or which are insurance companies qualified to manage,
acquire or dispose of the Trust Property's assets under the laws of more than
one state, and provided that each of such persons or firms has acknowledged to
the Committee and the Trustee in writing that he or she is a fiduciary with
respect to the Plan. In such event, the Trustee shall not be liable for the acts
or omissions of such investment manager or managers, nor shall it be under any
obligation to invest or otherwise manage any assets which are subject to the
management of such investment manager or managers.
12.11 COSTS AND EXPENSES. Unless otherwise determined by the
Compensation Committee of the Board of Directors, the Committee shall serve
without compensation for its services as such. However, the expenses of
administering the Plan, including the printing of literature and forms related
thereto, the disbursement of benefits thereunder, the compensation of
professional plan administrators, agents, appraisers, actuaries, consultants,
counsel, investment advisors, insurers or other specialists shall be paid by the
Company. At the direction of the Company, such expenses may be paid from the
Trust Property, unless otherwise directed by the Company.
12.12 STANDARD OF CARE. The members of the Committee shall use ordinary
care and reasonable diligence in the performance of their administrative duties.
12.13 INDEMNIFICATION AND INSURANCE. To the extent permitted by law,
neither the Committee, nor any other person performing duties hereunder, shall
incur any liability for any act done, determination made or any failure to act,
if in good faith, and the Company shall indemnify the Administrator, its members
and such other persons against any and all liability which is incurred as a
result of the good faith performance or non-performance of their duties
hereunder. Nothing in this Plan shall preclude the Company from purchasing
liability insurance to protect such persons with respect to their duties under
this Plan.
12.14 DISPUTES. In the event that any dispute shall arise as to any act
to be performed by the Committee, the Committee may postpone the performing of
such act until actual adjudication of such dispute shall have been made in a
court of competent jurisdiction or until they shall be indemnified or insured
against loss, to their satisfaction, by the Company.
12.15 COMMITTEE MEMBERS AS PARTICIPANTS. No member of the Committee
shall be precluded from becoming a Participant in the Plan if he or she would be
otherwise eligible, but he or she shall not be entitled to vote or act upon, or
sign any documents relating specifically to, his or her own participation under
the Plan except when it relates to benefits generally. If this disqualification
results in the lack of a Committee quorum, then the Compensation Committee of
the Board of Directors shall appoint a sufficient number of temporary members of
the Committee who shall serve for the sole purpose of determining such a
question.
ARTICLE XIII
CLAIMS PROCEDURE
13.1 CLAIMS PROCEDURE.
(a) Initial Claim. If an Eligible Employee or an Eligible Employee's
surviving spouse or other beneficiary (hereinafter referred to as a
"Claimant") is denied any benefit under this Plan, the Claimant may file a
claim with the Committee. The Committee shall review the claim itself
or appoint an individual or an entity to review the claim. The Claimant
shall be notified within sixty (60) days after the claim is filed whether
the claim is allowed or denied, unless the Claimant receives written
notice prior to the end of the sixty (60) day period stating that
circumstances require an extension of the time for decision. The notice
of the decision shall be in writing, sent by mail to the Claimant's last
known address, and, if the notice is a denial of the claim, the notice
must contain the following information:
(1) the specific reasons for the denial;
(2) a specific reference to pertinent provisions of the Plan on which the
denial is based; and
(3) if applicable, a description of any additional information or material
necessary to perfect the claim, an explanation of why such
information or material is necessary, and an explanation of the
Plan's claims review procedure.
(b) Review Procedure. A Claimant is entitled to request a review by the
Committee of any denial of the Claimant's claim. The request for review
must be submitted to the Committee in writing within sixty (60) days of
mailing of notice of the denial. Absent a request for review within the
sixty (60) day period, the claim will be deemed to be conclusively
denied. The review of a denial of a claim shall be conducted by the
Committee or an individual or entity appointed by the Committee. The
reviewer shall afford the Claimant an opportunity to review all pertinent
documents and submit issues and comments in writing and shall render a
review decision in writing, all within sixty (60) days after receipt of
a request for a review, provided that, where not prohibited by law, the
reviewer may extend the time for decision by not more than sixty (60) days
upon written notice to the Claimant. The Claimant shall receive
written notice of the reviewer's decision, together with specific
reasons for the decision and reference to the pertinent provisions of the
Plan.
13.2 COMPLIANCE WITH REGULATIONS. The review of all claims
hereunder shall be made in accordance with applicable regulations under the
Act.
ARTICLE XIV
TRUSTS
14.1 ESTABLISHMENT OF TRUSTS; APPOINTMENT AND REMOVAL OF TRUSTEE. The
Company will establish one or more trusts, at its discretion, with one or more
trustees selected by the Company. The Company, at its discretion, may modify or
terminate any trust established under the Plan or may remove any Trustee or
appoint a successor Trustee with respect to any such trust.
14.2 STANDARD OF CARE. The Company shall select each Trustee with the
care, skill, prudence and diligence under the circumstances then prevailing that
a prudent man acting in a like capacity and familiar with such matters would
use.
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ARTICLE XV
DISCONTINUANCE OF PLAN
15.1 TERMINATION AND AMENDMENT. The Company hopes and expects to
continue this Plan indefinitely, but reserves the right at any time to alter,
amend, suspend, discontinue or terminate the Plan; provided, however, that no
such alteration, amendment, suspension, discontinuance or termination shall have
the effect of permitting any of the Trust Property under the Plan to be used for
or diverted to purposes other than those of the Plan. If the Plan is
discontinued or terminated, or if Matching Contributions are discontinued, all
Trust Property under the Plan will become immediately vested in the affected
Participants and none will inure to the Employer. If this Plan is partially
terminated as determined under applicable rules and regulations of the Internal
Revenue Service, the interest of each Participant with respect to whom the Plan
is terminated shall become fully vested as of the date of partial termination.
15.2 TIME FOR DISTRIBUTIONS UPON PLAN TERMINATION. Effective as of
January 1, 1985, Accounts will be distributed to Participants or their
Designated Beneficiaries as soon as administratively feasible after the
termination of the Plan, provided that neither the Company nor an Affiliated
Employer establishes or maintains a successor plan, as defined in applicable
Treasury regulations.
15.3 DISTRIBUTIONS UPON SALE OF ASSETS - TIME FOR DISTRIBUTIONS.
Effective as of January 1, 1985, all Salary Deferral Contributions, Qualified
Nonelective Contributions, Qualified Matching Contributions and income
attributable thereto, at the discretion of the Company, may be distributed to
Participants as soon as administratively feasible after the sale to an entity
that is not an Affiliated Employer of substantially all of the assets used by
the Employer in the trade or business in which the Participant is employed.
15.4 DISTRIBUTIONS UPON SALE OF SUBSIDIARY - TIME FOR DISTRIBUTIONS.
Effective as of January 1, 1985, all Salary Deferral Contributions, Qualified
Nonelective Contributions, Qualified Matching Contributions and income
attributable thereto, at the discretion of the Company, may be distributed as
soon as administratively feasible after the sale to an entity that is not an
Affiliated Employer of an incorporated Affiliated Employer's interest in a
subsidiary to Participants employed by such subsidiary.
ARTICLE XVI
PROHIBITION OF ASSIGNMENT OF INTEREST
16.1 ANTI-ASSIGNMENT PROVISION. Except as provided in Sections 16.2 and
21.4, no benefit under the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any
attempt to do so shall be void. No benefit under the Plan shall in any manner be
liable for or subject to the debts, contracts, liabilities, engagements or torts
of any person. If any person entitled to benefits under the Plan becomes
bankrupt or attempts to anticipate, alienate, sell, transfer, assign, pledge,
encumber or charge any benefit under the Plan, or if any attempt is made to
subject any such benefit to the debts, contracts, liabilities, engagements or
torts of the person entitled to any such benefit, except as specifically
provided in the Plan, then such benefit shall cease and terminate in the
discretion of the Committee, and the Committee may hold or apply the same or any
part thereof to the benefit of any dependent or beneficiary or such person, in
such manner and proportion as the Committee may deem proper. The Company shall
not in any manner be liable for or subject to, the debts, contracts,
liabilities, engagements or torts of any person entitled to benefits hereunder.
16.2 QUALIFIED DOMESTIC RELATIONS ORDERS. The Trustee and the Committee
shall recognize the creation, assignment or recognition of a right to any
payment or distribution payable under the Plan with respect to a Participant if
such creation, assignment or recognition is pursuant to a Qualified Domestic
Relations Order.
ARTICLE XVII
GOVERNING LAW
17.1 GOVERNING LAW. The Plan shall be construed, and the rights and
obligations of the parties thereunder determined, in accordance with the laws of
the State of Maryland, except where those laws are preempted by the laws of the
United States.
ARTICLE XVIII
TOP HEAVY PROVISIONS
18.1 TOP HEAVY REQUIREMENTS. Notwithstanding anything contained herein
to the contrary, if the Plan is a Top Heavy Plan for any Plan Year beginning
after December 31, 1983, then the Plan shall meet the following requirements for
such Plan Year:
(a) Minimum Contribution Requirement. It is intended that the Company will
meet the minimum benefit and contribution requirements of Code section
416(c) by providing a minimum benefit which complies with that section
under the Company's defined benefit plan for such Plan Year for each
Participant who is a Non-Key Employee. If, however, such minimum
benefit is not so provided under said plan, then this Plan will
provide a minimum contribution allocation (which may include forfeitures
otherwise allocable) for such Plan Year for each Participant who is a
Non-Key Employee and who has not separated from service (regardless of
whether the Participant fails to complete 1,000 Hours of Service during
the Plan Year and regardless of whether the Participant declines to
make a Salary Deferral Contribution to the Plan in that Plan Year) in an
amount equal to at least three percent (3%) of such Participant's
compensation (as that term is defined in section 415 of the Code) for
such Plan Year. Such three percent (3%) minimum contribution allocation
requirement shall be increased to four percent (4%) for any year in which
the Company also maintains a defined benefit pension plan if such
increase is necessary to avoid the substitution of "1.0" for "1.25" in
the denominator of the fractions calculated in Section 20.1(c)(1) and
(2) of the Plan pursuant to Code section 416(h)(1), relating to special
adjustments to Code section 415 limits for Top Heavy Plans, and if the
adjusted limitations of Code section 416(h)(1) would otherwise be
exceeded if such minimum contribution allocation were not so increased.
The minimum contribution allocation requirements set forth hereinabove
shall be reduced in the following circumstances:
(1) The percentage minimum contribution allocation required hereunder shall
in no event exceed the percentage contribution allocation made for the Key
Employee for whom such percentage is the highest for the Plan Year, after
taking into account contribution allocations and benefits under other
qualified plans in this Plan's aggregation group as provided in Code
section 416(c)(2)(B)(iii); and
(2) No minimum contribution will be required (or the minimum contribution
will be reduced, as the case may be) for a Participant under this Plan for
any Plan Year if the Company maintains another qualified plan under which a
minimum benefit or contribution is being funded or made for such year for
the Participant in accordance with Code section 416(c).
(b) Maximum Eligible Earnings Limitation. Effective for Plan Years beginning
before January 1, 1989, the annual compensation of each Participant
recognized under the Plan for such Plan Year shall not exceed the first Two
Hundred Thousand Dollars ($200,000) of such Participant's compensation (as
that term is defined in section 415 of the Code); provided, however, that
such dollar limitation shall be adjusted to take into account any
adjustments made by the Secretary of the Treasury pursuant to Code section
416(d)(2).
(c) Additional Super Top Heavy Requirement. If the Plan is a Super Top Heavy
Plan for any Plan Year, the limitations on annual additions contained in
Article XIX shall be adjusted pursuant to section 416(h) of the Code and
section 235(g)(3) of the Tax Equity and Fiscal Responsibility Act of 1982.
18.2 TOP HEAVY PLAN DEFINITIONS. For purposes of this Article, the
following terms shall have the meanings provided below:
(a) A plan is a "Top Heavy Plan" if, as of the Determination Date, the
aggregate of the accounts of Key Employees under a defined contribution
plan exceeds sixty percent (60%) of the aggregate of the accounts of all
employees under such plan or, in the case of a defined benefit plan, the
present value of the cumulative accrued benefits under the plan for Key
Employees exceeds sixty percent (60%) of the present value of the
cumulative accrued benefits under the plan for all employees, all as
adjusted by and determined in accordance with the provisions of Code
section 416(g). The determination of whether a plan is Top Heavy shall
be made after aggregating each plan of the plan sponsor which enables any
plan in which at least one Key Employee participates to meet the
requirements of section 401(a)(4) or section 410 of the Code, and after
aggregating any other plan not required to be aggregated by the
foregoing if such aggregated group of plans, taking such plan into
account, continues to meet the requirements of section 401(a)(4) and
section 410 of the Code. A plan is a "Super Top Heavy Plan" if, as of
the Determination Date, the plan would meet the test specified above
for being a Top Heavy Plan if ninety percent (90%) were substituted
for sixty percent (60%) in each place it appears in this subsection (a).
Solely for the purpose of determining if the Plan, or any other plan
included in a required aggregation group of which this Plan is a part, is
Top Heavy (within the meaning of section 416(g) of the Code) the accrued
benefit of an Employee other than a Key Employee (within the meaning of
section 416(i)(1) of the Code) shall be determined under (a) the method, if
any, that uniformly applies for accrual purposes under all plans maintained
by the Affiliated Employers, or (b) if there is no such method, as if such
benefit accrued not more rapidly than the slowest accrual rate permitted
under the fractional accrual rate of section 411(b)(1)(c) of the Code.
If an employee has not performed services for the Employer at any time
during the five (5) year period ending on the Determination Date, any
accrued benefit for such employee (and the account(s) of any such employee)
shall not be taken into account.
(b) The "Determination Date" for purposes of determining whether a plan is Top
Heavy for a particular plan year is the last day of the preceding plan year
(or, in the case of the first plan year of a plan, the last day of the
first plan year).
(c) A "Key Employee" is an employee (as defined in section 416 of the Code and
the regulations thereunder), including a beneficiary of such employee, who
at any time during the plan year or any of the four (4) preceding plan
years is:
(1) An officer of the plan sponsor (or of any corporation required to be
aggregated with the plan sponsor under section 414(b), (c), (m) or (o) of
the Code) having an annual compensation greater than fifty percent (50%) of
the amount in effect under section 415(b)(1)(A) of the Code for the plan
year (but in no event shall the number of officers taken into account as
Key Employees exceed the lesser of (i) fifty (50) or, (ii) the greater of
three (3) or ten percent (10%) of all employees.
(2) One (1) of the ten (10) employees who (i) owns (or is considered to own
within the meaning of Code section 318) both more than a one-half percent
(1/2%) ownership interest and the largest percentage ownership interests in
the Employer, and (ii) has annual compensation (as defined below) of more
than the amount in effect under Code section 415(c)(1)(A). For purposes of
this Article, if two Employees have the same interest in the Employer, the
Employee having greater annual compensation (as defined below) from the
Employer shall be treated as having the larger interest;
(3) A person owning (or considered as owning within the meaning of Code
section 318) more than five percent (5%) of the outstanding stock of the
plan sponsor or stock possessing more than five percent (5%) of the total
combined voting power of all stock of the plan sponsor; or
(4) A person who has an annual compensation from the plan sponsor (or any
corporation required to be aggregated with the plan sponsor under section
414(b), (c), (m) and (o) of the Code) of more than One Hundred Fifty
Thousand Dollars ($150,000) and who would be described in subparagraph (3)
hereof if one percent (1%) were substituted for five percent (5%).
For purposes of applying Code section 318 to the provisions of this subsection
(c), subparagraph (C) of Code section 318(a)(2) shall be applied by
substituting five percent (5%) for fifty percent (50%). In addition, the
rules of subsections (b), (c) and (m) of Code section 414 shall not apply
for purposes of determining ownership of the plan sponsor under this
subsection (c).
For purposes of determining whether an Employee is a Key Employee, annual
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 excludable from the Employee's gross
income under section 125, section 402(a)(8), section 402(h) or section
403(b) of the Code.
(d) A "Non-Key Employee" is any participant in a plan (including a beneficiary
of such participant) who is not a Key Employee.
ARTICLE XIX
LIMITATION ON CONTRIBUTIONS
19.1 MAXIMUM ANNUAL ADDITIONS AND BENEFITS. In no event shall any
contributions or forfeitures be allocated to any Account maintained under this
Plan if such allocations would cause the Plan or any other plan maintained by
the Employer to violate the limitations of section 415 of the Code and the
regulations thereunder. For purposes of the limitations contained in section 415
of the Code, the Plan's "limitation year" for purposes of that section shall be
the Plan Year.
If the fraction of section 415 of the Code would exceed 1.0,
even after the reduction in the Participant's benefits under any defined benefit
plan(s) maintained by the Employer, which shall be done first, then the annual
additions for the Participant under this Plan shall be reduced to the extent
necessary to reduce such fraction to 1.0. Any such reduction shall be made in
accordance with regulations issued by the Internal Revenue Service under the
Code.
19.2 DISPOSITION OF EXCESS ANNUAL ADDITIONS. If the limitations on
annual additions contained above are exceeded for any Participant for any Plan
Year, the excess annual additions will be disposed of as follows:
(a) Contributions to the Participant's Employee Account shall be reduced
and paid to the Participant as additional compensation;
(b) If, after the application of item (a), excess annual additions still exist,
Company contributions (including any allocation of forfeitures) to the
Participant's Company Account made on behalf of such Participant for such
Plan Year shall be reduced and shall be used to reduce Company
contributions due hereunder for the following Plan Year(s).
ARTICLE XX
PLAN MERGERS, CONSOLIDATION AND TRANSFERS
20.1 MERGERS, CONSOLIDATIONS AND TRANSFERS. In the event of any merger
or consolidation of the Plan with, or transfer in whole or in part of the assets
or liabilities of the Plan to, another Plan, such merger, consolidation or
transfer shall be permissible only if:
(a) each Participant would receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit he
or she would have been entitled to receive immediately before the merger,
consolidation or transfer (determined, in each case, as if this Plan and
such transferee plan had then terminated);
(b) resolutions of the board of directors of each plan sponsor, or of any new
or successor Plan sponsor, of the affected Participants, shall authorize
such transfer of assets; and, in the case of the new or successor employer
of the affected Participants, its resolutions shall include an assumption
of liabilities with respect to such Participants' inclusion in the new
employer's plan; and
(c) such other plan and trust is qualified under sections 401(a) and 501(a) of
the Code.
ARTICLE XXI
LOANS TO PARTICIPANTS
21.1 LOAN ADMINISTRATION. The Committee appointed pursuant to Section
12.1 (the "Loan Administrator") is authorized to establish and administer a loan
program as provided herein.
Parties in interest (as defined in section 3(14) of the Act and the
regulations issued thereunder), who are Participants, or who are
beneficiaries who have become entitled to receive a benefit under the Plan,
may make written application to the Loan Administrator for a loan. The Loan
Administrator shall review the loan application and approve or deny the
application in writing, in accordance with the uniform and
nondiscriminatory loan policy set forth in this Article. Any such loan
shall be made from the assets of, and shall be charged against, the
borrower's Plan Accounts and Investment Funds as directed by the borrower,
to the extent possible.
21.2 FREQUENCY, NUMBER. The Committee shall establish guidelines for
limiting the frequency and number of loans from the Plan to a borrower.
21.3 AMOUNT, AVAILABILITY. The Committee may establish a minimum amount
which a borrower may borrow at any one time from the Plan, exclusive of
interest. The maximum amount which a borrower may borrow from the Plan, when
added to the outstanding balance of all other loans from the Plan and from any
other qualified plans maintained by the Employer and any entity required to be
aggregated with the Employer pursuant to Code section 72(p), exclusive of
interest, shall not exceed the lesser of: (i) fifty thousand dollars ($50,000),
reduced by the excess (if any) of the highest outstanding balance of loans from
the Plan to the borrower during the one (1) year period ending on the day before
the date on which such loan was made, over the outstanding balance of loans from
the Plan to the borrower on the date on which such loan was made; or (ii) fifty
percent (50%) of the borrower's vested Plan Account, determined as of the
origination date of the loan in the same manner as provided in Section 21.7. A
borrower's vested interest in the Plan shall be determined in accordance with
Code section 72(p)(2)(A). In addition, the Loan Administrator shall approve a
loan made pursuant to this Article only if the Loan Administrator determines, in
his or her sole and absolute discretion, that the amount of such loan is
reasonable based on factors that are legally considered by commercial entities
in the business of making similar loans. In no event shall a loan be made which
would be taxed under Code section 72(p) as a distribution from the Plan. Prior
default on a Plan loan by a borrower precludes future loans to that borrower.
21.4 NON-DISCRIMINATION. Loans shall be available to all parties in
interest (as defined above) who are Participants, or who are beneficiaries who
have become entitled to receive a benefit under the Plan, on a reasonably
equivalent basis, without regard to an individual's race, color, religion, age,
sex or national origin. In approving such loans, the Loan Administrator shall
not discriminate in favor of highly compensated employees (within the meaning of
Code section 414(q)) as to the general availability of loans, as to the terms of
repayment, or as to the amount of such loans in proportion to the vested portion
of the borrower's Plan Account. Notwithstanding anything in this Plan to the
contrary, all loans shall comply with the requirements of section 408(b)(1) of
the Act and the regulations issued thereunder.
21.5 LOAN APPROVAL. The Loan Administrator shall not take the
purpose of the loan into account in approving or disapproving a loan
application.
<PAGE>
The Loan Administrator shall approve or deny the loan application based on the
same factors which commercial lenders in the business of making similar
types of loans legally recognize for purposes of loan availability. The
Loan Administrator may examine such factors as creditworthiness, financial
need, adequacy of security and risk of loss to the Plan in the event of
default. Based on these factors, Participants and beneficiaries other than
active employees may be offered loans on different terms and conditions due
to valid economic differences.
21.6 INTEREST RATE. Each loan shall bear a reasonable rate of interest,
to be established by the Loan Administrator. A reasonable rate of interest means
an interest rate which is at least the rate of interest currently being charged
by commercial lenders in the area for the use of money which they lend under
similar circumstances (including creditworthiness of the borrower and the
security given for the loan). If the Plan is administered on a nationwide basis
a national rate of interest may be used. A nationwide plan may also grant loans
on a regional basis at rates which reflect appropriate regional factors. The
Loan Administrator shall not discriminate among borrowers in the matter of
interest, but loans may bear different interest rates if, in the Loan
Administrator's opinion, the difference is justified by different terms for
repayment, the security of the collateral, or changes in economic conditions. No
loans will be granted during any period in which the reasonable commercial
interest rate for money loaned under similar circumstances exceeds the maximum
legal rate that may be charged to individuals for loans of this nature under
applicable usury laws.
The Loan Administrator may from time to time set appropriate processing and loan
administration fees.
21.7 COLLATERAL. Each loan, to the extent of the amount of the
indebtedness, including interest, shall be secured by the assignment of no more
than fifty percent (50%) of the borrower's vested Plan Account, determined as of
the origination date of the loan, supported by the borrower's collateral
promissory note for the payment of the indebtedness, including interest, payable
to the order of the Trustee. Subject to applicable provisions of law, each loan
shall be further supported by the Participant's execution of an agreement, in a
form specified by the Loan Administrator, to repay the loan by payroll deduction
over a term and in a manner specified by the Loan Administrator. In addition to
the assignment of any part of the borrower's Plan Account, the Loan
Administrator may require such additional collateral as he or she may deem
necessary to adequately secure such loan. The Loan Administrator shall choose
collateral that the Plan can sell or foreclose on in the event of default, that
will not leave the Plan with a loss of principal or interest, and that would be
sufficient in the same context in a commercial setting. The assignment of any
part of the borrower's Plan Account provided for above shall be void for any
period of time during which the loan fails to comply with Code section
4975(d)(1) and section 408(b)(1) of the Act.
21.8 REPAYMENT. Except as provided in regulations or other formal
guidance issued by the Secretary of the Treasury or by the Department of Labor,
and subject to any limitations which may apply in the case of a borrower who is
not an active Employee, loans shall be repaid by payroll deductions. Any loan to
a borrower shall be repaid in such manner and over such period as will
constitute level amortization of such loan over the term of the loan (with
payments not less frequently than quarterly), and the term of the loan shall not
exceed such period (not to exceed five (5) years, or such longer period (of up
to ten (10) years) as may be allowed without causing the loan to be taxed under
Code section 72(p) as a distribution from the Plan (e.g., a loan used to
purchase the principal residence of the Participant)) as the Loan Administrator
shall determine. All payments by a borrower on any such loan, including
interest, shall be credited to such borrower's Plan Account.
The events of default shall be listed specifically in the borrower's Loan
Agreement. The Loan Agreement provisions are deemed part of the Plan with
respect to that borrower for purposes of complying with Department of Labor
Regulation section 2550.408b-1(d)(2). Generally, a borrower is in default
if one or more of the following events occurs: (a) any false or misleading
representation, warranty, or statement is made by the borrower in
connection with the borrower's Loan Agreement; (b) failure by the borrower
to pay any loan obligation when due; (c) failure by the borrower to observe
or perform any warranty, covenant, condition, or agreement under the Loan
Agreement; (d) the borrower's death or retirement; (e) the borrower's
request for a distribution of that portion of the borrower's Plan Account
which is used as collateral for any loan hereunder; (f) the borrower's
termination of employment; (g) the reduction in value of the collateral for
the loan to the extent that it no longer would cover the outstanding
balance of the loan; or (h) the Committee's receipt of actual notice of
proceedings brought by or against the borrower under bankruptcy or
insolvency laws. If a borrower defaults in the repayment of the loan, the
borrower's Plan Account under this Plan shall be charged with the full
unpaid balance of the loan, including any accrued but unpaid interest, as
of the earliest date on which the borrower may elect to receive a
distribution of a portion or all of his or her Plan Account. If the entire
balance of the borrower's Plan Account is insufficient to repay the
remaining balance of the loan, including interest, such borrower shall be
liable for and continue to make payments on any balance still due. Any
costs incurred by the Trustee or Loan Administrator in collecting amounts
due, including attorney's fees, shall be added to the principal balance of
the loan and treated accordingly.
21.9 PARTICIPANT CONSENT TO LOAN SET-OFFS. No loan shall be made to a
Participant unless the Participant consents, in writing, to the loan and to the
fact that, if the borrower defaults, the Participant's account may be reduced as
provided in Section 21.8, before the Participant attains the age of sixty-five
(65). The consent of the Participant must be made within the ninety (90) day
period before the making of the loan.
21.10 DISTRIBUTIONS PROHIBITED. No distribution of any amount which is
used as collateral for any loan hereunder shall be made to any Participant or
former Participant or to a beneficiary of any such Participant unless all unpaid
loans, including accrued interest, have been repaid or otherwise discharged.
21.11 NO ALIENATION. A loan made to a borrower shall not be treated as
an assignment or alienation of any portion of the borrower's Plan Account due to
the fact that the loan will be secured by the borrower's Plan Account and all
loans made to Participants and beneficiaries shall be exempt from the tax
imposed on prohibited transactions under Code section 4975(d)(1).
21.12 DISCLOSURE. Every borrower must receive from the Loan
Administrator a statement which describes the procedure for loan application,
the events constituting default and the steps which will be taken by the Plan in
the event of default, and a clear statement of the charges involved in each loan
transaction. The statement of charges shall include the dollar amount of the
loan and the annual interest rate.
ARTICLE XXII
TRUST AND TRUSTEE
22.1 TRUST FUND. The Trust Fund shall consist of all contributions made
to the Plan or transferred to the Trust as provided herein, and the investments
and reinvestments thereof and the income thereon which shall be accumulated and
added to principal.
22.2 TRUSTEE CONTROL. The Trustee shall hold and invest the funds and
assets received by the Trustee under this Plan subject to the terms of this Plan
and for the purposes herein set forth. The Trustee shall be responsible only for
such funds and assets as shall actually be received by the Trustee as Trustee
hereunder.
So long as a Trustee is acting, title to any of the assets of the Trust may be
held or registered in the name of a nominee of the Trustee for ease of
dealing with the same, provided that the books of the Trust reflect actual
ownership. The Trustee shall be liable for the acts of its nominees. The
assets so held or registered shall at all times remain in the possession or
under the control of the Trustee.
22.3 INVESTMENT FUNDS. The Trustee shall establish such investment
funds as the Committee shall direct, and shall divide the trust among investment
funds in accordance with the investment directions of Participants to the extent
permitted in this Plan. Investment funds shall be established either by direct
investment or through the medium of a bank, and trust fund, an insurance
contract or regulated investment company mutual fund, as the Committee shall
direct. Each investment fund (a) shall be held and administered as part of the
Trust, but (b) shall be separately invested and accounted for.
The assets of the Trust invested in each of the funds shall be separately
valued at fair market value as of the appropriate Valuation Date.
22.4 TRUSTEE APPOINTMENT AND RESIGNATION; REMOVAL AND SUCCESSION OF
TRUSTEES.
(a) Appointment of Trustee. The Trustee shall be appointed by Company.
(b) Resignation or Removal of Trustee. The Trustee may resign at any time by
filing the Trustee's resignation, in writing, with the Company shall have
the power to remove the Trustee at any time, with or without cause, and to
appoint a successor Trustee. Upon resignation or removal, the Trustee shall
render an accounting of its administration since the last annual accounting
and shall transfer and deliver the assets in hand under this Plan to any
remaining or successor Trustee. Any successor Trustee shall have all the
same titles, rights, powers, authorities, discretions and immunities as the
original Trustee hereunder.
22.5 PRUDENT PERSON RULE. The Trustee shall discharge its duties under
this Plan solely in the interest of Participants and their beneficiaries and:
(i) for the exclusive purpose of providing benefits to such Participants and
beneficiaries and paying reasonable expenses of administering the Plan; (ii)
with the care, skill, prudence and diligence under the circumstances then
prevailing that a prudent person acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of like character and
with like aims; (iii) by diversifying the investments of the Plan so as to
minimize the risk of large losses, unless under the circumstances it is clearly
prudent not to do so; and (iv) in accordance with the provisions of this Plan
insofar as they are consistent with the provisions of the Employee Retirement
Income Security Act of 1974.
22.6 LIABILITY; EXPENSES; COMPENSATION. The Trustee shall not be liable
for any losses which may be incurred upon the investments of the Trust Fund
except to the extent that any losses to the Trust Fund shall have been caused by
its bad faith, negligence or willful misconduct or by a breach of its fiduciary
duties under the Employee Retirement Income Security Act of 1974.
The Employer agrees to pay all expenses properly and actually incurred by the
Trustee in the administration or termination of the Trust Fund, including
compensation for the Trustee's services as Trustee and legal expenses,
provided that, if the Trustee already receives full time pay from the
Employer, the Trustee may not receive such compensation. Should the
Employer for any reason fail to pay such expenses, the same shall be paid
out of the Trust. The Trustee shall receive for the services rendered as
Trustee hereunder such reasonable compensation as the Company and the
Trustee may from time to time agree upon, unless the Trustee receives full
time pay from the Employer.
22.7 MANAGEMENT OF ASSETS.
(a) Powers of the Trustee or Investment Manager. The Trustee who is managing
and administering the Trust or, if applicable, the Investment Manager (as
defined in section 3(38) of ERISA) which has been appointed by the Employer
to manage the Plan's assets, shall be and hereby is empowered and
authorized, in its sole discretion and subject to current rules and
regulations at the time the investment is made and subject to the
provisions of Article XI and subsection (b) of this Section:
(1) To invest and reinvest contributions and any accretions thereto,
whether capital gains or income or both, and the proceeds of any sale,
pledge, lease or other disposition of any assets of the Trust in bonds,
notes, mortgages, commercial paper, coins, stamps, foreign bonds, antiques,
broodmares, gold, art, silver, diamonds, second trusts, option securities,
in any other type of personal property and in real property.
Notwithstanding any other provision of this Plan, any person having
investment authority with regard to the Trust hereby is authorized to
direct the investment of any part or all of the assets of the trust in any
common, collective, or group trust ("Common Trust"), including but not
limited to any Common Trust which has been qualified under Code section
401(a) and is exempt from taxation under Code section 501(a) now or
hereafter maintained by a bank or trust company which is a fiduciary with
respect to the Plan or trust, as any such Common Trust may have heretofore
been or may hereafter be amended, to be held subject to all the provisions
thereof and to be commingled with the assets of other trusts participating
therein; provided, however, that any investment and retention of an
interest therein shall be such as will not adversely affect in any manner
the qualified or exempt status of the Plan and trust under Code section
401(a) and section 501(a). To the extent of the equitable share of the
trust in a Common Trust which is qualified under Code section 401(a), the
Common Trust shall be a part of the Plan and of the trust, and all of the
terms and conditions of the instrument creating the Common Trust shall be
deemed to be incorporated by reference herein. The power herein conferred
is intended to and shall override any provision of this Plan to the
contrary (including, but not limited to, any investment limitations
contained in or imposed by this Plan).
(2) To vote any and all stock held hereunder and to continue any investment
in stocks, bonds, real estate notes or other securities, or real or
personal property, which may at any time form a part of the Trust Fund;
provided, however, that the Trustee shall vote stock of the Employer only
upon the instructions of the Committee, or, if an independent fiduciary has
been appointed by the Committee as provided in Section 11.1, only upon the
instructions of the independent fiduciary.
(3) To invest, reinvest and change investments; to sell, mortgage, pledge,
lease, assign, transfer and convey any and all of the Trust Fund property
for cash or on credit, at public or private sale; to exchange any Trust
property for other property; to grant options to purchase or acquire any
Trust property; to determine the prices and terms of sales, exchanges or
options; and to execute, acknowledge and deliver any and all deeds or other
trust instruments of conveyance which may be required to carry the
foregoing powers into effect, without obligation on the part of the
purchaser, lessee, lender, assignee or transferee, or anyone to whom the
property may in any way be conveyed to see to the application of the
purchase money loans or property exchanged, transferred, assigned or
conveyed.
(4) To allow cash in the Trustee's hands to remain uninvested and on
deposit in the commercial or savings department of any bank or trust
company supervised by the United States or a State or agency of either,
even if it is a fiduciary or party-in-interest, at any time and from time
to time in a reasonable amount; and, as to such amount on deposit, the
Trustee shall have no liability for interest thereon, except for such
interest as may be paid on such deposit.
(5) To exercise with respect to all investments all of the rights, powers
and privileges of an owner including, without limiting the foregoing, the
power to give proxies and to pay calls, assessments and other sums deemed
necessary for the protection of the Trust; to participate in voting trusts,
pooling agreements, foreclosures, reorganizations, consolidations, mergers
and liquidations, and in connection therewith to deposit securities with
and transfer title to any protective or other committee under such terms as
the Trustee may deem advisable; to exercise or sell stock subscriptions or
conversion rights and to accept and retain as an investment hereunder any
securities received through the exercise of any of the foregoing powers. If
the Trustee shall pay more than the par value of any security purchased,
the Trustee shall not be obligated to establish a sinking fund out of the
income of such investments for repaying to the principal the same amount
paid above par.
(6) To take any action with respect to conserving or realizing upon the
value of any Trust property and with respect to foreclosures,
reorganizations, or other changes affecting the Trust property; to collect,
pay, contest, compromise, or abandon demands of or against the Trust
estate, wherever situated; and to execute contracts, notes, conveyances and
other instruments, including instruments containing covenants and
warranties binding upon and creating a charge against the Trust estate, and
containing provisions excluding personal liability.
(7) To employ agents, including investment counsel, for advice and to
manage the investment of the Trust property, to employ attorneys, auditors,
depositories and proxies, with or without discretionary powers and all such
parties shall have the right to rely upon and execute the written
instructions of the Trustee, and shall not be obligated to inquire into the
propriety of the acts of directions of the Trustee, other than is required
under the Employee Retirement Income Security Act of 1974.
(8) To compromise any claims existing in favor of or made against the
Trust.
(9) To engage in any litigation, either for the collection of monies or for
other properties due the Trust, provided in defense of any claim against
the Trust Fund; provided, however, that the Trustee shall not be required
to engage in or participate in any litigation unless the Trustee shall have
been indemnified to its satisfaction against all expenses and liabilities
to which the Trustee may become subject.
(10)To invest and reinvest up to one hundred percent (100%) of the Trust in
Employer Securities. Such investment must be for the exclusive benefit of
Participants and must meet the requirements of the Act and all aspects
thereof as to the common law prudence standard (except as to the
diversification requirement).
(b) Investment Manager. Notwithstanding the foregoing, the Company reserves the
right to appoint an investment adviser registered as such under the
Investment Advisers Act of 1940, a bank (as defined in that Act) or an
insurance company qualified to perform investment management services under
the laws of more than one state to manage the investments of all or any
part of the Trust. Upon such appointment, and acknowledgment by the
appointee that it is a fiduciary as defined in the Employee Retirement
Income Security Act of 1974, the appointee shall have all rights to manage
the investments of that portion of the Trust over which authority has been
granted. The Trustee shall be relieved of all further responsibility in
respect thereof and shall abide by the instructions of such appointee.
22.8 RELIANCE BY TRUSTEE. The Trustee may rely on any decision of the
Committee purporting to be made pursuant to the terms of this Plan and on any
list or notice furnished by the Employer or the Committee as to any facts, the
occurrence of any events or the existence of any situation, and shall not be
bound to inquire as to the basis of any such decision, list or notice, and shall
incur no obligation or liability for any action taken or suffered to be taken by
them in reliance thereon.
22.9 CHANGES IN COMMITTEE MEMBERSHIP. The Trustee shall not be bound to
inquire as to changes in the membership of the Committee and shall be entitled
to rely on such information as it may receive from time to time from the
Employer with respect to such membership.
22.10 LEGAL COUNSEL. The Trustee may consult with legal counsel (who
may or may not be counsel for the Employer) concerning any question which may
arise with reference to its duties under this Plan, and the Trustee may rely in
good faith upon the opinion of such counsel.
22.11 ACCOUNTING OF FUNDS AND TRANSACTIONS.
(a) The Trustee shall keep true and accurate records of all transactions of the
Trust which records shall be available for inspection on order by
authorized representatives of the Employer or by Participants at reasonable
times.
Although a separate Account for each Participant under the Plan shall be
maintained as herein provided, it shall not be necessary for the Trustee to
make or maintain an actual physical division of the assets of the Trust
until the time shall arrive for the payment to a Participant or a
beneficiary or beneficiaries of a Participant, and, at such time or times,
the Trustee need only make an actual division of so much of any Account as
may be necessary to satisfy the particular payments to be made.
(b) On the last day of the Plan Year, or more often as directed by the
Employer, the Trustee shall prepare and deliver to the Employer an
accounting of the funds and transactions since the last previous such
accounting of the Trust. In the absence of the filing in writing with the
Trustee by the Employer of exceptions or objections to such
accounting within one hundred twenty (120) days after the delivery of such
accounting to the Employer, the Employer shall be deemed to have approved
such accounting, and in such a case or upon the written approval by the
Employer of such an accounting, the Trustee shall be released,
relieved and discharged with respect to all matters and things
disclosed in such accounting as though such accounting had been settled
by decree of a court of competent jurisdiction.
22.12 RELIANCE ON TRUSTEE. No person contracting or in any way dealing
with the Trustee shall be under any obligation to ascertain or inquire: (i) into
any powers of the Trustee, (ii) whether such powers have been properly
exercised, or (iii) about the sources or applications of any funds received from
or paid to the Trustee. Any person contracting or in any way dealing with the
Trustee may rely on the exercise of any power or authority as the conclusive
evidence that the Trustee possesses such power or authority.
22.13 LEGAL ACTION. In the case of any suit or proceeding regarding
this Plan to which the Trustee is a party, the Trustee shall be reasonably
reimbursed for any and all costs, including attorney's fees, and for all
necessary expenses which it has incurred or become liable on account thereof or
on account of any other phase of its administration of the Trust, and it shall
be entitled to reimburse itself for said expenses out of the Trust. In order to
protect the Trust Fund against depletion as the result of ill-advised
litigation, it is agreed that in the event any Participant, beneficiary or
Employee brings any legal action against the Trustee, the result of which shall
be adverse to the party bringing such suit, the court costs and attorney's fees
to the Trustee in defending such suit shall be charged to such extent as is
allowed by a court of competent jurisdiction, and as is possible, directly to
the account of said Participant, beneficiary or Employee, and only the excess,
if any, of such costs and fees over and above the Participant's separate share
of the fund shall be included in the expense in determining the earnings or loss
to the Trust.
IN WITNESS WHEREOF, the Company has caused this Amendment and
Restatement to be executed by its duly authorized officers and its corporate
seal to be affixed hereto, and the Trustees have joined herein to evidence their
acceptance of their appointment as the Trustee and of the Trust provisions in
Article XXII and related Plan provisions, effective, except as expressly
provided to the contrary herein, as of January 1, 1987.
<PAGE>
ATTEST/WITNESS: PHH CORPORATION
/s/ Gordon W. Priest, Jr. By: /s/ Samuel H. Wright
Print Name: Gordon W. Priest, Jr. Samuel H. Wright, Vice President
Date: April 10, 1995
TRUSTEE:
/s/ Gordon W. Priest, Jr. /s/ Roy A. Meierhenry
Print Name: Gordon W. Priest, Jr. Roy A. Meierhenry
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A - CREDITED SERVICE
Pension Credited
Company Name Loc/Div Date of Pension Benefit Service
At Date of Affiliation Org. ID Code Affiliation Vesting* Accrual* Vesting **
- ---------------------- ------- ---- ----------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
PHH Corporation CPHG010 N/A DOH DOH DOH
Peterson, Howell & Heather, Inc. VPH1010 N/A DOH DOH DOH
Homequity, Inc. RHEQ010 N/A DOH*** DOH DOH
Better Homes & Gardens BHG 9/15/91 DOA DOA DOA
Genesis GEN 11/24/91 DOA DOA DOA
National Truckers Service, Inc. VNTS010 N/A DOH DOH DOH
The Fantus Company, Inc. DFAN010 N/A DOH DOH DOH
PHH Capital Resources Management,
Inc. DCRM010 N/A DOH DOH DOH
EAF International, Inc. AEAF010 0730 01/01/83 DOA DOA DOH
0732 01/01/83 DOA DOA DOH
0731 N/A DOH DOH DOH
Executive Air Fleet Corporation AEAF020 0731 N/A DOH DOH DOH
0730 01/01/83 DOA DOA DOH
0732 01/01/83 DOA DOA DO
Beckett Aviation, Inc. AEAF030 0733 09/25/85 DOA DOA DOA
Aviation Consulting Incorporated AAC1010 10/01/82 DOA DOA DOH
Aviation Information Services, AAV1010 08/09/83 DOA DOA DOH
Inc. [Hunt Valley & Colorado] AAV1020 08/09/83 DOA DOA DOH
US Mortgage Corporation RUSM010 11/02/84 DOA DOA DOH
Avenue Group, Inc. DAVE010 06/20/86 DOH DOA DOA
Ryan Aviation, Inc. ARYA010 06/29/86 DOH DOA DOA
Interspace, Incorporated DINT010 07/02/86 DOH DOA DOA
Avis Leasing Corporation VAVS010 10/07/86 DOH DOA DOH
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Company Name Loc/Div Date of Pension Benefit Service
At Date of Affiliation Org. ID Code Affiliation Vesting* Accrual* Vesting **
- ---------------------- ------- ---- ----------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Scanning Technology, Inc. DSCA010 03/06/87 DOH DOA DOA
Neville Lewis Associates, Ltd. DNVL010 03/06/87 DOH DOA DOA
DNVL020 03/06/87 DOH DOA DOA
DNVL030 03/06/87 DOH DOA DOA
03/06/87 DOH DOA DOA
Timothy H. Walker & Associates DWLK010 03/19/87 DOH DOA DOA
Furniture Consultants, Inc. DFUR010 03/19/87 DOH DOA DOA
Edenton Motors, Inc. N/A N/A DOH
Williamsburg Motors, Inc. N/A N/A DOH
</TABLE>
Note: DOA = Date of Affiliation; DOH = Date of Hire
* Where base is DOA, take later of the Hire/Rehire Date or
Date of Affiliation.
** Where base is DOA, take later of the Orig. Hire Date or Date
of Affiliation.
*** Excludes Service with Homequity, Inc. prior to 5/1/66.
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
PHH Corporation:
We consent to the incorporation by reference in this Registration Statement on
Form S-8 of our report on the financial statements and schedules included in the
Annual Report on Form 10-K of PHH Corporation for the year ended April 30, 1995
KPMG PEAT MARWICK LLP
Baltimore, Maryland
November 27, 1995
Exhibit 24
PHH CORPORATION
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, as of this 16th day of October,1995,
that the undersigned directors and officers of PHH Corporation, a Maryland
corporation with offices at 11333 McCormick Road, Hunt Valley, Maryland 21031
(the "Corporation"), hereby constitute and appoint Robert D. Kunisch, Eugene A.
Arbaugh, Samuel H. Wright and Gordon W. Priest, Jr., and each of them, the true
and lawful agents and attorneys-in-fact of the undersigned, with full power of
substitution and with full power and authority in said agents and
attorneys-in-fact, and in any one or more of them, to sign for the undersigned
as director and/or officer of the Corporation and file with the Securities and
Exchange Commission ("SEC"), Washington D.C., or any other federal agency,
registration statements of the Corporation under the Securities Act of 1933 on
Forms S-3 and S-8, respectively, relating to (i) $2 billion of the Corporation's
debt securities to be issued in one or more series from time to time and (ii) up
to 450,000 shares of the Corporation's common stock to be issued under the
Corporation's Amended and Restated Employee Investment Plan, or any registration
or filing with any state or local jurisdiction within the United States or any
foreign jurisdiction, and any exhibits or amendments to any such SEC or federal
registration statement, report or filing, or state, local, or foreign
registration or filing (including post-effective amendments), hereby ratifying
and confirming all acts taken by such agents and attorneys-in-fact, or any one
or more of them, as herein authorized.
/s/ James S. Beard Director
James S. Beard
/s/ Andrew F. Brimm Director
Andrew F. Brimmer
/s/ George L. Bunting Director
George L. Bunting, Jr.
/s/ Alan P. Hoblitzell, Jr. Director
Alan P. Hoblitzell, Jr.
/s/ Paul X. Kelley Director
Paul X. Kelly
Director
L. Patton Kline
<PAGE>
/s/ Francis P. Lucier Director
Francis P. Lucier
/s/ Kent C. Nelson Director
Kent C. Nelson
/s/ Donald J. Shepard Director
Donald J. Shepard
/s/ Anne M. Tatlock Director
Anne M. Tatlock
/s/ Alexander B. Trowbridge Director
Alexander B. Trowbridge
/s/ Robert D. Kunisch Director
Robert D. Kunisch Chairman of the Board,
President and
Chief Executive Officer
/s/ Nan A. Grant Controller
Nan A. Grant
<PAGE>
Exhibit 24
PHH CORPORATION
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, as of this 16th day of October,1995,
that the undersigned officer of PHH Corporation, a Maryland corporation with
offices at 11333 McCormick Road, Hunt Valley, Maryland 21031 (the
"Corporation"), hereby constitutes and appoints Robert D. Kunisch, Eugene A.
Arbaugh, Samuel H. Wright and Gordon W. Priest, Jr. and each of them, the true
and lawful agents and attorneys-in-fact of the undersigned, with full power of
substitution and with full power and authority in said agents and
attorneys-in-fact, and in any one or more of them, to sign for the undersigned
as officer of the Corporation and file with the Securities and Exchange
Commission ("SEC"), Washington D.C., or any other federal agency, registration
statements of the Corporation under the Securities Act of 1933 on Forms S-3 and
S-8, respectively, relating to (i) $2 billion of the Corporation's debt
securities to be issued in one or more series from time to time and (ii) up to
450,000 shares of the Corporation's common stock to be issued under the
Corporation's Amended and Restated Employee Investment Plan, or any registration
or filing with any state or local jurisdiction within the United States or any
foreign jurisdiction, and any exhibits or amendments to any such SEC or federal
registration statement, report or filing, or state, local, or foreign
registration or filing (including post-effective amendments), hereby ratifying
and confirming all acts taken by such agents and attorneys-in-fact, or any one
or more of them, as herein authorized.
/s/ Roy A. Meierhenry Senior Vice President and
Roy A. Meierhenry Chief Financial Officer
