<PAGE> 1
As filed with the Securities and Exchange Commission on December 19, 1997
Registration No.______
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------
RED ROOF INNS, INC.
(Exact name of registrant as specified in its charter)
Delaware 31-1393666
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4355 Davidson Road, Hilliard, Ohio 43026-2491
(Address of principal executive offices including zip code)
RED ROOF INNS, INC. DEFERRED COMPENSATION PLAN
AND EXECUTIVE DEFERRED COMPENSATION PLAN
(Full title of the plan)
FRANCIS W. CASH
PRESIDENT AND CHIEF EXECUTIVE OFFICER
4355 Davidson Road
Hilliard, Ohio 43026-2491
(Name and address of agent for service)
(614) 876-3200
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================================
Title of securities to be Amount to be Proposed maximum Proposed maximum Amount of
registered registered offering price per interest aggregate offering price (1) registration fee
========================================================================================================================
<S> <C> <C> <C> <C>
Deferred
Compensation
Obligations (2) $3,380,000 100% $3,380,000 $997.10
========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee.
(2) The Deferred Compensation Obligations being registered are unsecured
obligations of Red Roof Inns, Inc. to pay deferred compensation in the
future in accordance with the terms of the Red Roof Inns, Inc. Deferred
Compensation Plan and Executive Deferred Compensation Plan.
<PAGE> 2
PART I
The information called for by Part I of this Registration Statement on
Form S-8 ("the Registration Statement") is included in the description of the
Red Roof Inns, Inc. Deferred Compensation Plan and Executive Deferred
Compensation Plan (the "Plan") to be delivered to persons eligible to
participate in the Plan. Pursuant to the Note to Part I of Form S-8, this
information is not being filed with or included in this Registration Statement.
PART II
INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by Red Roof Inns, Inc. (the "Company")
with the Securities and Exchange Commission are incorporated herein by
reference:
(1) Annual Report on Form 10-K for the fiscal year ended December
28, 1996, filed on March 25, 1997;
(2) Quarterly Reports on Form 10-Q for the fiscal quarter ended
March 29, 1997, filed on May 12, 1997, the fiscal quarter
ended June 28, 1997, filed on August 12, 1997 and the fiscal
quarter ended September 27, 1997, filed on November 7, 1997;
and
(3) Current Report on Form 8-K filed on June 30, 1997;
All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment that indicates that all securities offered herein have
been sold or that deregisters all securities then remaining unsold, shall be
deemed to be incorporated herein by reference and to be a part hereof from the
date of filing of each such document. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document that 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.
DESCRIPTION OF SECURITIES.
Under the Plan, the Company will provide directors and eligible
employees (each, an "eligible person") the opportunity to defer a specified
percentage of their cash compensation. The Plan also provides that the Company
shall make certain matching contributions to the accounts of participating
eligible persons. The obligations of the Company under the Plan (the "Deferred
Compensation Obligations") will be unsecured general obligations of the Company
to pay the deferred compensation, company contributions and any earnings thereon
in the future in accordance with the terms of the Plan, and will rank pari passu
with other unsecured and unsubordinated indebtedness of the Company from time to
time outstanding. The following description of the Plan is qualified in its
entirety by reference to the Plan, a copy of which is filed as an exhibit to
this Registration Statement.
The amount of compensation to be deferred by each eligible person who
elects to participate in the Plan (a "participant") will be determined in
accordance with the Plan based on elections by the participant. Each Deferred
Compensation Obligation will be payable in accordance with the terms of the
Plan. The Plan will be administered by a Committee appointed by the Company.
Each participant's account will be credited with compensation that the
participant elects to defer, company contributions and any gains (or losses)
deemed to be incurred thereon. All payments to participants in respect of their
Deferred Compensation Obligations will be subject to withholding for applicable
taxes.
A participant's right or the right of any other person to the Deferred
Compensation Obligations cannot be alienated, anticipated, commuted, pledged,
encumbered or assigned. The Deferred Compensation Obligations are not subject to
the debts, contracts, liabilities, engagements or torts of any person entitled
to receive benefits under the Plan.
The Committee may amend, suspend, or reinstate any or all of the
provisions of the Plan at any time; provided however, that no Plan amendment,
suspension, or reinstatement may adversely affect any participant's account as
it existed as of the effective date of such amendments suspension, or
reinstatement, without prior written consent of the participant.
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<PAGE> 3
The Company, in its sole discretion, may also terminate the Plan at any time and
for any reason; provided, however, that a termination shall not adversely affect
the value, timing or method of distribution of a participant's account without
the prior written consent of the participant.
INTERESTS OF NAMED EXPERTS AND COUNSEL.
The legality of the securities offered pursuant to this Registration
Statement has been passed upon by Jones, Day, Reavis & Pogue, Columbus, Ohio.
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, as amended,
provides in regards to indemnification of directors and officers as follows:
145. Indemnification of Officers, Directors, Employees and Agents;
Insurance.
(a) A corporation shall have the power to 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 the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the 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 his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the 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 reasonable cause to believe that the
person's conduct was unlawful.
(b) A corporation shall have the power to indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by the
person in connection with the defense of settlement of such action or suit if
the person acted in good faith and in a manner the person reasonably believed to
be in or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by a majority vote of the board of
directors who are not parties to such action, suit or proceeding, even though
less than a quorum or (2) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition
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<PAGE> 4
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys' fees) incurred
by other employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement, vote
of stockholders or disinterested directors, or otherwise. The Court of Chancery
may summarily determine a corporation's obligation to advance expenses
(including attorneys' fees).
Section 102(b)(7) of the Delaware General Corporation Law, as amended,
provides in regard to the limitation of liability of directors and officers as
follows:
(b) In addition to the matters required to be set forth in the
certificate of incorporation by subsection (a) of this section, the
certificate of incorporation may also contain any or all of the
following matters:
* * *
(7) A provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (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 of a
knowing violation of law, (iii) under section 174 of this title, or (iv) for any
transaction from which the director derived an improper personal benefit. No
such provision shall eliminate or limit the liability of a director for any act
or omission occurring prior to the date when such provision becomes effective.
All references in this paragraph to a director shall also be deemed to refer (x)
to a member of the governing body of a corporation which is not authorized to
issue capital stock, and (y) to such other person or persons, if any, who,
pursuant to a provision of the certificate of incorporation in accordance with
Section 141(a) of this title, exercise or perform any of the powers or duties
otherwise conferred or imposed upon the board of directors by this title.
II-3
<PAGE> 5
Article Ninth of the Amended and Restated Certificate of Incorporation
of the Company provides in regard to indemnification of directors and officers
as follows:
NINTH: (1) A director of the Company shall not be liable to the Company
or its stockholders for monetary damages for breach of fiduciary duty as a
director to the fullest extent permitted by Delaware Law.
(2)(a) Each person (and the heirs, executors or administrators of such
person) who was or is a party or is threatened to be made a party to, or is
involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director or officer of the Company or is or was
serving at the request of the Company as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, shall be
indemnified and held harmless by the Company to the fullest extent permitted by
Delaware Law. The right to indemnification conferred in this ARTICLE NINTH shall
also include the right to be paid by the Company the expenses incurred in
connection with any such proceeding in advance of its final disposition to the
fullest extent authorized by Delaware Law. The right to indemnification
conferred in this ARTICLE NINTH shall be a contract right.
(b) The Company may, by action of its Board of Directors, provide
indemnification to such of the officers, employees and agents of the Company to
such extent and to such effect as the Board of Directors shall determine to be
appropriate and authorized by Delaware Law.
(3) The Company shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any expense, liability or loss incurred by
such person in any such capacity or arising out of his status as such, whether
or not the Company would have the power to indemnify him against such liability
under Delaware Law.
(4) The rights and authority conferred in this ARTICLE NINTH shall not
be exclusive of any other right which any person may otherwise have or
hereafter acquire.
(5) Neither the amendment nor repeal of this ARTICLE NINTH, nor the
adoption of any provision of this Amended and Restated Certificate of
Incorporation or the bylaws of the Company, nor, to the fullest extent permitted
by Delaware Law, any modification of law, shall eliminate or reduce the effect
of this ARTICLE NINTH in respect of any acts or omissions occurring prior to
such amendment repeal, adoption or modification.
In addition, the Company has obtained insurance coverage that insures
certain directors and officers against certain liabilities that might be
incurred by them in such capacity. The Company has also entered into
indemnification agreements with certain officers.
EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
EXHIBITS
The following Exhibits are being filed as part of this Registration
Statement:
<TABLE>
<CAPTION>
<S> <C>
4 Red Roof Inns, Inc. Deferred Compensation Plan and
Executive Deferred Compensation Plan
5 Opinion of Counsel
23(a) Independent Auditors' Consent
23(b) Consent of Counsel (included in Exhibit 5)
24 Power of Attorney
</TABLE>
II-4
<PAGE> 6
UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file during any period in which offers or sales are
being made, a post-effective amendment to this
registration statement:
(i) to include any prospectus required by
Section 10(a)(3) of the Securities Act of
1933;
(ii) to reflect in the prospectus any facts or
events arising after the effective date of
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the registration
statement. Notwithstanding the foregoing,
any increase or decrease in the volume of
securities offered (if the total dollar
value of securities offered would not exceed
that which was registered) and any deviation
from the low or high end of the estimated
maximum offering range may be reflected in
the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and
price represent no more than a 20% change in
the maximum aggregate offering price set
forth in the "Calculation of Registration
Fee" table in the effective registration
statement; and
(iii) to include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(I) and
(a)(1)(ii) do not apply if the registration statement
is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a
post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Registration Statement 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 Hilliard, State of Ohio,
on this 19th day of December, 1997.
RED ROOF INNS, INC.
By: /s/ FRANCIS W. CASH
-------------------------------------------------
Francis W. Cash
Chairman of the Board, President, Chief Executive
Officer and Director
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<PAGE> 8
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on December 19, 1997.
Signature Title
/s/ FRANCIS W. CASH Chairman of the Board,
- -------------------------------- President, Chief Executive
Francis W. Cash Officer and Director
(Principal Executive Officer)
* Executive Vice President, Chief
- -------------------------------- Financial Officer and Director
David N. Chichester (Principal Financial Officer)
/s/ ROBERT M. HARSHBARGER Senior Vice President, Controller
- -------------------------------- and Chief Accounting Officer
Robert M. Harshbarger (Principal Accounting Officer)
* Director
- --------------------------------
James M. Allwin
* Director
- --------------------------------
Thomas E. Dobrowski
* Director
- --------------------------------
C. William Hosler
* Director
- --------------------------------
William M. Lewis, Jr.
* Director
- --------------------------------
Edward D. Powers
* Director
- --------------------------------
Judith A. Rogala
* Director
- --------------------------------
Owen D. Thomas
* This Registration Statement has been signed on behalf of the above-named
directors and officers of the Company by Francis W. Cash - Chairman of the
Board, President, Chief Executive Officer and Director of the Company, as
attorney-in-fact pursuant to a power of attorney filed with the Securities
and Exchange Commission as Exhibit 24 to this Registration Statement.
DATED: December 19, 1997
By: /s/ FRANCIS W. CASH
------------------------------------------
Francis W. Cash, Attorney-in-Fact
II-7
<PAGE> 9
The Deferred Compensation Plan and Executive Deferred Compensation
Plan. Pursuant to the requirements of the Securities Act of 1933, the Red Roof
Inns, Inc. Deferred Compensation Plan and Executive Deferred Compensation Plan
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Hilliard, State of
Ohio, on this 19th day of December, 1997.
RED ROOF INNS, INC. DEFERRED COMPENSATION
PLAN AND EXECUTIVE DEFERRED COMPENSATION
PLAN
By: /s/ Walter A. Furnas
---------------------------------------
Name: Walter A. Furnas
---------------------------------------
Title: Senior Vice President, Human Resources
---------------------------------------
II-8
<PAGE> 10
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
<TABLE>
<CAPTION>
<S> <C>
4 Red Roof Inns, Inc. Deferred Compensation Plan and
Executive Deferred Compensation Plan
5 Opinion of Counsel
23(a) Independent Auditors' Consent
23(b) Consent of Counsel (included in Exhibit 5)
24 Power of Attorney
</TABLE>
<PAGE> 1
Exhibit 4
RED ROOF INNS, INC.
DEFERRED COMPENSATION PLAN
AND
EXECUTIVE DEFERRED COMPENSATION PLAN
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
ARTICLE I PURPOSE...........................................................1
1.1 Purpose....................................................1
ARTICLE II DEFINITIONS......................................................1
2.1 Account....................................................1
2.2 Base Salary................................................1
2.3 Base Salary Participation Agreement........................1
2.4 Beneficiary................................................2
2.5 Board......................................................2
2.6 Bonus......................................................2
2.7 Bonus Participation Agreement..............................2
2.8 Change in Control..........................................2
2.9 Code.......................................................3
2.10 Committee..................................................3
2.11 Company....................................................3
2.12 Company Contributions......................................3
2.13 Company Contribution Subaccount............................3
2.14 Compensation...............................................3
2.15 Deduction Limitation.......................................3
2.16 Declared Rate..............................................3
2.17 Deferral Benefit...........................................4
2.18 Deferred Compensation Subaccount...........................4
2.19 Determination Date.........................................4
2.20 Effective Date.............................................4
2.21 Eligible Employee..........................................4
2.22 Emergency Benefit..........................................4
2.23 ERISA......................................................4
2.24 Exchange Act...............................................4
2.25 Participant................................................4
2.26 Plan.......................................................4
2.27 Plan Year..................................................4
2.28 Savings Plan...............................................4
ARTICLE III ELIGIBILITY AND PARTICIPATION...................................5
3.1 Eligibility................................................5
3.2 Base Salary Participation..................................5
3.3 Bonus Participation........................................5
3.4 Termination of Participation...............................5
3.5 Ineligible Participant.....................................6
i
<PAGE> 3
ARTICLE IV DEFERRAL AMOUNTS.................................................6
4.1 Deferral of Base Salary Under the Deferred
Compensation Portion of this Plan..........................6
4.2 Deferral of Compensation Under the Executive
Deferred Compensation Portion of this Plan.................6
4.3 Company Contributions......................................7
4.4 Crediting Deferred Compensation............................7
ARTICLE V BENEFIT ACCOUNTS..................................................7
5.1 Investment of Accounts.....................................7
5.2 Determination of Account...................................8
5.3 Crediting of Interest......................................8
5.4 Statements.................................................8
ARTICLE VI VESTING..........................................................8
6.1 Vesting and Forfeitures. .................................8
ARTICLE VII PAYMENT OF BENEFITS.............................................9
7.1 Payment of Deferral Benefit Upon
Termination of Service or Death............................9
7.2 Emergency Benefit..........................................9
7.3 Form of Payment............................................9
7.4 Commencement of Payments..................................10
7.5 Small Benefit.............................................10
7.6 Change of Control.........................................11
ARTICLE VIII BENEFICIARY DESIGNATION.......................................11
8.1 Beneficiary Designation...................................11
8.2 Amendments................................................11
8.3 No Designation............................................11
8.4 Effect of Payment.........................................11
ARTICLE IX ADMINISTRATION..................................................11
9.1 Committee.................................................11
9.2 Agents....................................................12
9.3 Binding Effect of Decisions...............................12
9.4 Indemnity of Committee....................................12
ARTICLE X AMENDMENT AND TERMINATION OF PLAN................................12
10.1 Amendment.................................................12
10.2 Termination...............................................12
ARTICLE XI LEAVE OF ABSENCE................................................13
11.1 Paid Leave of Absence.....................................13
11.2 Unpaid Leave of Absence...................................13
ii
<PAGE> 4
ARTICLE XII CLAIMS PROCEDURES..............................................13
12.1 Presentation of Claim.....................................13
12.2 Notification of Decision..................................13
12.3 Review of a Denied Claim..................................14
12.4 Decision on Review........................................14
12.5 Legal Action..............................................14
ARTICLE XIII TRUST.........................................................14
13.1 Establishment of the Trust................................14
13.2 Interrelationship of the Plan and the Trust...............15
13.3 Funding...................................................15
ARTICLE XIV MISCELLANEOUS..................................................15
14.1 Nonassignability..........................................15
14.2 Legal Fees and Expenses...................................16
14.3 Withholding Taxes.........................................16
14.4 Captions..................................................16
14.5 Governing Law.............................................16
14.6 Successors................................................16
14.7 Right to Continued Service................................17
14.8 Furnishing Information....................................17
14.9 Notice....................................................17
14.10 Distribution in the Event of Taxation.....................17
iii
<PAGE> 5
RED ROOF INNS, INC.
DEFERRED COMPENSATION
AND
EXECUTIVE DEFERRED COMPENSATION PLAN
ARTICLE I
PURPOSE
1.1 Purpose. This Red Roof Inns, Inc. Deferred Compensation Plan and
Executive Deferred Compensation Plan (the "Plan") is intended to provide an
opportunity for a select group of management and highly compensated employees to
defer a portion of their regular compensation and bonuses payable for services
rendered to the Company. It is expected that the Plan will assist in attracting
and retaining qualified individuals to serve as officers and key managers of the
Company. This Plan shall be unfunded for tax purposes and for purposes of Title
I of ERISA.
ARTICLE II
DEFINITIONS
When used in this Plan and initially capitalized, the following words
and phrases shall have the meanings indicated:
2.1 Account. "Account" means the account maintained on the books of the
Company for the purpose of accounting for the Compensation that a Participant
elects to defer under the Plan and Company Contributions, if any. Each Account
shall be a bookkeeping entry only and shall be used solely as a device for the
measurement and determination of the amounts to be paid to a Participant, or his
or her designated Beneficiary, pursuant to the Plan. The Account of each
Participant shall contain a Deferred Compensation Subaccount and a Company
Contribution Subaccount.
2.2 Base Salary. "Base Salary" means a Participant's base earnings paid
by the Company without regard to any increases or decreases as a result of an
election to defer base earnings under this Plan, or an election between benefits
or cash provided under a plan of the Company maintained pursuant to Section 125
or 401(k) of the Code. Base Salary includes commissions paid to Plan
Participants.
2.3 Base Salary Participation Agreement. "Base Salary Participation
Agreement" means (a) the agreement by an Eligible Employee to become a
Participant in the Deferred Compensation portion of this Plan with respect to
Base Salary, filed in the form prescribed by the Committee; and (b) the
agreement by an Eligible Employee to become a Participant in the Executive
Deferred Compensation portion of this Plan with respect to Base Salary, filed in
the form prescribed by the Committee.
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2.4 Beneficiary. "Beneficiary" means the person or persons designated
or deemed to have been designated by the Participant to receive benefits payable
under the Plan in the event of the Participant's death.
2.5 Board. "Board" means the Board of Directors of the Company.
2.6 Bonus. "Bonus" means a management bonus award, excluding any award
of stock options, without regard to any decreases as a result of an election to
defer all or any portion of the Bonus under this Plan, or an election between
benefits or cash provided under a plan of the Company maintained pursuant to
Section 125 or 401(k) of the Code.
2.7 Bonus Participation Agreement. "Bonus Participation Agreement"
means the agreement by an Eligible Employee to become a Participant in the
Executive Deferred Compensation portion of this Plan with respect to a Bonus,
filed in the form prescribed by the Committee.
2.8 Change in Control. "Change in Control" means the occurrence of any
of the following events:
(a) Any transaction, or series of transactions, including, but
not limited to, any merger, consolidation, or reorganization, which
results when any "person," as defined in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d) and 14(d) thereof, including
a "group" as defined in Section 13(d) of the Exchange Act, but
excluding the Company, any subsidiary of the Company, and any employee
benefit plan sponsored or maintained by the Company or any subsidiary
of the Company (including any trustee of such plan acting as trustee),
and excluding the Morgan Stanley Real Estate Fund, L.P. and its
affiliates (as defined in Rule 12b-2 under the Exchange Act), directly
or indirectly, becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of securities of the Company representing 20%
or more of the combined voting power of the Company's then outstanding
securities;
(b) When, during any period of 24 consecutive months, the
individuals who, at the beginning of such period, constitute the Board
(the "Incumbent Directors") cease for any reason other than death to
constitute at least a majority of the Board; provided, however, that a
director who was not a director at the beginning of such 24-month
period shall be deemed to have satisfied such 24-month requirement (and
be an Incumbent Director) if such director was elected by, or on the
recommendation of or with the approval of, at least two-thirds of the
directors who then qualified as Incumbent Directors either actually
(because they were directors at the beginning of such 24-month period)
or by prior operation of this Section; or
(c) When the stockholders of the Company approve a plan of
complete liquidation of the Company; or an agreement for the sale or
disposition of substantially all the Company's assets; or a merger,
consolidation, or reorganization of the Company in which stockholders
of the Company immediately prior to the transaction own less than 65%
of the combined voting power of the surviving entity.
2.9 Code. "Code" means the Internal Revenue Code of 1986, as amended.
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2.10 Committee. "Committee" means the committee appointed to administer
the Plan, as provided in Article IX.
2.11 Company. "Company" means Red Roof Inns, Inc. and any successor
thereto.
2.12 Company Contributions. "Company Contributions" means contributions
by the Company to the Plan pursuant to Section 4.3.
2.13 Company Contribution Subaccount. "Company Contribution Subaccount"
means that portion of the Participant's Account which consists of Company
Contributions made under the Plan and any earnings credited on such amounts.
2.14 Compensation. "Compensation" means the Base Salary and/or Bonus
payable with respect to an Eligible Employee for each calendar year.
2.15 Deduction Limitation. "Deduction Limitation" shall mean the
following described limitation on a benefit that may otherwise be distributable
pursuant to the provisions of this Plan. Except as otherwise provided, this
limitation shall be applied to all distributions that are subject to the
Deduction Limitation under this Plan. If the Company determines in good faith
prior to a Change in Control that there is a reasonable likelihood that any
compensation paid to a Participant for a taxable year of the Company would not
be deductible by the Company solely by reason of the limitation under Code
Section 162(m), then to the extent deemed necessary by the Company to ensure
that the entire amount of any distribution to the Participant pursuant to this
Plan prior to the Change in Control is deductible, the Company may defer all or
any portion of a distribution under this Plan. Any amounts deferred pursuant to
this limitation shall continue to be credited/debited with earnings, even if
such amounts are being paid out in installments. All amounts subject to the
Deduction Limitation shall be distributed to the Participant or his or her
Beneficiary (in the event of the Participant's death) at the earliest possible
date, as determined by the Company in good faith, on which the deductibility of
compensation paid to the Participant will not be limited by Code Section 162(m),
or if earlier, the effective date of a Change in Control. Notwithstanding
anything to the contrary in this Plan, the Deduction Limitation shall not apply
to any distributions made after a Change in Control.
2.16 Declared Rate. "Declared Rate" for any period means the 30 day
London Interbank Offered Rate (LIBOR), as adjusted on the first business day of
each January, April, July and October.
2.17 Deferral Benefit. "Deferral Benefit" means the benefit payable to
a Participant or his or her Beneficiary pursuant to Article VII and based on
such Participant's vested Account.
2.18 Deferred Compensation Subaccount. "Deferred Compensation
Subaccount" means that portion of the Participant's Account which consists of
Base Salary deferrals and Bonus deferrals made by the Participant under the Plan
and any earnings credited on such amounts.
2.19 Determination Date. "Determination Date" means a date on which the
amount of a Participant's Account is determined as provided in Article V. The
last business day of each month and any other date selected by the Committee
shall be a Determination Date.
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2.20 Effective Date. "Effective Date" means January 1, 1998.
2.21 Eligible Employee. "Eligible Employee" means an employee of the
Company who is paid at salary level 13 or above, who is a member of a select
group of management or highly compensated employees, and who is chosen by the
Committee in its discretion to participate in the Plan. The Committee shall
designate whether an Eligible Employee shall participate in the Deferred
Compensation portion of this Plan or the Executive Deferred Compensation portion
of this Plan.
2.22 Emergency Benefit. "Emergency Benefit" has the meaning set forth
in Section 7.2.
2.23 ERISA. "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
2.24 Exchange Act. "Exchange Act" means the Securities Exchange Act of
1934, as amended.
2.25 Participant. "Participant" means any Eligible Employee who elects
to participate in the Plan by filing (a) a Base Salary Participation Agreement
under the Deferred Compensation portion of this Plan in a form that is accepted
by the Committee; or (b) a Base Salary Participation Agreement or Bonus
Participation Agreement under the Executive Deferred Compensation portion of
this Plan in a form that is accepted by the Committee.
2.26 Plan. "Plan" means the Red Roof Inns, Inc. Deferred Compensation
Plan and Executive Deferred Compensation Plan.
2.27 Plan Year. "Plan Year" means a twelve-month period commencing
January 1 and ending the following December 31.
2.28 Savings Plan. "Savings Plan" means the Red Roof Inns 401(k)
Retirement Plan, and any successor thereto.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility. Eligibility to participate in both the Deferred
Compensation portion of this Plan and the Executive Deferred Compensation
portion of this Plan for any Plan Year with respect to deferral of Base Salary
is limited to those Eligible Employees who have elected to make the maximum
elective contributions permitted them under the terms of the Savings Plan for
such Plan Year; provided, however, that if an Eligible Employee is not eligible
to make elective contributions to the Savings Plan, the maximum deferral
election for such Eligible Employee under the Savings Plan shall be deemed to be
zero, and such eligible employee shall not be precluded from participation in
this Plan merely because of such failure to contribute to the Savings Plan. Any
Eligible Employee under the Executive Deferred Compensation portion of this Plan
is eligible to participate in the Plan for any Plan Year with respect to the
deferral of a Bonus.
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3.2 Base Salary Participation. Participation in the Plan with respect
to Base Salary under both the Deferred Compensation portion of this Plan and the
Executive Deferred Compensation portion of this Plan shall be limited to
Eligible Employees who elect to participate in the Plan by filing a completed
Base Salary Participation Agreement in a form prescribed by the Committee. A
Base Salary Participation Agreement may be filed by an Eligible Employee at any
time. The election to participate with respect to Base Salary shall become
effective on the first day of the next pay period following acceptance by the
Committee of the Base Salary Participation Agreement. A Base Salary
Participation Agreement shall be effective only with respect to Compensation
earned and payable following the later of the effective date of the Base Salary
Participation Agreement or the date such Base Salary Participation Agreement is
accepted by the Committee.
3.3 Bonus Participation. Participation in the Plan with respect to
Bonus under the Executive Deferred Compensation portion of this Plan shall be
limited to Eligible Employees who elect to participate in the Plan by filing a
Bonus Participation Agreement in a form prescribed by the Committee. A properly
completed and executed Bonus Participation Agreement shall be filed on or prior
to the last day of the Plan Year immediately preceding the Plan Year in which
the Participant's participation in the Plan with respect to Bonus will commence.
The election to participate with respect to a Bonus shall be effective on the
first day of the Plan Year following acceptance by the Committee of the Bonus
Participation Agreement. In the event that an Eligible Employee first commences
employment during the course of a Plan Year, a Bonus Participation Agreement may
be filed with the Committee not later than 30 days following his or her date of
employment. A Bonus Participation Agreement shall be effective only with respect
to a Bonus earned and payable following the later of the effective date of the
Bonus Participation Agreement or the date such Bonus Participation Agreement is
accepted by the Committee.
3.4 Termination of Participation. A Participant may elect to terminate
his or her participation in the Plan by filing a written notice to that effect
with the Committee. The termination shall be effective on the date specified by
the Participant in the notice. Amounts credited to a Participant's Account with
respect to periods prior to the effective date of a termination shall continue
to be payable pursuant to, receive interest on (where applicable), and otherwise
be governed by, the terms of the Plan.
3.5 Ineligible Participant. Notwithstanding any other provisions of
this Plan, if the Committee believes that any Participant may not qualify as a
member of a group of "management or highly compensated employees," as determined
in accordance with Sections 201(2), 301(a)(3) and 401(a)(l) of ERISA, the
Committee in its sole discretion may direct that such Participant shall cease to
be eligible to participate in this Plan. Upon such determination, the Company
shall make an immediate lump sum payment to the Participant equal to the amount
credited to his or her Account. Upon such payment, no benefit shall thereafter
be payable under the Plan either to the Participant or any Beneficiary of the
Participant, and all of the Participant's elections as to the time and manner of
payment of his or her Account will be deemed to be cancelled.
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ARTICLE IV
DEFERRAL AMOUNTS
4.1 Deferral of Base Salary Under the Deferred Compensation Portion of
this Plan. With respect to each Plan Year, a Participant in the Deferred
Compensation Portion of this Plan may elect to defer a specified dollar amount
or percentage of his or her Base Salary, provided, however, that the amount of
Base Salary that a Participant may elect to defer annually under the Deferred
Compensation portion of this Plan, when added to the amount the Participant is
expected to defer under the Savings Plan, as such amount is determined by the
Committee in its discretion, shall not exceed the dollar limit in effect under
for that year under Code Section 402(g). A Participant may change the dollar
amount or percentage of his or her Base Salary to be deferred by filing a
written notice thereof with the Committee. Any such change shall be effective on
the date specified by the Participant in such notice provided such date occurs
after the receipt of such notice by the Committee. Deferrals of Base Salary will
be credited to a Participant's Deferred Compensation Subaccount.
4.2 Deferral of Compensation Under the Executive Deferred Compensation
Portion of this Plan. With respect to each Plan Year, a Participant under the
Executive Deferred Compensation portion of this Plan may elect to defer a
specified dollar amount or percentage of his or her Base Salary or Bonus, or
both, provided, however, that although 100% of a Bonus may be deferred, the
amount of Base Salary that a Participant may elect to defer under this Plan
shall not exceed 50% of his or her Base Salary, net of such Participant's pretax
elective deferrals under the Savings Plan. A Participant may change the dollar
amount or percentage of his or her Compensation to be deferred by filing a
written notice thereof with the Committee. Any such change with respect to Base
Salary shall be effective on the date specified by the Participant in such
notice provided such date occurs after the receipt of such notice by the
Committee. Any such change with respect to Bonus shall be effective as of the
first day of the Plan Year immediately succeeding the Plan Year in which such
notice is accepted by the Committee. Deferrals of Compensation will be credited
to a Participant's Deferred Compensation Subaccount.
4.3 Company Contributions. As of the end of each payroll period, the
Company shall make a matching contribution to each Participant's Account. The
matching contribution shall be calculated as follows:
(a) Combine the Participant's salary deferral contributions to
this Plan with the Participant's salary deferral contributions to the
Savings Plan;
(b) Calculate the amount of matching contribution that would
have been made based on the combined salary deferrals if such deferrals
were all made to the Savings Plan;
(c) Subtract the amount of matching contribution actually made
to the Savings Plan for the Participant from the amount in (b) above;
and
(d) Contribute to this Plan the amount calculated in step (c).
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Company contributions will be credited to a Participant's Company Contribution
Subaccount.
4.4 Crediting Deferred Compensation. The amount of Compensation that a
Participant elects to defer shall be credited by the Company to the
Participant's Account as of the time such Compensation would otherwise become
payable to the Participant.
ARTICLE V
BENEFIT ACCOUNTS
5.1 Investment of Accounts. As soon as practicable after the crediting
of any amount to a Participant's Account, the Company may, in its sole
discretion, direct that the Company invest an amount equal to the amount
credited, in whole or in part, in such property (real, personal, tangible or
intangible), other than securities of the Company (collectively the
"Investments"), as the Committee shall direct, or may direct that the Company
retain the amount credited as cash to be added to its general assets. The
Committee may, but is under no obligation to, direct the investment of amounts
credited to a Participant's Account in accordance with requests made by the
Participant and communicated to the Committee. Earnings from Investments shall
be credited to a Participant's Account as soon as practicable and shall be
reinvested in the manner provided above. The Company shall be the sole owner and
beneficiary of all Investments, and all contracts and other evidences of the
Investments shall be registered in the name of the Company. The Company, under
the direction of the Committee, shall have the unrestricted right to sell any of
the Investments included in any Participant's Account, and the unrestricted
right to reinvest the proceeds of the sale in other Investments or to credit the
proceeds of the sale to a Participant's Account as cash. Amounts credited to a
Participant's Account that are not invested in Investments shall be credited to
a Participant's Account as cash.
5.2 Determination of Account. As of each Determination Date, a
Participant's Account shall consist of the following: (a) the balance of the
Participant's Account as of the immediately preceding Determination Date, plus
(b) the Participant's deferred Compensation (if any) credited since the
immediately preceding Determination Date, plus (c) any earnings and/or income
credited to the Account as of such Determination Date, plus (d) any Company
Contributions, minus (e) any losses or other diminution in the value of assets
in such Account since the immediately preceding Determination Date, minus (f)
the aggregate amount of distributions, if any, made from such Participant's
Account since the immediately preceding Determination Date.
5.3 Crediting of Interest. As of each Determination Date, the amounts
credited to a Participant's Account as cash shall be increased by the amount of
interest earned since the immediately preceding Determination Date. Interest
shall be credited at the Declared Rate as of such Determination Date based on
the balance of the cash amounts credited to the Account since the immediately
preceding Determination Date, but after such Account has been adjusted for any
contributions or distributions to be credited or deducted for such period.
Interest for the period prior to the first Determination Date applicable to a
Participant's Account shall be deemed earned ratably over such period.
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5.4 Statements. The Committee shall cause to be kept a detailed record
of all transactions affecting each Participant's Account and shall provide to
each Participant, within 120 days after the close of each calendar quarter, a
written statement setting forth a description of the Investments in such
Participant's Account and the cash balance, if any, of such Participant's
Account, as of the last day of the preceding calendar quarter and showing all
adjustments made thereto during such calendar quarter.
ARTICLE VI
VESTING
6.1 Vesting and Forfeitures. Company Contributions to this Plan shall
become vested and nonforfeitable in the same manner and in accordance with the
same vesting schedule and rules applicable to the Savings Plan. If a Participant
terminates employment and receives a payout of his vested Account at a time when
the Account is not fully vested, the Participant will forfeit the nonvested
portion of the Account. Forfeitures shall be used to offset future Company
Contributions to the Plan. Upon termination of the Plan, unallocated forfeitures
shall be credited as income to Participant Accounts ratably based on Account
balances.
ARTICLE VII
PAYMENT OF BENEFITS
7.1 Payment of Deferral Benefit Upon Termination of Service or Death.
Subject to the Deduction Limitation, upon the earlier of (a) termination of
service of the Participant as an employee of the Company, for reasons other than
death, or (b) the death of the Participant, the Company shall, in accordance
with this Article VII, pay to the Participant or to his or her Beneficiary, as
the case may be, a Deferral Benefit equal to the balance of his or her vested
Account determined pursuant to Articles V and VI, less any amounts previously
distributed; provided, however, that by written notice filed with the Committee
at least one year prior to the Participant's voluntary termination of employment
with, or retirement from, the Company, the Participant may elect to defer
commencement of the payment of his or her Deferral Benefit until a date selected
in such election. Any such election may be changed by the Participant at any
time and from time to time without the consent of any other person by filing a
later signed written election with the Committee at least one year prior to the
date on which the Deferral Benefit otherwise would be paid; provided that any
election made less than one year prior to the Participant's voluntary
termination of employment or retirement, or less than one year prior to an
elected payment date, shall not be valid, and in such case payment shall be made
in accordance with the Participant's prior election, or otherwise in accordance
with the first sentence of this Section 7.1.
7.2 Emergency Benefit. In the event that the Committee, upon written
petition of a Participant, determines, in its sole discretion, that the
Participant has suffered an unforeseeable financial emergency that can be cured
by funds in an amount not exceeding the aggregate balance of
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such Participant's vested Account, the Company shall pay to the Participant, as
soon as practicable following such determination, an amount necessary to meet
the emergency (the "Emergency Benefit"), but not exceeding the aggregate balance
of such Participant's Account, as of the date of such payment. For purposes of
this Section, an "unforeseeable financial emergency" shall mean an unexpected
need for cash arising from an illness, disability, casualty loss, sudden
financial reversal, or other such unforeseeable occurrence. Cash needs arising
from foreseeable events such as the purchase of a house or education expenses
for children shall not be considered to be the result of an unforeseeable
financial emergency. The amount of the Deferral Benefit otherwise payable under
the Plan to such Participant shall be adjusted to reflect the early payment of
the Emergency Benefit. The payment of any amount under this Section shall not be
subject to the Deduction Limitation.
7.3 Form of Payment.
(a) The Deferral Benefit shall be paid in the following forms,
as elected by the Participant in his or her Base Salary Participation
Agreement or Bonus Participation Agreement or by written notice as
provided in subsection (b) below:
(1) Monthly payments of a fixed amount which shall
amortize the Account balance as of the payment commencement
date elected by the Participant over a period not to exceed
fifteen years (together, in the case of each payment, with
earnings thereon credited after the payment commencement date
pursuant to Article V).
(2) A lump sum.
(3) A combination of (1) and (2) above. The
Participant shall designate the percentage payable under each
option.
Notwithstanding the foregoing, the Committee may, at any time, direct
that installment payments under (1) or (3) above shall be made
quarterly or annually.
(b) The Participant's election in a Base Salary Participation
Agreement or a Bonus Participation Agreement of the form of payment may
be changed by written notice filed with the Committee at least one year
prior to the Participant's voluntary termination of employment with, or
retirement from, the Company. Any such election may again be changed by
the Participant at any time and from time to time without the consent
of any other person by filing a later signed written election with the
Committee at least one year prior to the date on which the Deferral
Benefit otherwise would be paid; provided that any election made less
than one year prior to the Participant's voluntary termination of
employment or retirement, or less than one year prior to an elected
payment date, shall not be valid, and in such case payment shall be
made in accordance with the Participant's prior election; and provided,
further, that the Committee may, in its sole discretion, waive such one
year period upon a request of the Participant made while the
Participant remains an active employee of the Company.
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(c) The amount of each installment under Section 7.3(a) shall
be equal to the quotient obtained by dividing the Participant's Account
balance as of the date of such installment payment by the number of
installment payments remaining to be made to or in respect of such
Participant at the time of calculation.
(d) If a Participant fails to make an election with respect to
his or her Account in a timely manner as provided in this Section,
distribution shall be made in ten (10) annual installments of cash.
(e) A Participant's Deferral Benefit (or the remaining
portions thereof if payment to the Participant has commenced) shall be
distributed to his or her Beneficiary in the form of a single lump sum
payment following his or her death.
7.4 Commencement of Payments. Commencement of payments under Section
7.1 of the Plan shall begin as soon as practicable, and in accordance with the
payment commencement date elected by the Participant, following receipt of
notice by the Committee of an event which entitles a Participant (or a
Beneficiary) to payments under the Plan.
7.5 Small Benefit. In the event the Committee determines that the
balance of the Participant's Account is less than $50,000 at the time of
commencement of payments, the Company may pay the benefit in the form of a lump
sum payment, notwithstanding any provision of the Plan or attempted election by
the Participant to the contrary. Such lump sum payment shall be equal to the
balance of the Participant's Account, or the portion thereof payable to a
Beneficiary.
7.6 Change of Control. Upon a Change of Control, all amounts in all
Participant's Accounts shall become fully vested and shall be paid to such
Participants as soon as administratively feasible.
ARTICLE VIII
BENEFICIARY DESIGNATION
8.1 Beneficiary Designation. Each Participant shall have the right, at
any time, to designate any person or persons as his or her Beneficiary to whom
payment under the Plan shall be made in the event of his or her death prior to
complete distribution to the Participant of his or her Deferral Benefit.
8.2 Amendments. Any Beneficiary designation may be changed by a
Participant by the filing of a new Beneficiary designation, which will cancel
all Beneficiary designations previously filed. No designation or change in
designation of a Beneficiary shall be effective until received and acknowledged
in writing by the Committee or its designated agent.
8.3 No Designation. If a Participant fails to designate a Beneficiary
as provided above, or if all designated Beneficiaries predecease the
Participant, then the Participant's designated Beneficiary shall be the
Participant's estate.
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8.4 Effect of Payment. Payment to a Participant's Beneficiary (or, upon
the death of a Beneficiary, to the Beneficiary's estate) shall completely
discharge the Company's obligations under the Plan.
ARTICLE IX
ADMINISTRATION
9.1 Committee. The Company shall appoint a Committee consisting of at
least three individuals to administer the Plan. Members of the Committee shall
hold office at the pleasure of the Company and may be dismissed at any time,
with or without cause. Vacancies in the Committee arising from death,
resignation, removal or otherwise may be filled by the Company, but the
Committee may act notwithstanding the existence of vacancies so long as there
are at least three members of the Committee. The Committee shall supervise the
administration and operation of the Plan, may from time to time adopt rules and
procedures governing the Plan and shall have full discretionary authority to
construe and interpret the Plan (including, without limitation, by supplying
omissions from, correcting deficiencies in, or resolving inconsistencies and
ambiguities in, the language of the Plan).
9.2 Agents. The Committee may appoint an individual, who may be an
employee of the Company and who need not be a member of the Committee, to be the
Committee's agent with respect to the day-to-day administration of the Plan. In
addition, the Committee may, from time to time, employ other agents and delegate
to them such administrative duties as it sees fit, and may from time to time
consult with counsel who also may be counsel to the Company.
9.3 Binding Effect of Decisions. Any decision or action of the
Committee with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan shall be final and
binding upon all persons having any interest in the Plan.
9.4 Indemnity of Committee. The Company shall indemnify and hold
harmless the members of the Committee and their duly appointed agents under
Section 9.2 against any and all claims, loss, damage, expense, or liability
arising from any action or failure to act with respect to the Plan, except in
the case of gross negligence or willful misconduct by any such member or agent
of the Committee.
ARTICLE X
AMENDMENT AND TERMINATION OF PLAN
10.1 Amendment. The Company may at any time amend, suspend, or
reinstate any or all of the provisions of the Plan, except that no such
amendment, suspension, or reinstatement may adversely affect any Participant's
Account as it existed as of the effective date of such amendment, suspension, or
reinstatement, without such Participant's prior written consent. Written notice
of any amendment or other action with respect to the Plan shall be given to each
Participant.
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10.2 Termination. The Company, in its sole discretion, may terminate
this Plan at any time and for any reason whatsoever. Upon termination of the
Plan, the Committee shall take those actions necessary to administer any
Accounts existing prior to the effective date of such termination; provided,
however, that a termination of the Plan shall not adversely affect the value of
a Participant's Account, the earnings from Investments credited to a
Participant's Account under Section 5.1, the interest on cash amounts credited
to a Participant's Account under Section 5.3, or the timing or method of
distribution of a Participant's Account, without the Participant's prior written
consent.
ARTICLE XI
LEAVE OF ABSENCE
11.1 Paid Leave of Absence. If a Participant is authorized by the
Company for any reason to take a paid leave of absence, the Participant shall
continue to be considered employed by the Company. The elected percentage of
Compensation shall continue to be deferred during such paid leave of absence,
and the Participant shall remain eligible for a Company Contribution.
11.2 Unpaid Leave of Absence. If a Participant is authorized by the
Company for any reason to take an unpaid leave of absence, the Participant shall
continue to be considered employed by the Company and the Participant shall be
excused from making deferrals until the earlier of the date the leave of absence
expires or the Participant returns to a paid employment status. Upon such
expiration or return, deferrals shall resume.
ARTICLE XII
CLAIMS PROCEDURES
12.1 Presentation of Claim. Any Participant or Beneficiary of a
deceased Participant (collectively, a "Claimant") may deliver to the Committee a
written claim for a determination with respect to the amounts distributable to
such Claimant from the Plan. If such a claim relates to the contents of a notice
received by the Claimant, the claim must be made within 60 days after such
notice was received by the Claimant. All other claims must be made within 180
days of the date on which the event that caused the claim to arise occurred. The
claim must state with particularity the determination desired by the Claimant.
12.2 Notification of Decision. The Committee shall consider a
Claimant's claim within a reasonable time, and shall notify the Claimant in
writing:
(a) that the Claimant's requested determination has been made,
and that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in
whole or in part, to the Claimant's requested determination, and such
notice must set forth in a manner calculated to be understood by the
Claimant:
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<PAGE> 17
(1) the specific reason(s) for the denial of the
claim, or any part of it;
(2) specific reference(s) to pertinent provisions of
the Plan upon which such denial was based;
(3) a description of any additional material or
information necessary for the Claimant to perfect the claim,
and an explanation of why such material or information is
necessary; and
(4) an explanation of the claim review procedure
below.
12.3 Review of a Denied Claim. Within 60 days after receiving a notice
from the Committee that a claim has been denied, in whole or in part, a Claimant
(or the Claimant's duly authorized representative) may file with the Committee a
written request for a review of the denial of the claim. Thereafter, but not
later than 30 days after the review procedure began, the Claimant (or the
Claimant's duly authorized representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole
discretion, may grant.
12.4 Decision on Review. The Committee shall render its decision on
review promptly, and not later than 60 days after the filing of a written
request for review of the denial, unless a hearing is held or other special
circumstances require additional time, in which case the Committee's decision
must be rendered within 120 days after such date. Such decision must be written
in a manner calculated to be understood by the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions
upon which the decision was based; and
(c) such other matters as the Committee deems relevant.
12.5 Legal Action. A Claimant's compliance with the foregoing
provisions of this Article is a mandatory prerequisite to a Claimant's right to
commence any legal action with respect to any claim for benefits under this
Plan.
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ARTICLE XIII
TRUST
13.1 Establishment of the Trust. The Company shall establish the type
of grantor trust commonly called a "Rabbi Trust" (the "Trust"), and the Company
shall at least annually transfer over to the Trust such assets as the Company
determines, in its sole discretion, are necessary to provide, on a present value
basis, for its respective future liabilities created with respect to the
Accounts established for Participants for all periods prior to the transfer, as
well as any debits and credits to the Participants' Account balances for all
periods prior to the transfer, taking into consideration the value of the assets
in the Trust at the time of the transfer.
13.2 Interrelationship of the Plan and the Trust. The provisions of the
Plan and the Plan Agreement shall govern the rights of a Participant to receive
distributions pursuant to the Plan. The provisions of the Trust shall govern the
rights of the Company, the Participants, and the creditors of the Company to the
assets transferred to the Trust. The Company shall at all times remain liable to
carry out its obligations under the Plan.
13.3 Funding. Participants, their Beneficiaries, and their heirs,
successors, and assigns, shall have no secured interest or claim in any property
or assets of the Company. The Company's obligation under the Plan shall be
merely that of an unfunded and unsecured promise of the Company to pay money in
the future. Notwithstanding the foregoing, in the event of a Change in Control,
the Trust, if not already irrevocable, shall become irrevocable; and the Company
shall fund the Trust in an amount equal to no less than the total value of the
Participants' Accounts under the Plan as of the Determination Date immediately
preceding the Change in Control, provided that any funds contained therein shall
remain liable for the claims of the Company's general creditors while such
amounts remain in the Trust.
ARTICLE XIV
MISCELLANEOUS
14.1 Nonassignability. No right or interest under the Plan of a
Participant or his or her Beneficiary (or any person claiming through or under
any of them) shall be assignable or transferable in any manner or be subject to
alienation, anticipation, sale, pledge, encumbrance, or other legal process, or
in any manner be liable for or subject to the debts or liabilities of any such
Participant or Beneficiary. If any Participant or Beneficiary shall attempt to
or shall transfer, assign, alienate, anticipate, sell, pledge, or otherwise
encumber his or her benefits hereunder or any part thereof, or if by reason of
his or her bankruptcy or other event happening at any time such benefits would
devolve upon anyone else or would not be enjoyed by him or her, then the
Committee, in its discretion, may terminate his or her interest in any such
benefit to the extent the Committee considers necessary or advisable to prevent
or limit the effects of such occurrence. Termination shall be effected by filing
a written "termination declaration" with the Secretary of the Company and making
reasonable efforts to deliver a copy to the Participant or Beneficiary whose
interest is adversely affected (the "Terminated Participant").
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As long as the Terminated Participant is alive, any benefits affected
by the termination shall be retained by the Company and, in the Committee's sole
and absolute judgment, may be paid to or expended for the benefit of the
Terminated Participant, his or her spouse, his or her children, or any other
person or persons in fact dependent upon him or her in such a manner as the
Committee shall deem proper. Upon the death of the Terminated Participant, all
benefits withheld and not paid to others in accordance with the preceding
sentence shall be disposed of according to the provisions of the Plan that would
apply if the Terminated Participant had died prior to the time that all benefits
to which the Terminated Participant was entitled to receive were paid to him or
her.
14.2 Legal Fees and Expenses. It is the intent of the Company that no
Eligible Employee or former Eligible Employee be required to incur the expenses
associated with the enforcement of his or her rights under this Plan by
litigation or other legal action because the cost and expense thereof would
substantially detract from the benefits intended to be extended to an Eligible
Employee hereunder. Accordingly, if it should appear that the Company has failed
to comply with any of its obligations under this Plan or in the event that the
Company or any other person takes any action to declare this Plan void or
unenforceable, or institutes any litigation designed to deny, or to recover
from, the Eligible Employee the benefits intended to be provided to such
Eligible Employee hereunder, the Company irrevocably authorizes such Eligible
Employee from time to time to retain counsel of his or her choice, at the
expense of the Company as hereafter provided, to represent such Eligible
Employee in connection with the initiation or defense of any litigation or other
legal action, whether by or against the Company or any director, officer,
stockholder, or other person affiliated with the Company in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to such Eligible
Employee's entering into an attorney-client relationship with such counsel, and
in that connection the Company and such Eligible Employee agree that a
confidential relationship shall exist between such Eligible Employee and such
counsel. The Company shall pay and be solely responsible for any and all
attorneys' and related fees and expenses incurred by such Eligible Employee as a
result of the Company's failure to perform under this Plan or any provision
thereof; or as a result of the Company or any person contesting the validity or
enforceability of this Plan or any provision thereof.
14.3 Withholding Taxes. If the Company is required to withhold any
taxes or other amounts from a Participant's deferred Compensation pursuant to
any state, federal, or local law, such amounts shall, to the extent possible, be
withheld from the Participant's Compensation before such amounts are credited
under the Plan. Any additional withholding amount required shall be paid by the
Participant to the Company as a condition to the crediting of deferred
Compensation to the Participant's Account. The Company may withhold any required
state, federal, or local taxes or other amounts from any benefits payable to a
Participant or Beneficiary.
14.4 Captions. The captions contained herein are for convenience only
and shall not control or affect the meaning or construction hereof.
14.5 Governing Law. The provisions of the Plan shall be construed and
interpreted according to the laws of the State of Ohio.
14.6 Successors. The provisions of the Plan shall bind and inure to the
benefit of the Company and its respective successors and assigns. The term
successors as used herein shall include
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<PAGE> 20
any corporate or other business entity which shall, whether by merger,
consolidation, purchase or otherwise, acquire all or substantially all of the
business and assets of the Company and successors of any such corporation or
other business entity.
14.7 Right to Continued Service. Nothing contained herein shall be
construed to confer upon any Eligible Employee the right to continue to serve as
an Eligible Employee of the Company or in any other capacity.
14.8 Furnishing Information. A Participant or his or her Beneficiary
shall cooperate with the Committee by furnishing any and all information
requested by the Committee and take such other actions as may be requested in
order to facilitate the administration of the Plan and the payments of benefits
hereunder.
14.9 Notice. Any notice or filing required or permitted to be given to
the Committee under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address below:
Human Resources Department
Red Roof Inns, Inc.
4355 Davidson Road
Hilliard, OH 43026
Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification.
Any notice or filing required or permitted to be given to a Participant
under this Plan shall be sufficient if in writing and hand-delivered, or sent by
mail, to the last known address of the Participant.
14.10 Distribution in the Event of Taxation. If, for any reason, all or
any portion of a Participant's benefits under this Plan becomes taxable to the
Participant prior to receipt, a Participant may petition the Committee for a
distribution of that portion of his or her benefit that has become taxable. Upon
the grant of such a petition, which grant shall not be unreasonably withheld
(and, after a Change in Control, shall be granted), the Company shall distribute
to the Participant immediately available funds in an amount equal to the taxable
portion of his or her benefit (which amount shall not exceed a Participant's
unpaid Account balance under the Plan). If the petition is granted, the tax
liability distribution shall be made within 90 days of the date when the
Participant's petition is granted. Such a distribution shall affect and reduce
the benefits to be paid under this Plan.
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Executed this 17th day of December, 1997.
RED ROOF INNS, INC.
By: /s/ Walter A. Furnas
---------------------------------------------------
Title: Senior Vice President, Human Resources
17
<PAGE> 1
EXHIBIT 5
December 19, 1997
Red Roof Inns, Inc.
4355 Davidson Road
Hilliard, Ohio 43026
Re: Red Roof Inns, Inc. Deferred Compensation Plan and Executive
Deferred Compensation Plan
Ladies and Gentlemen:
We have acted as counsel for Red Roof Inns, Inc., a Delaware
corporation (the "Company"), in connection with the registration of the deferred
compensation payment obligations ("Deferred Compensation Obligations") arising
under the Red Roof Inns, Inc. Deferred Compensation Plan and Executive Deferred
Compensation Plan (the "Plan").
We have examined such documents, records and matters of law as
we have deemed necessary for the purposes of this opinion. Based on such
examination and on the assumptions, qualifications and limitations set forth
below, we are of the opinion that:
1. The Deferred Compensation Obligations, when issued in
accordance with the provisions of the Plan, will be valid and binding
obligations of the Company, enforceable in accordance with their terms,
except as enforcement thereof may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and subject to
general equity principals.
2. The provisions of the written documents of the Plan comply
with the applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
Our opinion expressed in paragraph 2 applies only as to the
form of the written documents of the Plan. Accordingly, but without limitation
of the preceding sentence, we express no opinion as to whether the employees
eligible to participate in the Plan constitute a select group of management or
highly compensated employees, which is a factual issue depending upon the facts
and circumstances in existence from time to time.
In rendering the foregoing opinions, we have relied as to
certain factual matters upon information provided by officers of the Company and
public officials, and we have not independently checked or verified the accuracy
of such information. In addition, our examination of matters of law has been
limited to the General Corporation Law of the State of Delaware and the federal
laws of the United States of America, in each case as in effect on the date
hereof.
We hereby consent to the filing of this opinion as Exhibit 5
to the Registration Statement on Form S-8 filed by the Company with respect to
the Deferred Compensation Obligations.
Very truly yours,
Jones, Day, Reavis & Pogue
<PAGE> 1
EXHIBIT 23(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement of
Red Roof Inns, Inc. on Form S-8 of our reports dated February 10, 1997,
appearing in the Annual Report on Form 10-K of Red Roof Inns, Inc. for the year
ended December 28, 1996.
DELOITTE & TOUCHE LLP
Columbus, Ohio
December 17, 1997
<PAGE> 1
EXHIBIT 24
DIRECTORS AND OFFICERS OF
RED ROOF INNS, INC.
REGISTRATION STATEMENT ON FORM S-8
POWER OF ATTORNEY
Each of the undersigned directors and officers of Red Roof Inns,
Inc., a Delaware corporation (the "Company"), hereby: (1) constitutes and
appoints Francis W. Cash and David N. Chichester, collectively and individually,
as his or her agent and attorney-in-fact, with full power of substitution and
resubstitution, to (a) sign and file on his or her behalf and in his or her
name, place and stead in any and all capacities (I) a Registration Statement on
Form S-8 (the "Registration Statement") with respect to the registration under
the Securities Act of 1933, as amended, of deferred compensation payment
obligations issuable under the Red Roof Inns, Inc. Deferred Compensation Plan
and Executive Deferred Compensation Plan, (ii) any and all amendments, including
post-effective amendments, and exhibits to the Registration Statement and (iii)
any and all applications or other documents to be filed with the Securities and
Exchange Commission or any state securities commission or other regulatory
authority with respect to the securities covered by the Registration Statement,
and (b) do and perform any and all other acts and deeds whatsoever that may be
necessary or required in the premises; and (2) ratifies and approves any and all
actions that may be taken pursuant hereto by any of the above-named agents and
attorneys-in-fact or their substitutes.
IN WITNESS WHEREOF, the undersigned directors and officers of the
Company have hereunto set their hands as of the 30th day of October, 1997.
/s/ FRANCIS W. CASH /s/ DAVID N. CHICHESTER
---------------------------- ----------------------------
Francis W. Cash David N. Chichester
/s/ JAMES M. ALLWIN /s/ THOMAS E. DOBROWSKI
---------------------------- ----------------------------
James M. Allwin Thomas E. Dobrowski
/s/ C. WILLIAM HOSLER /s/ WILLIAM M. LEWIS, JR.
---------------------------- ----------------------------
C. William Hosler William M. Lewis, Jr.
/s/ EDWARD D. POWERS /s/ JUDITH A. ROGALA
---------------------------- ----------------------------
Edward D. Powers Judith A. Rogala
/s/ OWEN D. THOMAS
----------------------------
Owen D. Thomas
