As filed with the Securities and Exchange Commission on April 22, 1997
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
HFS INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 22-3059335
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
6 Sylvan Way
Parsippany, New Jersey 07054 07054
(Address of principal executive office) (Zip Code)
PHH Corporation
Amended and Restated Employee Investment Plan
(Full title of the plan)
James E. Buckman, Esq.
HFS Incorporated
6 Sylvan Way, Parsippany, New Jersey 07054
(201) 428-9700
(Name, address and telephone number, including area code,
of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================================================
Title of Securities to Amount to be Proposed Maximum Offering Proposed Maximum Aggregate Amount of
be Registered Registered(1) Price Per Share (2)(3) Offering Price (2)(3) Registration Fee(2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par 300,000 $53.4375 $16,031,250 $4,858
value $.01 per share
===============================================================================================================================
</TABLE>
(1) Pursuant to Rule 416 under the Securities Act of 1933 (the "Securities
Act"), this Registration Statement also covers such indeterminable
number of additional shares of Common Stock as may be issuable pursuant
to the antidilution provisions of the employee benefit plan described
herein.
(2) Pursuant to paragraphs (c) and (h) of Rule 457 under the Securities
Act, the proposed maximum offering price and the registration fee are
based upon the average of the high and low prices per share of the
Registrant's Common Stock reported on the New York Stock Exchange
Composite Transaction Tape on April 16, 1997, within five business days
prior to the date of filing of this Registration Statement.
(3) Estimated solely for the purpose of calculating the registration fee.
<PAGE>
INTRODUCTORY STATEMENT
HFS Incorporated (the "Registrant") hereby files this Registration
Statement on Form S-8 relating to the Amended and Restated Employee Investment
Plan of PHH Corporation ("PHH"). In connection with an Agreement and Plan of
Merger dated as of November 10, 1996, (the "Merger Agreement"), by and among the
Registrant, Mercury Acq. Corp., a wholly-owned subsidiary of the Registrant
("Merger Sub") and PHH, Merger Sub is expected to be merged with and into PHH
and PHH is expected to become a wholly-owned subsidiary of the Registrant (the
"Merger"). The Merger is expected to be consummated on April 30, 1997, subject
to approval of the Merger by the stockholders of the Registrant and PHH at their
respective stockholders meetings to be held on April 30, 1997.
This Registration Statement covers shares to be issued subsequent to
the effective time of the Merger. Shares issued prior to the effective time will
have been converted into the right to receive HFS shares, which HFS shares have
been registered on the Registration Statement on Form S-4 (File Number
333-34021), filed with the Securities and Exchange Commission on March 27, 1997,
which is incorporated herein by reference.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information
Not required to be filed with this Registration Statement.
Item 2. Registrant Information and Employee Plan Annual Information
Not required to be filed with this Registration Statement.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
The following documents which have been heretofore filed with
the Securities and Exchange Commission (the "Commission") by the registrant, HFS
Incorporated, a Delaware corporation (the "Registrant"), are incorporated by
reference in this Registration Statement:
(a) The Registrant's annual report on Form 10-K for the fiscal year
ending December 31, 1996 (File Number 1-11402) filed with the Commission on
March 31, 1997 (as amended by the Form 10-K/A filed on March 31, 1997).
(b) All reports filed by the Registrant with the Commission pursuant to
Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), subsequent to December 31, 1996.
(c) The description of the Registrant's Common Stock contained in the
Company's Registration Statement on Form 8-A filed with the Commission on
September 28, 1994 (File Number 1-11402) pursuant to Section 12(b) of the
Exchange Act and any amendment or report filed with the Commission for purposes
of updating such description.
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment which indicates that all securities offered have been
sold or which deregisters all such securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be part hereof from the
date of filing of such documents. Any statement contained herein or 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 incorporated or deemed to be incorporated by
reference herein modifies or supersedes such statement Any such statement 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 applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
<PAGE>
Item 6. Indemnification of Directors and Officers
Registrant is a Delaware corporation. Reference is made to
Section 145 of the Delaware General Corporation Law, as amended ("GCL"), which
provides that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation), by reason of the
fact that such person is or was a director, officer, employee or agent of the
corporation, or is or was serving at its request in such capacity of another
corporation or business organization, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
that such person's conduct was unlawful. A Delaware corporation may indemnify
officers and directors in an action by or in the right of a corporation under
the same conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action, suit or proceeding referred to above,
the corporation must indemnify against the expenses (including, attorneys' fees)
that such officer or director actually and reasonably incurred in connection
therewith.
Reference is also made to Section 102(b)(7) of the GCL, which
permits a corporation to provide in its certificate of incorporation that a
director of the corporation shall not be personally liable to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the GCL or (iv) for any transaction from which
the director derived an improper personal benefit.
Articles Ninth and Tenth of the Registrant's Restated
Certificate of Incorporation provide for (i) the elimination of personal
liability of a director for breach of fiduciary duty as permitted by Section
102(b)(7) of the GCL, and (ii) the Registrant to indemnify its directors and
officers to the full extent permitted by Section 145 of the GCL.
The Registrant maintains, at its expense, a policy of
insurance which insures its directors and officers, subject to certain
exclusions and deductions as are customary in such insurance policies, against
certain liabilities which may be incurred in those capacities.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
3.1 Registrant's Restated Certificate of Incorporation filed with
the Secretary of State of the State of Delaware on January 22,
1996 (Incorporated by reference to Exhibit 4 to the
Registrant's Registration Statement on Form 8-A filed on February
21, 1996)
3.2 Registrant's By-Laws (Incorporated by reference to the 10-Q for
September 30, 1996 filed November 15, 1996.)
4.1 Amended and Restated PHH Corporation Employee Investment Plan
4.2 Form of Certificate of HFS's Common Stock, par value $.01 per
share (incorporated by reference to HFS's Registration Statement
on Form S-1, Registration No. 33-51422, Exhibit 4.1)
5.1 Determination Letter dated January 23, 1995 from the Internal
Revenue Service with
<PAGE>
respect to the Amended and Restated PHH Corporation Employee
Investment Plan 23.1 Consent of Deloitte & Touche LLP relating to
the financial statements of HFS Incorporated
23.2 Consent of Woolard, Krajnik & Company relating to the financial
statements of Century 21 of Eastern Pennsylvania, Inc.
23.3 Consent of White, Nelson & Co. LLP relating to the financial
statements of Century 21 Region V (Business Acquired by HFS
Incorporated)
23.4 Consent of Tony H. Davidson CPA, relating to the financial
statements of Century 21 Real Estate, Inc.
23.5 Consent of Coopers & Lybrand L.L.P. relating to the financial
statements of Coldwell Banker Corporation
23.6 Consent of Deloitte & Touche LLP relating to the financial
statements of Coldwell Banker Corporation
23.7 Consent of Price Waterhouse LLP relating to the financial
statements of Avis, Inc.
23.8 Consent of Ernst & Young LLP relating to the financial statements
of Resort Condominiums International, Inc.
23.9 Consent of KPMG Peat Marwick LLP relating to the financial
statements of PHH Corporation
23.10 Consent of Deloitte & Touche LLP relating to the financial
statements of Rental Car Operations of Avis Inc.
24.1 Power of Attorney (contained in the signature page hereof)
Item 9. Undertakings.
(a) The 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 the Securities Act;
ii) To reflect in the prospectus any facts or events
arising after the effective date of this 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 this
Registration Statement;
iii) To include any material information with respect
to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement-,
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
above do not apply if 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 Exchange Act that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act, 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.
<PAGE>
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered hereby
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, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this 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) Insofar as indemnification for liabilities arising under the
Securities Act 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 Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a director, officer or controlling person of 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 Securities 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 Parsippany, State of New Jersey, on April 22, 1997.
HFS INCORPORATED
(Registrant)
By: /s/ James E. Buckman
James E. Buckman
Executive Vice President,
General Counsel and Director
KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints James E. Buckman as his true
and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for such person and in his name, place and stead, in any and all
capacities, to sign any and all amendments or supplements to this Registration
Statement on Form S-8, including any and all post-effective amendments to the
Registration Statement and to sign any and all additional registration
statements relating to the same offering of securities as the Registration
Statement that are filed pursuant to Rule 462(b) of the Securities Act and to
file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that each of said attorney-in-fact
or substitute for such attorney-in-fact, may do or cause to be done by virtue
hereof.
<PAGE>
Pursuant to the requirements of the securities act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
/s/ Henry R. Silverman Chairman of the Board, April 22, 1997
- ----------------------------- Chief Executive Officer
(Henry R. Silverman) and Director (Principal Execu-
tive Officer
/s/ John D. Snodgrass Vice Chairman of the April 22, 1997
- ------------------------------ Board, President,
(John D. Snodgrass) Chief Operating Officer
and Director
/s/ Stephen P. Holmes Vice Chairman of the April 22, 1997
- ----------------------------- Board and Director
(Stephen P. Holmes)
/s/ Michael P. Monaco Vice Chairman of the April 22, 1997
- ----------------------------- Board and Chief Financial
(Michael P. Monaco) Officer and Director (Princi-
pal Financial Officer and
Principal Accounting Officer)
/s/ James E. Buckman Executive Vice Pre- April 22, 1997
- ----------------------------- sident and General
(James E. Buckman) Counsel and Director
/s/ Robert F. Smith Director April 22, 1997
- -------------------------------
(Robert F. Smith)
/s/ Leonard Schutzman Director April 22, 1997
(Leonard Schutzman)
/s/ Martin L. Edelman Director April 22, 1997
- -----------------------------
(Martin L. Edelman)
/s/ Robert W. Pittman Director April 22, 1997
- ------------------------------
(Robert W. Pittman)
/s/ Robert E. Nederlander Director April 22, 1997
- -----------------------------
(Robert E. Nederlander)
/s/ E. John Rosenwald, Jr. Director April 22, 1997
- ----------------------------
(E. John Rosenwald,Jr.)
/s/ Christel DeHaan Director April 22, 1997
- ----------------------------
(Christel DeHaan)
<PAGE>
EXHIBIT INDEX
Exhibits
3.1 Registrant's Restated Certificate of Incorporation filed with the Secretary
of State of the State of Delaware on January 22, 1996 (Incorporated by
reference to Exhibit 4 to the Registrant's Registration Statement on Form
8-A filed on February 21, 1996)
3.2 Registrant's By-Laws (Incorporated by reference to the 10-Q for September
30, 1996 filed November 15, 1996.)
4.1 Amended and Restated PHH Corporation Employee Investment Plan
4.2 Form of Certificate of HFS' Common Stock, par value $.01 per share
(incorporated by reference to HFS' Registration Statement on Form S-1,
Registration No. 33-51422, Exhibit 4.1)
5.1 Determination Letter dated January 23, 1995 from the Internal Revenue
Service with respect to the Amended and Restated PHH Corporation Employee
Investment Plan
23.1 Consent of Deloitte & Touche LLP relating to the financial statements of
HFS Incorporated
23.2 Consent of Woolard, Krajnik & Company relating to the financial statements
of Century 21 of Eastern Pennsylvania, Inc.
23.3 Consent of White, Nelson & Co. LLP relating to the financial statements of
Century 21 Region V (Business Acquired by HFS Incorporated)
23.4 Consent of Tony H. Davidson CPA, relating to the financial statements of
Century 21 Real Estate, Inc.
23.5 Consent of Coopers & Lybrand L.L.P. relating to the financial statements of
Coldwell Banker Corporation
23.6 Consent of Deloitte & Touche LLP relating to the financial statements of
Coldwell Banker Corporation
23.7 Consent of Price Waterhouse LLP relating to the financial statements of
Avis, Inc.
23.8 Consent of Ernst & Young LLP relating to the financial statements of Resort
Condominiums International, Inc.
23.9 Consent of KPMG Peat Marwick LLP relating to the financial statements of
PHH Corporation
23.10Consent of Deloitte & Touche LLP relating to the financial statements of
Rental Car Operations of Avis Inc.
24.1 Power of Attorney (contained in the signature page hereof)
EXHIBIT 4.1
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
2
<PAGE>
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............................................... 10
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
i
<PAGE>
Page
2.34 PLAN................................................... 11
2.35 PLAN YEAR.............................................. 11
2.36 PENSION PLAN........................................... 11
2.37 PRIOR PLAN............................................. 11
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........................................ 13
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
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 CONTRI-
BUTIONS............................................. 20
ii
<PAGE>
Page
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 CONTRIBU-
TIONS................................................. 29
4.15 EMPLOYER'S RIGHT TO MAKE ADDITIONAL CON-
TRIBUTION............................................. 30
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.................... 32
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....................................... 36
7.2 EFFECTIVE DATE OF WITHDRAWAL................................ 37
7.3 DISTRIBUTION OF INTERESTS................................... 37
iii
<PAGE>
Page
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................................... 41
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 PARTIC-
IPANTS.................................................. 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 DEATH................................................ 46
10.7 DISTRIBUTION REQUIREMENTS................................... 46
10.8 DIRECT ROLLOVER ELECTIONS................................... 51
ARTICLE XI
VOTING OF STOCK
11.1 VOTING OF STOCK BY TRUSTEE.................................. 52
11.2 OFFERS FOR COMMON STOCK..................................... 53
iv
<PAGE>
Page
ARTICLE XII
THE COMMITTEE
12.1 APPOINTMENT OF COMMITTEE................................... 54
12.2 OFFICERS AND SUBCOMMITTEES................................. 54
12.3 COMMITTEE PROCEDURES....................................... 55
12.4 COMMITTEE POWERS........................................... 55
12.5 INFORMATION FOR COMMITTEE.................................. 55
12.6 PLAN RECORDS............................................... 56
12.7 INSTRUCTIONS TO TRUSTEES................................... 56
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........................................... 58
12.13 INDEMNIFICATION AND INSURANCE.............................. 58
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................................ 60
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............... 61
15.3 DISTRIBUTIONS UPON SALE OF ASSETS - TIME
FOR DISTRIBUTIONS...................................... 61
15.4 DISTRIBUTIONS UPON SALE OF SUBSIDIARY -
TIME FOR DISTRIBUTIONS................................. 61
v
<PAGE>
Page
ARTICLE XVI
PROHIBITION OF ASSIGNMENT OF INTEREST
16.1 ANTI-ASSIGNMENT PROVISION................................. 61
16.2 QUALIFIED DOMESTIC RELATIONS ORDERS....................... 62
ARTICLE XVII
GOVERNING LAW
18.1 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
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....................................... 70
21.5 LOAN APPROVAL............................................ 70
21.6 INTEREST RATE............................................ 70
21.7 COLLATERAL............................................... 71
21.8 REPAYMENT................................................ 71
vi
<PAGE>
Page
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; RE-
MOVAL 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...................................... 80
22.9 CHANGES IN COMMITTEE MEMBERSHIP.......................... 80
22.10 LEGAL COUNSEL............................................ 80
22.11 ACCOUNTING OF FUNDS AND TRANSACTIONS..................... 80
22.12 RELIANCE ON TRUSTEE...................................... 81
22.13 LEGAL ACTION............................................. 81
vii
<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.
<PAGE>
ARTICLE I.
NAME AND PURPOSE
A. 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 volun- tary.
ARTICLE II.
DEFINITIONS
A. 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.
B. ACT means the Employee Retirement Income
Security Act of 1974, as it may be amended from time to
time, or any successor statute.
C. 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.
D. 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
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<PAGE>
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.
E. BOARD OF DIRECTORS means the Board of
Directors of the Company.
F. BREAK IN SERVICE means a Plan Year during
which a Participant does not complete more than five
hundred (500) Hours of Service.
G. CODE means the Internal Revenue Code of
1986, as it may be amended from time to time, or any
successor statute.
H. COMMITTEE means the Committee as defined
in Article XII.
I. COMMON STOCK means HFS Incorporated common
stock.
J. COMPANY means PHH Corporation (formerly
PHH Group, Inc.), a Maryland corporation, and any succes-
sor corporation.
K. 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.
L. 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
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<PAGE>
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.
M. 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.
N. DESIGNATED BENEFICIARY means the person
designated as a beneficiary by the Participant under the
Plan.
O. 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.
P. EFFECTIVE DATE means the effective date of
this amendment and restatement, generally January 1,
1987, unless otherwise expressly indicated.
Q. ELIGIBLE EARNINGS means the gross compen-
sation paid to the Employee or Participant by the Employ-
er, excluding pay for overtime or other extra work,
bonuses and profit sharing payments, except that, in the
case of commissioned salespersons, one hundred percent
4
<PAGE>
(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.
R. 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
5
<PAGE>
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.
S. 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.
T. EMPLOYEE CONTRIBUTION means, as described
in Section 4.11, any contribution to the Plan made by the
Employee for the Plan Year.
U. 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.
V. FAMILY MEMBER means an individual de-
scribed in section 414(q)(6) of the Code.
W. HIGHLY COMPENSATED EMPLOYEE. The term
Highly Compensated Employee includes active Highly Com-
pensated Employees and former Highly Compensated Employ-
ees.
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
6
<PAGE>
"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
7
<PAGE>
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:
1. 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
8
<PAGE>
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.
2. 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.
3. 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.
4. If, at all times during the applica-
ble year, the Employer maintained significant business activity (and employed
Employees) in at least two (2) significantly separate geographic areas, and the
Employer
9
<PAGE>
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).
X. 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.
Y. 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.
Z. INSIDER means, an officer of the Company
subject to Section 16 of the Securities Exchange Act of
1934.
10
<PAGE>
AA. 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.
AB. 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.
AC. 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.
AD. NON-HIGHLY COMPENSATED EMPLOYEE means an
Employee of the Employer who is neither a Highly Compen-
sated Employee nor a Family Member of a Highly Compensat-
ed Employee.
AE. NORMAL RETIREMENT DATE means the first day
of the month following the Participant's attainment of
age sixty-five (65).
AF. PARTICIPANT means any person who has a
vested or unvested interest in any Trust Property.
AG. 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.
AH. PLAN means the PHH Corporation Employee
Investment Plan as amended and restated herein.
AI. PLAN YEAR means each calendar year that
the Plan has been and remains in effect.
AJ. PENSION PLAN means the Company's qualified
defined benefit pension plan in effect from time to time.
AK. PRIOR PLAN means the Plan as in effect
prior to January 1, 1987.
11
<PAGE>
AL. PRIOR PLAN EMPLOYEE ACCOUNT means the
Participant's After Tax Savings Account as defined in the
Prior Plan.
AM. PRIOR PLAN MATCHING ACCOUNT means the
Participant's Company After Tax Matching Account as
defined in the Prior Plan.
AN. 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 regula-
tions thereunder, as amended from time to time.
AO. 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:
a. the separation from service, death or
disability of the Participant;
b. the attainment of age fifty-nine and
one-half (59-1/2) by the Participant;
c. the termination of the Plan without
establishment of a successor plan;
d. the events specified in Article XVI;
or
e. 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.
AP. ROLLOVER ACCOUNT means the Participant's
account hereunder which is attributable to Rollover
Contributions.
AQ. ROLLOVER CONTRIBUTION means a cash amount
representing some portion or all of the employee's inter-
est in a plan qualified under section 401(a) or 403(a) of
the Code which, prior to March 1, 1987, is contributed by
12
<PAGE>
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.
AR. SALARY DEFERRAL AGREEMENT means the agree-
ment described in Section 3.2.
AS. 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.
AT. SALARY DEFERRAL RATE means the percentage
selected by an Eligible Employee in accordance with
Section 4.2.
AU. SURVIVING SPOUSE means the person to whom
the Participant is married on the date of the
Participant's death.
AV. TRUST AGREEMENT means the Trust Agreement,
as stated in a separate document or as provided in Arti-
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<PAGE>
cle XXII, by and between the Trustee and the Company,
together with any and all amendments or supplements
thereto.
AW. TRUST PROPERTY means the cash, stock and
other properties attributable to Contributions held by
the Trustee.
AX. TRUSTEE means the fiduciary agent or
agents, individually and collectively, provided for in
Article XIV hereof.
AY. 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.
AZ. VOLUNTARY EMPLOYEE CONTRIBUTIONS means
voluntary after-tax contributions made to the Prior Plan
by a Participant.
BA. 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.
BB. 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.
14
<PAGE>
ARTICLE III.
PARTICIPATION
A. PARTICIPATION.
1. 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.
2. 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.
B. 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.
C. COLLECTIVE BARGAINING EMPLOYEES. If an
individual's employment with the Employer is covered by a
collective bargaining agreement and if retirement bene-
15
<PAGE>
fits 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.
D. 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 establish-
ment 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 com-
plying with Section 16 with respect to his or her partic-
ipation in the Plan and otherwise.
ARTICLE IV.
CONTRIBUTIONS
A. 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
16
<PAGE>
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.
B. 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.
C. SALARY DEFERRAL CONTRIBUTIONS. Beginning
-----------------------------
as soon as practicable after the filing of the Salary
Deferral Agreement pursuant to Section 3.2 or a modifica-
tion thereto as provided in Section 4.5(a), there shall
be contributed by each Employer to the Plan Salary Defer-
ral Contributions in an amount equal to the Salary Defer-
ral Rate each Participant has selected times each
Participant's Eligible Earnings rounded down to the
nearest whole dollar.
D. 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.
17
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E. CHANGES IN ELECTIONS.
1. 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 anoth-
er 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.
2. 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
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Matching Account balance in the PHH Common Stock Fund as valued under Article IX
on the date of the liquidation.
F. EMPLOYER MATCHING CONTRIBUTIONS. The
-------------------------------
Employer shall contribute to the Plan out of its current
or accumulated earnings and profits an amount equal to
(a) one hundred percent (100%) of the first three percent
(3%) of a Participant's Eligible Earnings constituting
the Matchable Portion, and (b) fifty percent (50%) of the
second three percent (3%) of a Participant's Eligible
Earnings constituting the Matchable Portion.
G. 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 pursu-
ant 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.
H. AVERAGE ACTUAL DEFERRAL PERCENTAGE TESTS.
1. The Average Deferral Percentage test
set forth below shall be satisfied each Plan Year:
a. The Average Actual Deferral Percent-
age for Eligible Participants who are Highly Compen-
sated Employees for the Plan Year shall not exceed
the Average Actual Deferral Percentage for Eligible
Participants who are Non-Highly Compensated Employ-
ees for the Plan Year multiplied by 1.25; or
b. 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.
19
<PAGE>
2. For purposes of this Section, the
following definitions apply:
a. "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.
b. "Average Actual Deferral Percentage"
means the average (expressed as a percentage) of the
Actual Deferral Percentages of the Eligible Partici-
pants in a group.
c. "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.
I. 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
20
<PAGE>
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.
J. 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 Sec-
21
<PAGE>
tion 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.
K. LIMITATIONS ON EMPLOYEE CONTRIBUTIONS AND
MATCHING CONTRIBUTIONS.
1. The Average Contribution Percentage
test set forth below shall be satisfied each Plan Year:
a. 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 Partic-
ipants who are Non-Highly Compensated Employees for
the Plan Year multiplied by 1.25, or
b. 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.
2. Multiple Use of Alternative Limita-
tion. 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
22
<PAGE>
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.
3. Definitions. For purposes of this
Section, the following definitions shall apply.
a. "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
23
<PAGE>
percent (200%) of or two (2) plus the greater of such Average Actual
Deferral Percentage or Average Contribution Percentage of Non-Highly
Compensated
Employees.
b. "Average Contribution Percentage"
means the average (expressed as a percentage) of the
Contribution Percentages of the Eligible Partici-
pants in a group.
c. "Contribution Percentage" means the
ratio of each Eligible Participant's Contribution
Percentage Amounts for the Plan Year to the Eligible
Participant's Compensation.
d. "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.
e. "Eligible Participant" means any
Employee who is eligible to make an Employee Contri-
bution, or an Elective Deferral (if the Employer
takes such contributions into account in the calcu-
lation of the Contribution Percentage), or to re-
24
<PAGE>
ceive 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.
f. "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.
4. 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.
a. 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.
25
<PAGE>
b. 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.
c. 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.
d. 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.
L. DISTRIBUTION OF EXCESS DEFERRALS.
1. 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.
2. 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.
3. 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
26
<PAGE>
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.
4. 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.
M. DISTRIBUTION OF EXCESS CONTRIBUTIONS.
1. 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.
27
<PAGE>
2. Excess Contributions. "Excess Con-
tributions" 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.
3. 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
28
<PAGE>
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.
4. 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.
N. DISTRIBUTION OF EXCESS AGGREGATE CONTRIBU-
TIONS.
1. 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.
2. 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
29
<PAGE>
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.
3. 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.
O. 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 addition-
30
<PAGE>
al 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.
P. 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 Beneficia-
ries, 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 Partici-
pants, former Participants and their Beneficiaries, and
legal representatives, are satisfied.
31
<PAGE>
ARTICLE V.
INVESTMENT OF FUNDS
A. INVESTMENT OF EMPLOYEE ACCOUNTS. A Par-
-------------------------------
ticipant may, as provided herein, select from time to
time one or more of the Investment Funds for the invest-
ment 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.
B. 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.
C. 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 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.
D. 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)
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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.
E. 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 contribu-
tions shall be invested by the Trustee in accordance with
the provisions of this Plan.
F. PROCEDURES FOR INVESTMENTS. The invest-
ment of all Participant Contributions and the crediting
to the Account(s) of each Participant of investments made
shall be done as follows:
1. As soon as practicable following its
receipt of Contributions from the Employer, the Trustee
shall make investments as required herein;
2. 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.
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G. 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
A. 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.
B. VESTING OF COMPANY ACCOUNTS.
1. 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
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<PAGE>
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.
2. 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.
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<PAGE>
C. 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 nonforfeit-
able percentage of any Participant's account value de-
rived 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
A. 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 Com-
mittee, 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 Ac-
count. Withdrawals prior to May 1, 1991 from a
36
<PAGE>
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.
B. 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.
C. DISTRIBUTION OF INTERESTS.
1. Form of Distribution. Unless other-
wise 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.
2. 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.
ARTICLE VIII.
HARDSHIP WITHDRAWALS, POST AGE 59-1/2
WITHDRAWALS AND ROLLOVER ACCOUNT WITHDRAWALS
A. HARDSHIP WITHDRAWALS.
1. Application for Hardship Withdrawal
Prior to January 1, 1989. For Plan Years beginning
37
<PAGE>
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
38
<PAGE>
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.
2. Hardship Withdrawals After Decem-
ber 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
39
<PAGE>
withdrawals established by the Committee in its discre-
tion 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.
40
<PAGE>
3. 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.
B. POST AGE 59-1/2 WITHDRAWALS.
1. 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.
2. 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.
C. ROLLOVER ACCOUNT WITHDRAWALS. A Partici-
pant may elect to withdraw amounts in his or her Rollover
Account pursuant to rules and procedures established by
the Committee.
D. 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.
41
<PAGE>
ARTICLE IX.
VALUATION OF FUNDS AND ACCOUNTS
A. 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 distribu-
tions 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.
B. VALUATIONS FOR WITHDRAWALS OR DISTRIBU-
TIONS. The amount subject to any withdrawal or distribu-
tion 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:
1. for hardship withdrawals, the "hard-
ship withdrawal valuation date" for the Plan or for any
particular account or accounts as determined from time to
time by the Committee; and
2. for all other withdrawals and distri-
butions, the Valuation Date next following the date of the Committee's receipt
of the request for the withdrawal or distribution.
42
<PAGE>
From time to time, the Committee, in its
discretion, may alter the foregoing valuation rules with
respect to any Account or Accounts.
C. 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
A. 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.
B. 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
43
<PAGE>
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.
C. 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).
D. 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 in-
44
<PAGE>
vested as directed by the Participant, pursuant to the
terms hereof effective for active Participants.
E. TIME OF DISTRIBUTION; SMALL DISTRIBUTIONS;
NOTICE REQUIREMENTS.
1. 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.
2. 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).
3. 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.
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<PAGE>
F. 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.
G. DISTRIBUTION REQUIREMENTS.
1. General Rule. This Section is in-
cluded 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.
2. Limits on Settlement Options. Distri-
butions, 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,
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<PAGE>
(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.
3. 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.
4. 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
47
<PAGE>
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.
5. 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 coin-
cident 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
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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.
6. Distribution Elections Under Section
242(b)(2) of TEFRA.
(1) Distribution Requirements. Notwithstanding 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 accor-
dance with a method of distribution desig-
nated by the Participant or, if the Par-
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ticipant is deceased, by a beneficiary of
such Participant.
(c) Such designation was in writing,
was signed by the Participant or the bene-
ficiary, as applicable, and was made be-
fore 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).
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(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).
H. DIRECT ROLLOVER ELECTIONS.
1. 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.
2. Definitions. The following defini-
tions apply to this Section:
(1) "Direct Rollover" means a pay-
ment 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).
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(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
A. 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:
1. 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
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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.
2. The Trustee shall vote any other
shares held in trust under the Plan at the direction of
the Committee.
B. 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
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<PAGE>
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
A. 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.
B. OFFICERS AND SUBCOMMITTEES. The Committee
shall elect a Chairman and shall appoint such subcommit-
tees as it shall deem necessary and appropriate.
C. COMMITTEE PROCEDURES. A majority of the
members of the Committee then serving shall constitute a
quorum for the transaction of business. All resolutions
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<PAGE>
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.
D. 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:
1. Determine all questions affecting the
eligibility of any Employee to participate herein;
2. Compute the amount of benefits pay-
able hereunder to any Participant or Designated Benefi-
ciary;
3. 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.
E. 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 appro-
priate 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
55
<PAGE>
Plan as is necessary for the proper administration thereof.
F. 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.
G. 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.
H. ALLOCATION OF DUTIES, ETC. AMONG COMMITTEE
MEMBERS. The duties, powers and responsibilities re-
served to the Committee may be allocated among its re-
spective 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 respec-
tive members, in which case, except as may be required by
the Act, no member of the Committee shall have any re-
sponsibility 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.
I. 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
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<PAGE>
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.
J. 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.
K. 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.
L. STANDARD OF CARE. The members of the
Committee shall use ordinary care and reasonable dili-
gence in the performance of their administrative duties.
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<PAGE>
M. 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.
N. DISPUTES. In the event that any dispute
shall arise as to any act to be performed by the Commit-
tee, 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.
O. 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
A. CLAIMS PROCEDURE.
1. Initial Claim. If an Eligible Em-
ployee 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
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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 perti-
nent 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.
2. 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.
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B. COMPLIANCE WITH REGULATIONS. The review
of all claims hereunder shall be made in accordance with
applicable regulations under the Act.
ARTICLE XIV.
TRUSTS
A. 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.
B. 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.
ARTICLE XV.
DISCONTINUANCE OF PLAN
A. 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.
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B. 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.
C. 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.
D. 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
A. 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
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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.
B. 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
A. GOVERNING LAW. The Plan shall be con-
strued, 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
A. TOP HEAVY REQUIREMENTS. Notwithstanding
anything contained herein to the contrary, if the Plan is
a Top Heavy Plan for any Plan Year beginning after Decem-
ber 31, 1983, then the Plan shall meet the following
requirements for such Plan Year:
1. 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
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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 re-
quirements 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
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funded or made for such year for the Participant in accordance with
Code section 416(c).
2. 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).
3. Additional Super Top Heavy Require-
ment. 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.
B. TOP HEAVY PLAN DEFINITIONS. For purposes
of this Article, the following terms shall have the
meanings provided below:
1. 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
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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.
2. 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).
3. 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.
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(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
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from the Employee's gross income under section 125, section 402(a)(8), section
402(h) or section 403(b) of the Code.
4. A "Non-Key Employee" is any partici-
pant in a plan (including a beneficiary of such partici-
pant) who is not a Key Employee.
ARTICLE XIX.
LIMITATION ON CONTRIBUTIONS
A. MAXIMUM ANNUAL ADDITIONS AND BENEFITS. In
-------------------------------------
no event shall any contributions or forfeitures be allo-
cated to any Account maintained under this Plan if such
allocations would cause the Plan or any other plan main-
tained 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.
B. 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:
1. Contributions to the Participant's
Employee Account shall be reduced and paid to the Partic-
ipant as additional compensation;
2. 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
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be used to reduce Company contributions due hereunder for
the following Plan Year(s).
ARTICLE XX.
PLAN MERGERS, CONSOLIDATION AND TRANSFERS
A. 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:
1. 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);
2. 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
3. such other plan and trust is quali-
fied under sections 401(a) and 501(a) of the Code.
ARTICLE XXI.
LOANS TO PARTICIPANTS
A. LOAN ADMINISTRATION. The Committee ap-
pointed pursuant to Section 12.1 (the "Loan Administra-
tor") 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
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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.
B. FREQUENCY, NUMBER. The Committee shall
establish guidelines for limiting the frequency and
number of loans from the Plan to a borrower.
C. 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.
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D. 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.
E. LOAN APPROVAL. The Loan Administrator
shall not take the purpose of the loan into account in
approving or disapproving a loan application.
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.
F. 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
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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.
G. 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.
H. 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
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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.
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I. PARTICIPANT CONSENT TO LOAN SET-OFFS. No
------------------------------------
loan shall be made to a Participant unless the Partici-
pant 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.
J. 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.
K. 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).
L. 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
A. 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.
B. 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
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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.
C. 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.
D. TRUSTEE APPOINTMENT AND RESIGNATION;
REMOVAL AND SUCCESSION OF TRUSTEES.
1. Appointment of Trustee. The Trustee
shall be appointed by Company.
2. 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 ti-
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tles, rights, powers, authorities, discretions and immunities as the original
Trustee hereunder.
E. 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.
F. 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.
G. MANAGEMENT OF ASSETS.
1. Powers of the Trustee or Investment
Manager. The Trustee who is managing and administering
the Trust or, if applicable, the Investment Manager (as
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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
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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.
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(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
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Employee Retirement Income Security Act of
1974.
(8) To compromise any claims exist-
ing 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).
2. 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.
H. 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
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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.
I. 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.
J. 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.
K. ACCOUNTING OF FUNDS AND TRANSACTIONS.
1. The Trustee shall keep true and accu-
rate 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.
2. 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
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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.
L. 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.
M. 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.
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<PAGE>
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.
ATTEST/WITNESS: PHH CORPORATION
/s/Gordon W. Priest, Jr. By: /s/ Samuel H. Wright
------------------------------
Print Name: Gordon W. Priest, Jr. Print Name: 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. Print Name: Roy A. Meierhenry
82
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
to PHH Corporation Employee Investment Plan -
CREDITED SERVICE
============================================================================================================================
401(k)
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
- ----------------------------------------------------------------------------------------------------------------------------
PHH Vehicle Management VPH1010 N/A DOH DOH DOH
Services (Peterson, Howell
& Heather, Inc.)
- ----------------------------------------------------------------------------------------------------------------------------
PHH Real Estate Services RHEQ010 N/A DOH*** DOH DOH
(Homequity, Inc.)
- ----------------------------------------------------------------------------------------------------------------------------
Better Homes & Gardens BHG 9/15/91 DOA DOA DOA
- ----------------------------------------------------------------------------------------------------------------------------
Genesis GEN 11/24/91 DOA DOA DOA
- ----------------------------------------------------------------------------------------------------------------------------
National Truckers VNTS010 N/A DOH DOH DOH
Service, Inc.
- ----------------------------------------------------------------------------------------------------------------------------
The Fantus Company, Inc. DFAN010 N/A DOH DOH DOH
- ----------------------------------------------------------------------------------------------------------------------------
PHH Capital Resources DCRM010 N/A DOH DOH DOH
Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------------
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 AEAF020 0731 N/A DOH DOH DOH
Corporation
- ----------------------------------------------------------------------------------------------------------------------------
0730 01/01/83 DOA DOA DOH
- ----------------------------------------------------------------------------------------------------------------------------
0732 01/01/83 DOA DOA DOA
- ----------------------------------------------------------------------------------------------------------------------------
Beckett Aviation, Inc. AEAF030 0733 09/25/85 DOA DOA DOA
- ----------------------------------------------------------------------------------------------------------------------------
Aviation Consulting AAC1010 10/01/82 DOA DOA DOH
Incorporated
- ----------------------------------------------------------------------------------------------------------------------------
Aviation Information AAV1010 08/09/83 DOA DOA DOH
Services, Inc.
- ----------------------------------------------------------------------------------------------------------------------------
AAV1020 08/09/83 DOA DOA DOH
- ----------------------------------------------------------------------------------------------------------------------------
PHH Mortgage Services (US RUSM010 11/02/84 DOA DOA DOH
Mortgage Corporation)
- ----------------------------------------------------------------------------------------------------------------------------
Avenue Group, Inc. DAVE010 06/20/86 DOH DOA DOA
A-1
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------
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
- ----------------------------------------------------------------------------------------------------------------------------
Scanning Technology, Inc. DSCA010 03/06/87 DOH DOA DOA
- ----------------------------------------------------------------------------------------------------------------------------
Neville Lewis Associates, DNVL010 03/06/87 DOH DOA DOA
Ltd.
- ----------------------------------------------------------------------------------------------------------------------------
DNVL020 03/06/87 DOH DOA DOA
- ----------------------------------------------------------------------------------------------------------------------------
DNVL030 03/06/87 DOH DOA DOA
- ----------------------------------------------------------------------------------------------------------------------------
DNVL040 03/06/87 DOH DOA DOA
- ----------------------------------------------------------------------------------------------------------------------------
Timothy H. Walker & DWLK010 03/19/87 DOH DOA DOA
Associates
- ----------------------------------------------------------------------------------------------------------------------------
Furniture Consultants, DFUR010 03/19/87 DOH DOA DOA
Inc.
- ----------------------------------------------------------------------------------------------------------------------------
Edenton Motors, Inc. N/A N/A DOH
- ----------------------------------------------------------------------------------------------------------------------------
Williamsburg Motors, Inc. N/A N/A DOH
- ----------------------------------------------------------------------------------------------------------------------------
PHH Auto Finance RAFC010 N/A DOH DOH DOH
Corporation
============================================================================================================================
</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.
A-2
EXHIBIT 5.1
INTERNAL REVENUE SERVICE DEPARTMENT OF TREASURY
DISTRICT DIRECTOR
31 HOPKINS PLAZA
BALTIMORE, MD 21201-000
Employer Identification Number:
52-0551284
Date: January 23, 1995 File Folder Number:
521035460
PHH GROUP INC Person to Contact:
C/O DONNA TRISCOLI & JOHN KRATZ, JR. SYLVAN J. OPPENHEIMER
PIPER & MARBURY - CHARLES CTR SOUTH Contact Telephone Number:
36 S. CHARLES ST. - STE. 1100 (410) 962-3645
BALTIMORE, MD 21201-3010 Plan Name:
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN AND TRUST
AGREEMENT
Plan Number: 002
Dear Applicant:
We have made a favorable determination on your plan, identified above,
based on the information supplied. Please keep this letter in your permanent
records.
Continued qualification of the plan under its present form will depend on
its effect in operation. (See section I.401-1(b)(3) of the Income Tax
Regulations.) We will review the status of the plan in operation periodically.
The enclosed document explains the significance of this favorable
determination letter, points out some features that may affect the qualified
status of your employee retirement plan, and provides information on the
reporting requirements for your plan. It also describes some events that
automatically nullify it. It is very important that you read the publication.
This letter relates only to the status of your plan under the Internal
Revenue Code. It is not a determination regarding the effect of other federal or
local statutes.
This determination is subject to your adoption of the proposed amendments
submitted in your letter dated August 31, 1994. The proposed amendments should
be adopted on or before the date prescribed by the regulations under Code
section 401(b).
This determination is also subject to your adoption of the proposed
amendments submitted in your letter(s) dated January 13, 1995. These proposed
amendments should also be adopted on or before the date prescribed by the
regulations under Code Section 401(b).
This plan has been mandatorily disaggregated, permissively aggregated, or
restructured to satisfy the nondiscrimination requirements.
This letter is issued under Rev. Proc. 93-39 and considers the amendments
required by the Tax Reform Act of 1986 except as otherwise specified in this
letter.
This plan satisfies the nondiscriminatory current availability requirements
of Section I.401(a)(4)- 4(b) of the regulations with respect to those benefits,
rights, and features that are currently available to all employees in the plan's
coverage group. For this purpose, the plan's coverage group consists of those
employees treated as currently benefiting for purposes of demonstrating that the
plan satisfies the minimum coverage requirements of Section 410(b) of the Code.
<PAGE>
We have sent a copy of this letter to your representative as indicated in
the power of attorney.
If you have questions concerning this matter, please contact the person
whose name and telephone number are shown above.
Sincerely,
/s/ Paul M. Harrington
District Director
Enclosures:
Publication 794
Reporting & Disclosure Guide
for Employee Benefit Plans
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
HFS Incorporated on Form S-8 of our report dated March 31, 1997, appearing in
the Annual Report on Form 10-K of HFS Incorporated for the year ended December
31, 1996.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
April 16, 1997
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
HFS Incorporated (the "Company") on Form S-8 of our report dated June 22, 1995
(except for Note 13, as to which the date is October 12, 1995), related to the
financial statements of Century 21 of Eastern Pennsylvania Inc. as of and for
the years ended April 30, 1995 and 1994, included in the Company's Current
Report on Form 8-K/A dated March 27, 1997.
WOOLARD, KRAJNIK & COMPANY, LLP
Exton, Pennsylvania
April 16, 1997
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
HFS Incorporated (the "Company") on Form S-8 of our report dated January 12,
1996 related to the consolidated financial statements of Century 21 Region V
(Business Acquired By HFS Incorporated) as of and for the year ended July 31,
1995, included in the Company's Current Report on Form 8-K/A dated March 27,
1997.
WHITE, NELSON & CO., LLP
Anaheim, California
April 16, 1997
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
I consent to the incorporation by reference in this Registration Statement of
HFS Incorporated (the "Company") on Form S-8 of my report dated September 25,
1995 related to the consolidated balance sheet of Century 21 Real Estate, Inc.
and subsidiaries as of July 31, 1995, 1994, and 1993 and the related statements
of income and retained earnings and cash flows for the years then ended included
in the Company's Current Report on Form 8-K/A dated March 27, 1997.
Tony H. Davidson, CPA
Lake Oswego, Oregon
April 16, 1997
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement of
HFS Incorporated (the "Company") on Form S-8 of our report dated February 27,
1996 related to the consolidated financial statements of Coldwell Banker
Corporation and Subsidiaries as of December 31, 1995 and 1994, and for each of
the two years in the period ended December 31, 1995 included in the Company's
Annual Report on Form 10K/A for the year ended December 31, 1996; such financial
statements were not included separately in such Form 10K/A.
Coopers & Lybrand L.L.P.
Newport Beach, California
April 16, 1997
EXHIBIT 23.6
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
HFS Incorporated (the "Company") on Form S-8 of our report dated March 11, 1994,
related to the consolidated statements of operations, stockholders' equity and
cash flows for the three months ended December 31, 1993 and the consolidated
statements of operations and cash flows for the nine months ended September 30,
1993 of Coldwell Banker Corporation and Subsidiaries (formerly Coldwell Banker
Residential Holding Company and Subsidiaries) appearing in the Company's Current
Report on Form 8-K/A, dated March 27, 1997.
DELOITTE & TOUCHE LLP
Costa Mesa, California
April 16, 1997
EXHIBIT 23.7
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of HFS Incorporated of our report dated April 25, 1996,
relating to the financial statements of Avis, Inc. appearing in HFS's current
Report on Form 8-K, as amended, dated August 29, 1996.
Price Waterhouse LLP
New York, New York
April 16, 1997
EXHIBIT 23.8
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the Amended and Restated Employee Investment Plan of PHH
Corporation of our report dated February 23, 1996 (except Notes 9 to 11, as to
which the date is February 7, 1997), with respect to the combined financial
statements of Resort Condominiums International, Inc., its affiliates and
subsidiaries for the year ended December 31, 1995 included in the Current Report
on Form 8-K/A of HFS Incorporated dated March 24, 1997, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
April 16, 1997
Indianapolis, Indiana
EXHIBIT 23.9
The Board of Director
PHH Corporation:
We consent to the incorporation by reference in the registration statement on
Form S-8 of HFS Incorporated of our report dated May 17, 1996, except for the
note on capital stock as to which the date is June 24, 1996 with respect to the
consolidated balance sheets of PHH Corporation and subsidiaries as of April 30,
1996 and 1995 and the related consolidated statement of income, stockholders'
equity, and cash flows for each of the years in the three-year period ended
April 30, 1996.
Our report contains an explanatory paragraph that states that the company
adopted the provisions of Statement of Financial Accounting Standards No. 122,
"Accounting for Mortgage Servicing Rights," in 1996.
KPMG Peat Marwick LLP
Baltimore, Maryland
April 16, 1997
EXHIBIT 23.10
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
HFS Incorporated (the "Company") on Form S-8 of our report dated January 24,
1997, appearing in the Annual Report on Form 10-K of HFS Incorporated, related
to the combined financial position of Rental Car Operations of Avis, Inc. at
December 31, 1996 and results of their operations and their cash flows for the
period October 17, 1996 (Date of Acquisition) to December 31, 1996.
DELOITTE & TOUCHE LLP
New York, New York
April 16, 1997
