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HOST MARRIOTT, L.P.

RETIREMENT AND SAVINGS PLAN

(Amended and Restated)

 

Effective January 1, 2004, as amended May 20, 2004

 

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HOST MARRIOTT, L.P.

 

RETIREMENT AND SAVINGS PLAN

 

PREAMBLE

 

WHEREAS, Host Marriott, L.P. has entered into the Employee Benefits and Other
Employment Matters Allocation Agreement between Host Marriott Corporation, Host
Marriott, L.P. and Crestline Capital Corporation (the “Agreement”) in connection
with the distribution of outstanding common shares of the Company (the
“Distribution”);

 

WHEREAS, pursuant to the Agreement, Host Marriott, L.P. assumed sponsorship of
the Host Marriott Corporation (HMC) Retirement and Savings Plan (the “Plan”);

 

WHEREAS, Host Marriott, L.P. amended and restated the Plan, effective as of
January 31, 2002, to reflect certain provisions of the Economic Growth and Tax
Relief Reconciliation Act of 2001;

 

NOW, THEREFORE, Host Marriott, L.P. hereby amends and restates the Host Marriott
Corporation (HMC) Retirement and Savings Plan to reflect certain additional
changes in the tax laws. This amendment is intended as good faith compliance
with the requirements of the Code and ERISA and is to be construed in accordance
with the Code and ERISA and guidance issued thereunder. Except as otherwise
provided, this amendment shall be effective as of January 1, 2004.

 

This amendment shall supersede the provisions of the Plan to the extent those
provisions are inconsistent with the provisions of its various amendments.

 

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TABLE OF CONTENTS

 

               Page

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ARTICLE I.      DEFINITIONS    1 1.1   

“Account”

   1 1.2   

“Actual Contribution Percentage”

   1 1.3   

“Actual Deferral Percentage”

   1 1.4   

“Additional After-tax Savings”

   1 1.5   

“Additions”

   1 1.6   

“Administrative Expenses”

   1 1.7   

“Affiliated Company”

   1 1.8   

“After-tax Savings”

   1 1.9   

“After-tax Savings Account”

   1 1.10   

“Allocable Portion”

   1 1.11   

“Allocation Agreement”

   2 1.12   

“Alternate Payee”

   2 1.13   

“Annuity Starting Date”

   2 1.14   

“Authorized Leave of Absence”

   2 1.15   

“Basic After-tax Savings”

   2 1.16   

“Beneficiary”

   2 1.17   

“Board of Directors”

   2 1.18   

“Code”

   2 1.19   

“Combined Basic Savings”

   2 1.20   

“Committee”

   2 1.21   

“Company”

   2 1.22   

“Company Contribution Account”

   2 1.23   

“Compensation”

   3 1.24   

“Default”

   3 1.25   

“Distributee”

   3 1.26   

“Effective Date”

   4 1.27   

“Eligible Rollover Distribution”

   4 1.28   

“Eligible Retirement Plan”

   4 1.29   

“Employee”

   4 1.30   

“Entry Date”

   5 1.31   

“ERISA”

   5 1.32   

“Fiduciary”

   5 1.33   

“Fiscal Year”

   5 1.34   

“Flexible Compensation”

   5 1.35   

“FLSA”

   5 1.36   

“Fund”

   5 1.37   

“Hardship”

   5 1.38   

“Highly Compensated Employee”

   6 1.39   

“Hire Date”

   6 1.40   

“Host Marriott L.P.”

   6

 

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1.41   

“Investment Expenses”

   6 1.42   

“Maximum Permissible Amounts”

   6 1.43   

“Month”

   6 1.44   

“Month of Credit”

   6 1.45   

“Named Fiduciary”

   7 1.46   

“Participant”

   7     

(a)

  

“Former Participant”

   7     

(b)

  

“Terminated Participant”

   7     

(c)

  

“Retired Participant”

   7     

(d)

  

“Disabled Participant”

   7     

(e)

  

“Deceased Participant”

   7 1.47   

“Participating Company”

   7 1.48   

“Permanent Disability”

   7 1.49   

“Period of Severance”

   7 1.50   

“Plan”

   7 1.51   

“Plan Administrator”

   7 1.52   

“Plan Year”

   8 1.53   

“Predecessor Company”

   8 1.54   

“Prior Plan”

   8 1.55   

“Pro Rata Share of Administrative Expenses”

   8 1.56   

“Qualified Domestic Relations Order”

   8 1.57   

“Qualified Joint and Survivor Annuity”

   8 1.58   

“Qualifying Employer Real Property”

   8 1.59   

“Qualifying Employer Securities”

   8 1.60   

“Reemployment Date”

   8 1.61   

“Required Beginning Date”

   8 1.62   

“Section 401(k) Contribution”

   9 1.63   

“Section 401(k) Contribution Account”

   9 1.64   

“Separation Date”

   9 1.65   

“Service”

   9 1.66   

“Spousal Consent”

   10 1.67   

“Spouse” or “Surviving Spouse”

   10 1.68   

“Subaccount”

   10 1.69   

“Subsidiary” or “Affiliated Company”

   10 1.70   

“Trustees”

   10 1.71   

“Trust Agreement”

   10 1.72   

“Trust Fund”

   10 1.73   

“Valuation Date”

   11 ARTICLE II.      ELIGIBILITY AND PARTICIPATION    12 2.1   

Eligibility and Participation

   12     

(a)

  

Eligibility

   12     

(b)

  

Commencement of Participation

   12     

(c)

  

Continued Participation

   12     

(d)

  

Participation Voluntary

   12

 

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2.2   

Reemployment of Employee

   12 2.3   

Termination of Plan Participation

   12 2.4   

Readmission of Former Participant

   12 2.5   

Participation During Authorized Leave of Absence or During Employment by
Subsidiary That Has Not Joined Plan

   12 2.6   

Treatment of Participants Who Cease Being Employees Pursuant to Section 1.29

   13 ARTICLE III.      COMPANY CONTRIBUTION    14 3.1   

Amount of Contribution

   14 3.2   

Time of Payment of Contributions

   14 3.3   

Form of Payment of Contributions

   14 3.4   

Return of Contributions to Company

   15 ARTICLE IV.      PARTICIPANTS’ AFTER-TAX SAVINGS    16 4.1   

Participant After-tax Savings

   16 4.2   

Amount of After-tax Savings

   16 4.3   

Payroll Deduction

   16 4.4   

Change in Rate of After-tax Savings

   16 4.5   

Payment to Trustees

   16 4.6   

Investment of Participants’ After-tax Savings

   16 4.7   

In-Service Withdrawal of After-tax Savings

   16 4.8   

Effect of Termination of Plan or Discontinuance of After-tax Contributions

   16 ARTICLE V.      SECTION 401(k) CONTRIBUTIONS    17 5.1   

Designation of Flexible Compensation

   17 5.2   

Section 401(k) Contributions

   17 5.3   

Election Rules

   17     

(a)

  

Method of Election

   17     

(b)

  

Effective Date of Election

   17     

(c)

  

Revocation or Amendment

   17 5.4   

Compensation Reduction

   17 5.5   

Limitations on Section 401(k) Contributions

   18 5.6   

Actual Deferral Percentage Tests

   18 5.7   

Recharacterization of Certain Section 401(k) Contributions

   18 5.8   

Coordination of After-tax Savings and Section 401(k) Contributions

   18 5.9   

Payment to Trustees

   19 5.10   

Distribution of Section 401(k) Contributions

   19     

(a)

  

Restrictions on Distributions

   19     

(b)

  

In-Service Withdrawal of Section 401(k) Contributions

   19 5.11   

Effect of Termination of Plan or Discontinuance of Section 401(k) Contributions

   19 5.12   

Catch-up Contributions

   19

 

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5.13   

Contribution Limitation

   20 ARTICLE VI.      ALLOCATION OF CONTRIBUTIONS AND NET INCOME AMONG
PARTICIPANTS    21 6.1   

Maintenance of Separate Accounts

   21 6.2   

Allocation to After-tax Savings Accounts

   21 6.3   

Allocation of 401(k) Contribution

   21 6.4   

Allocation of Company Contribution

   21 6.5(a)   

Limitation on After-tax Savings and Company Contributions

   22     

(b)

  

Multiple Use of the Alternative Limitation

   22 6.6   

Correcting Excess Aggregate Contributions

   23 6.7   

Special Provision for Allocating Company Contributions

   23 6.8   

Allocation of Net Income

   24 6.9   

Use of Forfeitures

   24 6.10   

Use of Unclaimed Benefits

   24     

(a)

  

Method of Allocation

   24     

(b)

  

Reduction in Forfeitures

   24 6.11   

Allocation Limitations

   24     

(a)

  

Maximum Additions

   24     

(b)

  

Correction of Excess

   24     

(c)

  

Further Limitations on Additions

   25 6.12   

Transfers From Other Qualified Plans

   25     

(a)

  

Manner of Rollover or Direct Transfer

   25     

(b)

  

Governing Provisions

   25 ARTICLE VII.      VESTING    26 7.1   

Vesting of After-tax Savings Account

   26 7.2   

Vesting of Section 401(k) Contribution Account

   26 7.3   

Vesting of Company Contribution Account

   26     

(a)

  

Vesting Schedule

   26     

(b)

  

Service to be Credited Upon Resumption of Employment

   26     

(c)

  

Definition of “Service”

   26     

(d)

  

Automatic 100% Vesting

   27 ARTICLE VIII.      TERMINATION AND DISTRIBUTION UPON RETIREMENT DEATH OR
DISABILITY    28 8.1   

Retirement

   28 8.2   

Death

   28 8.3   

Disability

   28 8.4   

Valuation of Account Balance

   28 8.5   

Available Payment Options

   28

 

iv

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8.6   

Spousal Consent Rules

   29     

(a)

  

Revocation of an Annuity

   29     

(b)

  

Waiver of Life Annuity or Qualified Joint and Survivor Annuity

   29     

(c)

  

Written Explanation

   30     

(d)

  

Result of Effective Waiver

   30     

(e)

  

Spousal Consent

   30 8.7   

Distributions Upon Married Participant’s Death

   30 8.8   

General Distribution Requirements

   30     

(a)

  

Distributions to Participants and Beneficiaries

   30     

(b)

  

Commencement of Distribution

   32 8.9   

Form of Payment

   32 8.10   

Mandatory Cash-Out of Small Accounts

   32 8.11   

Account Balance

   32 8.12   

Special Rule for Rollovers Out of the Plan

   32 ARTICLE IX.      TERMINATION AND DISTRIBUTION UPON TERMINATION OF
EMPLOYMENT OTHER THAN FOR
RETIREMENT DEATH OR DISABILITY    33 9.1   

Terminated Participant

   33 9.2   

Distribution of After-tax Savings and Section 401(k) Contributions

   33 9.3   

Distribution of Vested Company Contribution Account

   33 9.4   

Mandatory Cash-Out of Small Accounts

   33 9.5   

Unvested Company Contributions

   34     

(a)

  

Forfeiture

   34     

(b)

  

Restoration of Forfeiture

   34     

(c)

  

Distribution Prior to Reemployment

   34 9.6   

Account Balance

   34 9.7   

Special Rule for Rollovers Out of the Plan

   34 ARTICLE X.      DISTRIBUTION DURING CONTINUED EMPLOYMENT    35 10.1   

Withdrawal of After-tax Savings

   35     

(a)

  

Withdrawal of Additional After-tax Savings

   35     

(b)

  

Withdrawal of Basic After-tax Savings

   35     

(c)

  

Valuation of After-tax Savings Account

   35     

(d)

  

Form of Payment

   35     

(e)

  

Taxation of Withdrawal

   35 10.2   

Withdrawal of Section 401(k) Contribution

   35 10.3   

Withdrawal of Vested Company Contribution Account

   35 10.4   

Readmission of Former Participant to Plan

   35 10.5   

Distributions Upon Attainment of Age 59-1/2

   35 10.6   

Account Balance

   36 10.7   

Hardship Withdrawals

   36     

(a)

  

Terms of Hardship Withdrawals

   36     

(b)

  

Restrictions

   36

 

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(c)

  

Committee Guidelines and Determination

   36 10.8   

Special Rule for Rollovers Out of the Plan

   36 ARTICLE XI.      LOANS TO PARTICIPANTS    37 11.1   

General Provisions

   37 11.2   

Maximum Loan Amount

   37 11.3   

Minimum Loan Amount

   37 11.4   

Repayment Period

   37 11.5   

Terms and Conditions

   37 11.6   

Nondiscrimination

   38 11.7   

Offset of Account Balance

   38 11.8   

Default

   38 ARTICLE XII.      BENEFICIARIES    40 12.1   

Designation of Beneficiary

   40 12.2   

Manner of Designation

   40 12.3   

Absence of Valid Designation of Beneficiary

   40 12.4   

Beneficiary Bound by Plan Provisions

   40 ARTICLE XIII.      QUALIFIED DOMESTIC RELATIONS ORDERS    41 13.1   

Governing Provisions

   41 ARTICLE XIV.      PARTICIPANT’S DIRECTED INVESTMENTS    42 14.1   

Election by Participants

   42 14.2   

Election Rules

   42     

(a)

  

Election to be in Writing

   42     

(b)

  

Effective Date of Election

   42     

(c)

  

Revocation of Election

   42     

(d)

  

Change in Election

   42     

(e)

  

Default Election

   42 14.3   

Transfer Date

   43 14.4   

Confirmation

   43 14.5   

Subdivision of Accounts

   43     

(a)

  

Establishment of Subaccounts

   43     

(b)

   Allocation of After-tax Savings, Section 401(k) Contributions, Company
Contributions and Forfeitures Among Subaccounts    43 14.6   

Investment Funds

   43     

(a)

  

Committee’s Responsibility for Funds

   43     

(b)

  

Investment Policy of Funds

   43     

(c)

  

Funds

   44

 

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14.7   

Voting Rights

   44 14.8   

Allocation of Income of Funds

   44 14.9   

Investment Authority of Former Employees

   45 14.10   

Investment for the Benefit of Incompetents

   45 14.11   

Rules of Committee

   45 ARTICLE XV.      PLAN FIDUCIARIES    46 15.1   

Plan Fiduciaries

   46     

(a)

  

Named Fiduciary

   46     

(b)

  

Investment Committee

   46     

(c)

  

Trustees

   46 15.2   

Fiduciary Duty

   46 15.3   

Agents and Advisors

   46     

(a)

  

Employment of Agents

   46     

(b)

  

Delegation to Agents and Plan Administrator

   47     

(c)

  

Appointment of Investment Manager

   47 15.4   

Administrative Action

   47     

(a)

  

Action by Majority

   47     

(b)

  

Right to Vote

   47     

(c)

  

Authority to Execute Documents

   47 15.5   

Liabilities and Indemnifications

   47     

(a)

  

Liability of Fiduciaries

   47     

(b)

  

Indemnity by Company

   48 15.6   

Plan Expenses and Taxes

   48     

(a)

  

Plan Expenses

   48     

(b)

  

Taxes

   48 15.7   

Records and Financial Reporting

   48     

(a)

  

Book of Account

   48     

(b)

  

Financial Reporting Under ERISA

   48 15.8   

Compliance with ERISA and Code

   48 15.9   

Prohibited Transactions

   49 15.10   

Foreign Assets

   49 15.11   

Exclusive Benefit of Trust Fund

   49 15.12   

Board of Directors Resolution

   49 ARTICLE XVI.      PLAN ADMINISTRATION    50 16.1   

Administration of the Plan

   50     

(a)

  

Authority to Administer

   50     

(b)

  

Delegation of Authority to Plan Administrator

   50     

(c)

  

Finality of Decision

   50 16.2   

Claims

   50     

(a)

  

Claims for Benefits

   50     

(b)

  

Notice of Claim Denied

   50

 

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ARTICLE XVII.      PARTICIPATING COMPANY WITHDRAWAL FROM PLAN; TERMINATION OR
MERGER OF THE PLAN    51 17.1   

Voluntary Withdrawal from Plan

   51     

(a)

  

Withdrawal By Participating Company

   51     

(b)

  

Segregation of Trust Assets Upon Withdrawal

   51     

(c)

  

Exclusive Benefit of Participants

   51     

(d)

  

Applicability of Withdrawal Provisions

   51 17.2   

Amendment of Plan

   51 17.3   

Voluntary Termination of Plan

   52     

(a)

  

Right to Terminate Plan

   52     

(b)

  

Merger or Consolidation of Plan and Trust

   52     

(c)

  

Termination of Plan and Trust Fund

   52 17.4   

Discontinuance of Contributions

   53 17.5   

Rights to Benefits Upon Termination of Plan or Complete Discontinuance of
Contributions

   53 ARTICLE XVIII.      ELECTION TO PARTICIPATE BY SUBSIDIARIES    54 18.1   

Consent Required for Subsidiaries to Join Plan

   54 ARTICLE XIX.      MISCELLANEOUS PROVISIONS    55 19.1   

Status of Employment

   55 19.2   

Liability of Company

   55 19.3   

Information

   55     

(a)

  

Supplied by Named Fiduciary, the Committee or Trustees

   55     

(b)

  

Supplied by Company

   55 19.4   

Provisions of Plan to Control

   55 19.5   

Payment for Benefit of Incompetent

   55 19.6   

Account to be Charged Upon Payment

   55 19.7   

Tax Qualification of Plan

   56 19.8   

Deductibility of Company Contributions

   56 19.9   

Restriction on Alienation or Assignment

   56 19.10   

Unclaimed Benefits

   56 19.11   

Recovery of Plan Benefits Payment Made by Mistake

   56 19.12   

Bonding

   56 19.13   

Titles and Captions

   57 19.14   

Execution of Counterparts

   57 19.15   

Governing Law

   57 19.16   

Separability

   57 19.17   

Supplements and Appendices

   57 19.18   

Military Service

   57 19.19   

Employer Securities

   57

 

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ARTICLE XX.      TOP HEAVY PROVISIONS    58 20.1   

Determination of Top Heavy Status

   58 20.2   

Definitions

   58     

(a)

  

“Aggregation Group”

   58     

(b)

  

“Determination Date”

   58     

(c)

  

“Section 401 Plan”

   58     

(d)

  

“Top Heavy Group”

   58     

(e)

  

“Valuation Date”

   58 20.3   

Requirements if Plan is a Top Heavy Plan

   59 20.4   

Applicability of Top-Heavy Rules

   59

 

ix

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ARTICLE I.

DEFINITIONS

 

When used in this instrument, the following words and phrases have the indicated
meanings except where the contrary is expressly stated:

 

1.1 “Account” shall have the meaning set forth in Section 6.1.

 

1.2 “Actual Contribution Percentage” means, for a given Plan Year, the average
of the ratios, calculated separately for each Participant in a group, of (a) the
sum of After-tax Savings credited to the Participant’s After-tax Savings Account
and Company contributions and forfeitures allocable to the Participant’s Company
Contribution Account for the Plan Year to (b) the Participant’s Compensation for
such Plan Year.

 

1.3 “Actual Deferral Percentage” means, for a given Plan Year, the average of
the ratios, calculated separately for each Participant in a group, of (a) the
Section 401(k) Contributions made on behalf of such Participant by the Company
for the Plan Year to (b) the Participant’s Compensation for such Plan Year.

 

1.4 “Additional After-tax Savings” means After-tax Savings not included in
Combined Basic Savings for a payroll period.

 

1.5 “Additions” means, with respect to each Participant for any Fiscal Year, the
total of (a) the Company contributions and forfeitures allocated for the Fiscal
Year to the Participant’s Company Contribution Account, plus (b) Section 401(k)
Contributions allocated for the Fiscal Year to the Participant’s Section 401(k)
Contributions Account, plus (c) the After-tax Savings allocated for the Fiscal
Year to the Participant’s After-tax Savings Account.

 

1.6 “Administrative Expenses” means the administrative expenses described in
Section 15.6(a).

 

1.7 “Affiliated Company” means a “Subsidiary”, as defined in Section 1.69.

 

1.8 “After-tax Savings” means the After-tax savings deposited into the Trust
Fund by a Participant in accordance with Article IV.

 

1.9 “After-tax Savings Account” shall have the meaning set forth in Section
6.1(a).

 

1.10 “Allocable Portion” means, for purposes of Section 11.2, the lesser of: (a)
fifty percent (50%) of the Participant’s vested Account balance; or (b) $50,000,
reduced by the excess of (1) the highest outstanding balance of any previous
loan from the Plan and any other plans of the Company or a Subsidiary during the
one-year period ending on the day before the date on which the current loan is
made over (2) the outstanding balance of any previous loan from the Plan and any
other plans of the Company or a Subsidiary on the date on which the current loan
is made.

 

A-1

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1.11 “Allocation Agreement” means the Employee Benefits & Other Employment
Matters Allocation Agreement entered into by and between Host Marriott
Corporation, Host Marriott, L.P. and Crestline Capital Corporation.

 

1.12 “Alternate Payee” means any Spouse, former Spouse, child or other dependent
of a Participant who is entitled under a Qualified Domestic Relations Order to
receive all, or part of, the benefits payable to that Participant under the
Plan.

 

1.13 “Annuity Starting Date” means the first day of the first period for which
an amount is received as an annuity by reason of retirement or disability.

 

1.14 “Authorized Leave of Absence” means any absence authorized by the Company
under the Company’s standard personnel practices provided that the Employee or
Participant returns within the period of authorized absence. An absence due to
service in the Armed Forces of the United States shall be considered an
Authorized Leave of Absence provided that the absence is caused by war or other
emergency, or provided that the Employee or Participant is required to serve
under the laws of conscription in time of peace, and further provided that the
Employee or Participant returns to employment with the Company within the period
provided by law. Except for service in the Armed Forces of the United States in
accordance with the preceding sentence, an Authorized Leave of Absence may not
extend beyond two (2) years.

 

1.15 “Basic After-tax Savings” means After-tax Savings included in Combined
Basic Savings for a payroll period.

 

1.16 “Beneficiary” means the person or persons designated as a beneficiary
pursuant to Article XII.

 

1.17 “Board of Directors” means the Board of Directors of Host Marriott
Corporation, a Delaware corporation and the General Partner of Host Marriott,
L.P.

 

1.18 “Code” means the Internal Revenue Code of 1986, as amended, or any
successor statute, including the regulations issued thereunder.

 

1.19 “Combined Basic Savings” means the sum of a Participant’s After-tax Savings
and Section 401(k) Contributions for each payroll period, provided that such sum
shall include only an amount up to six percent (6%) of Compensation for each
payroll period. If the sum of a Participant’s After-tax Savings and Section
401(k) contributions for a payroll period exceed six percent (6%), the
Participant’s 401(k) contributions shall be included in Combined Basic Savings
before After-tax Savings.

 

1.20 “Committee” means the Investment Committee appointed by the Company
pursuant to Section 15.1(b).

 

1.21 “Company” means Host Marriott, L.P. and any affiliate or Subsidiary that
elects to join the Plan with the consent of the Board of Directors.

 

1.22 “Company Contribution Account” shall have the meaning set forth in Section
6.1 (c).

 

A-2

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1.23 “Compensation” means:

 

(a) Except as hereinafter specified, (1) earned income, wages, salary, overtime,
cash bonus, commissions, annual leave, sick leave and holiday pay, paid by the
Company to an Employee, and (2) gratuities reported by the Employee to the
Company and the Internal Revenue Service, all without regard for any election
under Article V or any elections made by the Participant under any plan
maintained by the Company pursuant to Section 125 of the Code, but excluding any
and all other forms of compensation. Notwithstanding the foregoing, Compensation
taken into account for each Employee for a Plan Year shall not exceed Two
Hundred Thousand Dollars ($200,000) or such other amount as the United States
Secretary of Treasury may designate under Section 401(a)(17) of the Code.

 

(b) For purposes of the limitation on contributions and benefits under Section
415 of the Code as set forth in Section 6.11, a Participant’s wages, salaries,
and fees for professional services, and other amounts received for personal
services actually rendered in the course of employment with the Company to the
extent that the amounts are includable in gross income (including, but not
limited to, commissions, gratuities reported by the Employee to the Company and
the Internal Revenue Service, bonuses, fringe benefits, reimbursements or other
expenses allowable under a non-accountable plan (as described in Section
1.62-2(c) of the Treasury Regulations) annual leave, sick leave and holiday pay)
and including amounts contributed by the Company pursuant to a salary reduction
agreement and which are not includable in the gross income of the Participant
under Sections 125, 132 (f)(4), 401(k), 402(g)(3), 402(h)(1)(B), 403(b) or 457
of the Code, and excluding the following:

 

(1) Company contributions to a plan of deferred compensation which (except as
provided above with respect to Sections 125, 402(g)(3) and 402(h)(1)(B) of the
Code) are not included in the Employee’s gross income for the taxable year in
which contributed, or any distribution from a plan of deferred compensation;

 

(2) Amounts realized from the exercise of a nonqualified stock option, or when
restricted stock (or property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture; and

 

(3) Amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option.

 

1.24 “Default” includes: (a) a failure to pay any principal or interest when due
on a loan provided pursuant to Section 11.1 that continues beyond the end of the
calendar quarter following the calendar quarter in which the payment of
principal and interest was due shall constitute a default of such loan; (b) a
failure by a terminated Participant to repay the entire outstanding balance of a
loan prior to the end of the calendar quarter following the calendar quarter in
which the Participant terminated employment with the Company, or (c) any other
uniform and nondiscriminatory written standards adopted by the Committee as to
what constitutes default.

 

1.25 “Distributee” means a Participant, Former Participant, Retired Participant,
Disabled Participant, the Surviving Spouse of a Deceased Participant, and an
Alternate Payee.

 

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1.26 “Effective Date” means January 1, 2004.

 

1.27 “Eligible Rollover Distribution” means any distribution of all or a portion
of the Distributee’s Account balance, except that an Eligible Rollover
Distribution does not include (a) any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually) made
for the life (or 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 (10) years or more, (b) any
distribution to the extent such distribution is required under Section 401(a)(9)
of the Code, and (c) the portion of any distribution that is not includable in
gross income (determined without regard to the exclusion for net unrealized
appreciation with respect to Company securities). This definition shall not
apply to amounts distributed due to hardships as provided in Section 10.7 of the
Plan. For purposes of the direct rollover provisions in Sections 6.12 and 8.12
of the Plan, a portion of a distribution shall not fail to be an eligible
rollover distribution merely because the portion consists of After-tax employee
contributions, which are not includable in gross income. However, such portion
may be transferred only to an individual retirement account or annuity described
in section 408(a) or (b) of the Code, or to a qualified defined contribution
plan described in section 401(a) or 403(a) of the Code that agrees to separately
account for amounts so transferred, including separately accounting for the
portion of such distribution which is includable in gross income and the portion
of such distribution which is not so includable.

 

1.28 “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), a qualified trust (described in Section 401(a) of the
Code), that accepts the Distributee’s Eligible Rollover Distribution, an annuity
contract described in Section 403(b) of the Code and an eligible plan under
Section 457(b) of the Code which is maintained by a state, political subdivision
of a state, or any agency or instrumentality of a state, and which agrees to
separately account for amounts transferred into such a plan from this plan. In
the case of an Eligible Rollover Distribution to the Spouse, this definition of
“Eligible Retirement Plan” shall apply.

 

1.29 “Employee” means any person classified by a Participating Company as an
“employee” and employed by a Participating Company other than: (a) a person who
is covered by a collective bargaining agreement, if there is evidence to show
that retirement benefits were the subject of good faith bargaining between a
Participating Company and the employee representatives with whom such agreement
was entered; (b) a nonresident alien who receives no earned income (within the
meaning of Section 911(d)(2) of the Code) from a Participating Company which
constitutes income from sources within the United States (within the meaning of
Section 861(a)(3) of the Code); (c) a participant in a profit sharing plan,
pension plan or other retirement plan (other than the Plan, the Host Marriott,
L.P. Executive Deferred Compensation Plan or the Host Marriott Corporation and
Host Marriott, L.P. Comprehensive Stock and Cash Incentive Plan or the Host
Marriott Corporation Non-Employee Directors’ Deferred Stock Compensation Plan)
maintained by Host Marriott Corporation or Host Marriott, L.P. or an affiliate,
whether or not the plan or the trust of such plan is intended to qualify under
Section 401 of the Code; (d) a leased employee (within the meaning of Section
414(n) of the Code); (e) an independent contractor; or (f) any other individual
who is not classified by the Participating

 

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Company as an employee, regardless of whether such leased employee, independent
contractor or other individual is later determined to be common law employee.

 

1.30 “Entry Date” means the first day of the four week accounting period of the
Company immediately following receipt by the Plan Administrator of an
application for admission to the Plan in writing, or in such other form
authorized by the Plan Administrator; provided, however, that Employees who were
employed by Host Marriott Corporation on the day immediately prior to the
Effective Date shall be eligible to participate in the Plan on the Effective
Date. The Board of Directors may, with respect to persons who become Employees
by virtue of having been employed by any business entity the stock or
substantially all of the assets of which are acquired by Host Marriott, L.P. or
any affiliate or Subsidiary or the management of which is assumed by the
Company, establish by written resolution as a special Entry Date, solely for
such Employees, the date of such acquisition or assumption of management.

 

1.31 “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

 

1.32 “Fiduciary” means any person who (a) exercises any discretionary authority
or discretionary control respecting management of the Plan or exercises any
authority or control respecting management or disposition of the Plan’s assets;
(b) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan, or has any
authority or responsibility to do so; or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan. The term
“Fiduciary” includes the Named Fiduciary, the Trustees and any person to whom
fiduciary responsibilities have been delegated pursuant to Section 15.3.

 

1.33 “Fiscal Year” means the calendar year. The Fiscal Year shall be the
“limitation year” of the Plan for purposes of the limitation on contributions
and benefits under Section 415 of the Code, or any successor provision thereto.

 

1.34 “Flexible Compensation” shall have the meaning set forth in Section 5.1.

 

1.35 “FLSA” means the Fair Labor Standards Act, as amended from time to time.

 

1.36 “Fund” means any of the separate funds in which Participants’ Accounts may
be placed and which are allocated and invested in accordance with Article XIV.

 

1.37 “Hardship” means the existence of an immediate and heavy financial need of
the Participant. A need exists if it is necessary for the following:

 

(a) expenses for medical care previously incurred by the Participant, his spouse
or any of his dependents or necessary for these persons to obtain medical care
within the limits of Section 213(d) of the Code;

 

(b) purchase (excluding mortgage payments) of a principal residence for the
Participant;

 

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(c) Payment of tuition, related education fees and room and board for the next
12 months of post-secondary education for the Participant, his spouse, children
or dependents;

 

(d) Payment to prevent the eviction of the Participant from his principal
residence or foreclosure on the mortgage of the Participant’s principal
residence; and

 

(e) Any other event determined by the Commissioner of Internal Revenue.

 

1.38 “Highly Compensated Employee” means any Employee or former Employee who
performs service for a Participating Company during the Plan Year and who (i)
for the prior Plan Year received Compensation from the Participating Company as
determined for purposes of Section 415 of the Code in excess of $85,000 and was
in the “top-paid group,” as defined in Section 414(q) of the Code (as adjusted
pursuant to Code Section 415(d)); or (ii) during the Plan Year or the prior Plan
Year was a 5% owner (as defined in Code Section 416(I)(1)).

 

1.39 “Hire Date” means, for any Employee, the date on which he first becomes
entitled to credit for an hour for which he is directly or indirectly paid or
entitled to be paid by the Company or a Subsidiary for the performance of
employment services.

 

1.40 “Host Marriott L.P.” means Host Marriott, L.P., a Delaware limited
partnership, or any successor thereto by merger, consolidation or the
acquisition of substantially all of the assets and business thereof.

 

1.41 “Investment Expenses” means all expenses which under generally accepted
accounting principles would be classified as investment expenses, including,
without limitation, investment manager’s or advisor’s fees and expenses,
custodial fees, fees of broker-dealers for effecting investment transactions or
rendering investment advice, expenses relating to the making of investments and
expenses relating to the recovery of any investment in a bankrupt or insolvent
entity.

 

1.42 “Maximum Permissible Amounts” means the lesser of:

 

(a) $40,000, or such higher amount to which such amount may be adjusted or,
pursuant to Section 415(f) of the Code, to implement special rules applicable to
combining more than one defined contribution plan as a single plan; or

 

(b) Twenty-five percent (25%) of the Participant’s Compensation as provided in
Section 1.23(b).

 

1.43 “Month” means any calendar month.

 

1.44 “Month of Credit” means any Month during the entire period of which an
Employee is employed by the Company. For purposes of the foregoing, a Month of
Credit shall be deemed to commence on the day of hire and end on the close of
business on the day preceding the next month’s anniversary thereof. Months of
Credit are cumulative and need not be successive. Notwithstanding any other
provision to the contrary, a Participant’s Months of Credit under the Plan shall
include Months of Credit, if any, credited to such Participant under the Prior
Plan immediately before the Effective Date.

 

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1.45 “Named Fiduciary” means the Committee in its role as named fiduciary of the
Plan as set forth in Section 15.1(a).

 

1.46 “Participant” means an Employee of the Company who has been admitted to
participation in this Plan in accordance with Article II. As appropriate to the
context a “Participant” may include one or more of the following
sub-definitions.

 

(a) “Former Participant” means any present Employee of the Company who, after
having been a Participant, ceases to participate in the Plan.

 

(b) “Terminated Participant” means any prior Employee of the Company who, after
having been a Participant, terminated his employment other than by retirement,
death or Permanent Disability, and has any vested balance in the Plan.

 

(c) “Retired Participant” means any Participant who retires from employment in
accordance with Section 8.1 and who has any vested balance in the Plan.

 

(d) “Disabled Participant” means any Participant who terminates from employment
as a result of a Permanent Disability and who has any vested balance in the
Plan.

 

(e) “Deceased Participant” means any Participant who terminates employment by
reason of death and who leaves any vested balance in the Plan.

 

1.47 “Participating Company” means Host Marriott, L.P. or any affiliate or
Subsidiary that has elected to join the Plan with the consent of the Host
Marriott Corporation’s Board of Directors. All of the Participating Companies
constitute the “Company”, as defined in Section 1.21.

 

1.48 “Permanent Disability” means that the Participant, as a result of a
disability, will be prevented on a permanent basis from engaging in any
occupation for which he is reasonably qualified by education, training or
experience as certified by a competent medical authority designated by the Named
Fiduciary to make such determination. The foregoing disability shall be
attributable to the permanent loss or loss of use of a member or function of the
body, or to the permanent disfigurement of the Participant.

 

The determination of the existence of a Permanent Disability shall be made by
the Plan Administrator and shall be final and binding upon the Participant and
all other parties.

 

1.49 “Period of Severance” means the period of time commencing on the Separation
Date and ending on the Participant’s Reemployment Date.

 

1.50 “Plan” means the Host Marriott, L.P. Retirement and Savings Plan, including
any amendments thereto.

 

1.51 “Plan Administrator” means the person to whom the duties of Plan
Administrator are delegated pursuant to Section 15.3(b).

 

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1.52 “Plan Year” shall mean, for Plan Years beginning after the Effective Date,
the same meaning as “Fiscal Year” in Section 1.33; for the Plan Year in which
the Effective Date occurs, the Plan Year shall mean January 4, 1998 through
December 31, 1998; for other Plan Years beginning before the Effective Date,
Plan Year shall mean the Fiscal Year of Host Marriott Corporation.

 

1.53 “Predecessor Company” means Host Marriott Corporation.

 

1.54 “Prior Plan” means the Host Marriott Corporation (HMC) Retirement and
Savings Plan and Trust, as in effect prior to the Effective Date.

 

1.55 “Pro Rata Share of Administrative Expenses” means the amount determined by
multiplying the Administrative Expenses of the Plan by a fraction, the numerator
of which is the total value of each Fund and the denominator of which is the
total aggregate value of all such Funds.

 

1.56 “Qualified Domestic Relations Order” or “QDRO” shall have the same meaning
as “qualified domestic relations order” under Section 414(p) of the Code and the
Treasury Regulations thereunder.

 

1.57 “Qualified Joint and Survivor Annuity” or “QJSA” means an annuity purchased
from a commercial insurance company with the Participant’s Account that pays a
benefit for the life of the Participant with a survivor annuity for the life of
the Participant’s Surviving Spouse in an amount elected by the Participant of
either fifty percent (50%) or one hundred percent (100%) of the amount being
paid to the Participant during his lifetime.

 

1.58 “Qualifying Employer Real Property” means parcels of real property (and
related personal property) which are leased to the Company or an Affiliated
Company (a) if a substantial number of the parcels are dispersed geographically;
and (b) if each parcel and the improvements thereon are suitable (or adaptable
without excessive cost) for more than one use.

 

1.59 “Qualifying Employer Securities” means (a) any stocks or other equity
securities issued by the Company or an Affiliated Company; or (b) any bonds,
debentures, notes or certificates or other evidences of indebtedness of the
Company or an Affiliated Company which are described in Section 503(e) of the
Code and Section 407(e) of ERISA.

 

1.60 “Reemployment Date” means, for any Employee, the first date following the
Employee’s Separation Date on which he first becomes entitled to credit for an
hour for which he is directly or indirectly paid or entitled to be paid by the
Company or a Subsidiary for the performance of employment duties.

 

1.61 “Required Beginning Date” means April 1 of the calendar year following the
calendar year in which the Participant attains age 70-1/2 or, if later, the
calendar year in which the Participant retires from the Company; provided,
however, that in the case of a Participant who is a 5% owner (as defined in Code
section 416), Required Beginning Date means April 1 of the calendar year
following the calendar year in which the Participant attains age 70-1/2; and
provided, further, that in the case of a Participant who attained age 70-1/2
before January 1, 1988, Required Beginning Date means the April 1 following the
later of the calendar year in

 

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which he (a) attained age 70-1/2; or (b) the sixtieth (60th) day following the
close of the Plan Year in which the Participant terminates employment with the
Company, provided such date is not later than April 1 of the calendar year
following the calendar year during which such termination occurs, unless he was
a five percent (5%) owner (as defined in Section 416 of the Code) of the Company
with respect to the Plan Year ending in the calendar year in which he attains
age 70-1/2, in which case, clause (b) shall not apply.

 

1.62 “Section 401(k) Contribution” shall have the meaning set forth in Section
5.2.

 

1.63 “Section 401(k) Contribution Account” shall have the meaning set forth in
Section 6.1(b).

 

1.64 “Separation Date” means the earlier of:

 

(a) Any date on which an Employee’s employment with the Company terminates by
reason of voluntary termination, discharge, retirement or death; or

 

(b) The first anniversary of the first date of a period in which the Employee
remains absent from active employment with the Company for some reason other
than voluntary termination, discharge, retirement, death, approved leave of
absence, or military service.

 

Provided, however, that, solely for the purpose of determining whether a Period
of Severance has occurred, if an Employee is absent from service beyond the
first anniversary of the first date of absence by reason of a “maternity or
paternity leave”, then the Separation Date of such Employee shall be the second
anniversary of the first date of such absence. For purposes of this Section,
“maternity or paternity leave” means termination of employment or absence from
work due to: (i) the pregnancy of the Participant, (ii) the birth of a child of
the Participant, (iii) the placement of a child in connection with the adoption
of the child by a Participant, or (iv) the caring for a Participant’s child
during the period immediately following the child’s birth or placement for
adoption. The Plan Administrator shall determine, under rules of uniform
application and based on information provided to the Plan Administrator by the
Participant, whether or not the Participant’s termination of employment or
absence from work is due to “maternity or paternity leave”.

 

1.65 “Service” means an Employee’s or a Participant’s period of employment with
the Company; the Predecessor Company prior to the Effective Date; as a leased
employee (within the meaning of Section 414(n) of the Code) unless the leased
employee is covered by a safe harbor plan described in Section 414(n)(5) of the
Code; any other employer that is required to be aggregated with the Company
under Section 414 of the Code, as determined in accordance with Article VII or
any employer that maintains a plan from which assets are transferred to this
Plan on behalf of the Employee or Participant in a transaction subject to
Section 414(1) of the Code. An Employee’s Service shall include any period of
employment with Crestline Capital Corporation if the Employee was employed by
the Company immediately after becoming employed by Crestline Capital
Corporation. Employment of an Employee or a Participant by any of the following
employers shall be treated as Service:

 

(a) A Subsidiary, both prior to and after becoming a Subsidiary, if such
Subsidiary has elected to join the Plan.

 

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(b) A Subsidiary, after becoming a Subsidiary, if such Subsidiary has not
elected to join the Plan.

 

In addition, the Board of Directors shall have the authority by adopting written
resolutions to recognize employment of an Employee or a Participant by any of
the following employers as Service:

 

(a) A Subsidiary, prior to becoming a Subsidiary, if such Subsidiary has not
elected to join the Plan.

 

(b) Any business entity substantially all of the assets of which are acquired by
Host Marriott, L.P. or any affiliate or Subsidiary or whose management is
assumed by the Company; provided that such recognition shall apply uniformly to
all employees of any such employer.

 

1.66 “Spousal Consent” means a Spouse’s written consent which acknowledges the
effect of the Participant’s election and is witnessed by a Plan representative
or notary public. Spousal Consent may be in the form of a specific consent,
general consent or limited general consent, as provided in Section 8.6(e).

 

1.67 “Spouse” or “Surviving Spouse” means the spouse or surviving spouse of the
Participant, provided that a former spouse will be treated as the spouse or
surviving spouse and a current spouse will not be treated as the spouse or
surviving spouse to the extent provided in a Qualified Domestic Relations Order.

 

1.68 “Subaccount” means the portion of a Participant’s Account placed in each
Fund pursuant to Article XIV.

 

1.69 “Subsidiary” or “Affiliated Company” means (a) a member of a controlled
group of corporations of which Host Marriott, L.P. is a member as determined in
accordance with Section 414(b) of the Code; or (b) an unincorporated trade or
business which is under common control by or with Host Marriott, L.P., as
determined in accordance with Section 414(c) of the Code. For purposes hereof, a
“controlled group of corporations” shall mean a controlled group of corporations
as defined in Section 1563(a) of the Code, determined without regard to Sections
1563(a)(4) and 1563(e)(3)(C) of the Code, except that, with respect to the
limitation on Annual Additions set forth in Section 6.11, instead of eighty
percent (80%), the applicable percentage shall be fifty percent (50%) wherever
such percentage appears in Section 1563(a)(1) of the Code.

 

1.70 “Trustees” means the corporate trustee or persons appointed as Trustee of
the Trust Fund and any successors.

 

1.71 “Trust Agreement” means the Agreement providing for the terms and
conditions under which the Trustee will hold and invest the Trust Fund.

 

1.72 “Trust Fund” means the assets of the Plan and Trust as the same shall exist
from time to time.

 

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1.73 “Valuation Date” means the last day of the Plan Year and such other dates
as of which the Plan Administrator values the interest of Participants in the
assets of the Trust Fund, such valuations being made in accordance with the
provisions of Section 6.8.

 

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ARTICLE II.

ELIGIBILITY AND PARTICIPATION

 

2.1 Eligibility and Participation.

 

(a) Eligibility. Any Employee shall be eligible to participate in the Plan
immediately on the Employee’s Hire Date.

 

(b) Commencement of Participation. Any Employee may commence participation in
the Plan on any Entry Date after the Employee’s Hire Date and shall be admitted
to the Plan on any such Entry Date if the Plan Administrator receives the
Employee’s written application for admission to the Plan.

 

(c) Continued Participation. Notwithstanding subsection (a), any person who was
a Participant or Former Participant in the Prior Plan on the day before the
Effective Date shall automatically become a Participant under this Plan on the
Effective Date, provided that such person is an Employee on the Effective Date.

 

(d) Participation Voluntary. Participation in the Plan shall be entirely
voluntary.

 

2.2 Reemployment of Employee. An Employee who terminates employment with the
Company and subsequently resumes employment with the Company shall become
eligible to participate in the Plan immediately upon again becoming an Employee
and may be admitted to the Plan on any Entry Date thereafter upon written
application in accordance with Section 2.1(b).

 

2.3 Termination of Plan Participation. A Participant may cease to participate in
the Plan during the Participant’s continued employment at any time by giving
written notice thereof to the Plan Administrator. Such notice shall be effective
to terminate participation upon its receipt by the Plan Administrator and such
Employee shall thereupon become a Former Participant.

 

2.4 Readmission of Former Participant. Any Former Participant may be readmitted
to the Plan as a Participant on any Entry Date upon written application in
accordance with Section 2.1(b); provided, however, that if any Former
Participant withdraws any portion of his Basic After-tax Savings pursuant to
Section 10.1, he shall not be eligible for readmission to the Plan until six (6)
months have elapsed from the date on which he became a Former Participant.

 

2.5 Participation During Authorized Leave of Absence or During Employment by
Subsidiary That Has Not Joined Plan. Participation in the Plan may continue
during periods of Authorized Leave of Absence, and periods during which a
Participant is employed by a Subsidiary, which has not elected to join the Plan.
However, the Participant may neither deposit savings in the Trust Fund nor share
in the allocation of the Company contribution during such periods. A Participant
on Authorized Leave of Absence who does not return to active employment with the
Company by the expiration of such Authorized Leave of Absence shall be treated
for the purposes of the Plan as having terminated employment pursuant to Section
9.1.

 

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2.6 Treatment of Participants Who Cease Being Employees Pursuant to Section
1.29. Notwithstanding the provisions of Section 2.5, any Participant who ceases
to be an Employee by reason of Section 1.29(a), (b), (d) or (e), or by becoming
employed by a Subsidiary which has not elected to join the Plan, or by becoming
a participant in a plan described in Section 1.29(c), shall be treated thereupon
as a Former Participant in accordance with the provisions of this Plan.

 

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ARTICLE III.

COMPANY CONTRIBUTION

 

3.1 Amount of Contribution. For each Fiscal Year or portion thereof, each
Participating Company shall make the following contributions to the Trust Fund:

 

(a) Section 401(k) Contributions, as provided by Article V;

 

(b) Effective May 20, 2004, a matching contribution on behalf of each
Participant in the amount of fifty percent (50%) of the Participant’s Combined
Basic Savings for each payroll period, but only if such Participant is an
employee on the last day of the quarter or such lesser period as determined by
the Committee or Plan Administrator; and

 

(c) Any additional contribution, if any, as determined in the absolute and sole
discretion of the Host Marriott Corporation Board of Directors or the Committee.

 

Notwithstanding anything to the contrary, in no event shall the amount
contributed by any Participating Company include an amount, if any, equal to the
amount of any “excess aggregate contributions” (as defined in Section
401(m)(6)(B) of the Code) for such year that would otherwise be allocable to
Participants who are Highly Compensated Employees, if such amounts were
contributed to the Plan.

 

In no event shall the amount of the contribution exceed the maximum amount
deductible by a Participating Company for the Fiscal Year with respect to which
the contribution is made under Section 404(a) of the Code or the corresponding
provision of any subsequent tax law.

 

Effective January 1, 2004, if as a result of Code Section 402(g) dollar
limitation on the amount of the annual Section 401(k) Contributions or the Code
Section 401(a)(17) dollar limitation on Compensation, the Participant does not
receive a total matching contribution pursuant to Section 3.1(b) under the
payroll matching procedure, an additional matching contribution shall be made on
the Participant’s behalf so that the Participant’s total matching contribution
is equal to 100% of the Participant’s Combined Basic Savings which does not
exceed 6% of the Participant’s Compensation for that Plan Year.

 

3.2 Time of Payment of Contributions. A Participating Company may pay its
contributions at such time or times and in such amount or amounts as it may deem
appropriate during the Fiscal Year for which each such contribution becomes due
and for such period thereafter during which payment thereof may be permitted as
a deduction for the previous Fiscal Year under the Code.

 

3.3 Form of Payment of Contributions. All payments of contributions shall be
made directly to the Trustees. Payments may be in cash, Qualifying Employer
Securities (including treasury stock or previously unissued stock of Host
Marriott Corporation), Qualifying Employer Real Property or in such other
property of any kind as the Named Fiduciary may authorize the Trustees to
accept, to the extent permitted by law. The value of any property other than
cash, which may be paid to the Trustees shall be its fair market value as of the
date of such payment, as determined by the Named Fiduciary, based on the report
of an independent appraiser.

 

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3.4 Return of Contributions to Company. Notwithstanding any other provisions of
this Plan, any contributions made by a Participating Company pursuant to Section
3.1 shall, to the extent permitted by Section 403(c) of ERISA, be returned to a
Participating Company if:

 

(a) The contributions are made as the result of a mistake of fact;

 

(b) A tax deduction claimed for the contributions pursuant to Section 404 of the
Code is denied to the Company by the Internal Revenue Service; or

 

(c) The IRS determines that the Plan is not tax-qualified under Section 401 of
the Code.

 

Notwithstanding the foregoing, however, no contributions may be returned to a
Participating Company under the above provisions later than one (1) year from
the date a mistaken contribution is made, a tax deduction for a contribution is
denied, or the IRS determines that the Plan is not tax-qualified, as the case
may be. Further, except as otherwise provided in this paragraph, the assets of
the Plan shall not inure to the benefit of the Company, and shall be held for
the exclusive purposes of providing benefits to Participants and Beneficiaries
and defraying reasonable expenses of administering the Plan.

 

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ARTICLE IV.

PARTICIPANTS’ AFTER-TAX SAVINGS

 

4.1 Participant After-tax Savings. Subject to the provisions of Section 4.2,
each Participant may deposit After-tax Savings into the Trust Fund.

 

4.2 Amount of After-tax Savings. Subject to the limitation provisions of Section
6.5, a Participant may deposit in the Trust Fund, specified in multiples of one
percent (1%), an amount, which is at least one percent (1%), but not more than
twenty percent (20%), of his Compensation paid for each payroll period. The
maximum amount of After-tax Savings is reduced by the amount of the
Participant’s 401(k) Contributions as provided in Section 5.8.

 

4.3 Payroll Deduction. Each Participant’s After-tax Savings shall be withheld by
the Company from Compensation paid such Participant for each payroll period.

 

4.4 Change in Rate of After-tax Savings. A Participant may change the rate of
his After-tax Savings to any other rate authorized by Section 4.2 at any time by
giving written notice to the Plan Administrator. Such notice shall be effective
as specified by the Committee. In addition, a Participant may discontinue his
After-tax Savings at any time by giving written notice to the Plan
Administrator. Such notice of discontinuation shall be effective as specified in
Section 2.3, unless the Participant has made an election pursuant to Section
5.2.

 

4.5 Payment to Trustees. The Participants’ After-tax Savings withheld shall be
paid to the Trustees by the Company on the earliest date on which such After-tax
Savings can reasonably be segregated from the Company’s general assets. A
statement showing the amount representing the After-tax Savings of each
Participant shall accompany each such payment.

 

4.6 Investment of Participants’ After-tax Savings. Subject to the Participant’s
right to direct investments, the Participant’s After-tax Savings shall be
commingled with other assets in the Trust Fund for investment purposes.

 

4.7 In-Service Withdrawal of After-tax Savings. A Participant may withdraw
After-tax Savings from his After-tax Savings Account as provided in Sections
10.1 and 10.5.

 

4.8 Effect of Termination of Plan or Discontinuance of After-tax Contributions.
In the event (a) the Plan is terminated or partially terminated with respect to
a Participating Company or particular group or class of Participants, or (b) the
Company or any Participating Company discontinues the making of After-tax
Contributions, the election made by any affected Participant under the
provisions of this Article IV shall be immediately null and void and of no
further effect, and no additional amounts of After-tax Savings shall be
contributed to the Trust Fund by the Company or the Participating Company.

 

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ARTICLE V.

SECTION 401(K) CONTRIBUTIONS

 

5.1 Designation of Flexible Compensation. The books and records of the Company
shall designate twenty percent (20%) of each Participant’s Compensation for each
payroll period as “Flexible Compensation.” Flexible Compensation shall for all
purposes, tax or otherwise, be treated as part of a Participant’s Compensation
and the designation of such amount shall be relevant only for purposes of this
Article V.

 

5.2 Section 401(k) Contributions. Subject to the terms and conditions of this
Article V, any Participant may, at any time and from time to time, elect to have
contributed to the Trust Fund out of his Flexible Compensation, specified in
multiples of one percent (1%), an amount which shall be designated a Section
401(k) Contribution and shall constitute a contribution to the Trust Fund by the
Company on behalf of the Participant under the provisions of Section 401(k) of
the Code.

 

5.3 Election Rules.

 

(a) Method of Election. The Committee shall determine the method by which an
election may be made pursuant to this Article V. Any such election method must
be consistent with the provisions of Section 401(k)(2) of the Code and (assuming
such consistency) may include either an affirmative election procedure whereby
Participants shall only be treated as having made an election upon written
direction of the Participants or a negative election procedure whereby
Participants shall be deemed to have made an election until and unless a
Participant files a written direction negating the election. Regardless of the
method of election determined by the Committee, Participants shall be given
prompt and adequate notice thereof and thus be afforded an appropriate
opportunity to exercise their rights under this Article V.

 

(b) Effective Date of Election. An election shall become effective (unless
previously revoked) upon the first day of the payroll period of the Company
immediately following receipt by the Plan Administrator of the election.

 

(c) Revocation or Amendment. An election may be made to change a Participant’s
rate of Section 401(k) Contributions to any other rate authorized under Section
5.2 at any time. Such election shall be made in the manner, and shall be
effective, as specified by the Committee. In addition, an election may be made
to discontinue future Section 401(k) Contributions at any time. Such election to
discontinue future contributions shall be effective as specified in Section 2.3,
unless the Participant is depositing After-tax Savings into the Trust Fund
pursuant to Section 4.2. Finally, the Plan Administrator shall have the right
and obligation to reduce a Participant’s rate of Section 401(k) Contribution to
any rate as necessary, from time to time, in order to assure compliance by this
Plan with the standards of Section 401(k)(3) of the Code.

 

5.4 Compensation Reduction. For each payroll period, a Participant’s
Compensation shall be reduced by the portion of a Participant’s Flexible
Compensation, which such Participant has elected to have contributed by the
Company to the Trust Fund as a Section 401(k) Contribution (or such lesser
amount determined by the Plan Administrator pursuant to Section 5.3(c)).

 

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A Participant’s Flexible Compensation for the payroll period in excess of such
amount shall be paid to the Participant as cash compensation for the period.

 

5.5 Limitations on Section 401(k) Contributions. Except as permitted under
Section 5.12 of the Plan and Section 414(v) of the Code, if applicable, the
annual addition that may be contributed or allocated to a participant’s account
under the plan for any limitation year shall not exceed the lesser of:

 

(a) Forty Thousand Dollars ($40,000) as adjusted for increases in the
cost-of-living under Section 415(d) of the Code;

 

(b) One Hundred percent (100%) of the participant’s compensation, within the
meaning of Section 415(c)(3) of the Code, for the limitation year.

 

(c) Such lesser amount which may be allowed in order to assure compliance by the
Plan with one of the Actual Deferral Percentage Tests set forth in Section 5.6.

 

Furthermore, the maximum amount of a Participant’s Section 401(k) Contributions
for a calendar year shall not exceed the amount in effect under Section
402(g)(5) for such calendar year.

 

5.6 Actual Deferral Percentage Tests. The Actual Deferral Percentage Test shall
be satisfied for a Plan Year if one of the following two tests is met for such
Plan Year:

 

(a) The Actual Deferral Percentage for the eligible Highly Compensated Employees
is not more than the Actual Deferral Percentage of all other eligible Employees
for the prior Plan Year multiplied by 1.25; or

 

(b) The Actual Deferral Percentage for the Highly Compensated Employees is not
more than the Actual Deferral Percentage of all other eligible Employees for the
prior Plan Year multiplied by 2.0, and the excess of the Actual Deferral
Percentage for the Highly Compensated Employees for the prior Plan Year over all
other eligible Employees for the prior Plan Year is not more than two percentage
points.

 

5.7 Recharacterization of Certain Section 401(k) Contributions. To the extent
that contributions made on behalf of a Participant pursuant to an election under
Section 5.2 by a Participant who is a Highly Compensated Employee would
otherwise cause the Plan to fail to comply with the Actual Deferral Percentage
Test set forth in Section 5.6, such contributions shall constitute After-tax
Savings by the Participant rather than Section 401(k) Contributions. Excess
contributions for a Plan Year shall be recharacterized as After-tax Savings on
the basis of the amount of contributions by, or on behalf of, each Highly
Compensated Employee starting with the Highly Compensated Employee having the
highest dollar amount.

 

5.8 Coordination of After-tax Savings and Section 401(k) Contributions. A
Section 401(k) Contribution is made in lieu of all or a portion of such
Participant’s After-tax Savings deposits into the Trust Fund under Section 4.2
of the Plan. Thus, the maximum After-tax Savings deposit which may be made by a
Participant under Section 4.2 during any Fiscal Year is

 

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equal to (a) the amount which may be made under Section 4.2 without regard to
this Section 5.8, less (b) the Section 401(k) Contribution made on behalf of the
Participant under Section 5.2.

 

5.9 Payment to Trustees. Section 401(k) Contributions shall be paid to the
Trustees by the Company on the earliest date on which such Section 401(k)
Contributions can reasonably be segregated from the Company’s general assets. A
statement showing the amount representing the Section 401(k) Contributions of
each Participant shall accompany each such payment.

 

5.10 Distribution of Section 401(k) Contributions.

 

(a) Restrictions on Distributions. Notwithstanding any provision of this Plan to
the contrary, a Participant’s Section 401(k) Contributions (and earnings
attributable thereto) shall not be distributable other than upon:

 

(1) The Participant’s severance from employment (within the meaning of Section
401(k)(2)(B) of the Code), death or Permanent Disability;

 

(2) The Participant’s attainment of age 59-1/2, or termination of participation
in the Plan after attaining age 59-1/2;

 

(3) The Participant’s Hardship; or

 

(4) The termination of the Plan by the Company without establishment or
maintenance of another defined contribution plan (other than an employee stock
ownership plan as defined in Section 4975(e)(7) of the Code).

 

Notwithstanding the foregoing, any distribution made pursuant to subsections
(a)(4) of this Section must meet the requirements of Section 410(k)(10) of the
Code.

 

(b) In-Service Withdrawal of Section 401(k) Contributions. Any Participant or
Former Participant who meets the requirements of subsection (a)(2) or (3) of
this Section may withdraw his Section 401(k) Contributions during the
Participant’s continued employment, as provided in Section 10.5 or Section 10.7,
as applicable.

 

5.11 Effect of Termination of Plan or Discontinuance of Section 401(k)
Contributions. In the event (a) the Plan is terminated or partially terminated
with respect to a Participating Company or particular group or class of
Participants, or (b) the Company or any Participating Company discontinues the
making of Section 401(k) Contributions, the election made by any affected
Participant under the provisions of this Article V shall be immediately null and
void and of no further effect, and no additional amounts of such Participant’s
Flexible Compensation shall be contributed to the Trust Fund by the Company or
the Participating Company.

 

5.12 Catch-up Contributions. All Participants who are eligible to make elective
deferrals under the Plan and who have attained age 50 before the close of the
Plan Year shall be eligible to make catch-up contributions in accordance with,
and subject to the limitations of, Section 414(v) of the Code. Such catch-up
contributions shall not be taken into account for purposes of the provisions of
the Plan implementing the required limitations of sections 402(g)

 

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and 415 of the Code. The Plan shall not be treated as failing to satisfy the
provisions of the Plan implementing the requirements of section 401(k)(3),
401(k)(11), 401(k)(12), 410(b), or 416 of the Code, as applicable, by reason of
the making of such catch-up contributions.

 

5.13 Contribution Limitation. No participant shall be permitted to have elective
deferrals made under this Plan, or any other qualified plan maintained by the
employer during any taxable year, in excess of the dollar limitation contained
in section 402(g) of the Code in effect for such taxable year, except to the
extent permitted under Section 5.12 of the Plan and section 414(v) of the Code,
if applicable.

 

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ARTICLE VI.

ALLOCATION OF CONTRIBUTIONS

AND NET INCOME AMONG PARTICIPANTS

 

6.1 Maintenance of Separate Accounts. The Plan Administrator shall maintain the
following accounts in the name of each person participating in the Plan:

 

(a) After-tax Savings Account (consisting of Participants’ After-tax Savings
pursuant to Article IV and any earnings or losses thereon);

 

(b) Section 401(k) Contribution Account (consisting of Section 401(k)
Contributions pursuant to Article V and any earnings or losses thereon); and

 

(c) Company Contribution Account (consisting of Company contributions under
Section 3.1(b) and (c), forfeitures and any earnings or losses thereon).

 

All of such separate accounts and the separate Fund Subaccounts, as established
pursuant to Section 14.5(a), shall in the aggregate constitute the Participant’s
Account.

 

6.2 Allocation to After-tax Savings Accounts. The After-tax Savings deposited by
a Participant pursuant to Section 4.2 shall be credited, as made, to the
Participant’s After-tax Savings Account.

 

6.3 Allocation of 401(k) Contribution. Section 401(k) Contributions made by the
Company on behalf of a Participant pursuant to Section V shall be credited, as
made, to the Participant’s Section 401(k) Contribution Account.

 

6.4 Allocation of Company Contribution. Subject to Section 6.7, Company
contributions shall be allocated as follows:

 

(a) Effective May 20, 2004, Company contributions pursuant to Section 3.1(b)
shall be credited as made pursuant to Section 3.2 to each Participant’s Company
Contribution Account if such Participant is an employee on the last day of the
quarter or such earlier date as determined by the Committee or Plan
Administrator; and

 

(b) Company contributions pursuant to Section 3.1(c) shall be allocated and
applied in the following order:

 

(1) To the restoration of forfeitures of Terminated Participants readmitted to
the Plan in accordance with Section 9.5(b) and unclaimed benefits previously
reallocated in accordance with Section 6.10, to the extent that current
forfeitures are insufficient to provide for such restoration, as provided in
Sections 6.9 and 6.10; and

 

(2) To the Company Contribution Accounts of all Participants who are Employees
of the Company on the day that the Board approves the Company Contribution made
pursuant to Section 3.1(c) and all Participants who become Retired, Disabled or
Deceased Participants during the Fiscal Year, based on the ratio that each such
Participant’s Combined Basic Savings for such Fiscal Year bears to the total
Combined Basic Savings of all such

 

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Participants for such Fiscal Year. The Company Contributions allocated to each
Participant’s Account shall be further allocated among such Participant’s Fund
Subaccounts in accordance with the provisions of Article XIV.

 

6.5 (a) Limitation on After-tax Savings and Company Contributions.
Notwithstanding any provisions of the Plan to the contrary, the Participant’s
After-tax Savings and Company contributions (including forfeitures used to
reduce contributions under Section 3.1(b) or (c) for a Plan Year must satisfy
the Actual Contribution Percentage Tests for such Plan Year. The Actual
Contribution Percentage Test shall be satisfied for a Plan Year if one of the
following two tests is met for such Plan Year:

 

(1) The Actual Contribution Percentage for the eligible Highly Compensated
Employees is not more than the Actual Contribution Percentage for the prior Plan
Year of all other eligible Employees multiplied by 1.25; or

 

(2) The Actual Contribution Percentage for the Highly Compensated Employees is
not more than the Actual Contribution Percentage for the prior Plan Year of all
other eligible Employees multiplied by 2.0, and the excess of the Actual
Contribution Percentage for the Highly Compensated Employees over all other
eligible Employees for the prior Plan Year is not more than two percentage
points.

 

(b) Multiple Use of the Alternative Limitation. Notwithstanding the above, if
both Section 5.6(a) and subsection (a)(1) of this Section are not satisfied for
a Plan Year and one Highly Compensated Employee of the Company is eligible to
have Section 401(k) Contributions made on his behalf, and to make deposits of
After-tax Savings to his After-tax Savings Account or have Company contributions
allocated to his Company Contribution Account during such Plan Year, then the
sum of the Actual Deferral Percentage and the Actual Contribution Percentage for
eligible Highly Compensated Employees shall not exceed the greater of:

 

(1) The sum of:

 

(a) 1.25 multiplied by the greater of:

 

(i) The Actual Deferral Percentage for eligible Employees for the prior Plan
Year who are not Highly Compensated Employees, or

 

(ii) The Actual Contribution Percentage for eligible Employees who are not
Highly Compensated Employees for the prior Plan Year; and

 

(b) Two (2) plus the lesser of:

 

(i) Subsection (b)(1)(a)(i) of this Section, or

 

(ii) Subsection (b)(1)(a)(ii) of this Section, which shall in no event exceed
twice the lesser of subsection (b)(1)(a)(i) of this Section or subsection
(b)(1)(a)(ii); or

 

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(2) The sum of:

 

(a) 1.25 multiplied by the lesser of:

 

(i) Subsection (b)(1)(a)(i) of this Section, or

 

(ii) Subsection (b)(1)(a)(ii); and

 

(b) Two (2) plus the greater of:

 

(i) Subsection (b)(1)(a)(i), or

 

(ii) Subsection (b)(1)(a)(ii), which shall in no event exceed twice the greater
of subsection (B)(1)(a)(i) or subsection (b)(1)(a)(ii) above.

 

In the event that the limitation of this subsection (b) is exceeded, the Actual
Contribution Percentage shall be reduced in accordance with the manner described
in Section 6.6.

 

6.6 Correcting Excess Aggregate Contributions. In the event that the limitation
imposed by Section 6.5 is not satisfied for any Plan Year, Participant After-tax
Savings (including recharacterized Section 401(k) Contributions) credited to a
Participant’s Account shall, to the extent such credited amounts constitute
“excess aggregate contributions” (within the meaning of Section 401(m)(6)(B) of
the Code, and after taking into account the last subsection of Section 3.1(c)
and Section 6.7), be distributed to affected Participants on or before the date
which is two and one-half (2-1/2) months after the end of the Plan Year to which
such credited amounts relate. The excess aggregate contributions for a Plan Year
shall be allocated to each Highly Compensated Employee in an amount equal to the
amount by which the Highly Compensated Employees’ After-tax Savings (including
recharacterized Section 401(k) contributions) are reduced in accordance with the
following procedure. The dollar amount of After-tax Savings (including
recharachterized Section 401(k) Contributions) for the Plan Year made on behalf
of the Highly Compensated Employee with the highest dollar amount of After-tax
Savings (including recharacterized Section 401(k) contributions) for the Plan
Year is reduced to the extent required to (1) reduce the Plan’s excess aggregate
contributions to zero, or (2) cause such Highly Compensated Employee’s dollar
amount of After-tax Savings (including recharacterized Section 401(k)
contributions) for the Plan Year to equal the After-tax Savings (including
recharacterized Section 401(k) contributions) of the Highly Compensated Employee
with the next highest dollar amount of After-tax Savings (including
recharacterized Section 401(k) contributions) for the Plan Year. This process is
repeated until the Plan’s excess aggregate contributions are reduced to zero.
Each Highly Compensated Employee’s After-tax Savings (including recharacterized
Section 401(k) contributions that are treated as excess aggregate contributions)
shall consist first of unmatched After-tax Savings (including recharacterized
Section 401(k) contributions), and then to the extent necessary, matched
Employee After-tax Savings (including recharacterized Section 401(k)
contributions). Distribution of credited amounts shall include any income
attributable thereto, and shall be determined in accordance with regulations
promulgated by the United States Secretary of the Treasury under Section 401(m)
of the Code.

 

6.7 Special Provision for Allocating Company Contributions. Notwithstanding any
other provision of this Plan, Company contributions pursuant to Sections 3.1(b)
and 3.1(c) shall be allocated and applied to the accounts of Participants who
are not Highly Compensated

 

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Employees as if the reduction of contributions provided in the last subsection
of Section 3.1(c) had not taken place. Company contributions shall be allocated
and applied to the accounts of Highly Compensated Employees after taking into
account the reduction of contributions provided in the next to last paragraph of
Section 3.1 so that no amounts constituting “excess aggregate contributions”
(within the meaning of Section 401(m)(6)(B) of the Code) are allocated to the
Company Contribution Account of any Participant under this Article VI.

 

6.8 Allocation of Net Income. As of each Valuation Date, each Fund shall be
charged or credited with the net earnings, gains, losses, Investment Expenses
and the Pro Rata Share of Administrative Expenses as well as any appreciation or
depreciation in the market value using publicly issued fair market values when
available or appropriate. To the extent that a Participant’s Subaccounts are
invested in Funds that are accounted for as pooled assets or investments, the
allocation of earnings, gains and losses of each Participant’s accounts shall be
based upon the total amount of funds so invested, in a manner proportionate to
the Participant’s share of such pooled investment. To the extent that a
Participant’s Subaccounts are invested in Funds that are accounted for as
segregated assets, the allocation of earnings, gains and losses from such assets
shall be made on a separate and distinct basis.

 

6.9 Use of Forfeitures. Forfeitures, as described in Section 9.5(a), shall be
applied in the following order: (a) first to restore forfeitures of Terminated
Participants readmitted to the Plan in accordance with Section 9.5(b) and
unclaimed benefits previously reallocated in accordance with Section 9.6, (b)
second to pay Plan expenses, and (c) third, to reduce the Company Contributions.

 

6.10 Use of Unclaimed Benefits.

 

(a) Method of Allocation. Unclaimed benefits, as described in Section 19.10,
shall be reallocated in the same manner as forfeitures as provided in Section
6.9.

 

(b) Reduction in Forfeitures. If the Plan Administrator pays any unclaimed
benefits, which had previously been reallocated hereunder, the amount of such
benefits shall reduce the amount of forfeitures otherwise reallocated pursuant
to Section 6.9. In the event that forfeitures for the Fiscal Year in question
are not sufficient to pay any unclaimed benefits, the Company contribution for
such Fiscal Year shall first be applied for such payment.

 

6.11 Allocation Limitations.

 

(a) Maximum Additions. Notwithstanding anything to the contrary contained in the
Plan, the sum of: (1) the total Additions made to the Account of a Participant
under this Plan for any Fiscal Year; and (2) the “annual additions” (as defined
in Section 415 of the Code) made to the account of a Participant under any other
qualified defined contribution plan maintained by the Company or any Affiliated
Company, shall not exceed the Maximum Permissible Amount.

 

(b) Correction of Excess. If the Maximum Permissible Amount is exceeded in any
Plan Year for any Participant, the Plan shall distribute to the Participant any
After-tax Savings or Section 401(k) Contributions made by the Participant to the
Plan for the Plan Year to the extent such distribution would cause the excess to
be reduced. If, after returning such

 

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After-tax Savings or Section 401(k) Contributions to the Participant an excess
still exists, such excess shall be corrected in accordance with the provisions
of Treasury Regulation Section 415-6(b)(6) or such other rules or procedures as
the Internal Revenue Service shall allow.

 

(c) Further Limitations on Additions. Notwithstanding the foregoing provisions
of this Section 6.11, the otherwise permissible annual additions for any
Participant under this Plan shall be further reduced to the extent necessary, as
determined by the Committee to prevent disqualification of the Plan under
Section 415 of the Code, which imposes additional limitations on the benefits
payable to Participants who also may be participating in another tax-qualified
pension, profit sharing, savings or stock bonus plan of the Company or any
Affiliated Company. The Committee shall advise affected Participants of any
additional limitation of their annual Additions required by the preceding
sentence.

 

6.12 Transfers From Other Qualified Plans.

 

(a) Manner of Rollover or Direct Transfer. An Employee (including an Employee
who is not a Participant) may rollover or transfer to this Plan amounts received
from a retirement plan which are eligible to be rolled over or transferred to
this Plan pursuant to the provisions of Section 402 of the Code, including a
direct transfer of an eligible rollover distribution pursuant to the provisions
of Sections 401(a) and 403(a) of the Code, an annuity that meets the
requirements of Section 403(b) of the Code, or from an eligible plan under
Section 457(b) of the Code. Such rollover or transfer must comply with the
requirement of Section 402 of the Code.

 

(b) Governing Provisions. The assets so rolled over or transferred shall be
solely in cash. The Committee shall develop such procedures, and may require
such information from the Employee desiring to make such a rollover or transfer,
as it deems necessary to determine that the proposed rollover or transfer will
meet the requirements of this Section and will not jeopardize the tax qualified
status of the Plan. All amounts rolled over or transferred pursuant to this
Section shall be deposited in the Trust Fund and shall be credited to a rollover
account. The rollover account shall be one hundred percent (100%) vested in the
Participant, shall share in income allocations in accordance with Section 6.8
(but shall not share in Company contributions) and shall be invested in
accordance with the provisions of Article XIV. Distributions of amounts so
transferred shall be subject to the same restrictions as those stated in Section
5.10.

 

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ARTICLE VII.

VESTING

 

7.1 Vesting of After-tax Savings Account. The interest of each Participant in
his After-tax Savings Account shall vest to the extent of one hundred percent
(100%) as soon as such After-tax Savings are withheld from his Compensation
pursuant to Article IV and as soon as the earnings on such After-tax Savings are
credited pursuant to Article VI.

 

7.2 Vesting of Section 401(k) Contribution Account. The interest of each
Participant in his Section 401(k) Contribution Account shall vest to the extent
of one hundred percent (100%) as soon as such Section 401(k) Contributions are
made on his behalf by the Company pursuant to Article V and as soon as the
earnings thereon are credited pursuant to Article VI.

 

7.3 Vesting of Company Contribution Account.

 

(a) Vesting Schedule. The interest of each Participant in his Company
Contribution Account shall vest as follows:

 

Period of Service

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

   Vested Percentage

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

 

Less than 2 years

   0 %

At least 2 years but less than 3 years

   25 %

At least 3 years but less than 4 years

   50 %

At least 4 years but less than 5 years

   75 %

5 years or more

   100 %

 

(b) Service to be Credited Upon Resumption of Employment. If an Employee
terminates employment and is reemployed by the Company, upon the Employee’s
reemployment, all Service with the Company (including Service before and after
such reemployment) shall be counted for purposes of determining his vested
interest in his Company Contribution Account, if any.

 

(c) Definition of “Service”. For purposes of determining a Participant’s vested
interest in his Company Contribution Account, “Service” means the period of time
commencing on the Participant’s Hire Date and ending on the Participant’s
Separation Date and, if applicable, the period of time commencing on the
Participant’s Reemployment Date and ending on the Participant’s subsequent
Separation Date. In addition, such Service shall include the period following a
Separation Date described in Section 1.64(a) if a Participant’s or Former
Participant’s Reemployment Date occurs within the 12-consecutive month period
following such Separation Date; provided, however, that if a Participant or
Former Participant is otherwise absent from employment, the period following
such Separation Date shall be counted as Service only if the Participant’s or
Former Participant’s Reemployment Date occurs within the 12-consecutive month
period following the commencement of such other absence from employment.
“Service” shall also include any periods of absence from active employment
followed by a Separation Date, and periods of approved Leaves of Absence granted
in accordance with a nondiscriminatory leave policy; provided, however, that if
the Participant or Former Participant does not resume status as an employee of
the Company at the time agreed

 

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upon by the Company and the Participant, the Participant shall be deemed to be
discharged at such time. Service includes periods of employment described in
Section 1.65.

 

(d) Automatic 100% Vesting. Notwithstanding subsection (a) of this Section, the
Participant’s interest in his Company Contribution Account shall vest to the
extent of one hundred percent (100%) upon the earlier of the following while
employed by the Company or an Affiliate:

 

(1) Death;

 

(2) Permanent Disability; or

 

(3) Attainment of age 59 1/2.

 

Such vesting in the event of Permanent Disability is intended to provide
“accident or health insurance” as described in Section 105(a) of the Code, in
providing benefits for the permanent loss or loss of use of a member or function
of the body, or the permanent disfigurement of Participants, to the extent that
Permanent Disability results.

 

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ARTICLE VIII.

TERMINATION AND DISTRIBUTION UPON

RETIREMENT DEATH OR DISABILITY

 

8.1 Retirement. Upon retirement, a Participant shall be eligible to receive the
balance in his Account. Retirement for purposes of this Plan may be elected by
any Participant upon attaining age 59 ½.

 

8.2 Death. The death of any Participant or Former Participant shall be reported
promptly to the Plan Administrator by the Company. The death of a Terminated
Participant or a Retired Participant shall be reported to the Plan Administrator
by dependents or beneficiaries who are directly concerned. Upon the
Participant’s death, the Participant’s Beneficiary shall be entitled to payment
of the balance of the Participant’s vested Account in the manner provided by the
Plan.

 

8.3 Disability. The termination of a Participant’s employment with the Company
by reason of Permanent Disability shall be promptly certified to the Plan
Administrator by the Company. Upon such termination of employment, the
Participant shall be eligible to receive the balance in his Account.

 

8.4 Valuation of Account Balance. The Account balance of a Retired, Deceased or
Disabled Participant shall be valued as of the Valuation Date coinciding with or
immediately preceding the date distribution is made to such Participant or
Beneficiary, as applicable (and shall include such Participant’s pro rata share
of the Company contribution under Section 3.1(c), as determined under Section
6.4(b), if any, for the year in which such Participant terminated employment).

 

8.5 Available Payment Options. Subject to the mandatory cash-out of small
amounts provided in Section 8.10, a Retired, Deceased or Disabled Participant’s
Account balance shall be distributed by the Trustees under such of the following
payment options as the Participant (or, if a Deceased Participant shall have
failed to select a payment option, as his Beneficiary) shall determine:

 

(a) Lump sum payment;

 

(b) Deferred payments in installments in any amount from time to time or over a
period of time specified by the Participant, including installment payments in
substantially equal amounts;

 

(c) Purchase of a term annuity contract from a commercial insurance company with
payments for a term certain in regular installments; or

 

(d) Purchase of a single-life or Qualified Joint and Survivor Annuity contract
from a commercial insurance company with payments for the life of the
Participant or the life of the Participant and his or her Surviving Spouse.
Election of a single life annuity by a married Participant and revocation of
Qualified Joint and Survivor Annuity are subject to the Spousal Consent Rules of
Section 8.6.

 

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8.6 Spousal Consent Rules.

 

(a) Revocation of an Annuity. A married Participant who has selected a Term
Annuity pursuant to Section 8.5(c) or a single life annuity or Qualified Joint
and Survivor Annuity (hereinafter “QJSA”), pursuant to Section 8.5(d), may
revoke such election and elect instead to receive his or her benefits as
follows:

 

(1) If the Participant elected a term certain annuity form of payment and the
commercial annuity contract has not yet been purchased by the Plan, the
Participant (or the Surviving Spouse, if the Participant has died) may elect to
receive any other form of benefit available for the Plan;

 

(2) If the Participant elected a life annuity or a Qualified Joint and Survivor
Annuity form of payment and the commercial annuity contract has not yet been
purchased by the Plan, the Participant (or his Surviving Spouse, if the
Participant has died) may elect to receive any other form of benefit available
from the Plan, provided that the Participant and his Spouse (or the Surviving
Spouse, if the Participant has died) consent in writing to the distribution
revocation of such election in accordance with Section 8.6(b).

 

(b) Waiver of Life Annuity or Qualified Joint and Survivor Annuity. A
Participant who is married on the Annuity Starting Date may elect a single life
annuity pursuant to Section 8.5(d) only if the Participant’s Spouse provides a
waiver of a Qualified Joint and Survivor Annuity. A married Participant who has
selected a QJSA, pursuant to Section 8.5(d), may if permitted under Section
8.6(a) elect to revoke such election and waive the QJSA payment option. Such
waivers must be made within the ninety (90) day period ending on the
Participant’s Annuity Starting Date with respect to such benefit. Subject to
Section 8.6(a), a Participant may subsequently revoke the election to waive the
QJSA and elect again to waive the QJSA at any time and any number of times prior
to such Annuity Starting Date. All such elections and revocations shall be in
writing. Any election to waive the QJSA must:

 

(1) Specify the alternate payment option elected;

 

(2) Be accompanied by the designation of a specific non-spouse Beneficiary
(including any class of beneficiaries or any contingent beneficiaries) who will
receive the benefit upon the Participant’s death, if applicable; and

 

(3) Be accompanied by Spousal Consent.

 

Notwithstanding the above, no consent under this subsection (b) shall be valid
unless, within thirty (30) days and no more than ninety (90) days before the
Annuity Starting Date, the Plan Administrator has provided the Participant with
the written explanation described in subsection (c) of this Section. A
Participant may elect to receive distribution prior to the expiration of such
thirty (30) day period if distribution commences more than seven (7) days after
the written explanation described in the previous sentence was provided.

 

A Participant who is not married on the Annuity Starting Date may, subject to
Section 8.6(a), revoke an election to receive a single life annuity. The
election must comply with this

 

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Section and Section 8.6(c) as if it were an election to waive the Qualified
Joint and Survivor Annuity by a married participant, but without the Spousal
Consent requirement.

 

(c) Written Explanation. The written explanation shall contain the following:

 

(1) The terms and conditions of the QJSA;

 

(2) The Participant’s right to make, and the effect of, an election to waive the
QJSA payment option;

 

(3) The rights of the Participant’s Spouse; and

 

(4) The right to make, and the effect of, a revocation of a previous election to
waive the QJSA.

 

(d) Result of Effective Waiver. In the event of an effective waiver of the QJSA
payment option, in accordance with the terms of subsection (b) of this Section,
the amount payable to the married Retired or Disabled Participant (or to the
Beneficiary of a Deceased Participant) shall be distributed by the Trustees or
their delegate under such of the alternate payment options set forth in Section
8.5 as the Participant or his legal representative may select.

 

(e) Spousal Consent. A Spousal Consent shall specify the non-spouse Beneficiary.
Once made, a consent shall be irrevocable unless the Participant changes his
Beneficiary designation or revokes his election to waive the Qualified Joint and
Survivor Annuity; upon such event, the consent shall be deemed to be revoked.
Notwithstanding the foregoing, Spousal Consent is not required if the
Participant establishes to the satisfaction of the Plan Administrator that such
written consent cannot be obtained because there is no Spouse or that the Spouse
cannot be located. In addition, no Spousal Consent is necessary if the
Participant has been legally separated or abandoned within the meaning of local
law and the Participant provides the Plan Administrator with a court order to
that effect, so long as such court order does not conflict with a Qualified
Domestic Relations Order. If the Spouse is legally incompetent to consent, the
Spouse’s legal guardian may consent on his behalf, even if the legal guardian is
a Participant.

 

8.7 Distributions Upon Married Participant’s Death. If a Participant is married
on the date of his death, the full amount of the Participant’s Account balance
shall be payable on the death of the Participant to the Participant’s Surviving
Spouse, unless the Participant’s Surviving Spouse has given Spousal Consent to
the designation of a specific non-spouse Beneficiary (including any class of
beneficiaries or any contingent beneficiaries) who will receive the Account
balance upon the Participant’s death.

 

8.8 General Distribution Requirements. Notwithstanding any provision to the
contrary, all Plan distributions to Participants and Beneficiaries shall comply
with the requirements of Section 401(a)(9) of the Code and the regulations
thereunder.

 

(a) Distributions to Participants. For distributions commencing on or after
January 1, 2003, distribution of a Participant’s Account balance shall be made
or commence as provided in Appendix A to the Plan. For distributions commencing
prior to January 1, 2003, the

 

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Participant’s Account balance shall be distributed or begin to be distributed no
later than the Participant’s Required Beginning Date and may only be distributed
over:

 

(1) A period of years not to exceed the life-expectancy of the Participant, or
the joint life expectancy of the Participant and the Participant’s designated
Beneficiary; or

 

(2) The life of the Participant, or the lives of the Participant and the
Participant’s designated Beneficiary.

 

Life expectancy shall be recalculated annually.

 

(b) Distributions to Beneficiary. For distributions commencing on or after
January 1, 2003, distribution of a Participant’s Account balance to a
Participant’s Beneficiary shall be made or commence as provided in Appendix A to
the Plan. Notwithstanding any other provision of this Article VIII, any
distribution, commencing prior to January 1, 2003, to a Participant’s
Beneficiary must comply with the following requirements:

 

(1) If the Participant dies after distribution of his Account balance has begun,
then the remaining portion of such Account balance shall be distributed at least
as rapidly as under the method of distribution being used prior to the
Participant’s death.

 

(2) If the Participant dies before receiving any portion of his Account balance
then distribution of the Participant’s entire Account balance shall be completed
by December 31 of the calendar year containing the fifth (5th) anniversary of
the Participant’s death unless:

 

(a) The Beneficiary elects to receive payments over his life (or over a period
not extending beyond his life expectancy) in which case the first installment
must be made by December 31 of the calendar year immediately following the
calendar year in which the Participant died; or

 

(b) In the case of a Beneficiary who is a Surviving Spouse, the Surviving Spouse
elects to receive installment payments as set forth in subsection (b)(2)(i) of
this Section, in which case the first installment may be deferred until the
later of: December 31 of the calendar year immediately following the calendar
year in which the Participant died or December 31 of the calendar year in which
the Participant would have attained age 70-1/2.

 

Such an election shall be made by the earlier of: the date the distribution is
required to be made under subsection (b)(2) of this Section or December 31 of
the calendar year which contains the fifth (5th) anniversary of the
Participant’s death. If the Participant has no Beneficiary or if the Beneficiary
does not elect a method of distribution, distribution of the entire Account
balance shall be completed by December 31 of the calendar year containing the
fifth (5th) anniversary of the Participant’s death.

 

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If the Surviving Spouse dies after the Participant but before payments to such
Surviving Spouse begin, then the provisions of subsection (b)(2) of this Section
with the exception of subsection (b)(2)(ii) of this Section shall be applied as
if the Spouse were the Participant.

 

Distribution of a Participant’s Account balance shall be made or commence as
provided in Appendix A to the Plan.

 

(c) Commencement of Distribution. Distribution of a Participant’s Account
balance shall be made or commence no later than 60 days after the close of the
Plan Year in which occurs the latest of:

 

(1) The date on which the Participant attains age 62;

 

(2) The tenth anniversary of the year in which the Participant commenced
participation in the Plan; or

 

(3) The date on which the Participant terminates employment with the Company.

 

Notwithstanding the preceding sentence no payment will be made under the Plan
until the Participant files a written claim for such payment unless otherwise
required by the Plan.”

 

8.9 Form of Payment. Distribution may be in cash or employer securities, except
that any distribution of employer securities shall be limited to the amount of
such securities credited to the Participant’s account under the Host Marriott
Corporation Stock Fund.

 

8.10 Mandatory Cash-Out of Small Accounts. Notwithstanding any other provision
of this Article VIII, if the total vested value of the Participant’s Account
does not (and did not, at the time of commencement of the distribution) exceed
Five Thousand Dollars ($5,000), the Plan Administrator shall direct the Trustee
to distribute as soon as practicable the full amount thereof to the Participant,
his legal representative or Beneficiary to the extent permitted by Section
411(a)(II) of the Code and Section 203(e) of ERISA.

 

8.11 Account Balance. For purposes of this Article VIII, Account balance shall
include any rollover account balance.

 

8.12 Special Rule for Rollovers Out of the Plan. Notwithstanding any provision
of the Plan to the contrary that would otherwise limit the election of a
Distributee under this Article VIII, a Distributee may elect, at the time and in
the manner prescribed by the Plan Administrator, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible Retirement Plan
specified by the Distributee in a direct rollover. This right shall also apply
in the case of Eligible Rollover Distributions to a surviving spouse, or to a
spouse or former spouse who is the alternate payee under a Qualified Domestic
Relations Order as defined in Section 414(p) of the Code. Any portion of an
Eligible Rollover Distribution that is not paid directly to an Eligible
Retirement Plan shall be subject to applicable income tax withholding. For
purposes of this Section 8.12, a “direct rollover” is a payment by the Plan to
the Eligible Retirement Plan specified by the Distributee.

 

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ARTICLE IX.

TERMINATION AND DISTRIBUTION UPON

TERMINATION OF EMPLOYMENT OTHER THAN

FOR RETIREMENT DEATH OR DISABILITY

 

9.1 Terminated Participant. Upon a Participant’s or Former Participant’s
termination of employment with the Company for any reason other than retirement,
death or Permanent Disability, the Company shall promptly notify the Plan
Administrator in writing of such fact and such Participant shall become (a) a
Terminated Participant if such Participant has not attained retirement age (as
provided in Section 8.1), or (b) a Retired Participant if such Participant has
attained retirement age (as provided in Section 8.1). In the event a Terminated
Participant has attained retirement age, the provisions of Article VIII shall
thereafter apply to such Participant.

 

9.2 Distribution of After-tax Savings and Section 401(k) Contributions. The
balance of a Terminated Participant’s After-tax Savings Account and Section
401(k) Contribution Account (as determined in accordance with Articles IV and V)
shall be valued as of the Valuation Date coinciding with or immediately
preceding the date distribution is made to the Participant, and shall be subject
to distribution in the same manner as provided in Sections 8.5 and 8.10 (and in
the same forms as provided in Section 8.9) without discrimination in favor of or
against any class.

 

9.3 Distribution of Vested Company Contribution Account. The vested interest of
the Terminated Participant in the Terminated Participant’s Company Contribution
Account (as determined in accordance with Article VII) shall be valued as of the
Valuation Date coinciding with or immediately preceding the date distribution is
made to the Participant, and shall be subject to distribution in the same manner
as provided in Section 8.5 and 8.10 (and in the same forms as provided in
Section 8.9) without discrimination in favor of or against any class. A
Terminated Participant may elect to defer distribution of his vested interest
until the earliest of the date such Terminated Participant attains age 62, dies,
or suffers a Permanent Disability; provided, however, that the Terminated
Participant may elect to commence distribution in any of the forms of payment
available under Section 8.5 as of any earlier date after the date on which he
becomes a Terminated Participant. There will be no pro rata credit of the
Company Contribution for the partial Plan Year in valuing a Terminated
Participant’s Company Contribution Account.

 

9.4 Mandatory Cash-Out of Small Accounts. Notwithstanding any other provision in
this Article IX, if the total value of the Terminated Participant’s vested
Account does not (and did not, at the time of any prior distribution or
withdrawal) exceed Five Thousand Dollars ($5,000), the Plan Administrator shall
direct the Trustee to distribute as soon as practicable the full amount thereof
to the Terminated Participant or his legal representative or Beneficiary to the
extent permitted by Section 411(a)(11) of the Code and Section 203(e) of ERISA,
and subject to Section 5.10.

 

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9.5 Unvested Company Contributions.

 

(a) Forfeiture. Any portion of a Terminated Participant’s Company Contribution
Account, which has not vested at the time the Participant’s employment is
terminated will be forfeited upon the Participant’s incurring a one year Period
of Severance.

 

(b) Restoration of Forfeiture. Subject to the requirements of subsection (c) of
this Section, a Terminated Participant (described in subsection (a) of this
Section) who resumes status as an Employee of the Company before incurring five
(5) consecutive Periods of Severance and who is readmitted to the Plan in
accordance with Section 2.2 shall have his forfeited amounts restored and added
to his new Company Contribution Account (where it will vest in accordance with
Article VII).

 

(c) Distribution Prior to Reemployment. A Terminated Participant described in
subsection (b) of this Section who previously received a distribution will have
his forfeitures restored only if he repays, at any time prior to the end of five
(5) consecutive Periods of Severance commencing on the date such distribution is
made:

 

(1) The entire amount of distribution, if any, previously received from the
Terminated Participant’s After-tax Savings Account under Section 9.2;

 

(2) The entire amount of distribution, if any, previously received from the
Terminated Participant’s Section 401(k) Contribution Account under Section 9.2;
and

 

(3) The entire amount of distribution, if any, previously received from the
Terminated Participant’s Vested Company Contribution Account under Section 9.3.

 

Any repayment made by a Participant pursuant to this subsection (c) shall be
made by means of a single lump sum cash payment.

 

9.6 Account Balance. For purposes of this Article IX, Account balance shall
include any rollover account balance.

 

9.7 Special Rule for Rollovers Out of the Plan. The special rule provided in
Section 8.12 shall apply to distributions under this Article IX.

 

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ARTICLE X.

DISTRIBUTION DURING CONTINUED EMPLOYMENT

 

10.1 Withdrawal of After-tax Savings.

 

(a) Withdrawal of Additional After-tax Savings. A Participant or Former
Participant may withdraw his Additional After-tax Savings at any time and
continue to participate in the Plan after such withdrawal.

 

(b) Withdrawal of Basic After-tax Savings. A Participant or Former Participant
may withdraw his Basic After-tax Savings at any time. However, upon withdrawing
such Basic After-tax Savings, the Participant shall cease to participate in the
Plan and shall in all respects become a Former Participant, except as otherwise
provided in Section 10.5 and subject to the provisions of Section 2.4.

 

(c) Valuation of After-tax Savings Account. The After-tax Savings Account of the
Participant or Former Participant shall be valued as of the Valuation Date
coinciding with or immediately preceding the date distribution is made to the
Participant or Former Participant.

 

(d) Form of Payment. Withdrawals of After-tax Savings under this Section 10.1
(including the withdrawal of any earnings thereon) shall be distributed in whole
or in part as a single lump sum payment and may be in cash or employer
securities, except that any withdrawal of employer securities shall be limited
to the amount of such securities credited to the Participant’s or Former
Participant’s account under the Host Marriott Corporation Stock Fund.

 

(e) Taxation of Withdrawal. After-tax Savings (including earnings) shall be
treated as a “separate contract” from all other contributions for purposes of
determining the tax consequences of withdrawals.

 

10.2 Withdrawal of Section 401(k) Contribution. Distribution of a Participant’s
or Former Participant’s Section 401(k) Contribution Account (and the earnings
thereon) is subject to Section 5.10 and the limitations of Section 401(k) of the
Code.

 

10.3 Withdrawal of Vested Company Contribution Account. A Participant or Former
Participant may not withdraw his vested Company contributions (or any earnings
thereon) prior to his Separation Date, except as provided in Section 10.5.

 

10.4 Readmission of Former Participant to Plan. A Former Participant who
terminates participation in the Plan during continued employment shall be
entitled to readmission thereto as provided in Section 2.4.

 

10.5 Distributions Upon Attainment of Age 59-1/2. Upon attainment of age 59-1/2,
a Participant or Former Participant may elect to withdraw the entire balance of
his After-tax Savings Account, Section 401(k) Contribution Account and vested
Company Contribution Account and continue participation in the Plan. Application
for withdrawal under this Section 10.5 by Participants or Former Participants
shall be made in writing and shall be made in accordance with the distribution
requirements set forth in Article VIII.

 

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10.6 Account Balance. For purposes of this Article X, Account balance shall
include any rollover account balance.

 

10.7 Hardship Withdrawals.

 

(a) Terms of Hardship Withdrawals. Any Participant who sustains a Hardship may
submit a request to the Plan Administrator for a distribution from the Plan as
may be necessary to meet such Hardship. The Plan Administrator shall have the
power in its sole discretion to approve or disapprove (in whole or in part) any
such request, based on the standards set forth in this Section 10. 7. Any
distribution to a Participant pursuant to this Section 10.7 shall not exceed the
amount required to meet the Hardship, and distribution shall be made only if
participant represents in writing that such amount is not reasonably available
from other resources of the Participant as described in Treas. Reg. Section
1.401(k)-I(d)(2)(ii)(B). Such distributions shall be limited to the sum of (1)
amounts in the Participant’s Section 401(k) Contribution Account attributable to
amounts transferred from the Prior Plan that had accrued on or before December
31, 1988 (along with earnings attributable thereto), plus (2) amounts in the
Participant’s Section 401(k) Contribution Account accrued under the Prior Plan
and this Plan after December 31, 1988 (exclusive of any earnings), plus (3)
amounts in the Participant’s Rollover Account.

 

(b) Restrictions. Participants receiving Hardship distribution under this
Section 10.7 shall be subject to the following restrictions:

 

(1) The Participant’s limit under Section 402(g) of the Code on Section 401(k)
Contributions for the Fiscal Year immediately following the Fiscal Year in which
a distribution is made to the Participant shall be reduced by the amount of
Section 401(k) Contributions for the Fiscal Year in which such distribution was
made; and

 

(2) The Participant shall be prohibited for six (6) months from the date of a
distribution under this Section 10.7 from electing any Section 401(k)
Contributions under Article V or making contributions of Basic or Additional
After-tax Savings under Article IV of this Plan. The Participant shall likewise
be prohibited for the same six (6) month period from making employee
contributions under any deferred compensation plan of the Company, in accordance
with written guidelines set forth by the Committee.

 

(c) Committee Guidelines and Determination. The Committee shall set forth
written guidelines for the Administrator to make its determination under this
Section 10.7 in accordance with the above standards (and the definition of
Hardship) in a uniform and nondiscriminatory manner. The Committee shall make
its determination under this Section 10.7 in accordance with the above standards
(and the definition of Hardship) and in a uniform and nondiscriminatory manner.

 

10.8 Special Rule for Rollovers Out of the Plan. Unless otherwise provided by a
provision of the Code, the rule provided in Section 8.12 shall apply to
distributions under this Article X.

 

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ARTICLE XI.

LOANS TO PARTICIPANTS

 

11.1 General Provisions. The Committee shall direct the Trustees to make a loan
to Participants who are “parties in interest” (as defined in Section 3(14) of
ERISA) (and to beneficiaries of such Participants as designated in written rules
set forth by the Committee) as provided in this Section 11.1. Such loan shall be
in an amount that does not exceed the amount set forth in Section 11.2. Loans
shall be made on written application to the Plan Administrator and on such terms
and conditions as set forth in this Article XI, and in accordance with the rules
and procedures established by the Committee in a written resolution. All such
rules and procedures shall be uniform and nondiscriminatory and shall relate to
such matters as:

 

(a) Procedures for applying for loans;

 

(b) The basis on which loans will be approved or denied;

 

(c) Limitations on the types of loans offered;

 

(d) The procedure for determining a reasonable rate of interest;

 

(e) The types of collateral which may secure a loan;

 

(f) The events constituting default;

 

(g) Minimum loan amounts;

 

(h) Frequency of loans; and

 

(i) Any other appropriate matters consistent with this Article XI.

 

11.2 Maximum Loan Amount. A loan to a Participant (when added to the outstanding
balance of all other loans made to the Participant under this Plan) shall not be
in an amount that exceeds the Allocable Portion of the total balance in the
Participant’s After-tax Savings Account and Section 401(k) Contribution Account
(valued as of the Valuation Date coinciding with or immediately preceding the
date of such loan). The Allocable Portion shall be adjusted accordingly in the
event the maximum permissible loan amount under Section 72(p) of the Code (or
any successor provision) is decreased.

 

11.3 Minimum Loan Amount. The minimum loan amount for each loan shall be One
Thousand Dollars ($1,000).

 

11.4 Repayment Period. The term of a loan made under this Article XI shall be
fixed by the Committee, but in no event shall such term exceed (a) one hundred
twenty (120) months in the case of a loan for the purchase of a principal
residence, or (b) sixty (60) months in the case of a loan for any other purpose.

 

11.5 Terms and Conditions. Loans made to Participants shall be made in
accordance with the following terms and conditions:

 

(a) The loans shall be secured by the Participant’s interest in the Plan, plus
by the Participant’s promissory note for the amount of the loan (including
interest) payable to the order of the Trustees. The Plan Administrator may also
require such other collateral which in a normal commercial setting would be
considered adequate for the full protection of the Trust Fund.

 

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(b) The interest rate for the loan shall be the Federal prime rate as of the
last day of the quarter immediately preceding or ending on the date the loan is
made.

 

(c) Payment of principal and interest shall be made through appropriate payroll
deductions from the Compensation otherwise payable to the Participant while the
Participant is an Employee. Such payroll deductions shall continue until the
full outstanding balance of any loans is repaid, regardless of whether the
borrower remains a Participant in the Plan. Payment of principal by an
individual who is no longer an Employee shall be made through such other means
(not less frequently than quarterly) as the Committee deems appropriate.

 

(d) The loan shall be made to the Participant from his Account and shall be
treated as an investment of assets of such Account. All interest and all losses
attributable to loans shall be charged to the borrowing Participant’s Account,
and all loan payments shall be credited to the Participant’s Account.

 

(e) The loan shall not be used as a means of distributing benefits before they
otherwise become due.

 

(f) Any loan made under the Plan shall be subject to such other terms and
conditions as the Committee shall determine are necessary or appropriate,
including the condition that the Participant pay (through payroll withholding)
the reasonable expenses determined by the Committee incurred by the Plan to make
and service the loan.

 

(g) Loan repayments will be suspended during a period of Qualified Military
Service as defined in Section 414(u) of the Code.

 

(h) A married Participant who has elected payment in the form of a life annuity
or a QJSA, pursuant to Section 8.5(d), must obtain Spousal Consent to obtain a
loan.

 

11.6 Nondiscrimination. In making loans under this Article XI, the Committee
shall not discriminate in favor of or against any Participant or group of
Participant. Accordingly, loans shall be available to all Participants on a
reasonably equivalent basis and shall not be made to Highly-Compensated
Employees of the Company in an amount greater than the amount made available to
other Participants.

 

11.7 Offset of Account Balance. Notwithstanding anything to the contrary
contained elsewhere in the Plan, in determining the amount of any distribution
made in accordance with Article VIII or Article IX, the amount of any security
interest held by the Plan by reason of any loan made against the Participant’s
Account under this Article XI, including accrued interest, shall be collected by
the Plan Administrator from any amounts standing to the credit of the
Participant in the Plan in satisfaction of the loan before making any payments
to the Participant or to the Participant’s Beneficiary.

 

11.8 Default. In the event a Participant defaults on the repayment of a loan
(under uniform and nondiscriminatory written standards adopted by the Committee
as to what constitutes default), the Trustees may treat the loan as a
distribution and pay the principal and

 

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interest owing under the loan from the Participant’s After-tax Savings Account
in the following order of priority:

 

(a) Current year After-tax Savings;

 

(b) Prior years’ After-tax Savings;

 

(c) Earnings on prior years’ After-tax Savings; and

 

(d) Earnings on current year After-tax Savings.

 

In the event the Participant’s After-tax Savings Account is insufficient to
repay the full amount of principal and interest owing, the Plan Administrator,
in its sole discretion, may treat the unpaid balance as a distribution from the
vested portion of the Participant’s Company Contribution Account.

 

In the event the Participant’s After-tax Savings Account and the vested portion
of the Participant’s Company Contribution Account are insufficient to repay the
full amount of principal and interest owing, a determination shall be made
whether the Participant qualifies for a Hardship withdrawal under the provisions
of Section 10.7, and, if so, a distribution shall be made in accordance
therewith. If the Participant fails to qualify for a Hardship distribution, the
Plan Administrator shall take such other collection action as it deems fit, in
accordance with written standards adopted by the Committee; provided, however,
that the Plan Administrator shall defer making any distribution from the
Participant’s Section 401(k) Contribution Account to repay any unpaid loan
balance until such time as the Participant has incurred a Separation Date or has
attained age 59 ½, or until an event described in Section 401(k)(10) of the Code
has occurred or as defined in Section 1.24.

 

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ARTICLE XII.

BENEFICIARIES

 

12.1 Designation of Beneficiary. Each Participant or Alternate Payee may
designate, on the forms provided by the Plan Administrator, one or more
Beneficiaries and contingent Beneficiaries to receive the Plan benefits in the
event of the Participant’s or Alternate Payee’s death. Notwithstanding the
preceding sentence, if the Participant is married at the time of his death and
has not elected a Qualified Joint and Survivor Annuity, his Account balance
shall be payable in full to his Surviving Spouse, unless he has designated a
different beneficiary with the consent of his Spouse, if any, in accordance with
Sections 1.66 and 8.6(c).

 

12.2 Manner of Designation. Such designation may be delivered, on forms provided
by the Plan Administrator, at the time such Participant commences participation
in the Plan, or thereafter. A beneficiary designation completed by an Alternate
Payee may be delivered at the time the Administrator notifies the Alternate
Payee that he is entitled to Plan benefits under a Qualified Domestic Relations
Order, or thereafter. A Participant or Alternate Payee may designate different
Beneficiaries at any time by delivering a new written designation to the Plan
Administrator. Any such designation shall become effective only upon its receipt
by the Plan Administrator. The last effective designation received by the Plan
Administrator shall supersede all prior designations. A designation of a
Beneficiary shall be effective only if the designated Beneficiary survives the
Participant or Alternate Payee. All designations must be signed by either the
Participant or Alternate Payee, as appropriate.

 

12.3 Absence of Valid Designation of Beneficiary. Except as provided in section
8.7, if a Participant or Alternate Payee fails to designate a Beneficiary, if no
designated Beneficiary survives the Participant or Alternate Payee, or if such
designation is for any reason illegal or ineffective, distribution of benefits
otherwise payable under this Plan shall be made to the Participant’s or
Alternate Payee’s estate.

 

12.4 Beneficiary Bound by Plan Provisions. Whenever the rights of a Participant
or Alternate Payee are stated or limited in the Plan, the Participant’s or
Alternate Payee’s Beneficiaries shall be bound thereby.

 

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ARTICLE XIII.

QUALIFIED DOMESTIC RELATIONS ORDERS

 

13.1 Governing Provisions. Notwithstanding any other provisions of this Plan, a
Participant’s Account may be assigned in whole or in part pursuant to the
provisions of a Qualified Domestic Relations Order (hereinafter “QDRO”). In such
case, the following rules shall apply:

 

(a) A separate account shall be established for any Alternate Payee who has been
awarded Plan assets, unless a QDRO obligates the Plan to distribute, as soon as
administratively practicable, all or part of a Participant’s Account to the
Alternate Payee. In such cases, a pro rata portion of the amount payable to the
Alternate Payee shall be withdrawn from each Fund in which the Participant,
pursuant to Section 14.1, has invested. This pro rata withdrawal from each Fund
shall be calculated according to the percentage of the Participant’s total
Account, which the Participant has placed in each Fund. Thus, for example, if a
Participant with an Account of $200,000 has invested fifty percent (50%) in the
Balanced Fund and fifty percent (50%) in the Bond Fund, and a QDRO awards
$100,000 to an Alternate Payee, fifty percent (50%) of the Alternate Payee’s
award shall be deducted from the Bond Fund and fifty percent (50%) from the
Balanced Fund.

 

(b) All such payments pursuant to a QDRO shall be subject to reasonable rules
and regulations promulgated by the Committee respecting the time of payment
pursuant to such order and the valuation of the Participant’s Account from which
payment is made, provided that all such payments are made in accordance with
such order and Section 414(p) of the Code.

 

(c) The balance of a Participant’s Account subject to any QDRO shall be reduced
by the amount of any payment made pursuant to such order.

 

An Alternate Payee for whom a separate Account is established pursuant to this
Article XIII shall be entitled to file an election with regard to investment of
that Account in the manner specified by Article XIV and subject to the terms of
the QDRO. All such elections shall be subject to the same terms and conditions
as Article XIV imposes upon Participant elections, and all such elections shall
be carried out by the Administrator in accordance with Article XIV.

 

Upon the death of an Alternate Payee, the Alternate Payee’s Beneficiaries shall
be entitled to payment of benefits in an amount and in the manner provided by
the Plan.

 

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ARTICLE XIV.

PARTICIPANT’S DIRECTED INVESTMENTS

 

14.1 Election by Participants. Subject to the terms and conditions of this
Article XIV, each Participant shall have the right to direct that his (a)
Account balance, (b) share of future allocations of Company contributions, (c)
share of future forfeitures, and (d) future After-tax Savings and Section 401(k)
Contributions, be invested, in specified multiples of one percent (1%), in any
of the Funds maintained under the Plan, provided the Participant elects to do
so. The Plan Administrator shall carry out the election in accordance with the
provisions of this Article XIV. For the purposes of making elections under this
Article XIV, the term “Participant” shall include a Beneficiary, and an
Alternate Payee for whom a separate account has been established in accordance
with Article XIII.

 

14.2 Election Rules.

 

(a) Election to be in Writing. A Participant’s election to direct investments
shall be in writing, on a form furnished by the Plan Administrator, or shall be
made under such other procedures as specified by the Plan Administrator. The
election shall state the percentage to be transferred to or from a Fund.

 

(b) Effective Date of Election. An election shall become effective upon the next
subsequent Transfer Date (as described in Section 14.3) occurring within a
reasonable time (as determined under procedures specified by the Plan
Administrator) after the receipt of the Participant’s valid election by the Plan
Administrator, unless such election is revoked before such Transfer Date.

 

(c) Revocation of Election. A Participant may revoke an election, in whole or in
part, any time prior to the Transfer Date. Thereafter, a revocation shall become
effective as of the next ensuing Transfer Date occurring within a reasonable
time (as determined under procedures specified by the Plan Administrator) after
the Plan Administrator’s receipt of such revocation.

 

(d) Change in Election. Each Participant may elect to change the Funds (and/or
the percentage to be allocated thereto) in which his (1) Account balance, (2)
share of future allocations of Company contributions, (3) share of future
forfeitures, and (4) future After-tax Savings and Section 401(k) Contributions,
are to be invested. Upon the receipt by the Plan Administrator of a
Participant’s request for a change in writing or in some other form authorized
by the Plan Administrator, the election shall be effective as provided in
paragraph (b) of this Section.

 

(e) Default Election. In the event that a Participant does not make an initial
election to direct investments, his (1) Account balance, (2) share of future
allocations of Company contributions (3) share of future forfeitures, and (4)
future After-tax Savings and Section 401(k) Contributions, shall be invested in
the Fund(s) determined in the sole discretion of the Committee until an election
is made pursuant to this Article.

 

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14.3 Transfer Date. The Committee on behalf of the Named Fiduciary shall
establish one or more Transfer Dates in each Fiscal Year; provided, however,
that such Transfer Dates shall occur no less frequently than quarter-annually.

 

14.4 Confirmation. The Plan Administrator shall provide written confirmation to
a Participant within a reasonable time after an election or change of election
is made by such Participant.

 

14.5 Subdivision of Accounts.

 

(a) Establishment of Subaccounts. The Account of a Participant who has made an
election pursuant to this Article shall be subdivided as of the Transfer Date
into a Subaccount corresponding to each of the Funds maintained under the Plan
into which the Participant has made an election to have his Account invested.
Such Participant’s Fund Subaccounts shall each have a balance as of the Transfer
Date giving effect to the percentages indicated by the Participant’s election.
If a Participant has not made an election as to any Fund, such Participant’s
Account shall be placed into the Fund(s) determined under Section 14.2(e) and
the Participant’s Fund Subaccount(s) shall have an aggregate value equal to the
Participant’s entire Account balance.

 

(b) Allocation of After-tax Savings, Section 401(k) Contributions, Company
Contributions and Forfeitures Among Subaccounts. The following amounts shall be
further allocated among such Participant’s Fund Subaccounts in the appropriate
percentages in accordance with the Participant’s election: (1) that portion of
any Company contribution which is allocated pursuant to Section 6.4 to the
Company Contribution Account of a Participant who has made an election; (2) the
Participant’s After-tax Savings; (3) the Participant’s Section 401(k)
Contributions; and (4) forfeitures allocated under Section 6.9 to the Company
Contribution Account of a Participant.

 

14.6 Investment Funds.

 

(a) Committee’s Responsibility for Funds. The Committee shall be responsible for
designating Funds in the Trust Fund into which Participants may elect to invest
their Accounts as provided in this Article. The Plan Administrator shall provide
sufficient information to Participants concerning the Funds to permit them to
make informed investment decisions, or, if appropriate, provide Participants
with directions as to how such information may be obtained.

 

(b) Investment Policy of Funds. The Committee shall determine the Funds to be
made available under the Plan; provided however, that at all times that in
addition to the Host Marriott Corporation Stock Fund, three (3) or more Funds
shall be maintained which (1) shall not invest in Qualifying Employer Securities
or Qualifying Employer Real Property; (2) shall be designed to enable
Participants, by choosing among them, to minimize the risk of large losses in
their Accounts; (3) shall be designed to enable Participants, by combining them,
to achieve general risk and return characteristics in their Accounts as desired
by Participants; (4) shall be designed to limit a Participant’s investment in
Company stock or Qualifying Employer Securities to no more than twenty percent
(20%) of the Participant’s Account; and (5) shall be designed to

 

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permit Participants to generally minimize the risk to their Accounts at any
level of expected return.

 

The Named Fiduciary, acting by and through the Committee, shall establish an
investment policy and method consistent with the objectives of the Plan and the
requirements of Title I of ERISA. Such objectives shall include, those set forth
in Article XIV with respect to the Funds. The Committee acting on behalf of the
Named Fiduciary shall at least annually review such investment policy and
method. In establishing and reviewing such investment policy and method, the
Named Fiduciary shall endeavor to determine the Plan’s short-term and long-term
objectives and financial needs, taking into account the need for liquidity to
pay benefits and the need for investment growth. All actions of the Committee
acting on behalf of the Named Fiduciary taken pursuant to this subsection (b)
and the reasons therefore shall be recorded and shall be communicated to the
Trustees and to the Board of Directors.

 

(c) Funds. The Committee shall make available to the Participants the Funds
described in the Investment Policy or such other Funds as the Committee shall
determine from time to time.

 

14.7 Voting Rights.

 

(a) Generally, all shares (including fractional shares) held in a Participant’s
Host Marriott Corporation Stock Fund Subaccount shall be voted in accordance
with the written direction of the Participant.

 

(1) The Committee shall notify the Participants in writing of each occasion for
the exercise of voting rights as soon as practicable, and generally not less
than thirty (30) days, before such rights are to be exercised. Such notification
shall include all the information that the Corporation distributes to
shareholders regarding the exercise of such rights.

 

(2) Each Participant shall be entitled to direct the exercise of rights other
than voting rights (such as, for example, a conversion privilege) with respect
to all shares held in the Participant’s Host Marriott Corporation Stock Fund
Subaccount in the same manner as prescribed in this Section 14.7, to the extent
required by the provisions of the Plan and applicable laws.

 

(3) Notwithstanding the above, in the event of a tender offer for Host Marriott
Corporation common stock with time limits that do not permit voting rights with
respect to the offer to be passed through to Participants, the Committee shall
instruct the Trustee regarding the exercise of rights with respect to the tender
offer.

 

(b) The Trustee shall exercise voting rights with respect to all investments
other than Qualifying Employer Securities held in the Host Marriott Corporation
Stock Fund.

 

14.8 Allocation of Income of Funds. The net income of each Fund shall be
allocated among the Fund Subaccounts as provided in Section 6.8.

 

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14.9 Investment Authority of Former Employees. Any Participant who ceases to be
an Employee shall continue to have the authority to direct the investment of his
Account in accordance with the provisions of this Article.

 

14.10 Investment for the Benefit of Incompetents. If the Plan Administrator
receives notice that any person entitled to direct investments hereunder has
been determined to be legally incompetent, his Account shall be placed in a
Fund(s) determined under Section 14.2(e) until such time as the person’s legal
representative files an election in the manner specified in this Article.

 

14.11 Rules of Committee. The Committee may establish such rules as it deems
necessary to carry out the provisions of this Article and to comply with the
requirements of ERISA.

 

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ARTICLE XV.

PLAN FIDUCIARIES

 

15.1 Plan Fiduciaries.

 

(a) Named Fiduciary. The Committee is hereby named as the fiduciary of the Plan
to have authority to control and manage the operation and administration of the
Plan. As such, the Committee may hereinafter be referred to as the “Named
Fiduciary”. The Named Fiduciary shall have all of the legal liabilities and
obligations set forth in ERISA with respect to employee benefit plan
fiduciaries.

 

(b) Investment Committee. The function of the Committee shall be to advise and
assist the Plan Administrator in the day-to-day discharge of its duties
hereunder. The Committee shall consist of at least five (5), but no more than
ten (10), persons appointed by the Board of Directors. The Plan Administrator
shall attend all meetings of the Committee. A representative of the Office of
the General Counsel shall attend all meetings of the Committee and shall act as
the secretary of the Committee ex officio to record minutes of all action taken
at any such meeting. Each member of the Committee shall sit at the pleasure of
the Board of Directors and may be removed at any time with or without cause.

 

(c) Trustees. The Named Fiduciary shall appoint one or more trustees
(“Trustees”) under the terms of the Trust Agreement.

 

15.2 Fiduciary Duty. Subject to Section 403(c) of ERISA, the Named Fiduciary and
each other Fiduciary shall discharge its duties with respect to the Plan solely
in the interest of the Participants and their Beneficiaries and:

 

(a) For the exclusive purpose of providing benefits to Participants and their
Beneficiaries and defraying reasonable expenses of administering the Plan;

 

(b) 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 in the conduct of an enterprise of a like character and with
like aims;

 

(c) 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

 

(d) In accordance with the provisions of this Plan insofar as they are
consistent with the provisions of ERISA. The diversification requirement of
subsection (c) of this Section and the prudence requirement (only to the extent
that it requires diversification) of subsection (b) of this Section shall not be
violated by acquisition or holding of Qualifying Employer Real Property or by
acquisition or holding of Qualifying Employer Securities.

 

15.3 Agents and Advisors.

 

(a) Employment of Agents. The Named Fiduciary and the Committee shall have the
power to employ suitable agents and advisors for themselves including but not
limited to auditors, accountants, investment advisers and custodians and legal
and other counsel, and to

 

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pay reasonable compensation for their services. Such agents may be persons
acting in a similar capacity for the Company, or may be employees of the
Company. The opinion of any such agent shall be complete authority and
protection for any action taken or omitted by the Named Fiduciary and the
Committee acting in good faith and in accordance with such opinion.

 

(b) Delegation to Agents and Plan Administrator. The Named Fiduciary acting by
and through the Committee may employ agents and delegate to them ministerial
duties. The Named Fiduciary may also designate persons, including a Plan
Administrator and the Committee, to carry out both ministerial and fiduciary
responsibilities; provided, however, that the Trustees’ responsibility to manage
or control the assets of the Plan may not be so delegated except to an
investment manager or managers pursuant to subsection (c) of this Section.

 

(c) Appointment of Investment Manager. The Named Fiduciary shall have the power
as provided in the Trust Agreement to appoint an investment manager or managers
with the power to manage, acquire or dispose of any assets of the Plan so long
as each such investment manager (1)(i) is registered as an investment advisor
under the Investment Advisors Act of 1940; (ii) is a bank, as defined in that
Act; or (iii) is an insurance company qualified to manage, acquire, or dispose
of assets of employee pension benefit plans under the laws of more than one
State; and (2) has acknowledged in writing to the Named Fiduciary that he or she
or it is a fiduciary with respect to the Plan.

 

15.4 Administrative Action.

 

(a) Action by Majority. The action of a majority of the Board of Directors or
the Committee at the time acting hereunder, and any instrument executed by a
majority of such Directors or Committee members shall be considered the action
or instrument of the Board of Directors or the Committee as the case may be.
Action may be taken by the Board of Directors or the Committee at a meeting or
in writing without a meeting.

 

(b) Right to Vote. No Director or Committee member or Plan Administrator shall
have the right to vote or decide upon any matter relating solely to himself or
solely to any of his rights or benefits under the Plan.

 

(c) Authority to Execute Documents. The Named Fiduciary or the Committee may
authorize in writing any one or more of their number to execute any document or
documents on their behalf, and anyone dealing with the Named Fiduciary,
Committee or Trustees may accept and rely upon any document executed by such
member or members as representing action by the Named Fiduciary, Committee or
Trustees, as the case may be.

 

15.5 Liabilities and Indemnifications.

 

(a) Liability of Fiduciaries. The Named Fiduciary and their assistants and
representatives including members of the Committee and the Plan Administrator
(other than any Investment Manager) shall be free from all liability for their
acts and conduct in the administration of the Plan except for acts of willful
misconduct; provided, however, that the foregoing shall not relieve any of them
from any responsibility or liability for any responsibility, obligation or duty
that they may have pursuant to ERISA.

 

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(b) Indemnity by Company. In the event, and to the extent not insured against by
any insurance company pursuant to provisions of any applicable insurance policy,
the Company shall indemnify and hold harmless the Named Fiduciary and their
assistants and representatives including members of the Committee and the Plan
Administrator from any and all claims, demands, suits or proceedings in
connection with the Plan that may be brought by the Company’s (or Affiliated
Company’s) employees, Participants or their Beneficiaries or legal
representatives, or by any other person, corporation, entity, government or
agency thereof; provided, however, that such indemnification shall not apply to
any such person for such person’s acts of willful misconduct in connection with
the Plan.

 

15.6 Plan Expenses and Taxes.

 

(a) Plan Expenses. The administrative expenses (and the Investment Expenses)
incurred by the Named Fiduciary, the Committee and Trustees in the performance
of their duties, including recordkeeping fees and fees for legal services
rendered to the Named Fiduciary and Trustees, such compensation to the Named
Fiduciary and Trustees as may be agreed upon in writing from time to time
between themselves and the Board of Directors, and all other proper charges and
disbursements of the Named Fiduciary, the Committee and Trustees, shall be paid
by the Trust Fund to the extent not paid from forfeitures as provided in Section
6.9 or by the Company.

 

(b) Taxes. All taxes of any and all kinds whatsoever that may be levied or
assessed under existing or future laws upon or with respect to the Trust Fund or
the income thereof shall be paid from the Trust Fund, subject to the making of
appropriate charges.

 

15.7 Records and Financial Reporting.

 

(a) Book of Account. The Named Fiduciary acting by and through the Committee and
the Trustees shall keep accurate and detailed accounts of all investments,
receipts, disbursements and other transactions hereunder. Within ninety (90)
days following the close of each Fiscal Year and at the request of the Company
ninety (90) days after the removal or resignation of any Trustee as provided in
Section 15.1(c), the Trustees shall file with the Company a written account
setting forth all investments, receipts, disbursements, allocations and other
transactions effected by the Trustees during such Fiscal Year or during the
period from the close of the last Fiscal Year to the date of such removal or
resignation.

 

(b) Financial Reporting Under ERISA. The Named Fiduciary shall if required by
ERISA cause the Plan to engage, on behalf of the Participants, an independent
qualified public accountant, who shall conduct such examinations and give such
opinions as are required in connection with the Plan’s reporting and filing
requirements under ERISA. The Named Fiduciary shall make available or cause to
be made available to each Participant and each beneficiary who is receiving
benefits under this Plan, such information, financial and otherwise, and in such
manner and at such times as is required under ERISA.

 

15.8 Compliance with ERISA and Code. The Named Fiduciary shall cause the Plan to
comply with all filing requirements as provided in ERISA and in the Code and all
regulations promulgated thereunder. All authority granted to the Named
Fiduciary, the Committee and the

 

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Trustees hereunder is subject to their compliance with Sections 15.2, 15.9 and
15.10 and with ERISA.

 

15.9 Prohibited Transactions. A Fiduciary shall not engage in any prohibited
transaction within the meaning of Sections 406 and 407 of ERISA, or Section
4975(c) of the Code, unless such transaction is exempt under Section 408 or
Section 414(c) of ERISA or Section 4975(d) of the Code, or acquire or hold any
Company securities or real property except to the extent permitted under Section
407 of ERISA.

 

15.10 Foreign Assets. No Fiduciary may maintain the indicia of ownership of any
assets of the Plan outside the jurisdiction of the district courts of the United
States, except as may be authorized by the Secretary of Labor by regulation.

 

15.11 Exclusive Benefit of Trust Fund. The assets of the Trust Fund shall never
inure to the benefit of the Company and shall be held for the exclusive purposes
of providing benefits to Participants and their Beneficiaries and defraying
reasonable expenses of administering the Plan.

 

15.12 Board of Directors Resolution. Any action by the Company pursuant to any
of the provisions hereof shall be evidenced by a resolution of its Board of
Directors certified to the Committee or the Trustees over the signature of its
secretary or of any assistant secretary. The Committee and the Trustees shall be
fully protected in acting in accordance with such certified resolution.

 

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ARTICLE XVI.

PLAN ADMINISTRATION

 

16.1 Administration of the Plan.

 

(a) Authority to Administer. On behalf of the Named Fiduciary, the Committee
shall administer the Plan in accordance with its terms and shall have all powers
and discretionary authority necessary to carry out the provisions of the Plan,
including but not limited to, the power to: (1) interpret and construe the
provisions of the Plan, including making factual determinations; (2) prepare any
rules and regulations which may become necessary or desirable in the operation
of the Plan, including but not limited to specifying procedures to be followed
by eligible Employees in electing to participate in the Plan and in revoking
such participation; (3) determine eligibility for benefits and determine the
amounts and manner of payment thereof under the provisions of the Plan; (4) keep
individual accounts; (5) establish investment policies to be followed by the
Trustees; and (6) perform such other duties as may be required for the proper
administration of the Plan. The Committee shall have absolute discretion in
interpreting the provisions of the Plan and administering the Plan in accordance
with such provisions, including by way of illustration and not of limitation,
the making of determinations of eligibility to participate and the calculation
of benefits accruing or payable under this Plan.

 

(b) Delegation of Authority to Plan Administrator. In accordance with Section
15.3(b), the duties described in subsection (a) of this Section shall be
exercised by the Plan Administrator acting on behalf of the Committee, subject
to review by the Committee under Section 16.2(c) of a denial of a claim for
benefits.

 

(c) Finality of Decision. Any decision of the Named Fiduciary or of the
Committee on its behalf, in matters within its jurisdiction shall be final,
binding and conclusive upon the Company and upon all persons who have
participated or have any interest or concern, whatsoever, in the Plan.

 

16.2 Claims.

 

(a) Claims for Benefits. Any claim for benefits under the Plan shall be made in
writing to the Plan Administrator. Except as to his own account, no claimant
shall have any legal right to inquire as to any payment under the Plan having
been made or as to determining the amount of such payment.

 

(b) Notice of Claim Denied. If a claim for benefits is denied, in whole or in
part, the claims procedure set forth in Appendix B shall apply.

 

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ARTICLE XVII.

PARTICIPATING COMPANY WITHDRAWAL FROM PLAN;

TERMINATION OR MERGER OF THE PLAN

 

17.1 Voluntary Withdrawal from Plan.

 

(a) Withdrawal By Participating Company. Any Participating Company may at any
time withdraw from the Plan upon giving the Named Fiduciary at least thirty (30)
days notice in writing of its intention to withdraw, unless the Named Fiduciary
shall waive such thirty (30) days notice. The withdrawal of such Participating
Company shall be effective on the last day of the Month in which the foregoing
thirty (30) day period ends.

 

(b) Segregation of Trust Assets Upon Withdrawal. Upon the withdrawal of a
Participating Company pursuant to subsection (a) of this Section, the Plan
Administrator shall segregate the share of the assets in the Trust Fund, the
value of which, determined on the day the withdrawal of such Participating
Company shall be effective, shall equal the total credited to the accounts of
Participants of the withdrawing Participating Company. The determination of
which assets are to be so segregated shall be made by the Committee acting on
behalf of the Named Fiduciary in its sole discretion.

 

(c) Exclusive Benefit of Participants. Neither the segregation and transfer of
the Trust assets upon the withdrawal of a Participating Company nor the
execution of a new agreement and declaration of trust by such withdrawing
Participating Company shall operate to permit any part of the Trust Fund to be
used for or diverted to purposes other than for the exclusive benefit of the
Participants.

 

(d) Applicability of Withdrawal Provisions. The withdrawal provisions contained
in this Section 17.1 shall be applicable only if the withdrawing Participating
Company continues to cover its Participants and eligible employees in another
profit-sharing plan or pension plan and trust qualified under Sections 401 and
501 of the Code. Otherwise, the termination provisions of Section 17.3 shall
apply.

 

17.2 Amendment of Plan. The Board of Directors may amend the Plan with respect
to all Participating Companies or with respect to a particular Participating
Company at any time, and from time to time, pursuant to written resolutions
adopted by the Board of Directors (and all Employees and persons claiming any
interest hereunder shall be bound thereby); provided, however, that no such
amendment shall:

 

(a) Alter the rights, duties or responsibilities of the Named Fiduciary or
Trustees without their written consent;

 

(b) Permit any portion of the Trust Fund to inure to the benefit of the Company
or permit any portion of the Trust Fund to be held or used other than for the
exclusive purpose of providing benefits to Participants and their Beneficiaries
and defraying reasonable costs of administering the Plan; or

 

(c) Have the effect of decreasing the “accrued benefit” of any Participant as
proscribed in Section 411(d)(6) of the Code;

 

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(d) Have the effect of reducing any then vested percentage of benefits of any
Participant as computed in accordance with the vesting schedule under Article
VII of the Plan.

 

If the vesting schedule under Article VII of the Plan shall be amended and such
an amendment would, at any time, decrease the percentage of vested benefits
which any Participant would have been entitled to receive had the vesting
schedule not been so amended, then each Participant who is an Employee on the
date such amendment is adopted, or the date such amendment is effective,
whichever is later, and who has three (3) or more Periods of Service as of the
end of the period within which such Participant may make the election provided
for herein, shall be permitted, beginning on the date such amendment is adopted,
to irrevocably elect to have the Participant’s vested interest computed without
regard to such amendment. Written notice of such amendment and the availability
of such election must be given to each such Participant, and each such
Participant shall be granted a period of sixty (60) days after the later of:

 

(1) The Participant’s receipt of such notice; or

 

(2) The effective date of such amendment within which to make such election.

 

Such election shall be exercised by the Participant by delivering or sending
written notice thereof to the Named Fiduciary prior to the expiration of such
sixty (60) day period.

 

17.3 Voluntary Termination of Plan.

 

(a) Right to Terminate Plan. Each Participating Company contemplates that the
Plan shall be permanent and that it shall be able to make contributions to the
Plan. Nevertheless, in recognition of the fact that future conditions and
circumstances cannot now be entirely foreseen, each Participating Company
reserves the right to terminate (as to such Participating Company) either the
Plan (exclusive of the Trust Fund) or both the Plan and the Trust Fund, at any
time, by resolution of the board of directors of the Participating Company.

 

(b) Merger or Consolidation of Plan and Trust. Neither the Plan nor the Trust
Fund may be merged or consolidated with, nor may its assets or liabilities be
transferred to, any other plan or trust, unless each Participant would (if the
Plan then terminated) receive a benefit immediately after the merger,
consolidation, or transfer which is equal to or greater than the benefit the
Participant would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan had then terminated).

 

(c) Termination of Plan and Trust Fund. If the board of directors of a
Participating Company determines to terminate (as to such Participating Company)
the Plan and Trust Fund completely, the Plan and Trust Fund shall be terminated
insofar as they are applicable to such Participating Company as of the date
specified in certified copies of resolutions of such board of directors
delivered to the Named Fiduciary, the Committee and the Trustees. Upon such
termination of the Plan and Trust Fund, after payment of all expenses and
proportional adjustment of accounts of Participants employed by such
Participating Company to reflect such expenses, Trust Fund earnings or losses,
and allocations of any previously unallocated funds to the date of termination,
such Participating Company’s Participants shall be entitled to receive the

 

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amount then credited to their respective accounts in the Trust Fund. The Named
Fiduciary, in its sole discretion, may make payment of such amount in cash, in
assets of the Trust Fund, or in the form of immediate or deferred payment term
annuity contracts for such Participants.

 

17.4 Discontinuance of Contributions. Whenever a Participating Company
determines that it is impossible or inadvisable for it to make further
contributions as provided in the Plan, the board of directors of such
Participating Company may, without terminating the Trust Fund, adopt an
appropriate resolution permanently discontinuing all further contributions by
such Participating Company. A certified copy of such resolution shall be
delivered to the Named Fiduciary, the Committee and the Trustees. Thereafter,
the Named Fiduciary, the Committee and the Trustees shall continue to administer
all the provisions of the Plan, which are necessary and remain in force, other
than the provisions relating to contributions by such Participating Company.
However, the Trust Fund shall remain in existence with respect to such
Participating Company and all of the provisions of the Plan relating to the
Trust Fund shall remain in force.

 

17.5 Rights to Benefits Upon Termination of Plan or Complete Discontinuance of
Contributions. Upon the termination or partial termination of the Plan or the
complete discontinuance of contributions by a Participating Company, the rights
of each of such Participating Company’s Participants affected by such
termination or partial termination to the amount credited to such Participant’s
Account at such time shall be nonforfeitable without reference to any formal
action on the part of such Participating Company, the Named Fiduciary, the
Committee or the Trustees.

 

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ARTICLE XVIII.

ELECTION TO PARTICIPATE BY SUBSIDIARIES

 

18.1 Consent Required for Subsidiaries to Join Plan. The Plan Administrator,
upon receiving a written resolution of the board of directors of a Subsidiary
electing to become a Participating Company, may approve or disapprove such
election acting as the delegate of the Board of Directors. The Board of
Directors shall retain the final authority to override such action and approve
or disapprove the Subsidiary’s request.

 

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ARTICLE XIX.

MISCELLANEOUS PROVISIONS

 

19.1 Status of Employment. The adoption and maintenance of the Plan shall not be
deemed to constitute a contract of employment between the Company and any
Employee or Participant, or to be a consideration for, or an inducement or
condition of, any employment. Nothing contained herein shall be deemed to give
any Employee the right to be retained in the service of the Company or to
interfere with the right of the Company to discharge any Employee or Participant
at any time.

 

19.2 Liability of Company. Except as may be determined by the Board of
Directors, in its sole discretion from time to time, all benefits payable under
this Plan shall be paid or provided solely from the Trust Fund and the Company
(other than Host Marriott, L.P. in its role as Named Fiduciary) assumes no
liability or responsibility therefore; its obligation which is expressly stated
to be non-contractual is limited solely to the making of contributions to the
Trust Fund as provided in this Plan.

 

19.3 Information.

 

(a) Supplied by Named Fiduciary, the Committee or Trustees. A certification in
writing to the Named Fiduciary, Plan Administrator, the Committee or the
Trustees, executed in accordance with the provisions of this Plan, certifying to
the existence, occurrence or happening of any event, shall constitute evidence
of such existence, occurrence or happening; and the Named Fiduciary, Plan
Administrator, the Committee, the Trustees and the Company shall be fully
protected in accepting and relying upon such certification and shall incur no
liability or responsibility for so doing.

 

(b) Supplied by Company. At the request of the Named Fiduciary, the Committee or
the Trustees, the Company shall furnish in writing to the Named Fiduciary, the
Committee or the Trustees such information as may be necessary or desirable in
order that the Named Fiduciary, the Committee or the Trustees may be able to
carry out their respective duties hereunder. The Named Fiduciary, the Committee
and the Trustees shall be entitled to rely upon such information as being
correct.

 

19.4 Provisions of Plan to Control. In the event of any conflict between the
terms of the Plan as set forth in this instrument and in any description of the
Plan which may be furnished to Participants or others, the Plan set forth herein
shall control.

 

19.5 Payment for Benefit of Incompetent. The Trustees may make payment to any
incompetent who is entitled to receive payments hereunder by making the same to
the legal representative of such incompetent or to his parent or Spouse or may
apply them for the incompetent benefit.

 

19.6 Account to be Charged Upon Payment. When any distribution or other payment
is made to or for the benefit or on behalf of any party entitled to receive
payments hereunder, the account held for the benefit of such party shall be
charged accordingly.

 

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19.7 Tax Qualification of Plan. The Plan is intended to qualify as a tax exempt
profit sharing plan pursuant to the provisions of Section 401, the cash or
deferred arrangement provisions of the Plan set forth in Article V and elsewhere
are intended to satisfy the requirements of Sections 401(k) and 401(m), and the
Trust created hereunder is intended to qualify as a tax exempt trust under the
provisions of Section 501(a) of the Code together with any amendments thereto
and all provisions of the Plan shall be construed to obtain those results.

 

19.8 Deductibility of Company Contributions. The Contributions made by the
Company under this Plan are intended to be deductible as business expenses,
under the provisions of Section 404 of the Code, together with any amendments
thereto, and all provisions of the Plan shall be construed accordingly.

 

19.9 Restriction on Alienation or Assignment. Benefits provided under the Plan
may not be assigned or alienated, except as permitted by Article XIII and the
following:

 

(a) A loan made by the Plan to a Participant in accordance with Article XI shall
be secured by the Participant’s After-tax Savings Account and Company
Contribution Account as provided in Article XI.

 

(b) If a Participant is indebted to the Company or to the Marriott Employees
Federal Credit Union at the time any payments are to be made to such Participant
or to the Participant’s Beneficiary hereunder and if the Participant, prior to
September 2, 1974 has executed in favor of such creditor an irrevocable security
assignment of the Participant’s account balances in the Plan, the Trustees are
authorized to pay to such creditor all or such portion of said payments as may
be required to discharge such indebtedness.

 

(c) An offset to a Participant’s benefit against an amount the Participant is
required to pay the Plan with respect to a judgment, order, decree or settlement
entered into or against a Participant on or after August 5, 1997 shall be
permitted in accordance with Code section 401(a)(13)(C).

 

19.10 Unclaimed Benefits. In the event that benefit payments owing to a
Participant have not been claimed by the Participant within three (3) years of
the date on which such benefits first became payable, the Plan Administrator
shall, at the end of the Fiscal Year during which such three (3) year
anniversary occurs reallocate such benefits to the remaining Participants in the
manner provided in Section 6.10(a). If subsequent to such reallocation, the
Participant entitled to such benefits makes claim therefor, the Plan
Administrator shall promptly pay such forfeited benefit. Funds with which to pay
any such benefits shall be provided as set forth in Section 6.10(b ).

 

19.11 Recovery of Plan Benefits Payment Made by Mistake. A Participant or
Beneficiary shall be required to return to the Plan any payments made under the
Plan made by a mistake of fact or law.

 

19.12 Bonding. Every Fiduciary of the Plan and every person who handles funds or
other property of the Plan shall be bonded if and to the extent required by
Section 412 of ERISA.

 

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19.13 Titles and Captions. The titles and captions to the Articles, Sections and
subsections in the Plan are placed herein for convenience of reference only, and
in case of any conflict the text of this instrument, rather than such titles,
shall control.

 

19.14 Execution of Counterparts. This instrument may be executed in any number
of counterparts, each of which shall be deemed to be an original.

 

19.15 Governing Law. The Plan shall be governed, construed, administered and
regulated in all respects by and under the laws of the State of Maryland.

 

19.16 Separability. If any provisions of the Plan shall for any reason be
invalid or unenforceable, the remaining provisions shall nevertheless remain in
full force and effect.

 

19.17 Supplements and Appendices. Supplements and Appendices to the Plan or the
Trust may be adopted, attached to and incorporated in the Plan or the Trust at
any time. The provisions of any such Supplements or Appendices shall have the
same effect that such provisions would have if they were included within the
basic text of the Plan or the Trust. Supplements and Appendices shall be adopted
by the Board pursuant to the amendment authority set forth in Section 17.2 of
the Plan and shall specify the persons affected.

 

19.18 Military Service. Notwithstanding any other provision of the Plan to the
contrary, contributions, benefits and service credit with respect to qualified
military service will be provided in accordance with section 414(u) of the
Internal Revenue Code.

 

19.19 Employer Securities. Notwithstanding any provision of the Plan or Trust to
the contrary, the Plan may invest in Qualifying Employer Securities and
Qualifying Employer Real Property up to 100% of the Plan’s assets or otherwise
the maximum permitted by ERISA.

 

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ARTICLE XX.

TOP HEAVY PROVISIONS

 

20.1 Determination of Top Heavy Status. For purposes of this Article, the Plan
shall be a Top Heavy Plan if, as of the Determination Date, either:

 

(a) The sum of the aggregated accounts of Participants who are “key employees”
(as defined in Section 416(i) of the Code) exceeds sixty percent (60%) of the
sum of the aggregated accounts of all Plan Participants; or

 

(b) The Plan is included in a Top Heavy Group.

 

If a Participant has received no compensation from the Company during the five
(5) year period preceding the Determination Date, his account balance may be
disregarded for purposes of determining whether the Plan is top-heavy. Solely
for purposes of determining which Participants are “key employees,” the term
“compensation” (as used in Section 416(1) of the Code) shall mean the
compensation stated on an Employee’s Form W-2 for the calendar year that ends
with or within the Plan Year.

 

20.2 Definitions. For purposes of this Article, the following terms shall have
the meanings set forth herein:

 

(a) “Aggregation Group” means:

 

(1) Each Section 401 Plan of the Company in which a “key employee” (as defined
in Section 416(i) of the Code) is a participant; and

 

(2) Each Section 401 Plan of the Company which enables any plan described in
subsection (a)(i) of this Section to meet the requirements of Section 401(a)(4)
or 410 of the Code.

 

(3) To the extent elected by the Committee, any other Section 401 Plan of the
Company that when aggregated with any plans described in Subsections (a)(1) and
(2) of this Section meets the requirements of Sections 401(a)(4) and 410 of the
Code.

 

(b) “Determination Date” means, with respect to any Plan Year, the last day of
the preceding Plan Year. In the case of the Plan Year which includes the
Effective Date of the Plan, the last day of such Plan Year.

 

(c) “Section 401 Plan” means any stock bonus, pension, or profit sharing plan
subject to the qualification requirements of Section 401 of the Code.

 

(d) “Top Heavy Group” means any Aggregation Group determined to be a Top Heavy
Group in accordance with the test set forth in Code Section 416(g)(2)(B).

 

(e) “Valuation Date” shall have the same meaning as set forth in Section 1.72.

 

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20.3 Requirements if Plan is a Top Heavy Plan. Notwithstanding any other
provision of this Plan, for any Plan Year for which the Plan is a Top Heavy
Plan, a minimum allocation shall be made on behalf of each Participant who is
not a “key employee” (as defined in Section 416(i) of the Code) and who is
employed on the last day of such Plan Year in an amount equal to the lesser of
(a) three percent (3%) of such Participant’s Compensation or (b) the largest
percentage of Compensation allocated to any key employee during such Plan Year.
401(k) elective deferrals made by a non-key employee under this Plan or any
other plan of the Company or a Subsidiary pursuant to a cash or deferred
arrangement shall not be credited toward the minimum allocation described in the
preceding sentence. The minimum allocation shall not apply to any non-key
employee who receives a minimum contribution or a minimum benefit under any
other plan of the Company or a Subsidiary. Notwithstanding the above, if a
non-key employee participates in this Plan and a defined benefit plan that is
included in an Aggregation Group, the non-key employee shall receive a minimum
benefit under the defined benefit plan rather than a minimum allocation under
this Plan, provided that if the defined benefit plan does not provide for a
minimum benefit, the non-key employee shall receive a minimum allocation under
this Plan of five percent (5%) of Compensation.

 

20.4 Applicability of Top-Heavy Rules. The top-heavy requirements of Section 416
of the Code and Article 20 of the Plan shall not apply in any year beginning
after December 31, 2001, in which the plan consists solely of a cash or deferred
arrangement which meets the requirements of Section 401(k)(12) of the Code and
matching contributions with respect to which the requirements of the Section
401(m)(11) of the Code are met.

 

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Appendix A

 

MINIMUM DISTRIBUTION REQUIREMENTS

 

Section A-1. General Rules

 

A-1.1. Effective Date. The provisions of this Appendix will apply for purposes
of determining required minimum distributions for calendar years beginning with
the 2003 calendar year.

 

A-1.2. Precedence. The requirements of this Appendix will take precedence over
any inconsistent provisions of the Plan.

 

A-1.3. Requirements of Treasury Regulations Incorporated. All distributions
required under this Appendix will be determined and made in accordance with the
Treasury regulations under Code Section 401(a)(9).

 

A-1.4. TEFRA Section 242(b)(2) Elections. Notwithstanding the other provisions
of this Appendix, distributions may be made under a designation made before
January 1, 1984, in accordance with section 242(b)(2) of the Tax Equity and
Fiscal Responsibility Act (TEFRA) and the provisions of the Plan that relate to
section 242(b)(2) of TEFRA.

 

Section A-2. Time and Manner of Distribution.

 

A-2.1. Required Beginning Date. The Participant’s entire interest will be
distributed, or begin to be distributed, to the Participant no later than the
Participant’s Required Beginning Date.

 

A-2.2. Death of Participant Before Distributions Begin. If the Participant dies
before distributions begin, the Participant’s entire interest will be
distributed, or begin to be distributed, no later than as follows:

 

(a) If the Participant’s surviving spouse is the Participant’s sole designated
beneficiary, then distributions to the surviving spouse will begin by the later
of December 31 of the calendar year immediately following the calendar year in
which the Participant died or by December 31 of the calendar year in which the
Participant would have attained age 70½.

 

(b) If the Participant’s surviving spouse is not the Participant’s sole
designated beneficiary, then, distributions to the designated beneficiary will
begin by December 31 of the calendar year immediately following the calendar
year in which the Participant died.

 

(c) If there is no designated beneficiary as of September 30 of the year
following the year of the Participant’s death, the Participant’s entire interest
will be distributed by December 31 of the calendar year containing the fifth
anniversary of the Participant’s death.

 

(d) If the Participant’s surviving spouse is the Participant’s sole designated
beneficiary and the surviving spouse dies after the Participant but before
distributions to the surviving spouse

 

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begin, this section A-2.2, other than section A-2.2(a), will apply as if the
surviving spouse were the Participant.

 

For purposes of this section A-2.2 and section A-4, unless section A-2.2(d)
applies, distributions are considered to begin on the Participant’s Required
Beginning Date. If section A-2.2(d) applies, distributions are considered to
begin on the date distributions are required to begin to the surviving spouse
under section A-2.2(a). If distributions under an annuity purchased from an
insurance company irrevocably commence to the Participant before the
Participant’s Required Beginning Date (or to the Participant’s surviving spouse
before the date distributions are required to begin to the surviving spouse
under section A-2.2(a)), the date distributions are considered to begin is the
date distributions actually commence.

 

A-2.3. Forms of Distribution. Unless the Participant’s interest is distributed
in a single sum on or before the Required Beginning Date, as of the first
distribution calendar year distributions will be made in accordance with
sections A-3 and A-4 of this Appendix. If the Participant’s interest is
distributed in the form of an annuity purchased from an insurance company,
distributions thereunder will be made in accordance with the requirements of
Section 401(a)(9) of the Code and the Treasury regulations.

 

Section A-3. Required Minimum Distributions During Participant’s Lifetime.

 

A-3.1. Amount of Required Minimum Distribution For Each Distribution Calendar
Year. During the Participant’s lifetime, the minimum amount that will be
distributed for each distribution calendar year is the lesser of:

 

(a) the quotient obtained by dividing the Participant’s account balance by the
distribution period in the Uniform Lifetime Table set forth in Treas. Reg. Sec.
1.401(a)(9)-9, using the Participant’s age as of the Participant’s birthday in
the distribution calendar year; or

 

(b) if the Participant’s sole designated beneficiary for the distribution
calendar year is the Participant’s spouse, the quotient obtained by dividing the
Participant’s account balance by the number in the Joint and Last Survivor Table
set forth in Treas. Reg. Sec. 1.401(a)(9)-9, using the Participant’s and
spouse’s attained ages as of the Participant’s and spouse’s birthdays in the
distribution calendar year.

 

A-3.2. Lifetime Required Minimum Distributions Continue Through Year of
Participant’s Death. Required minimum distributions will be determined under
this section A-3 beginning with the first distribution calendar year and up to
and including the distribution calendar year that includes the Participant’s
date of death.

 

Section A-4. Required Minimum Distributions After Participant’s Death.

 

A-4.1. Death On or After Date Distributions Begin.

 

(a) Participant Survived by Designated Beneficiary. If the Participant dies on
or after the date distributions begin and there is a designated beneficiary, the
minimum amount that will be distributed for each distribution calendar year
after the year of the Participant’s death is the quotient obtained by dividing
the Participant’s account balance by the longer of the remaining

 

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life expectancy of the Participant or the remaining life expectancy of the
Participant’s designated beneficiary, determined as follows:

 

(1) The Participant’s remaining life expectancy is calculated using the age of
the Participant in the year of death, reduced by one for each subsequent year.

 

(2) If the Participant’s surviving spouse is the Participant’s sole designated
beneficiary, the remaining life expectancy of the surviving spouse is calculated
for each distribution calendar year after the year of the Participant’s death
using the surviving spouse’s age as of the spouse’s birthday in that year. For
distribution calendar years after the year of the surviving spouse’s death, the
remaining life expectancy of the surviving spouse is calculated using the age of
the surviving spouse as of the spouse’s birthday in the calendar year of the
spouse’s death, reduced by one for each subsequent calendar year.

 

(3) If the Participant’s surviving spouse is not the Participant’s sole
designated beneficiary, the designated beneficiary’s remaining life expectancy
is calculated using the age of the beneficiary in the year following the year of
the Participant’s death, reduced by one for each subsequent year.

 

(b) No Designated Beneficiary. If the Participant dies on or after the date
distributions begin and there is no designated beneficiary as of September 30 of
the year after the year of the Participant’s death, the minimum amount that will
be distributed for each distribution calendar year after the year of the
Participant’s death is the quotient obtained by dividing the Participant’s
account balance by the Participant’s remaining life expectancy calculated using
the age of the Participant in the year of death, reduced by one for each
subsequent year.

 

A-4.2. Death Before Date Distributions Begin

 

(a) Participant Survived by Designated Beneficiary. If the Participant dies
before the date distributions begin and there is a designated beneficiary, the
minimum amount that will be distributed for each distribution calendar year
after the year of the Participant’s death is the quotient obtained by dividing
the Participant’s account balance by the remaining life expectancy of the
Participant’s designated beneficiary, determined as provided in section A-4.1.

 

(b) No Designated Beneficiary. If the Participant dies before the date
distributions begin and there is no designated beneficiary as of September 30 of
the year following the year of the Participant’s death, distribution of the
Participant’s entire interest will be completed by December 31 of the calendar
year containing the fifth anniversary of the Participant’s death.

 

(c) Death of Surviving Spouse Before Distributions to Surviving Spouse Are
Required to Begin. If the Participant dies before the date distributions begin,
the Participant’s surviving spouse is the Participant’s sole designated
beneficiary, and the surviving spouse dies before distributions are required to
begin to the surviving spouse under section A-2.2(a), this section A-4.2 will
apply as if the surviving spouse were the Participant.

 

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Section A-5. Definitions.

 

A-5.1. Designated beneficiary. The individual who is designated as the
beneficiary under Section 1.16 of the Plan and is the designated beneficiary
under Code Section 401(a)(9). Treas. Reg. Sec. 1.401(a)(9)-1, Q&A-4.

 

A-5.2. Distribution calendar year. A calendar year for which a minimum
distribution is required. For distributions beginning before the Participant’s
death, the first distribution calendar year is the calendar year immediately
preceding the calendar year which contains the Participant’s Required Beginning
Date. For distributions beginning after the Participant’s death, the first
distribution calendar year is the calendar year in which distributions are
required to begin under section A-2.2. The required minimum distribution for the
Participant’s first distribution calendar year will be made on or before the
Participant’s Required Beginning Date. The required minimum distribution for
other distribution calendar years, including the required minimum distribution
for the distribution calendar year in which the Participant’s Required Beginning
Date occurs, will be made on or before December 31 of that distribution calendar
year.

 

A-5.3. Life expectancy. Life expectancy as computed by use of the Single Life
Table in Treas. Reg. Sec. 1.401(a)(9)-9.

 

A-5.4. Participant’s account balance. The account balance as of the last
valuation date in the calendar year immediately preceding the distribution
calendar year (valuation calendar year) increased by the amount of any
contributions made and allocated or forfeitures allocated to the account balance
as of dates in the valuation calendar year after the valuation date and
decreased by distributions made in the valuation calendar year after the
valuation date. The account balance for the valuation calendar year includes any
amounts rolled over or transferred to the Plan either in the valuation calendar
year or in the distribution calendar year if distributed or transferred in the
valuation calendar year.

 

A-5.5. Required Beginning Date. The date specified in Section 1.61 of the Plan.

 

The Sections marked below shall apply for purposes of this Appendix.

 

Section A-6. Election to Apply 5-Year Rule to Distributions to Designated
Beneficiaries.

 

For all distributions, if the Participant dies before distributions begin and
there is a designated beneficiary, distribution to the designated beneficiary is
not required to begin by the date specified in section A- 2.2 of this Appendix,
but the Participant’s entire interest will be distributed to the designated
beneficiary by December 31 of the calendar year containing the fifth anniversary
of the Participant’s death. If the Participant’s surviving spouse is the
Participant’s sole designated beneficiary and the surviving spouse dies after
the Participant but before distributions to either the Participant or the
surviving spouse begin, this election will apply as if the surviving spouse were
the Participant.

 

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Section A-7. Election to Allow Participants or Beneficiaries to Elect 5-Year
Rule.

 

Participants or Beneficiaries may elect on an individual basis whether the
5-year rule or the life expectancy rule in sections A-2.2 and A-4.2 of this
Appendix applies to distributions after the death of a Participant who has a
designated beneficiary. The election must be made no later than the earlier of
September 30 of the calendar year in which distribution would be required to
begin under section A-2.2 of this Appendix, or by September 30 of the calendar
year which contains the fifth anniversary of the Participant’s (or, if
applicable, surviving spouse’s) death. If neither the Participant nor
Beneficiary makes an election under this paragraph, distributions will be made
in accordance with sections A-2.2 and A-4.2 of this Appendix and, if applicable,
the elections in section A-6 above.

 

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Appendix B

 

Claims Procedure

 

CLAIMS FOR BENEFITS

 

The Plan Administrator shall determine the Participants’, alternate payees’ and
Beneficiaries’ rights to benefits under the Plan. Except as to their own
Accounts, claimants shall not have any legal right to inquire as to any payment
under this Plan having been made or as to determining the amount of such
payment.

 

REQUIREMENTS FOR NOTICE OF DENIAL

 

If a claim is wholly or partially denied, the Administrator shall provide the
claimant with a notice of denial written in a manner calculated to be understood
by the claimant, setting forth:

 

  1. The specific reason for such denial;

 

  2. Specific references to the pertinent Plan provisions on which the denial is
based;

 

  3. A description of any additional material or information necessary for the
claimant to perfect the claim with an explanation of why such material or
information is necessary; and

 

  4. Appropriate information as to the steps (including time limits applicable
to such steps) to be taken if the claimant wishes to submit his or her claim for
review and a statement of the claimant’s rights to bring a civil action under
Section 502(a) of ERISA.

 

TIMING OF NOTIFICATION OF DENIAL

 

The notice of denial shall be given within a reasonable time period but no later
than 60 days after the claim is filed, unless special circumstances require an
extension of time for processing the claim. If such extension is required,
written notice shall be furnished to the claimant within 90 days of the date the
claim was filed stating the special circumstances requiring an extension of time
and the date by which a decision on the claim can be expected, which shall be no
more than 180 days from the date the claim was filed. If no notice of denial is
provided as herein described, the claimant may appeal the claim as though the
claim had been denied.

 

CLAIM FOR APPEAL MUST BE SUBMITTED WITHIN 60 DAYS

 

In the event of a dispute over benefits, a Participant, alternate payee, or
Beneficiary may file a written claim for benefits with the Administrator,
provided such claim is filed within 60 days of the date the Participant,
Beneficiary, or alternate payee receives notification of the Administrative
decision. In connection with the claimant’s appeal of the denial of the claim
for

 

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benefits, the claimant (or his authorized representative) may review permanent
documents and may submit issues and comments regarding the claim in writing.

 

TIME LIMIT ON REVIEW OF DENIED CLAIM

 

Upon receipt of a request for review, the Administrator shall provide written
notification of its decision to the claimant stating the specific reasons and
referencing specific plan provisions on which its decision is based, within a
reasonable time period but not later than 60 days after receiving the request,
unless special circumstances require an extension for processing the review. If
such an extension is required, the Administrator shall notify the claimant in
writing of such special circumstances and of the date, no later than 120 days
after the original date the review was requested, on which the Administrator
will notify the claimant of its decision.

 

CLAIMANT’S RIGHTS DURING APPEAL

 

Claimant will have a reasonable opportunity for a full and fair review of a
claim and adverse benefit determination, including the following:

 

  1. Claimant has the opportunity to submit written comments, documents,
records, and other information relating to the claim for benefits;

 

  2. Claimant shall be provided, upon request and free of charge, reasonable
access to, and copies of, all documents, records, and other information relevant
to the claimant’s claim for benefits. A document is “relevant” if such document
(A) was relied upon in making the benefit determination; (B) was submitted,
considered, or generated in the course of making the benefit determination,
without regard to whether such document, record, or other information was relied
upon in making the benefit determination; (C) demonstrates compliance with the
administrative processes and safeguards designed to ensure and to verify that
benefit claim determinations are made in accordance with governing plan
documents and that, where appropriate, the Plan provisions have been applied
consistently with respect to similarly situated claimants; or (D) constitutes a
statement of policy or guidance with respect to the plan concerning the denied
treatment option or benefit for the claimant’s diagnosis, without regard to
whether such advice or statement was relied upon in making the benefit
determination; and

 

  3. The claims procedure shall provide for a review that takes into account all
comments, documents, records, and other information submitted by the claimant
relating to the claim, without regard to whether such information was submitted
or considered in the initial benefit determination.

 

If a claim is wholly or partially denied, the Administrator shall provide the
claimant with a notice of denial written in a manner calculated to be understood
by the claimant, setting forth:

 

  1. The specific reason for such denial;

 

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  2. Specific references to the pertinent Plan provisions on which the denial is
based;

 

  3. A statement that the claimant is entitled to receive, upon request and free
of charge, reasonable access to, and copies of, all documents, records, and
other information relevant to the claimant’s claim for benefits. A document,
record, or other information is relevant to a claim for benefits if such
document, record, or other information: (A) was relied upon in making the
benefit determination; (B) was submitted, considered, or generated in the course
of making the benefit determination, without regard to whether such document,
record, or other information was relied upon in making the benefit
determination; (C) demonstrates compliance with the administrative processes and
safeguards designed to ensure and to verify that benefit claim determinations
are made in accordance with governing Plan documents and that, where
appropriate, the Plan provisions have been applied consistently with respect to
similarly situated claimants; or (D) constitutes a statement of policy or
guidance with respect to the Plan concerning the denied treatment option or
benefit for the claimant’s diagnosis, without regard to whether such advice or
statement was relied upon in making the benefit determination; and

 

  4. Appropriate information as to the steps (including time limits applicable
to such steps) to be taken if the claimant wishes to submit his or her claim for
review and a statement of the claimant’s rights to bring a civil action under
Section 502(a) of ERISA.

 

REQUIREMENTS FOR DISABILITY BENEFITS

 

  1. Timing of Notification of Denial. Notwithstanding the foregoing, a notice
of denial of disability benefits shall be given within a reasonable time period
but no later than 45 days after the claim is filed. This period may be extended
by 30 days provided that special circumstances require an extension of time for
processing the claim due to matters beyond the control of the Plan. If prior to
the end of the first 30 day extension, the Administrator determines that, due to
matters beyond the control of the Plan, a decision cannot be rendered within the
initial 30 day extension period, the period for making the determination may be
extended an additional 30 days. If such second 30 day extension is required,
written notice shall be furnished to the claimant within 75 days of the date the
claim was filed stating the special circumstances requiring an extension of time
and the date by which a decision on the claim can be expected, which shall be no
more than 105 days from the date the claim was filed. If an initial or secondary
30 day extension is required, written notice shall be furnished to the claimant
within 45 days or 75 days of the date the claim was filed, as applicable,
stating: (A) the special circumstances requiring an extension of time; (B) the
date by which a decision on the claim can be expected, which shall be no more
than 75 days or 105 days from the date the claim was filed; (C) the standards on
which entitlement to a benefit is based; (D) the unresolved issues that prevent
a decision on the claim; (E) any additional information needed to resolve those
issues; and (F) the time period during which the claimant must provide any
additional information, which shall be no less than 45 days.

 

B-3

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  2. Requirements for Notification of Denial. If a claim is wholly or partially
denied, the Administrator shall provide the claimant with a notice of denial
written in a manner calculated to be understood by the claimant, setting forth:

 

  a. The specific reason for such denial;

 

  b. Specific references to the pertinent Plan provisions on which the denial is
based;

 

  c. A description of any additional material or information necessary for the
claimant to perfect the claim with an explanation of why such material or
information is necessary;

 

  d. Appropriate information as to the steps (including time limits applicable
to such steps) to be taken if the claimant wishes to submit his or her claim for
review and a statement of the claimant’s rights to bring a civil action under
Section 502(a) of ERISA;

 

  e. If an internal rule, guideline, protocol or other similar criterion was
relied upon in making the denial of a claim for disability benefits, either (i)
the specific rule, guideline, protocol or other similar criterion will be
provided or (ii) a statement that a specific rule, guideline, protocol or other
similar criterion was relied upon and that a copy of such specific rule,
guideline, protocol or other similar criterion will be provided free of charge
to the claimant upon request; and

 

  f. If the denial of a claim for disability benefits is based on a medical
necessity, experimental treatment or similar exclusion or limit, either (i) an
explanation of the scientific or clinical judgment for the determination as
applied to the claimant’s specific circumstances or (ii) a statement that such
explanation will be provided free of charge upon request.

 

  3. Claim for Appeal Must be Submitted within 60 Days. The claimant and/or his
representative may appeal the denied claim, free of charge, provided that such
appeal is made within 180 days of the date the claimant receives a notification
of the denied disability claim. The decision of the claimant as to whether or
not to submit a benefit dispute to this voluntary level of appeal will have no
effect on the claimant’s rights to any other benefits under the Plan. The
Committee’s review shall take into account all comments, documents, records and
other information submitted by the claimant relating to the claim, regardless of
whether such information was submitted and/or considered in the initial
determination. In the review of a claim for disability benefits, the following
shall apply:

 

  a.

A review shall not afford deference to the initial denial and shall be conducted
by a named fiduciary of the Plan who is neither the individual who made the
adverse

 

B-4

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benefit determination that is the subject of the appeal, nor a subordinate or
such individual;

 

  b. The named fiduciary who is reviewing the appeal and making a determination
based, in whole or in part, on medical judgment shall consult with a health care
professional who (i) has appropriate training and experience in the field of
medicine involved in the medical judgment, (ii) did not consult with respect to
the initial adverse benefit determination that is the subject of the appeal, and
(iii) is not a subordinate of an individual who consulted with respect to the
initial adverse benefit determination that is the subject of the appeal; and

 

The Plan shall provide the identification of medical or vocational experts whose
advice was obtained on behalf of the Plan in connection with the denial of the
claim for disability benefits.

 

B-5