Exhibit 10.25
HILTON HOTELS THRIFT SAVINGS PLAN
(1996 RESTATEMENT)
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.1 Requirements for Participation . . . . . . . . . . 23
Section 2.2 Notice of Eligibility. . . . . . . . . . . . . . . 23
Section 2.3 Application to Participate . . . . . . . . . . . . 23
Section 2.4 Designation of Beneficiary . . . . . . . . . . . . 24
Section 2.5 Date of Participation. . . . . . . . . . . . . . . 26
ARTICLE III
PARTICIPANT'S CONTRIBUTIONS . . . . . . . . . . . . . . . . . . 26
Section 3.1 Participant Contributions. . . . . . . . . . . . . 26
Section 3.2 Compensation Deferrals . . . . . . . . . . . . . . 27
Section 3.3 Change in Participant's Contributions. . . . . . . 29
Section 3.4 Cessation of Participation . . . . . . . . . . . . 29
Section 3.5 Investment Funds . . . . . . . . . . . . . . . . . 30
Section 3.6 Valuation of Accounts. . . . . . . . . . . . . . . 31
Section 3.7 Section 404(c) Provisions. . . . . . . . . . . . . 31
Section 3.8 Section 402(g) Limit on Compensation
Deferrals. . . . . . . . . . . . . . . . . . . . . 32
Section 3.9 Section 401(k) Limitations on
Compensation Deferrals . . . . . . . . . . . . . . 34
Section 3.10 Section 401(m) Limitations on Participant
Contributions and Matching Company Contributions . 39
Section 3.11 Rollover Contributions . . . . . . . . . . . . . . 43
ARTICLE IV
COMPANY CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . 44
Section 4.1 Matching Company Contributions . . . . . . . . . . 44
Section 4.2 Allocation of Matching Company
Contributions. . . . . . . . . . . . . . . . . . . 46
Section 4.3 Contribution Limits. . . . . . . . . . . . . . . . 47
Section 4.4 Limit of Deductible Contributions By The
Company. . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE V
PARTICIPANT'S ACCOUNTS. . . . . . . . . . . . . . . . . . . . . 47
Section 5.1 Account Balances . . . . . . . . . . . . . . . . . 47
Section 5.2 Allocation of Earnings, Losses and
Changes in Fair Market Value of the Net Assets of
the Funds. . . . . . . . . . . . . . . . . . . . . 48
Section 5.3 Vesting of Participant's Interests . . . . . . . . 48
ARTICLE VI
DISTRIBUTION FROM TRUST FUND. . . . . . . . . . . . . . . . . . 51
i
TABLE OF CONTENTS (CONTINUED)
PAGE
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Section 6.1 When Interests Become Distributable and
Effect Thereof . . . . . . . . . . . . . . . . . . 51
Section 6.2 Payment. . . . . . . . . . . . . . . . . . . . . . 52
Section 6.3 Disposition of Forfeitable Interest -
Effect of Rehiring . . . . . . . . . . . . . . . . 57
Section 6.4 Spendthrift Trust Provisions . . . . . . . . . . . 58
Section 6.5 Withdrawal of Contributions. . . . . . . . . . . . 59
Section 6.6 Missing Participant or Beneficiary . . . . . . . . 66
Section 6.7 Direct Rollovers . . . . . . . . . . . . . . . . . 67
ARTICLE VII
COMMITTEE, INVESTMENT AND ADMINISTRATION. . . . . . . . . . . . 69
Section 7.1 Appointment of Committee . . . . . . . . . . . . . 69
Section 7.2 General Duties and Powers of Committee . . . . . . 69
Section 7.3 Investment Powers and Duties . . . . . . . . . . . 71
Section 7.4 Organization of Committee. . . . . . . . . . . . . 74
Section 7.5 Records and Reports. . . . . . . . . . . . . . . . 75
Section 7.6 Claims Procedure . . . . . . . . . . . . . . . . . 76
Section 7.7 Manner of Administering. . . . . . . . . . . . . . 77
Section 7.8 Compensation, Bonding, Expenses
and Indemnity. . . . . . . . . . . . . . . . . . . 77
ARTICLE VIII
CONTINUANCE AND AMENDMENT OF PLAN . . . . . . . . . . . . . . . 79
Section 8.1 Continuance of Plan Not a Contractual
Obligation of Company - Impossibility of
Diversion. . . . . . . . . . . . . . . . . . . . . 79
Section 8.2 Consolidation or Merger. . . . . . . . . . . . . . 80
Section 8.3 Amendments . . . . . . . . . . . . . . . . . . . . 81
Section 8.4 Termination of Plan. . . . . . . . . . . . . . . . 82
ARTICLE IX
ADMINISTRATION OF THE TRUST FUND -
THE TRUST AGREEMENT - EXPENSES. . . . . . . . . . . . . . . . . 83
ARTICLE X
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 10.1 Loans to Participants. . . . . . . . . . . . . . . 84
Section 10.2 Limits on Employees' Rights. . . . . . . . . . . . 88
Section 10.3 Transfers of Participants. . . . . . . . . . . . . 88
Section 10.4 Context to Control . . . . . . . . . . . . . . . . 89
Section 10.5 Construction . . . . . . . . . . . . . . . . . . . 89
Section 10.6 Qualified Domestic Relations Orders. . . . . . . . 89
Section 10.7 Action by Participant or Other Person. . . . . . . 89
Section 10.8 Receipt or Release . . . . . . . . . . . . . . . . 90
ii
TABLE OF CONTENTS (CONTINUED)
PAGE
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Section 10.9 Persons Under Incapacity . . . . . . . . . . . . . 90
Section 10.10 Top-Heavy Plan Requirements . . . . . . . . . . . 90
ARTICLE XI
LAW GOVERNING AND SEVERABILITY. . . . . . . . . . . . . . . . . 91
APPENDIX A
ANNUAL ADDITION LIMITS. . . . . . . . . . . . . . . . . . . . .A-1
APPENDIX B
TOP-HEAVY PROVISIONS. . . . . . . . . . . . . . . . . . . . . .B-1
iii
HILTON HOTELS THRIFT SAVINGS PLAN
(1996 Restatement)
HILTON HOTELS CORPORATION, pursuant to action of its Board
of Directors taken at a duly called meeting, has adopted and does institute
the following as an amendment and restatement in toto of the Hilton Hotels
Thrift Savings Plan:
ARTICLE I
DEFINITIONS
When used herein and in the Trust Agreement, with the first
letter capitalized, the following words shall have the following meanings
unless the context clearly indicates otherwise.
"Account" or "Accounts" shall mean the accounts established
to record a Participant's interest in the Trust Fund established in
accordance with this Plan.
"Affiliated Employer" shall mean, with respect to the
Company and each Participating Employer;
(a) Each corporation which is a member of a controlled
group of corporations (within the meaning of Section 1563(a) of the Code,
determined without regard to Section 1563(a)(4) and (e)(3)(C) thereof) of
which the Company or Participating Employer is a component member,
(b) each entity (whether or not incorporated) which is
under common control with the Company or
1
Participating Employer, as such common control is defined in Section 414(c)
of the Code and Regulations issued thereunder,
(c) any organization which is a member of an affiliated
service group (within the meaning of Section 414(m) of the Code) of which the
Company or a Participating Employer is a member, and
(d) any organization which is required by regulations
issued under Section 414(o) of the Code to be treated as an Affiliated
Employer. For the purposes of Section 4.3 of this Plan the phrase "more than
50 percent" shall be substituted for the phrase "at least 80 percent" each
place it appears in Section 1563(a)(1) of the Code. The term "Affiliated
Employer" shall also include each predecessor employer to the extent required
by Section 414(a) of the Code or to the extent designated by the Board of
Directors. Notwithstanding the foregoing, an organization shall not be
considered an Affiliated Employer for any purpose under the Plan prior to the
date it is considered affiliated under clauses (a) through (d) above.
"Beneficiary" or "Beneficiaries" shall mean the person or
persons, including a trustee, personal representative or other fiduciary,
last designated in writing by a Participant in accordance with the provisions
of Section 2.4 to receive the benefits specified hereunder in the event of
the Participant's death. If there is no valid Beneficiary designation in
effect that complies with
2
the provisions of Section 2.4, or if there is no surviving designated
Beneficiary, then the Participant's surviving spouse shall be the
Beneficiary. If there is no surviving spouse to receive any benefits payable
in accordance with the preceding sentence, the duly appointed and currently
acting personal representative of the Participant's estate (which shall
include either the Participant's probate estate or living trust) shall be the
Beneficiary. In any case where there is no such personal representative of
the Participant's estate duly appointed and acting in that capacity within 90
days after the Participant's death (or such extended period as the Committee
determines is reasonably necessary to allow such personal representative to
be appointed, but not to exceed 180 days after the Participant's death), then
Beneficiary or Beneficiaries shall mean the person or persons who can verify
by affidavit or court order to the satisfaction of the Committee that they
are legally entitled to receive the benefits specified hereunder.
In the event any amount is payable under the Plan to a
minor, payment shall not be made to the minor, but instead shall be paid (i)
to that person's then living parent(s) to act as custodian, (ii) if that
person's parents are then divorced, and one parent is the sole custodial
parent, to such custodial parent, or (iii) if no parent of that person is
then living, to a custodian selected by the Committee to hold the funds for
the minor under the Uniform
3
Transfers or Gifts to Minors Act in effect in the jurisdiction in which the
minor resides. If no parent is living and the Committee decides not to
select another custodian to hold the funds for the minor, then payment shall
be made to the duly appointed and currently acting guardian of the estate for
the minor or, if no guardian of the estate for the minor is duly appointed
and currently acting within 60 days after the date the amount becomes
payable, payment shall be deposited with the court having jurisdiction over
the estate of the minor.
"Board of Directors" shall mean the Board of Directors of
HILTON HOTELS CORPORATION.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Committee" shall mean the Administrative Committee
appointed in accordance with Article VII.
"Company" shall mean HILTON HOTELS CORPORATION, any
predecessor corporation, or any successor corporation resulting from merger,
consolidation, or transfer of assets substantially as a whole which shall
expressly agree in writing to continue this Plan and, where the context so
warrants, any Participating Employer.
"Company Contribution Account" shall mean the Account
established to hold matching Company contributions contributed in accordance
with Article IV on behalf of each Participant, together with the allocations
thereto as required by the Plan.
4
"Compensation" shall mean compensation paid or accrued, to
or on behalf of a Participant, subject to Employer FICA Taxes under the Code
provisions in effect on March 1, 1978 (without regard to the dollar
limitation). Such Compensation shall include overtime, bonuses, gratuities
subject to Employer FICA Taxes, vacation pay and holiday pay. Such
Compensation shall not include tips, tokens, gratuities or other forms of
extra Compensation not subject to Employer FICA Taxes, relocation,
maintenance or severance allowances, retirement plan contributions or
benefits, fees, or insurance premiums or benefits, and shall also exclude any
amounts attributable to a plan, program or other arrangement based on or
involving Hilton Hotels Corporation capital stock which otherwise would be
treated as Compensation. Compensation shall include amounts by which a
Participant's Compensation is reduced pursuant to a cafeteria plan, in
accordance with Section 125 of the Code. Effective January 1, 1994,
Compensation shall include tips, tokens and gratuities, but only to the
extent that such tips, tokens and gratuities are actually reported as income
subject to income tax withholding on form W-2 for the Employee.
Notwithstanding the foregoing, for purposes of Section 3.10
of this Plan, Compensation shall mean compensation actually paid by the
Company to the Participant during the Plan Year and reportable for federal
income tax
5
purposes on Form W-2, reduced by the amounts described in Treas. Reg. Section
1.414(s)-1(c)(3).
For Plan years beginning on or after January 1, 1989, the
maximum amount of an Employee's Compensation which shall be taken into
account under the Plan for any Plan Year shall be $200,000 adjusted at the
same time and in the same manner as under Section 415(d) of the Code. For
any Plan Year of fewer than twelve months, the $200,000 limit shall be
reduced to the amount obtained by multiplying the $200,000 limit (as adjusted
under Code Section 415(d)) by a fraction having a numerator equal to the
number of full months in the Plan Year and a denominator equal to twelve.
For purposes of the $200,000 limitation referred to above, the Compensation
of any Participant who is either a 5% owner (as defined in Section 416(i)(1)
of the Code), or one of the ten most highly paid Highly Compensated Employees
during the Plan Year ("First Participant") shall be aggregated with the
Compensation of any Participant who has not attained age 19 and is a lineal
descendant of the First Participant and any Participant who is the spouse of
the First Participant. In any case in which such aggregation would produce
Compensation in excess of the $200,000 limitation, the amount of the First
Participant's Compensation that is considered under the Plan shall be reduced
until the $200,000 limitation is met.
Notwithstanding the foregoing, for Plan Years beginning on
or after January 1, 1994, the $200,000 limit
6
referred to above shall be reduced to $150,000 adjusted in accordance with
Section 401(a)(17)(B) of the Code. For purposes of applying the $150,000
limit, the rules set forth in the preceding paragraph shall continue to
apply, except that "$150,000" shall replace "$200,000" each place it appears.
"Compensation Deferrals" shall mean an amount contributed to this Plan
by the Company in lieu of being paid to a Participant as salary or wages.
Compensation Deferrals shall be made under salary reduction arrangements
between each Participant and the Company with respect to salary or wages not
yet paid or otherwise available to the Participant as of the date of the
Participant's election under the arrangement. Section 3.2 contains the
provisions under which Compensation Deferrals may be made.
"Compensation Deferral Account" shall mean the Account maintained by
the Committee for each Participant that is to be credited with Company
payments to the Plan attributable to the Participant's Compensation Deferrals
that are credited to this Account in accordance with Section 3.2, together
with the allocations thereto as required by the Plan.
"Disability Retirement Date" shall mean the date of retirement prior
to the Normal Retirement Date fixed by the Company for a Participant who is
found by the Committee, in its sole discretion, after consideration of such
evidence as it may require, including reports of such physicians as
7
it may designate, to have become totally and permanently unable to discharge
his assigned duties as a result of mental or physical disease or condition.
"Effective Date" of this Plan is the 1st day of January, 1979.
"Eligible Employee" shall mean each Employee of the Company and
Participating Employers except that there shall be excluded all leased
employees described in Section 414(n) of the Code and those employees covered
by a collective bargaining agreement between the Company or Participating
Employers and any collective bargaining representative if retirement benefits
were the subject of good faith bargaining between such representative and the
Company or Affiliated Employer unless the Employee is a member of a group of
employees to whom this Plan has been extended by such a collective bargaining
agreement.
"Employee" shall mean every person employed by the Company or an
Affiliated Employer, including any leased employee described in Section
414(n) of the Code and any other individual required to be treated as
employed by the Company or an Affiliated Employer under Section 414(o) of the
Code.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Fiduciary" shall mean all persons defined in Section 3(21) of ERISA
associated in any manner with the control, management, operation, and
administration of the
8
Plan or the assets of the Plan, and such term shall be construed as including
the term "Named Fiduciary" with respect to those Fiduciaries named in the
Plan or who are identified as Fiduciaries pursuant to procedures specified in
the Plan.
"Fiscal Year" shall mean the fiscal year of the HILTON HOTELS
CORPORATION. At present, that Fiscal Year commences the first day of January
and ends the last day of December, and this shall be the Plan Year,
limitation year, and the taxable year of the Trust established pursuant to
this Plan.
"Highly Compensated Employee" shall, with respect to the Company and
each Participating Employer, mean:
a) For Plan Years Commencing on or prior to December 31,
1996:
(i) Any Employee who performs services for the Company or any
Affiliated Employer during the "determination year" and who, during the
"look-back year" (1) was a 5% owner of the Company or any Affiliated
Employer; (2) received compensation from the Company or any Affiliated
Employer in excess of $75,000 (as adjusted pursuant to Section 415(d) of the
Code); (3) received compensation from the Company or any Affiliated Employer
in excess of $50,000 (as adjusted pursuant to Section 415(d) of the Code) and
was a member of the "top-paid group" for such year; or (4) was an officer of
the Company or any Affiliated Employer and received compensation during such
year that is
9
greater than 50% of the dollar limitation in effect under Section
415(b)(1)(A) of the Code;
(ii) Any Employee who performs services for the Company or any
Affiliated Employer during the determination year and who, with respect to
the determination year, is either described in (a)(i)(1) above or is both one
of the 100 Employees who received the most compensation from the Company or
any Affiliated Employer during the determination year and is described in
(a)(i)(2), (a)(i)(3) or (a)(i)(4); or
(iii) Any Employee who separated from service (or was deemed
to have separated) prior to the determination year, performs no services for
the Company or any Affiliated Employer during the determination year, and met
the description in (a)(i) or (a)(ii) above for either the separation year or
any determination year ending on or after the Employee's 55th birthday.
(iv) If no officer of the Company or any Affiliated Employer
has compensation in excess of 50% of the dollar limitation in effect under
Section 415(b)(1)(A) of the Code during a determination year or a look-back
year, the highest paid officer for such year shall be treated as a Highly
Compensated Employee.
(v) If an Employee is, during a determination year or
look-back year, a "family member" of either a 5% owner who is an Employee or
of a Highly Compensated Employee in the group consisting of the 10 most
10
highly compensated Employees ranked on the basis of compensation paid by the
Company or any Affiliated Employer during the determination year or the
look-back year, then the family member and 5% owner or top-ten Highly
Compensated Employee shall be treated as a single Employee, and their
compensation and contributions or benefits under this Plan shall be
aggregated. Except as otherwise provided under Section 401(a)(17) of the
Code, "family member' includes the spouse, lineal ascendants and descendants
of the Employee or former Employee and the spouses of such lineal ascendants
and descendants.
(vi) The "determination year" shall be the Plan Year for
which compliance is being tested, and the "look-back year" shall be the
12-month period immediately preceding the determination year.
(vii) The top-paid group for a determination year or a
look-back year shall consist of the top 20% of Employees ranked on the basis
of compensation received during the year excluding Employees described in
Section 414(q)(8) of the Code and Treasury Regulations thereunder. The
number of Employees treated as officers shall be limited to 50 (or, if less,
the greater of 3 Employees or 10% of the Employees). For purposes of this
definition of "Highly Compensated Employee", "compensation" means
compensation within the meaning of Section 415(c)(3) of the Code, but
including elective or salary reduction contributions to a
11
cafeteria plan, cash or deferred arrangement or tax-sheltered annuity.
(viii) If the Company or Participating Employer makes an
election for any year under this Paragraph (viii), in determining whether an
Employee is a Highly Compensated Employee for such year, Paragraph (a)(i)(2)
shall be applied by substituting "$50,000" for "$75,000," and Paragraph
(a)(i)(3) shall not apply.
b) For Plan Years Commencing after December 31, 1996:
(i) Any Employee who performs services for the Company or
any Affiliated Employer who, at any time during the "determination year" or
the "look-back year" was a 5% owner of the Company or any Affiliated
Employer, or who, during the "look-back year," received compensation from the
Company or any Affiliated Employer in excess of $80,000 (as adjusted pursuant
to Section 415(d) of the Code); or
(ii) Any Employee who separated from service (or was
deemed to have separated) prior to the determination year, performs no
services for the Company or any Affiliated Employer during the determination
year, and met the description in (b)(i) above for either the separation year
or any determination year ending on or after the Employee's 55th birthday.
(iii) The "determination year" shall be the Plan Year for
which compliance is being tested, and the "look-back year" shall be the
12-month period immediately
12
preceding the determination year. The provisions of this Subsection (b)
shall be applied to determine "Highly Compensated Employees" in any look-back
year even if such look-back year coincided with a Plan Year which commenced
on or prior to December 31, 1996.
(iv) For purposes of this definition of "Highly
Compensated Employee", "compensation" means compensation within the meaning
of Section 415(c)(3) of the Code, but including elective or salary reduction
contributions to a cafeteria plan, cash or deferred arrangement or
tax-sheltered annuity.
(v) If the Company or Participating Employer makes an
election for any year under this Paragraph (b)(v), in determining whether an
Employee is a Highly Compensated Employee for such year, Paragraph (b)(i)
shall be applied by substituting "$80,000 (as adjusted pursuant to Section
415(d) of the Code) and who was a member of the 'top-paid group' for such
year" for "$80,000 (as adjusted pursuant to Section 415(d) of the Code)"
therein. The "top-paid group" for a look-back year shall consist of the top
20% of Employees ranked on the basis of compensation received during the year
excluding Employees described in Section 414(q)(5) of the Code and Treasury
Regulations thereunder.
13
"Hour of Service" shall be defined as each hour
(a) for which an Employee is paid, or entitled to payment, for the
performance of duties for the Company or an Affiliated Employer;
(b) for which the Employee is paid or entitled to payment by the
Company or an Affiliated Employer on account of a period during which no
duties are performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty, or leave of absence; or
(c) for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Company or an Affiliated Employer.
The following additional rules shall apply in calculating Hours of
Service: (1) no more than 501 Hours of Service are required to be credited
to an Employee on account of any single period during which the Employee
performs no duties; (2) an hour for which an Employee is directly or
indirectly paid, or entitled to payment, on account of a period during which
no duties are performed is not required to be credited to the Employee if
such payment is made or due under a plan maintained solely for the purpose of
complying with applicable worker's compensation, unemployment compensation,
or disability insurance laws; (3) Hours of Service are not required to be
credited for a payment which solely reimburses an Employee for medical or
14
medically related expenses incurred by the Employee; (4) a payment shall be
deemed to be made by or due from a Company or an Affiliated Employer
regardless of whether such payment is made by or due from the Company or an
Affiliated Employer directly, or indirectly through, among others, a trust
fund, or insurer, to which the Company or an Affiliated Employer contributes
or pays premiums and regardless of whether contributions made or due to the
trust fund, insurer, or other entity are for the benefit of particular
Employees or on behalf of a group of Employees in the aggregate; (5) no more
than one Hour of Service shall be credited with respect to any hour of time;
(6) an "Hour of Service" shall include any hour for which an Employee is
entitled to payment by a "leasing organization" (as described in Section
414(n)(2) of the Code) for the performance of duties for the Company or an
Affiliated Employer.
The definition of "Hour of Service" set forth herein shall also be
construed in accordance with, and shall include any additional periods of
service, that may be required by regulations promulgated by the United States
Department of Labor. The hour of service rules stated in the Department of
Labor Regulations Section 2530.200b-2(b) and -2(c) are herein incorporated by
reference.
"Investment Fund" shall mean one of the funds established by the
Committee for the investment of the assets of the Plan pursuant to Sections
2.3(b) and 3.5.
15
"Investment Manager" shall mean a Fiduciary designated by the
Committee under this Plan to whom has been delegated the responsibility and
authority to manage, acquire or dispose of Plan assets (a) who (1) is
registered as an investment adviser under the Investment Advisers Act of
1940; (2) is a bank, as defined in that Act; or (3) is an insurance company
qualified to perform investment advisory services under the laws of more than
one state; and (b) who has acknowledged in writing that he is a Fiduciary
with respect to the management, acquisition, and control of Plan assets.
"Matched Compensation Deferrals" shall mean a Participant's
Compensation Deferrals which are matched by the Company in accordance with
Section 4.1.
"Matching Company Contributions" shall mean the contributions made by
the Company or a Participating Employer pursuant to Section 4.1.
"Normal Retirement Age" shall mean a Participant's sixty-fifth
birthday. A Participant may retire at any time after attaining Normal
Retirement Age. Until actual retirement, a Participant shall continue to
participate in this Plan.
"One Year Break in Service" or "Break in Service" shall mean a
computation period during which an individual completes not more than 500
Hours of Service. The computation period for purposes of Section 2.1 shall
be the twelve-month period commencing on the date the Employee
16
first becomes an Employee and anniversaries thereof and for all other
purposes shall be the Fiscal Year.
(a) Solely for purposes of determining whether an
Employee sustains a Break in Service, an Employee shall be eligible to
receive credit for absence (i) by reason of pregnancy of the Employee, (ii)
by reason of the birth of a child of the Employee, (iii) by reason of the
placement of a child with the Employee in connection with the adoption of the
child by the Employee, or (iv) for purposes of caring for the child for a
period beginning immediately following the birth or placement.
(b) The number of Hours of Service which shall
credited to an Employee for a period of absence described in Subsection (a)
above shall be (i) the number which otherwise would normally have been
credited to the Employee but for the absence, or (ii) if the Committee
determines that such number can not be determined, eight (8) Hours of Service
per day of such absence; provided, however, that the total number of hours
treated as Hours of Service under this Subsection (b) shall not exceed five
hundred one (501) and that these Hours of Service shall be taken into account
solely for purposes of determining whether or not the Employee has incurred a
Break in Service.
(c) The Hours of Service described in Subsection
(b) above shall be credited to the computation period (i) in which the
absence from work begins, if the Employee would be prevented from incurring a
Break in Service in that
17
computation period solely because of such crediting, or (ii) in any other
case, in the immediately following computation period.
(d) Subsections (a)-(c) above shall not apply
unless the Employee provides such timely information as the Committee may
reasonably require to establish (i) that the absence is for reasons described
in Subsection (a), and (ii) the number of days for which there was such an
absence.
"Participant" shall mean any Eligible Employee included in
the Plan as provided in Article II.
"Participant Contribution Account" shall mean the account
to which Participant Matched Contributions and Participant Supplementary
Contributions are allocated pursuant to Section 5.1 on behalf of such
Participant, together with the allocations thereto as required by the Plan.
"Participant Contributions" shall mean the Participant
Matched Contributions and Participant Supplementary Contributions.
"Participant Matched Contributions" shall mean the
contributions of Compensation made by a Participant pursuant to Section 3.1
which are matched by the Company in accordance with Section 4.1.
"Participant Supplementary Contributions" shall mean
contributions of Compensation made by a Participant pursuant to Section 3.1
in excess of the Participant's
18
Matched Contributions which shall not be matched by Company contributions.
"Participating Employer" shall mean the Company and any
Affiliated Employer with respect to the Company which, by resolution of its
board of directors and with the approval of the Board of Directors, elects to
participate in this Plan. In addition, "Participating Employer" shall mean
other business entities in which the Company, directly or indirectly, has an
interest or with which it has a contractual relationship designated from time
to time by the Committee as being eligible to be included in the Plan, and
which adopts the Plan by appropriate action; but any such designation or
adoption may be terminated or withdrawn at any time by filing with the
Company a resolution, respectively of the Committee or of the adopting
business entity, and such termination or withdrawal the entity whose
designation or adoption was so terminated or withdrawn shall not thereafter
be considered a Participating Employer under this Plan. By electing to
participate in this Plan, a Participating Employer agrees to be bound by any
Plan or Trust amendment adopted by resolution of the Board of Directors or by
the written instrument of any person to whom the Board of Directors has
delegated its authority to adopt the amendment. Each Participating Employer
shall also be bound by the investment and administrative control of the Plan
by delegates properly appointed by the Company and Committee. Appendix C
hereto sets forth the names of all
19
Participating Employers as of November 1, 1991 and shall be revised from time
to time by the Committee or its delegate.
"Plan" means the Hilton Hotels Thrift Savings Plan set
forth in this document and all subsequent amendments thereto.
"Plan Year" shall mean the Fiscal Year.
"Rollover Account" shall mean the Account maintained for a
Participant that is credited with the amount, if any, received by the Plan in
accordance with Section 3.11 as a rollover contribution, as defined in
Section 402(a)(5) of the Code, together with the allocations thereto as
required by the Plan.
"Supplemental Compensation Deferrals" shall mean a
Participant's Compensation Deferrals in excess of his or her Matched
Compensation Deferrals. Supplemental Compensation Deferrals are those which
are not matched by Company contributions.
"Trust" shall mean that Trust established pursuant to the
Trust Agreement.
"Trust Agreement" shall mean that certain agreement between
the Company and the Trustee providing for the investment and administration
of the Trust Fund.
"Trust Fund" shall mean the fund established under the
Trust Agreement by contributions made by the Company and Participants and
from which any amounts payable under the Plan are to be paid.
20
"Trustee" shall mean the Trustee under the Trust Agreement.
"Valuation Date" shall mean any date as of which the Trust
Fund was valued pursuant to Section 3.6.
"Year of Service" shall mean a computation period during
which the Employee completes one thousand (1,000) or more Hours of Service
for the Company or an Affiliated Employer. The computation period referred
to in the preceding sentence shall be the Fiscal Year except for purposes of
Section 2.1, in which case the computation period shall be the twelve (12)
month period commencing on the date the Employee first becomes an Employee
(or any anniversary thereof). In no instance will an Employee be credited
with more than one (1) Year of Service with respect to service performed in a
single computation period. Notwithstanding any provision to the contrary in
this Plan, an Employee shall be credited with Years of Service only with
respect to periods of "covered service" and "contiguous noncovered service."
For purposes of determining an Employee's Years of Service, "covered service"
shall mean an Employee's service as an Eligible Employee and "contiguous
noncovered service" shall mean an Employee's noncovered service as a
non-Eligible Employee which immediately precedes or follows such Employee's
covered service and no quit, discharge or retirement occurs between such
covered service and uncovered service; provided, however, that any transfer
of an Employee between (a) a corporation or trade
21
or business included within the definition of "Company" and (b) an Affiliated
Employer not included within the definition of "Company" shall result in such
Employee's period of noncovered service which immediately precedes or follows
such transfer being deemed "noncontiguous" for purposes of this definition of
Year of Service.
A Participant's employment is not considered terminated for
purposes of the Plan if the Employee has been on leave of absence with the
consent of the Company or an Affiliated Employer, provided that he returns to
the employ of the Company or an Affiliated Employer at the expiration of such
leave or such longer period as may be prescribed by law in the case of a
Participant who is a member of the armed forces of the United States. A
leave of absence shall mean leaves granted by the Company or an Affiliated
Employer, in accordance with rules uniformly applied to all Employees, for
reasons of health, military or public service or for reasons determined by
the Company or an Affiliated Employer to be in its best interests.
Participants who do not return to the employ of the Company or an Affiliated
Employer within ten days following the end of the leave of absence, or within
the required time in case of service with the armed forces, shall be deemed
to have terminated their employment as of the date when their leave began,
unless such failure to return was the result of their death, total disability
or normal retirement.
22
ARTICLE II
ELIGIBILITY
SECTION 2.1 REQUIREMENTS FOR PARTICIPATION. Participation
in the Plan on the part of each Employee is voluntary. An Eligible Employee
who on the Effective Date of this Plan, or the first day of any calendar
month thereafter, has completed at least one Year of Service shall be
eligible to participate as of the first day of the first calendar month
coinciding with or next following the date the Eligible Employee satisfies
the aforesaid service requirement.
SECTION 2.2 NOTICE OF ELIGIBILITY. The Committee shall
give reasonable advance written notice to Employees of their prospective
eligibility to become Participants, and shall state therein the conditions of
participation.
SECTION 2.3 APPLICATION TO PARTICIPATE. An Eligible
Employee eligible to become a Participant may become a Participant by filing,
at least thirty (30) days before the first day of the month as of which
participation is to commence, in such form and with such persons as the
Committee shall designate, an application which shall:
(a) Specify the amount of Compensation Deferrals
and Participant Contributions to be deducted from his Compensation by the
Company and paid to the Trustee on his behalf;
23
(b) Specify the manner in which such contributions
shall be invested, provided that such investments must be in accordance with
Section 3.5;
(c) Designate a Beneficiary or Beneficiaries to
receive any payments which may be due under the Plan upon his death;
(d) Contain such other or additional information
as in the opinion of the Committee is desirable or necessary in the operation
of the Plan.
(e) Notwithstanding anything herein to the
contrary, an Employee shall not be entitled to make contributions or
deferrals for any calendar month which commenced prior to the Employee's
specification of the amount of contributions or deferrals to be deducted from
his Compensation, nor shall he be entitled to retroactively increase his
specified contributions or deferrals.
(f) The aggregate Compensation Deferrals and
Participant Contributions specified by a Participant pursuant to Section
2.3(a) shall not exceed 14% of such Participant's Compensation.
SECTION 2.4 DESIGNATION OF BENEFICIARY. Upon forms
provided by the Committee, each Employee who becomes a Participant shall
designate in writing the Beneficiary or Beneficiaries whom such Employee
desires to receive any benefits payable under this Plan in the event of such
Employee's death. A Participant may from time to time change his designated
Beneficiary or Beneficiaries without
24
the consent of such Beneficiary or Beneficiaries by filing a new designation
in writing with the Committee. However, if a married Participant wishes to
designate a person other than his spouse as Beneficiary, such designation
shall be consented to in writing by the spouse, which consent shall
acknowledge the effect of the designation and be witnessed by a Plan
representative or a notary public. The Participant may change any election
designating a Beneficiary or Beneficiaries without any requirement of further
spousal consent if the spouse's consent so provides. Notwithstanding the
foregoing, spousal consent shall be unnecessary if it is established (to the
satisfaction of a Plan representative) that there is no spouse or that the
required consent cannot be obtained because the spouse cannot be located, or
because of other circumstances prescribed by Treasury Regulations. The
Company, the Committee and the Trustee may rely upon his designation of
Beneficiary or Beneficiaries last filed in accordance with the terms of this
Plan. Upon the dissolution of marriage of a Participant, any designation of
the Participant's former spouse as a Beneficiary shall be treated as though
the Participant's former spouse had predeceased the Participant, unless (i)
the Participant executes another Beneficiary designation that complies with
this Section 2.4 and that clearly names such former spouse as a Beneficiary,
or (ii) a court order presented to the Committee prior to distribution on
behalf of the Participant explicitly requires the
25
Participant to continue to maintain the former spouse as the Beneficiary. In
any case in which the Participant's former spouse is treated under the
Participant's Beneficiary designation as having predeceased the Participant,
no heirs or other beneficiaries of the former spouse shall receive benefits
from the Plan as a Beneficiary of the Participant except as provided
otherwise in the Participant's Beneficiary designation.
SECTION 2.5 DATE OF PARTICIPATION. Once the application
for participation is completed, participation shall become effective on the
date of eligibility specified in Section 2.1 and shall continue during the
Participant's employment with the Company or Participating Employer.
ARTICLE III
PARTICIPANT'S CONTRIBUTIONS
SECTION 3.1 PARTICIPANT CONTRIBUTIONS.
(a) A Participant may make Participant
Contributions which shall be made solely by payroll deductions from his
Compensation and the amounts so deducted shall be paid to the Trustee on or
before ninety days following the time when the deduction is made. The
amount, which shall be specified under Section 2.3(a) and deducted under this
Section, shall be in whole percentages from 1% to 14% of his Compensation as
specified by the Participant, subject to the limitation in Section 2.3(f).
26
(b) Notwithstanding any provision in this Plan to the
contrary, if, due to federal or state tax withholding requirements the net
amount of after-tax Compensation payable to a Participant by the Company for
a pay period is less than the Compensation percentage specified by the
Participant in accordance with Section 2.3(a), the Participant may make a
cash contribution to the Plan equal to the difference between the
Participant's contribution for the payroll period by payroll deduction, if
any, and the Compensation percentage specified by the Participant. Any
direct cash contribution by a Participant with respect to a payroll period in
accordance with this Section 3.1(d) shall be made within thirty (30) days
following the last day of such payroll period.
SECTION 3.2 COMPENSATION DEFERRALS.
(a) ELECTION TO DEFER. Subject to the limitations in
Sections 2.3(f), 3.8, 3.9 and Appendix A, each Participant may elect
Compensation Deferrals, in writing in the manner prescribed by the Committee,
in whole percentages from 1% to 14% of the Participant's Compensation for
each payroll period. The Participant's compensation shall be reduced by the
amount of his Compensation Deferrals, which shall be credited to the
Participant's Compensation Deferral Account, and shall be made in accordance
with rules established by the Committee.
(b) STATUS OF COMPENSATION DEFERRALS. To make Compensation
Deferrals under this Section, the Company will
27
reduce the Participant's compensation in the amount authorized by the
Participant and make a contribution to the Trustee equal to such reduction as
of the earliest date on which such amount can reasonably be segregated from
the Company's general assets, not to exceed 90 days from the date on which
such amount would otherwise have been payable to the Participant in cash, or
as of such earlier date as may be required by regulations issued pursuant to
ERISA. Effective February 3, 1997, to make Compensation Deferrals under this
Section, the Company will reduce the Participant's compensation in the amount
authorized by the Participant and make a contribution to the Trustee equal to
such reduction as of the earliest date on which such amount can reasonably be
segregated from the Company's general assets, not to occur later than the
15th business day of the month following the month in which such amount would
otherwise have been payable to the Participant in cash, or as of such earlier
date as may be required by regulations issued pursuant to ERISA, or as of
such later date as may be applicable if the Company qualifies for an
extension of time to make such payment pursuant to regulations issued under
ERISA. Compensation Deferrals constitute Company contributions under the
Plan and are intended to qualify as elective contributions under Code Section
401(k).
(c) GENERAL LIMITATIONS ON COMPENSATION DEFERRALS. As of the
last day of the Plan Year, the Committee shall determine the amount of
Compensation
28
Deferrals in excess of those permitted under Section 3.8 of the Plan, and any
excess shall be distributed to the Participant responsible for the excess
Compensation Deferral in accordance with the Code, Treasury Regulations and
Section 3.9(d).
SECTION 3.3 CHANGE IN PARTICIPANT'S CONTRIBUTIONS. A
Participant may as of the first day of any calendar month change the
specifications with respect to payroll deductions made under Section 2.3(a),
3.1(a) and 3.2(a) to another specification permitted under such Sections by
filing an application to change such specification in such form and with such
person as the Committee shall designate. Such change in specification shall
not become effective until the first day of the calendar month which is at
least thirty days after the filing of such application.
SECTION 3.4 CESSATION OF PARTICIPATION. A Participant who
changes his specification to direct that no contributions shall be deducted
from his Compensation shall have such change effective as of the next regular
payroll period and need not wait until the beginning of the next calendar
month; provided, however, that such Participant may not again change such
specification to begin further contributions sooner than the beginning of the
payroll period in the calendar month coinciding with or next
29
following three (3) months after the first payroll date for which no
contribution is made by that Participant.
SECTION 3.5 INVESTMENT FUNDS.
(a) Five separate Investment Funds shall be established and
maintained by the Committee under this Plan. The Committee, the Trustee or the
Investment Manager shall determine the investments to be made under the
Investment Funds. The Investment Funds shall be (i) a Fixed Income Fund,
(ii) a S&P 500 Index Stock Fund, (iii) a Growth & Income Stock Fund, (iv) a
Balanced Fund, and (v) a Self-managed Account.
(b) Pursuant to rules established by the Committee and
subject to the provisions of this Section, each Participant shall have the
right and obligation to designate, in 10% increments, in which of the Investment
Funds his Accounts will be invested, and to change such designation. The
designation shall be on such forms as are established by the Committee or
pursuant to such other methods (including telephonic transfers if authorized by
the Committee). The Committee shall describe to the Participants the
investments to be made under each Investment Fund in such detail as the
Committee deems appropriate in its sole discretion.
(c) Participant loans made pursuant to this Plan shall not
be included in any of the Investment Funds. Instead, for any Participant who
takes such a loan, such loan shall be considered an investment of his Accounts.
30
Such Participant's Accounts shall be credited with the investment gain or
loss attributable to such loan. The Committee may establish other rules,
regulations, and procedures regarding the Investment Funds as it deems
appropriate in its sole discretion.
SECTION 3.6 VALUATION OF ACCOUNTS.
(a) The value of the Accounts invested in the Investment
Funds shall be established on each business day by the Trustee or the applicable
Investment Manager, and investment gains and losses shall be allocated to such
Accounts according to the investment elections of Participants.
(b) Notwithstanding anything to the contrary herein, if the
Committee determines that an alternative method of allocating earnings and
losses would better serve the interests of Participants and Beneficiaries or
could be more readily implemented, the Committee may substitute such
alternative; provided that any such alternative method must result in Plan
earnings being allocated on the general basis of Account balances.
SECTION 3.7 SECTION 404(c) PROVISIONS.
(a) This Plan is intended to constitute a plan described in
Section 404(c) of ERISA, and the regulations thereunder. As a result, with
respect to elections described in this Plan and any other exercise of control by
a Participant or his or her Beneficiary over assets in the Participant's
Accounts, such Participant or Beneficiary
31
shall be solely responsible for such actions and neither the Trustee, the
Committee, the Company, an Investment Manager nor any other person or entity
which is otherwise a Fiduciary shall be liable for any loss or liability
which results from such Participant's or Beneficiary's exercise of control.
(b) The Committee shall provide to each Participant or his or
her Beneficiary the information described in Section 2530.404b-1(b)(2)(i)(B)(1)
of the Department of Labor Regulations. Upon request by a Participant or his or
her Beneficiary, the Committee shall provide the information described in
Section 2530.404b-1(b)(2)(i)(B)(2) of the Department of Labor Regulations.
(c) The Committee may take such other actions or implement
such other procedures as it deems necessary or desirable in order that the Plan
comply with Section 404(c) of ERISA.
SECTION 3.8 SECTION 402(g) LIMIT ON COMPENSATION DEFERRALS.
(a) Compensation Deferrals made on behalf of any Participant
under this Plan and all other plans (which are described in Section 3.8(c))
maintained by the Company or an Affiliated Employer shall not exceed the
limitation under Code Section 402(g)(1) for the taxable year of the Participant,
as adjusted annually under Section 402(g)(5) of the Code, and shall be effective
as of January 1 of each calendar year.
32
(b) In the event that the dollar limitation provided for in
Section 3.8(a) is exceeded, the Participant is deemed to have requested a
distribution of the excess amount by the first March 1 following the close of
the Participant's taxable year, and the Committee shall distribute such excess
amount, and any income allocable to such amount, to the Participant by
April 15th. In determining the excess amount distributable with respect to a
Participant's taxable year, excess Compensation Deferrals previously distributed
or redesignated as after-tax contributions for the Plan Year beginning with or
within such taxable year shall reduce the amount otherwise distributable under
this Subsection (b).
(c) In the event that a Participant is also a participant in
(1) another qualified cash or deferred arrangement as defined in Section 401(k)
of the Code, (2) a simplified employee pension, as defined in Section 408(k) of
the Code, or (3) a salary reduction arrangement, within the meaning of
Section 3121(a)(5)(D) of the Code, and the elective deferrals, as defined in
Section 402(g)(3) of the Code, made under such other arrangement(s) and this
Plan cumulatively exceed the dollar limit under Section 3.8(a) for such
Participant's taxable year, the Participant may, not later than March 1
following the close of his taxable year, notify the Committee in writing of such
excess and request that the Compensation Deferrals made on his behalf under this
Plan be reduced by an amount specified by the Participant.
33
The Committee may then determine to distribute such excess in the same manner
as provided in Section 3.8(b).
SECTION 3.9 SECTION 401(k) LIMITATIONS ON COMPENSATION
DEFERRALS.
(a) The Committee will estimate, as soon as practical before
the close of the Plan Year and at such other times as the Committee in its
discretion determines, the extent, if any, to which Compensation Deferral
treatment under Section 401(k) of the Code may not be available to any
Participant or class of Participants. In accordance with any such estimate, the
Committee may modify the limits in Section 3.2(a), or set initial or interim
limits, for Compensation Deferrals relating to any Participant or class of
Participants. These rules may include provisions authorizing the suspension or
reduction of Compensation Deferrals above a specified dollar amount or
percentage of Compensation.
(b) For each Plan Year, an actual deferral percentage will be
determined for each Participant equal to the ratio of the total amount of the
Participant's Compensation Deferrals allocated under Section 3.2(a) for the
Plan Year divided by the Participant's Compensation in the Plan Year. For
purposes of this Section 3.9, "Compensation" shall meet the requirements of
Section 414(s) of the Code and Treasury Regulations. For Plan Years commencing
on or before December 31, 1996, in the case of
34
family members treated as a single Highly Compensated Employee under
Paragraph (a)(v) of the definition of "Highly Compensated Employee" in
Article I, in accordance with the family aggregation rules of Section
414(q)(6) of the Code, the actual deferral percentage shall be determined by
combining the Compensation Deferrals and Compensation of all eligible family
members. Except to the extent taken into account in the preceding sentence,
the Compensation Deferrals and Compensation of such family members shall be
disregarded for purposes of determining the actual deferral percentages for
the group of non-Highly Compensated Employees under this Section 3.9. An
Employee's Compensation taken into account for this purpose shall be limited
to Compensation received during the Plan Year while the Employee is a
Participant. Except as otherwise provided in this Section 3.9(b), with
respect to Participants who have made no Compensation Deferrals under this
Plan, such actual deferral percentage will be zero.
(c) The average of the actual deferral percentages for Highly
Compensated Employees ("High Average") when compared with the average of the
actual deferral percentages for non-Highly Compensated Employees ("Low Average")
must meet one of the following requirements:
(1) The High Average is no greater than 1.25 times the Low
Average; or
35
(2) The High Average is no greater than two times the Low
Average, and the High Average is no greater than the Low Average plus
two percentage points.
(d) If, at the end of a Plan Year, a Participant or class of
Participants has excess Compensation Deferrals, then the Committee may elect, at
its discretion, to pursue any of the following courses of action or any
combination thereof:
(i) Excess Compensation Deferrals, and any earnings
attributable thereto through the end of the Plan Year, may be
distributed to the Participant within the 2-1/2 month period following
the close of the Plan Year to which the excess Compensation Deferrals
relate to the extent feasible, but in all events no later than 12
months after the close of such Plan Year. A Participant's Supplemental
Compensation Deferrals, and any earnings thereon, shall be distributed
prior to his or her Matched Compensation Deferrals, and any earnings
thereon.
(ii) The Company, in its discretion, may make a contribution
to the Plan, which will be allocated as a fixed dollar amount among the
Accounts of some or all non-Highly Compensated Employees (as determined
by the Company) who have met the requirements of Section 2.1. Such
contributions shall be fully (100%) vested at all times, and shall be
subject to the withdrawal restrictions which are applicable to
Compensation
36
Deferrals. Such contributions shall be considered "Qualified
Non-Elective Contributions" under applicable Treasury
Regulations.
Any such excess Compensation Deferrals distributed from the Plan with respect
to a Participant for a Plan Year shall be reduced by any amount previously
distributed to such Participant under Section 3.8(b) for the Participant's
taxable year ending with or within such Plan Year.
(e) The amount of the excess Compensation Deferrals will be
determined by the Committee by reducing the actual deferral percentage of the
Highly Compensated Employee(s) with the highest actual deferral percentage to
the extent required to enable the Plan to meet the limits in (c) above or to
cause the actual deferral percentage of such Highly Compensated Employee(s)
to equal the actual deferral percentage of the Highly Compensated Employee(s)
with the next-highest actual deferral percentage. The process in the
preceding sentence shall be repeated until the Plan satisfies the limits in
(c) above. In the case of family members subject to the family aggregation
rules of Section 414(q)(6) of the Code, excess Compensation Deferrals will be
allocated among family members in proportion to the Compensation Deferrals of
each family member that have been combined under Section 3.9(b) above.
Effective for Plan Years commencing after December 31, 1996, the amount of
the excess Compensation Deferrals will be determined by the Committee by
reducing the Compensation Deferrals of the
37
Highly Compensated Employee(s) with the highest actual Compensation Deferrals
to the extent required to enable the Plan to meet the limits in (c) above or
to cause the amount of such deferrals to equal the Compensation Deferrals of
the Highly Compensated Employee(s) with the next-highest actual Compensation
Deferrals. The process in the preceding sentence shall be repeated until the
Plan satisfies the limits in (c) above. The earnings attributable to excess
Compensation Deferrals will be determined in accordance with Treasury
Regulations. The Committee will not be liable to any Participant (or his
Beneficiary, if applicable) for any losses caused by inaccurately estimating
or calculating the amount of any Participant's excess Compensation Deferrals
and earnings attributable to the Compensation Deferrals.
(f) If the Committee determines that an amount to be
deferred pursuant to the election provided in Section 3.2 would cause Company
contributions under this and any other tax-qualified retirement plan
maintained by any Company to exceed the applicable deduction limitations
contained in Section 404 of the Code, or to exceed the maximum Annual
Addition determined in accordance with Appendix A, the Committee may treat
such amount in accordance with the rules in Section 3.9(d)(2) hereof.
(g) In the discretion of the Committee, the tests described
in this section may be applied by aggregating the Plan with any other defined
contribution plans permitted under the Code. For purposes of determining
whether the
38
Plan satisfies the requirements of this Section 3.9, all Compensation
Deferrals and Elective Contributions under any other Plan maintained by the
Company which is aggregated with this Plan for purposes of Section 401(a) or
410(b) of the Code (other than Section 410(b)(2)(A)(ii)) are to be treated as
made under a single plan. Furthermore, if two or more plans are permissively
aggregated for purposes of the test described in this section, the aggregated
plans must also satisfy Code Sections 401(a)(4) and 410(b) as though they
were a single plan.
SECTION 3.10 SECTION 401(m) LIMITATIONS ON PARTICIPANT
CONTRIBUTIONS AND MATCHING COMPANY CONTRIBUTIONS.
(a) The Committee will estimate, as soon as practicable,
before the close of the Plan Year and at such other times as the Committee in
its discretion determines, the extent to which Participant Contributions
and/or Matching Company Contributions may not be available to any Participant
or class of Participants under Code Section 401(m). In accordance with any
such estimate, the Committee may modify the limits in Section 3.1 or set
initial or interim limits, for Participant Contributions and/or Matching
Company Contributions relating to any Participant or class of Participants.
The tests of this Section 3.10 shall be performed separately with respect to
the Company and Participating Employers together with their respective
Affiliated Employers.
39
(b) For each Plan Year, a contribution percentage will be
determined for each Eligible Employee equal to the ratio of the total amount
of the Participant Contributions and Matching Company Contributions allocated
under Sections 3.1 and 4.1 for the Plan Year divided by the Eligible
Employee's Compensation in the Plan Year during which the Eligible Employee
was eligible to participate in the Plan. For Plan Years commencing on or
before December 31, 1996, in the case of family members treated as a single
Highly Compensated Employee under Paragraph (a)(v) of the definition of
"Highly Compensated Employee," in accordance with the family aggregation
rules of Section 414(q)(6) of the Code, the contribution percentage shall be
determined by combining the Participant Contributions, Matching Company
Contributions and Compensation of all eligible family members. Except to the
extent taken into account in the preceding sentence, the Participant
Contributions, Matching Company Contributions, and Compensation of such
family members shall be disregarded for purposes of determining the average
of the contribution percentages for the group of non-Highly Compensated
Employees under this Section 3.10(b). Except as otherwise provided in this
Section 3.10(b), with respect to Eligible Employees who have made no
Participant Contributions and for whom there were no Matching Contributions
under this Plan, such contribution percentage will be zero.
40
(c) The average of the contribution percentages for Highly
Compensated Employees ("High Average") when compared with the average of the
contribution percentages for non-Highly Compensated Employees ("Low Average")
must meet one of the following requirements:
(i) The High Average is no greater than 1.25
times the Low Average; or
(ii) The High Average is no greater than two
times the Low Average, and the High Average is no greater than the
Low Average plus two percentage points.
(iii) If, at the end of a Plan Year, a
Participant or class of Participants has excess contributions, then the
Committee may elect, at its discretion, to pursue any of the following
courses of action or any combination thereof:
(1) Matching Company Contributions
(and any earnings attributable thereto through the end of the Plan Year) that
are not vested may be forfeited.
(2) Excess Participant Contributions
and excess Matching Company Contributions (and any earnings attributable to
such excess amounts through the end of the Plan Year) may be distributed to
the Participant within the 2-1/2 month period following the close of the Plan
Year to the extent feasible, and in all events no later than 12 months after
the close of the Plan Year. The Company may distribute the Participant
Supplementary Contributions
41
before distributing any Participant Matched Contributions or may distribute
(or forfeit pursuant to clause i above) Matching Company Contributions prior
to distributing any Participant Matched Contributions.
(e) The amount of excess Participant Contributions
and Matching Company Contributions shall be determined by the Committee by
reducing the contribution percentage of the Highly Compensated Employees with
the highest contribution percentage to the extent required to enable the Plan to
meet the limits in (c) above or to cause the contribution percentage of such
Participants to equal the contribution percentage of the Highly Compensated
Employees with the next-highest contribution percentage. The process in the
preceding sentence shall be repeated until the Plan satisfies the limits in (c)
above. The earnings attributable to excess contributions will be determined in
accordance with Treasury Regulations. The Company and Committee will not be
liable to any Participant (or to his Beneficiary, if applicable) for any losses
caused by inaccurately estimating or calculating the amount of any Participant's
excess contributions and earnings attributable to such contributions.
(f) For purposes of performing the tests described in
this Section:
(i) if, for purposes of meeting the
requirements of Sections 401(m), 401(a)(4) and 410(b) of the Code
(other than Section 410(b)(2)(A)(ii) of the
42
Code), this Plan is aggregated with any other plan(s) of the Company
which provide for elective deferrals, employer matching and/or
employee after-tax contributions, then all contributions subject to
Section 401(m) of the Code that are made under this Plan and such
other plan(s) shall be treated as having been made under one plan;
and
(ii) if any Highly Compensated Employee under this
Plan participates in any other plan(s) of the Company which provide
for elective deferrals, employer matching and/or employee after-tax
contributions, then all contributions made by such Highly
Compensated Employee under this Plan and such other plan(s) shall be
treated as having been made under one plan.
SECTION 3.11 ROLLOVER CONTRIBUTIONS.
(a) An Eligible Employee, regardless of whether he has
satisfied the participation requirements of Section 2.1 who, as a result of a
termination of employment, disability or attainment of age 59-1/2, has
received a distribution from a plan which meets the requirements of Section
401(a) of the Code may, in accordance with procedures approved by the
Committee, transfer the distribution received from the other plan to the
Trust; provided that the distribution is eligible for rollover treatment and
exclusion from the gross income of the Participant in accordance with Section
402(a)(5) of the Code.
43
(b) The Committee shall develop such procedures, and may
require such information from an Employee desiring to make such a transfer,
as it deems necessary or desirable to determine that the proposed transfer
will meet the requirements of this Section. Upon approval by the Committee,
the amount transferred shall be deposited in the Trust and shall be credited
to an account which shall be referred to as the "Rollover Account." Such
account shall be 100% vested in the Employee and shall share in income
allocations as provided in the Plan, but shall not share in Company
contribution allocations. Upon termination of employment, the total amount of
the Employee's Rollover Account shall be distributed in accordance with
Article VI.
(c) Upon such transfer by an Eligible Employee who has not
yet completed the participation requirements of Section 2.1, his Rollover
Account shall represent his sole interest in the Plan until he becomes a
Participant.
ARTICLE IV
COMPANY CONTRIBUTIONS
SECTION 4.1 MATCHING COMPANY CONTRIBUTIONS. With respect to
Participant's who have completed five or fewer Years of Service, at the time
such Participant's contributions are paid to the Trustee, the Company will pay
to the Trustee a corresponding contribution equal to fifty percent (50%) of the
Participant Contributions or Compensation Deferrals for the payroll period of
each such
44
Participant (reduced by certain forfeitures as provided in Section 6.3);
provided that the maximum Matching Company Contribution made on behalf of any
such Participant shall not exceed 3% of such Participant's Compensation
during the payroll period. With respect to Participant's who have completed
more than five Years of Service, at the time such Participant's contributions
are paid to the Trustee, the Company will pay to the Trustee a corresponding
contribution equal to seventy-five percent (75%) of the Participant
Contributions or Compensation Deferrals for the payroll period of each such
Participant (reduced by certain forfeitures as provided in Section 6.3);
provided that the maximum Matching Company Contribution made on behalf of any
such Participant shall not exceed 4.5% of such Participant's Compensation
during the payroll period. Matching Company Contributions shall be deemed to
be made first with respect to a Participant's Compensation Deferrals, and
then, in the event that such Participant's Matching Company Contributions
exceed the maximum amount which could have been made with respect to his or
her Compensation Deferrals, with respect to his or her Participant
Contributions. Notwithstanding the foregoing, to the extent determined by the
Company, the Company may at its sole discretion make an additional Matching
Contribution for any Plan Year on behalf of Participants whose Compensation
does not exceed a specified dollar amount ("Eligible Participants"). Such
additional Matching Company Contribution for a Plan Year
45
shall be allocated among Eligible Participants who are Employees as of the
last day of such Plan Year in the proportion that each such Eligible
Participant's Matched Contributions for the Plan Year bears to the total of
Matched Contributions by all such Eligible Participants for such Plan Year.
Any additional Matching Company Contribution shall be made within the time
prescribed under Section 404 of the Code and such contribution shall be
deemed to be made with respect to that Participant's Compensation Deferrals.
The Company shall pay to the Trustee the Company Matching
Contribution for any Plan Year within the time prescribed by law, including
extensions of time for filing the Company's federal income tax return for the
Company's taxable year ending with or within the Plan Year to which the
contribution relates.
Contributions by the Company shall be made without regard to
current and accumulated profits for the year; provided, however, that the Plan
shall continue to be designed to qualify as a profit sharing plan for purposes
of Sections 401(a) et seq. of the Code.
SECTION 4.2 ALLOCATION OF MATCHING COMPANY CONTRIBUTIONS.
Contributions made by the Company for any payroll period shall be allocated to
the Company Contribution Account maintained for the Participant on behalf of
whom the contribution under Section 4.1 was made. No part of the contributions
paid by the Company to the Trustee shall be recoverable by the Company, and it
is
46
intended that the contributions not be used for or diverted to purposes other
than for the exclusive benefit of the Participants.
SECTION 4.3 CONTRIBUTION LIMITS. Notwithstanding anything
else contained herein, the Annual Additions, to all the Accounts of a
Participant shall not exceed the lesser of $30,000 (or, if greater, 1/4 of
the defined benefit dollar limitation in effect under Section 415(b)(1) of
the Code for the limitation year) or 25% of the Participant's Section 415
Compensation from the Company or Affiliated Employers during the Plan Year,
in accordance with the provisions of Appendix A attached hereto.
SECTION 4.4 LIMIT OF DEDUCTIBLE CONTRIBUTIONS BY THE
COMPANY. The amount of the contribution made by the Company or a Participating
Employer for any fiscal year shall not exceed the amount deductible by such
Company or Participating Employer for federal income tax purposes, including
any amounts which may be carried forward.
ARTICLE V
PARTICIPANT'S ACCOUNTS
SECTION 5.1 ACCOUNT BALANCES. There shall be maintained
for each Participant a Participant Contribution Account, a Compensation
Deferral Account, a Rollover Account, and a Company Contribution Account
which shall show the dollar value of his current interest in the Trust Fund
valued pursuant to Section 3.6, including the Participant
47
Contributions and Compensation Deferrals made by the Participant during the
calendar month through such date, the Matching Company Contributions made
during the calendar month through such date on behalf of each such
Participant, and all forfeitures allocated to such Participant under this
Plan during the calendar month through such date. For purposes of
determining a Participant's basis in his Account under Section 72(e) of the
Code, his interest in the Participant Contribution Account attributable to
any pre-1987 Participant Supplementary Contributions and pre-1987 Participant
Matched Contributions shall be separately accounted for.
SECTION 5.2 ALLOCATION OF EARNINGS, LOSSES AND CHANGES IN
FAIR MARKET VALUE OF THE NET ASSETS OF THE FUNDS. Earnings, losses and
changes in fair market value of the net assets of each fund comprising the
Investment Funds shall be allocated as of the date provided in Section 3.6 to
the Participant's Accounts in the ratio which the dollar value of the
interest of each such Participant in the respective fund bears to the dollar
value of the interests in such fund of all such Participants as of the most
recent Valuation Date.
SECTION 5.3 VESTING OF PARTICIPANT'S INTERESTS.
(a) FULLY VESTED ACCOUNTS. A Participant's
Participant Contribution Account, Compensation Deferral Account, and Rollover
Account shall be 100% vested and nonforfeitable.
48
(b) COMPANY CONTRIBUTION ACCOUNT. A Participant's
interest allocated to his Company Contribution Account shall become vested to
the extent of twenty-five percent (25%) upon completion of two Years of
Service and twenty-five percent (25%) for each additional Year of Service.
Therefore, a Participant shall be fully vested in his Company Contribution
Account balance after five Years of Service. Any portion of the interest of
a Participant which shall not have become vested as herein provided shall be
a forfeitable interest.
(i) With respect to an Employee who has a
One-Year Break in Service, such Employee's pre-break and post-break service
will be aggregated for vesting purposes only after the Employee's post-break
service is at least one year.
(ii) If any Employee has five (5) or more
consecutive One Year Breaks in Service and the number of such consecutive
Breaks in Service is greater than the number of Years of Service he had prior
to such break, and if such Employee has no vested benefits under this Plan
derived from contributions by the Company at the time of said break, then
Years of Service prior to such break shall not be added to the Years of
Service after such break for vesting purposes.
(c) DISCONTINUANCE OF CONTRIBUTIONS. If the Company shall,
for any reason, completely discontinue its contributions to the Trust Fund,
the entire interest of each
49
Participant in his Company Contribution Account shall be one hundred percent
(100%) vested.
(d) VALUATION OF AMOUNTS DISTRIBUTABLE. The value of
Participant Account balances shall be determined as of the Valuation Date
immediately preceding the date of distribution.
(e) VESTING ON DEATH OR NORMAL RETIREMENT. When any
Participant shall reach his Normal Retirement Age or shall die, or shall
suffer total disability while an Employee, his entire interest in the Trust
Fund shall become one hundred percent (100%) vested without regard to his
period of employment.
(f) PLAN PROVISIONS GOVERN DISTRIBUTION. Any interest in
the Trust Fund, whether forfeitable or vested, shall be and become payable to
such Participant or his Beneficiaries only as and to the extent provided in
this Plan, and a Participant or a former Participant who dies having
designated a Beneficiary shall cease to have any interest hereunder or in his
separate Account, and his Beneficiary shall become entitled to payment
thereof solely as provided by the terms of this Plan.
(g) AMENDMENT OF VESTING SCHEDULE. If the vesting schedule
under the Plan is amended or if the Plan is amended in any way that directly
or indirectly affects the computation of a Participant's vested interest in
the Trust Fund, each Participant who has completed at least three (3) Years
of Service may elect, within a reasonable time after
50
the adoption of the amendment, to continue to have such vested interest
computed under the Plan without regard to such amendment. The period during
which the election may be made shall commence with the date the amendment is
adopted and shall end on the latest of: (i) 60 days after the amendment is
adopted; (ii) 60 days after the amendment is effective; or (iii) 60 days
after the Participant is issued written notice of the amendment.
ARTICLE VI
DISTRIBUTION FROM TRUST FUND
SECTION 6.1 WHEN INTERESTS BECOME DISTRIBUTABLE AND EFFECT
THEREOF.
(a) UPON DEATH, DISABILITY OR RETIREMENT. When a
Participant dies, suffers total disability or retires, his entire interest in
the Trust Fund as defined in this Plan, which shall have become one hundred
percent (100%) vested as provided in Article V hereof, shall thereupon become
distributable as hereinafter provided.
(b) UPON TERMINATION OF EMPLOYMENT. When a Participant's
employment is terminated for any reason other than death, total disability or
retirement, such portion of his interest in the Trust Fund as shall have
become vested as provided in Article V hereof shall thereupon become
distributable as hereinafter provided.
(c) EFFECT OF INTEREST BECOMING DISTRIBUTABLE. When a
Participant's vested interest shall become
51
distributable upon termination of employment for any reason, as provided in
this Section 6.1, such Participant, or his designated Beneficiary, shall
cease to have any further interest or participation in the Trust Fund, or any
subsequent accrual or contributions thereto, except the right to receive, in
accordance with this Plan, payment of the value of his vested Account
balance.
SECTION 6.2 PAYMENT.
(a) DISTRIBUTION UPON RETIREMENT OR DISABILITY. A
Participant whose termination of employment occurs on or after attaining
Normal Retirement Age or Disability Retirement Date shall, prior to the
commencement of benefits, make an election with respect to the method of
payment of his interest in the Trust Fund. The Committee shall then
institute one of the following methods of payment, as elected by the
Participant, normally within ninety (90) days of said election to the extent
administratively feasible:
(i) Payment of the entire interest in cash
in a lump sum.
(ii) Transfer of the entire interest to a
separate account for the Participant as described in Section 6.2(d), and
payment thereof, including earnings to the Participant or Beneficiary, in
substantially equal monthly installments not to exceed 120.
Notwithstanding the preceding provisions of this Section
6.2(a), no payment period shall extend beyond the
52
maximum period prescribed under Section 401(a)(9)(A) of the Internal Revenue
Code. In the event a Participant or Beneficiary shall fail to make a timely
election with respect to the method of payment, payment shall be made in a
cash lump sum and shall be made as soon as practicable following attainment
of Normal Retirement Age or Disability Retirement Date.
(b) DISTRIBUTION UPON DEATH.
If such Participant's interest is to be distributed because
of his death, his Beneficiary or Beneficiaries shall be paid the entire
amount of his interest in a lump sum within ninety (90) days after the
receipt of notice of death and any other documents deemed appropriate by the
Committee to the extent administratively feasible; provided, however, if an
election for payment other than lump sum is in effect under Section 6.2(a),
the selected mode of payment shall continue, and the method of distribution
shall be at least as rapid as in effect on the date of the Participant's
death. However, a Beneficiary may make an election to have the Participant's
interest payable in installments, as provided in Section 6.2(a). Neither the
Trustee nor the Company shall in any way be responsible for payment of death
taxes attributable to payment of benefits hereunder. Notwithstanding the
preceding provisions of this Section 6.2(b), no payment period shall extend
beyond the maximum period described by Code Section 401(a)(9), and, if
payment is to be made in a lump sum, the Participant's
53
interest shall be distributed within five (5) years of the Participant's
death.
(c) DISTRIBUTION UPON TERMINATION OF EMPLOYMENT.
If a Participant's employment terminates prior to his Normal Retirement Age
for any reason other than death or total disability, his vested interest in
the Trust Fund shall be distributable in cash in a lump sum after receipt by
the Committee of all required documentation, as follows:
(i) In the case of a Participant whose
vested interest does not exceed $3,500, distribution shall be made within
ninety (90) days following the Participant's termination of employment to the
extent administratively feasible, whether or not the Participant consents to
such distribution.
(ii) In the case of a Participant whose
vested interest exceeds $3,500 distribution shall be made, to the extent
administratively feasible, within ninety (90) days after the Participant's
termination of employment, but only after the receipt by the Committee of the
properly completed application of the Participant and any other required
documentation to request distribution, including the Participant's consent to
the distribution.
(iii) If a Participant described in (ii)
above fails to consent to distribution of his vested interest prior to ninety
(90) days following the Participant's termination of employment, the
provisions of Section 6.2(d) shall apply. Such a Participant shall be deemed
to have
54
made an election to defer distribution to his Normal Retirement Age, unless
prior to Normal Retirement Age and in accordance with (ii) above the
Participant submits a request for an earlier distribution.
(d) TRANSFER FOR DEFERRED PAYMENTS. A terminated
Participant's forfeitable interest in the Trust Fund, if any, and any vested
interest of the Participant that is not distributed prior to ninety (90) days
following the Participant's termination of employment, pursuant to (i) an
election of an installment distribution under Section 6.2(a) or (ii) the
deferral of the distribution under Section 6.2(c), shall be transferred to
and held in the Short-Term Money Market Income Fund or equivalent fund as
designated by the Committee.
(e) REQUIRED DISTRIBUTION DATE.
(i) Unless a Participant elects otherwise
in writing, payment of benefits hereunder shall commence, notwithstanding
anything to the contrary contained herein, no later than sixty days following
the close of the later of the Plan Year in which (1) the Participant reaches
Normal Retirement Age, (2) the Participant terminates employment, or (3) in
which occurs the tenth anniversary of the year in which the Participant
commenced participation in the Plan (unless the amount of the Participant's
benefit has not been calculated by that date or the Participant cannot be
located, in which case distribution shall begin no later
55
than sixty days after the payment can be calculated or the Participant
located).
(ii) Notwithstanding anything to the
contrary contained herein, the distribution options under the Plan shall
comply with Section 401(a)(9) of the Code and regulations promulgated
thereunder, which are hereby incorporated by this reference as a part of the
Plan. Accordingly, unless otherwise permitted by law, the entire interest of
each Participant shall be distributed by April 1 of the calendar year
following the calendar year in which the Participant reaches age 70-1/2.
However, effective January 1, 1997 and only with respect to a Participant who
is not a five percent (5%) owner of the Company or an Affiliated Employer at
any time during Plan Year ending in the calendar year in which he or she
attains age 70-1/2, and except as otherwise provided by law, such a
Participant is not required to receive a distribution of his or her interest
until the April 1 of the calendar year following the calendar year in which
he or she retires. Except as provided by law, a Participant who reached age
70-1/2 before January 1, 1988 and who was not a five percent owner of the
Company at any time during the Plan Year ending with or within the calendar
year in which the Participant attains age 66-1/2 or thereafter, is not
required to receive distribution of his interest until he separates from
service.
56
SECTION 6.3 DISPOSITION OF FORFEITABLE INTEREST - EFFECT OF
REHIRING.
(a) Subject to the provisions of (c) below, any
forfeitable portion of a Participant's interest in the Trust Fund shall be
forfeited as of the earlier of the date the Participant's vested interest is
distributed to him, as provided in Section 6.2(c), or the date the Participant
incurs five (5) consecutive Breaks in Service.
(b) Effective as of January 1, 1997, as of the last
day of each Plan year, any and all amounts forfeited by Participants shall used
to pay expenses and fees in connection with the administration of the Plan and
Trust, except that if the Company pays such expenses and fees, then the amounts
forfeited by Participants shall be applied to reduce future Matching Company
Contributions by the Company or Participating Employer that made such
contribution on behalf of the Participant.
(c) In accordance with such rules as the Committee
may prescribe, there shall be restored to the Participant's credit in his
Account the dollar value of any portion of a Participant's interest in the
Trust Fund which was forfeited upon distribution of the Participant's vested
interest in accordance with Section 6.2(c); provided, however, that such
restoration shall be made only in the case of the Participant's reemployment
as an Eligible Employee prior to sustaining five (5) consecutive one year
Breaks in Service, and only if the Participant repays to the
57
Plan in cash no later than the fifth anniversary of his reemployment as an
Eligible Employee, the amount of the distribution attributable to Company
Matching Contributions and earnings thereon received at termination. The
determination of the amount the Participant is required to repay in cash
under this Subsection (c), and the determination of the dollar value of the
forfeited amount required to be restored shall be made as of the Valuation
Date the Participant's Account was valued for purposes of determining the
amount of his distribution from the Trust Fund. No adjustment in the dollar
value of the forfeited amount shall be made for any gains or losses of the
Trust Fund between the applicable Valuation Date and the restoration of the
dollar value of the forfeited portion of Participant's interest in the Trust
Fund. The repaid amount and the Participant's restored interest in the Trust
Fund shall upon repayment become a part of the Participant's new Account
balance. Said forfeited interest shall be restored from forfeitures in the
Plan Year of repayment, or as soon as available.
SECTION 6.4 SPENDTHRIFT TRUST PROVISIONS. Except as
otherwise provided hereunder, all amounts payable hereunder by the Trustee
shall be paid only to the person or persons entitled thereto, and all such
payments shall be made directly into the hands of such person or persons and
not into the hands of any other person or corporation whatsoever. The
interests of any Participant or Beneficiary
58
in the Trust Fund and/or any of the benefits, payments, proceeds or avails
therefrom and under this Plan shall not be subject to claims of his
creditors, or others, or subject to attachment, garnishment, execution or
other process of law, and no Participant or Beneficiary shall have any right
to alienate, assign, anticipate, commute, pledge or encumber his interest in
the Trust Fund and/or any of the benefits, payments, proceeds or avails
therefrom or under this Plan in any manner.
SECTION 6.5 WITHDRAWAL OF CONTRIBUTIONS. Effective on the
last day of any given calendar month, or effective upon such other date as
the Committee shall determine, a Participant may, upon giving notice as
required by the Committee, withdraw a part of the dollar value of his Account
subject to the following conditions and limitations:
(a) Such withdrawal must first be made from the
Participant's pre-1987 Supplementary Contributions, if any, but exclusive of
earnings thereon. A Participant who elects to make a withdrawal of his
pre-1987 Supplementary Contributions under the provisions of this Subsection
(a) shall not be permitted to make further Participant Contributions or
Compensation Deferrals until the beginning of the calendar month following a
period of three months from the last day of the calendar month in which such
withdrawal request is made.
(b) Upon exhaustion of the Participant's pre-1987
Supplementary Contributions, any further withdrawal must
59
then be made from the Participant's pre-1987 Matched Contributions, if any,
also exclusive of earnings thereon; provided, however, that any Participant
withdrawing pre-1987 Matched Contributions shall not be permitted to make
further Participant Contributions or Compensation Deferrals until the
beginning of the calendar month following a period of three months from the
last day of the calendar month in which such withdrawal request is made.
(c) Upon exhaustion of the Participant's pre-1987 Matched
Contributions, if any, exclusive of earnings thereon, any further withdrawal
must then be made from the Participant's post-1986 Participant Contributions
and earnings allocable to his aggregate Participant Contributions under the
Plan. Any such withdrawal shall be treated as an allocable withdrawal of his
post-1986 Participant Contributions and of the earnings thereon in accordance
with Section 72(e); provided, however, any withdrawal treated under Section
72(e) of the Code as a withdrawal of amounts contributed by the Participant
shall be first allocable to the Participant's Supplementary Contributions and
then to his Matched Contributions. A Participant who elects to make a
withdrawal of any or all of his post-1986 Participant Contributions and
earnings on his aggregate contributions under the provisions of this
Subsection (c) shall not be permitted to make further Participant
Contributions or Compensation Deferrals until the beginning of the calendar
month following a period of
60
three months from the last day of the calendar month in which such withdrawal
request is made.
(d) Notwithstanding Subsections (a), (b), and (c), a
Participant may at any time request a withdrawal from his or her Rollover
Account.
(e) Notwithstanding Subsections (a), (b), and (c), in the
case of a Participant who has withdrawn the total dollar value of his or her
Participant Contributions, earnings allocable to such contributions, and his
or her Rollover Account, withdrawals may be made in the following order: (i)
first, from the Participant's Supplementary Compensation Deferrals, and (ii)
second, from the Participant's Matched Compensation Deferrals; exclusive of
any earnings thereon; provided, however, that a Participant must be
determined by the Committee to have an immediate and heavy financial need and
the amount withdrawn must be necessary to meet that need.
Subject to the approval of the Committee and guidelines
promulgated by the Committee, withdrawals pursuant to this Subsection (e) may
be permitted upon written request by the Participant to meet an immediate and
heavy financial need resulting from:
(i) Uninsured medical expenses previously
incurred by the Participant, or the Participant's spouse or
dependent or necessary to obtain such medical care;
61
(ii) The purchase (excluding mortgage payments)
of a principal residence of the Participant;
(iii) The payment of tuition for the next 12
months of post-secondary education for the Participant, or the
Participant's spouse, children or dependents;
(iv) The prevention of eviction of the
Participant from his principal residence, or foreclosure on the
mortgage of the Participant's principal residence; and
(v) Any other event described in Treasury
Regulations or rulings as an immediate and heavy financial
need and approved by the Company as a reason for permitting
distribution under this Subsection (e).
The Committee shall determine, in a uniform
and non-discriminatory manner, whether a Participant has an
immediate and heavy financial need. A hardship distribution
may be made under this Subsection (e) only if such
distribution does not exceed the amount required to meet the
immediate financial need created by the hardship (including
taxes or penalties reasonably anticipated from the
distribution) and is not reasonably available from other
resources of the Participant.
A Participant shall not be permitted to make any hardship
withdrawals from his Accounts pursuant to this Subsection (e) until he has
obtained all distributions, other than hardship distributions, and all non-
taxable loans
62
currently available under all qualified profit sharing and retirement plans
maintained by the Company or an Affiliated Employer.
The Participant's request for a hardship withdrawal shall
include his written statement that the need cannot be relieved: (i) through
reimbursement or compensation by insurance or otherwise; (ii) by reasonable
liquidation of the Participant's assets, to the extent such liquidation would
not itself cause immediate and heavy financial need; (iii) by cessation of
Participant Contributions or Compensation Deferrals under the Plan or by
cessation of contributions to any other qualified or nonqualified plans of
deferred compensation maintained by the Company or an Affiliated Employer; or
(iv) by other distributions or nontaxable loans currently available from plans
maintained by the Company or an Affiliated Employer, or by borrowing from
commercial sources on reasonable commercial terms; and a statement consenting
to the suspension of his or her Participant Contributions and Compensation
Deferrals as provided below.
A Participant who makes a hardship withdrawal shall make no
further Participant Contributions or Compensation Deferrals under this Plan or
any other qualified or nonqualified plan of deferred compensation (including
stock purchase or stock option plans, but not including any cafeteria or other
health or welfare plan) maintained by the Company or an Affiliated Employer
until
63
the beginning of the calendar month following a period of twelve months from
the last day of the calendar month in which such withdrawal is made.
The Compensation Deferrals in the taxable year following a
taxable year in which a Participant makes a hardship withdrawal shall not
exceed: (1) the limit set forth in Section 3.8, minus (2) the amount of
Compensation Deferrals made by such Participant in the taxable year in which
such hardship withdrawal was made.
(f) Notwithstanding Subsections (a), (b), and (c), in the
case of a Participant who has withdrawn the total dollar value of his or her
Participant Contributions, earnings allocable to such contributions, and his
or her Rollover Account, withdrawals may be made from the Company's Matching
Contributions made with respect to that Participant's Participant
Contributions and any earnings thereon, up to the full amount thereof;
provided, however, that such Participant must be fully vested (100%) in
Company contributions at the date of such a withdrawal, and must be
determined by the Committee to have a hardship need. Participants shall not
withdraw any Company Matching Contributions made with respect to Compensation
Deferrals, or any earnings thereon. A Participant who makes a withdrawal
pursuant to this Subsection (f) shall make no further Participant
Contributions or Compensation Deferrals until the beginning of the calendar
month following a period
64
of three months from the last day of the calendar month in which such
withdrawal is made.
Hardship determinations shall be made by in a uniform and
non discriminatory manner. By way of example, and not limitation, hardship
would be a financial hardship occurring in the personal affairs of a
Participant because of:
(i) A financial need of long range proportion,
such as a need for Participant's purchase of a primary home or
residence or for the post-secondary education of Participant's
children; or
(ii) A financial need of large proportion,
such as a need due to major destruction of Participant's
residence when not covered by insurance; major loss of income
caused by accident, sickness, or temporary disability of
Participant; major loss of income caused by extended layoff of at
least 90 days of Participant; major financial burden caused by
death occurring in the immediate family of Participant;
foreclosure on the mortgage of Participant's residence; and
medical expenses of Participants who are eligible to participate
in the Hilton Hotels Group Health Plans to the extent such
expenses are not otherwise covered under those plans. Such
election shall be effective as of the first day of the calendar
month which is at least 30 days following the date the election
is filed.
65
(g) If a Participant's Compensation Deferrals or
Participant Contributions are suspended in the event of a withdrawal under
this Section, such contributions shall not be resumed unless the Participant
files a written election with the Committee to that effect.
(h) Withdrawals under this Section may not be in an amount
less than the lesser of the amount contributed to the Plan by the
Participant, or $500.00, and a period of 12 months must have elapsed since
the last withdrawal, except for hardship withdrawals under Subsection (d)
hereof.
SECTION 6.6 MISSING PARTICIPANT OR BENEFICIARY. If a
Participant's vested interest cannot be distributed because such Participant
or his Beneficiary or Beneficiaries cannot be located, the Trustee shall
transfer the value of the Participant's interest in the Trust Fund to the
fund described in Section 6.2(d) for the benefit of such Participant or
Beneficiary. Thereafter, if the Committee fails to locate the Participant or
Beneficiary entitled to a distribution, the entire amount set aside with
respect to such payee, plus earnings, shall be forfeited as of the beginning
of the calendar month coinciding with or next following the fifth anniversary
of the date distribution of said vested interest was first attempted. Said
forfeited amount shall be disposed of as provided in Section 6.3 hereof.
Should a Participant or Beneficiary to whom payment is due
make a claim for his vested interest in the
66
Trust Fund, the vested interest so forfeited will be reinstated on behalf of
such claimant. Said reinstated vested interest shall be paid from
forfeitures arising in the Plan Year during which the claim is settled, or as
soon as available from forfeitures.
SECTION 6.7 DIRECT ROLLOVERS.
(a) This Section 6.7 applies to distributions made on or after January
1, 1993. Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a Distributee's election under this Section 6.7, a
Distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Distributee in a
Direct Rollover.
(b) ELIGIBLE ROLLOVER DISTRIBUTIONS: For purposes of this Section 6.7,
an "Eligible Rollover Distribution" is any distribution of all or any portion
of the balance to the credit of the Distributee, except that an Eligible
Rollover Distribution does not include:
(i) any distribution to the extent such distribution is required
under Section 401(a)(9) of the Code; and
(ii) the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
67
(c) ELIGIBLE RETIREMENT PLAN: For purposes of this Section 6.7, an
"Eligible Retirement Plan" is an individual retirement account described in
Section 408(a) of the Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described in Section 403(a) of
the Code, or a qualified trust described in Section 401(a) of the Code, that
accepts the Distributee's Eligible Rollover Distribution. However, in the
case of an Eligible Rollover Distribution to the surviving spouse, an
Eligible Retirement Plan is an individual retirement account or individual
retirement annuity.
(d) DISTRIBUTEE: For purposes of this Section 6.7, a "Distributee"
includes an Employee or former Employee. In addition, the Employee's or
former Employee's surviving spouse and the Employee's or former Employee's
spouse or former spouse who is the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the Code, are Distributees
with regard to the interest of the spouse or former spouse.
(e) DIRECT ROLLOVER: For purposes of this Section 6.7, a "Direct
Rollover" is a payment by the Plan to the Eligible Retirement Plan specified
by the Distributee."
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ARTICLE VII
COMMITTEE, INVESTMENT AND ADMINISTRATION
SECTION 7.1 APPOINTMENT OF COMMITTEE. The Committee shall consist of
three or more members appointed by the Board of Directors of the Company.
The Board of Directors shall by resolution appoint the original members of
such Committee, and such members shall hold office until resignation, death
or removal by the Board of Directors. The Committee may then select a Plan
Administrator under the Plan.
SECTION 7.2 GENERAL DUTIES AND POWERS OF COMMITTEE. The Committee
shall be charged with the administration of this Plan and shall decide,
subject to the terms of the Trust Agreement, all questions arising in the
administration, interpretation and application of this Plan, including all
questions of eligibility.
The Committee shall, from time to time, direct the Trustee concerning
the payments to be made out of the Trust Fund pursuant to this Plan and shall
have such other powers respecting the administration of the Trust Fund as may
be conferred upon it hereunder or under the Trust Agreement.
Within a reasonable time after the last day of a calendar month, the
Company shall certify to the Committee in writing the total amount of the
Company's contribution to the Trust Fund for such month and such information
from the Company's records with respect to Employees as the Committee may
require in order to determine the identity and interests
69
of the Participants and otherwise to perform its duties hereunder.
Any certification by the Company of information to the Committee
pursuant to this Plan shall, for all purposes of this Plan, be binding on all
parties, provided that whenever any Employee proves to the satisfaction of
the Company that his period of employment or his Compensation as so certified
is incorrect, the Company shall correct such certification, all in accordance
with the claims procedure provided herein.
The determination of the Committee as to the identity of the respective
Participants and as to their respective interests shall be binding upon the
Company, the Trustee, the Employees, the Participants and all the
Beneficiaries.
In any matter affecting any member of the Committee in his individual
capacity as a Participant hereunder, separate and apart from his status as a
member of the group of Participants, such interested member shall have no
authority or vote in the determination of such matter as a member of the
Committee, but said Committee shall determine such matter as if said
interested member were not a member of the Committee; provided, however, that
this shall not be deemed to take from said interested member any of his
rights hereunder as a Participant. In the event that the remaining members
of the Committee should be unable to agree on any matter so affecting an
interested member
70
because of an equal division of voting, the Board of Directors shall appoint
a temporary member of the Committee in order to create an odd number of
voting members.
SECTION 7.3 INVESTMENT POWERS AND DUTIES. The Committee may
direct the Trustee with respect to the investment and reinvestment of the Trust
Fund, and to the extent it exercises its power to direct the Trustee, shall be
the Fiduciary with respect to investment, management and control of Trust
assets.
The Committee may transfer to the Trustee or an Investment Manager the
authority and duty to direct the investment and management of all or a
portion of the Trust assets. Upon such transfer the Trustee or the
Investment Manager, as the case may be, shall be the Fiduciary with respect
to the investment and management of such Trust assets and the Committee shall
have no responsibility therefor. Any transfer of investment and management
to the Trustee or to an Investment Manager may be revoked upon receipt by the
Trustee and the Investment Manager, if applicable, of a notice to that effect
by the Committee. The appointment, selection and retention of a qualified
Investment Manager shall be solely the responsibility of the Committee. The
Trustee is authorized and entitled to rely upon the fact that said Investment
Manager is at all times a qualified Investment Manager until such time as the
Trustee has received a written notice from the Committee to the contrary, as
well as to rely upon the fact that said
71
Investment Manager is authorized to direct the investment and management of
the assets of the aforesaid Trust until such time as the Committee shall
notify the Trustee in writing that another Investment Manager has been named
or, in the alternative, that the Investment Manager named has been removed
and the responsibility for the investment and management of the Trust assets
has been assumed by the Committee or has been transferred back to the
Trustee, as the case may be.
To the extent the Committee exercises its power to direct the Trustee
with respect to the investment and management of all or a portion of the
assets of the Trust Fund, the Trustee shall not be liable nor responsible for
losses or unfavorable results arising from the Trustee's compliance with
proper directions of the Committee which are made in accordance with the
terms of the Plan and Trust and which are not contrary to the provisions of
any applicable Federal or State statute regulating such investment and
management of the assets of an employee benefit trust. To the extent
authority and responsibility with respect to the investment and management of
all or a portion of the Trust assets are transferred to an Investment
Manager, the Trustee shall not be liable nor responsible in any way for any
losses or other unfavorable results arising from the Trustee's compliance
with investment or management directions received by the Trustee from the
Investment Manager. Any directions by the Committee shall be in accordance
with the Trust Agreement.
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Any directions by an Investment Manager shall be in accordance with an
agreement between said Manager, the Committee and the Trustee; provided,
however, the Trustee shall be under no duty to question any directions of the
Investment Manager nor to review any securities or other property of the
Trust constituting assets thereof with respect to which an Investment Manager
has investment responsibility, nor to make any suggestions to such Investment
Manager in connection therewith. The Trustee shall, as promptly as possible,
comply with any written directions given by the Committee or an Investment
Management hereunder.
The Trustee shall not be liable, in any manner nor for any reason, for
the making or retention of any investment pursuant to such directions of the
Investment Manager, nor shall the Trustee be liable for its failure to invest
any or all of the Trust Funds in the absence of such written directions. In
any event, neither the Committee nor any Investment Manager referred to above
shall direct the purchase, sale or retention of any assets of the Trust Fund
if such directions are not in compliance with the applicable provisions of
the Act and any Regulations or Rulings issued thereunder. No Fiduciary shall
permit the indicia of ownership of any of the Trust assets to be maintained
at a location outside the jurisdiction of the District Courts of the United
States, except as authorized by the Secretary of Labor.
73
During such period or periods of time, if any, as the Committee or an
Investment Manager is authorized to direct the investment and management of
the Trust assets, the Trustee shall have no obligation to determine the
existence of any conversion, redemption, exchange, subscription or other
right relating to any of said securities purchased of which notice was given
prior to the purchase of such securities, and shall have no obligation to
exercise any such right unless the Trustee is informed of the existence of
the right and is instructed to exercise such right, in writing, by the
Committee or the Investment Manager, as the case may be, within a reasonable
time prior to the expiration of such right.
In the event the Committee or Investment Manager has the power to direct
the Trustee in the investment of the Trust Fund, they shall have the power to
direct the Trustee to invest and/or reinvest any and all money or property of
any description at any time held by it and constituting a part of the Trust
Fund in accordance with the investment powers enumerated in the Trust
Agreement; providing investments are prudently made, with diversity to
minimize risk of loss, and are not in conflict with other fiduciary rules
hereunder and under the Trust Agreement.
SECTION 7.4 ORGANIZATION OF COMMITTEE. The Committee may adopt such
by-laws and regulations as it deems desirable for the conduct of its affairs
and appoint one of its own members chairman and appoint a secretary and one
or
74
assistant secretaries and one or more other agents, none of whom need be a
member of the Committee, but any of whom may, but need not be, an officer or
employee of the Company. It may delegate to any agent such duties and
powers, both ministerial and discretionary, as it deems appropriate,
excepting only that all matters involving investment of funds, if applicable,
interpretation of this Plan and settlement of disputes shall be determined by
the Committee.
Any member of the Committee may resign at any time by giving written
notice to the other members and to the Secretary of the Company, effective as
therein stated, otherwise upon receipt. Any member who leaves the employ of
the Company shall be deemed to have resigned as a member on the date of his
termination of employment. Any member of the Committee may, at any time, be
removed by the Board of Directors.
Upon the death, resignation or removal of any member, the Board of
Directors shall at its next regular meeting, or at a special meeting if so
desired, appoint by resolution a successor. Notice of appointment of a
successor member shall be made by the Secretary of the Company in writing to
the Trustee and to the Committee.
SECTION 7.5 RECORDS AND REPORTS. The Committee shall keep accurate
records of all of its proceedings, as well as such books of account, records
and other data as may be necessary for the proper administration of the Plan.
The Plan Administrator, unless the Plan is otherwise exempted by
75
law, shall, within the time prescribed by law, prepare and submit to the
Internal Revenue Service and the Company an Annual Report conforming with the
requirements of the Employee Retirement Income Security Act of 1974, as
amended, and any Regulations or Rulings thereunder. Notwithstanding anything
herein to the contrary, the Plan Administrator shall fully comply with all
reporting and disclosure requirements provided by law.
SECTION 7.6 CLAIMS PROCEDURE. Claims for benefits or hardship
withdrawal shall be filed with the Plan Administrator, who shall be required
to give written notice to any Participant or Beneficiary who makes a claim
under the Plan which claim is denied by the Committee. Unless additional
time is required, such notice shall be given within ninety (90) days of
receipt of the claim, and shall be sent to the Participant's or Beneficiary's
last known address and shall set forth the specific reasons for denial of the
benefit claimed, specify the pertinent Plan provisions on which the denial is
based, describe any additional material or information necessary for the
claimant to perfect the claim and explain why such material is necessary.
The notice must also explain the Plan's claim review procedure. The
Participant, Beneficiary or a duly authorized representative, shall have
sixty (60) days from the date such notice was given to submit a written
request for review of his claims denial. He shall be entitled to review
pertinent documents and submit issues and comments in
76
writing, whereupon the entire Committee shall, unless additional time is
required, within thirty (30) days of receipt of the request, hear such appeal
and shall render a written decision within sixty (60) days thereafter.
SECTION 7.7 MANNER OF ADMINISTERING. The Committee shall have full
discretion to construe and interpret the terms and provisions of this Plan,
which interpretation or construction shall be final and binding on all
parties, including but not limited to the Company and any Participant or
Beneficiary, except as otherwise provided by law. The Committee shall
administer such terms and provisions in a uniform and nondiscriminatory
manner and in full accordance with any and all laws applicable to the Plan.
SECTION 7.8 COMPENSATION, BONDING, EXPENSES AND INDEMNITY.
(a) The members of the Committee shall serve without compensation for
their services hereunder.
(b) Members of the Committee and any delegates shall be bonded to the
extent required by Section 412(a) of ERISA and the regulations thereunder.
Bond premiums and all expenses of the Committee or of any delegate who is an
employee of the Company shall be paid by the Company and the Company shall
furnish the Committee and any such delegate with such clerical and other
assistance as is necessary in the performance of their duties.
77
(c) The Committee is authorized at the expense of the Company to employ
such legal counsel as it may deem advisable to assist in the performance of
its duties hereunder. Expenses and fees in connection with the
administration of the Plan and the Trust shall be paid from the Trust assets
as provided in Article IX to the fullest extent permitted by law, unless the
Company determines otherwise.
(d) To the extent permitted by applicable state law, the Company shall
indemnify and save harmless the Committee and each member thereof, the Board
of Directors and any delegate of the Committee who is an employee of the
Company against any and all expenses, liabilities and claims, including legal
fees to defend against such liabilities and claims arising out of their
discharge in good faith of responsibilities under or incident to the Plan,
other than expenses and liabilities arising out of willful misconduct. This
indemnity shall not preclude such further indemnities as may be available
under insurance purchased by the Company or provided by the Company under any
by-law, agreement or otherwise, as such indemnities are permitted under state
law. Payments with respect to any indemnity and payment of any expenses and
fees under this Section shall be made only from assets of the Company and
shall not be made directly or indirectly from Trust assets.
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ARTICLE VIII
CONTINUANCE AND AMENDMENT OF PLAN
SECTION 8.1 CONTINUANCE OF PLAN NOT A CONTRACTUAL OBLIGATION OF COMPANY
- - - IMPOSSIBILITY OF DIVERSION. It is the expectation of the Company that it
will continue this Plan indefinitely, but the continuance of this Plan is not
assumed as a contractual obligation by the Company, and the right is reserved
to the Company by action of its Board of Directors at any time to discontinue
this Plan. The discontinuance of this Plan by the Company shall not have the
effect of revesting in the Company any part of the Trust Fund, except as
specifically provided hereinafter. Upon the complete discontinuance of
contributions by any Company, affected Participants shall be one hundred
percent (100%) vested in their Account balances, and the Committee shall
direct the Trustee to distribute the net amount available, after payment of
any fees and expenses, in cash to the Participants entitled thereto according
to their Account balances, in accordance with Section 6.2.
In the event that the initial determination of the Commissioner of
Internal Revenue as to the qualification of this Plan and the Trust hereunder
under Sections 401 and 501(a) of the Federal Internal Revenue Code of 1954 or
any amendments thereto effective prior to said initial determination, or the
corresponding provisions of any later statute effective prior to said
determination, shall be that this Plan and the Trust hereunder do not
initially qualify
79
under said sections, then the Company, by action of its Board of Directors,
shall have the right to discontinue this Plan and the Trust hereunder and to
cause all contributions made to the Trust hereunder by the Company to be
returned to the Company, and Participants shall have their contributions
returned as well.
Under no circumstances, other than those of the preceding paragraph,
shall any contributions by the Company to the Trust or any part of the Trust
Fund be recoverable by the Company from the Trustee or from any Participant
or former Participant, his Beneficiaries or other persons, or be used for or
diverted to purposes other than for the exclusive benefit of Participants and
their Beneficiaries and defraying the reasonable expenses of the Plan.
SECTION 8.2 CONSOLIDATION OR MERGER. In the event of the consolidation
or merger of the Company with or into any other business enterprise, or the
sale by the Company of its assets or stock, the resulting successor
enterprise may continue the Plan by formally adopting the same and by
executing a proper supplemental agreement to the Trust Agreement with the
Trustee; provided, however, that such continuation shall be allowed only with
the express written authorization of the Board of Directors of the Company;
and provided, further, that in the case of any merger or consolidation with
or transfer of assets or liabilities to any other plan, each Participant in
the Plan must, if the Plan is then terminated, receive a benefit
80
immediately after the merger, consolidation, or transfer which is equal to or
greater than the benefit he would have been entitled to receive immediately
before the merger, consolidation or transfer. If, within ninety (90) days
from the effective date of such consolidation, merger or sale of assets, the
Board of Directors of the Company does not authorize continuation or such
successor does not adopt the Plan, the Plan shall be terminated in accordance
with Section 8.4.
SECTION 8.3 AMENDMENTS. The Company, by action of the Board of
Directors, may at any time and from time to time amend this Plan; provided,
however, that no amendment shall be made at any time pursuant to which the
Trust Fund may be diverted to purposes other than for the exclusive benefit
of the Participants and their Beneficiaries, and provided further that no
amendment shall decrease the percentage of the interest of any Participant
which shall theretofore have become vested, nor shall any amendment
discriminate in favor of employees who are officers, shareholders, or highly
compensated employees, and further that no amendment shall be made which
affects the rights, duties or responsibilities of the Trustee without the
Trustees approval, and further if any amendment changes the vesting schedule,
any Participant with three or more Years of Service may, by filing a written
request thereto with the Company within sixty (60) days after he has received
notice of such amendment, elect to have his vested percentage
81
computed under the vesting schedule in effect prior to the amendment. Notice
and disclosure of amendments shall be given by the Plan Administrator in
accordance with law.
Notwithstanding anything herein to the contrary, however, this Plan may
be amended at any time if necessary to conform to the provisions and
requirements of the Federal Internal Revenue Code, the provisions and
requirements of the Revenue and Taxation Code of the State of California with
respect to employee benefit trusts or any amendments thereto, or regulations
issued pursuant thereto, or any similar act, and the Employee Retirement
Income Security Act of 1974 or any amendments thereto, or regulations, orders
or rulings issued pursuant thereto; and no such amendment shall be considered
prejudicial to any interest of any Participant or Beneficiary.
Amendments made by the Board of Directors as above shall bind all
adopting corporations without further action on their part, unless the Board
of Directors is otherwise notified within thirty (30) days of such amendment.
SECTION 8.4 TERMINATION OF PLAN. While the Plan is intended as a
permanent program, the Board of Directors reserves the right to terminate the
Plan at any time. In the event of such termination or a partial termination,
all affected Participants shall be one hundred percent (100%) vested, to the
extent required by applicable law. To the extent permissible under Code
Section 411(a)(11), the Committee shall direct the Trustee to distribute the
net
82
amount available, after payment of any fees and expenses, in cash to the
Participants entitled thereto according to their Account Balances. Any
payments shall be made within a reasonable time following the effective date
of the termination or a determination of the occurrence of a partial
termination.
ARTICLE IX
ADMINISTRATION OF THE TRUST FUND -
THE TRUST AGREEMENT - EXPENSES
Concurrently with the adoption of this Plan, the Company has executed a
Trust Agreement providing for the administration of the Trust Fund by the
Trustee hereunder and containing such provisions as the Company has deemed
appropriate with respect to the following: (a) powers and authority of the
Trustee as to the investment and reinvestment of the Trust Fund, the income
therefrom, and the general administration thereof, subject to an election by
the Company regarding the right of the Committee or an Investment Manager to
direct the Trustee with respect to investment of the Trust Fund; (b) the
limitations on the liability of the Trustee; (c) authority of the Committee
to settle the Accounts of the Trustee on behalf of all persons having any
interest in the Trust Fund and from time to time to appoint a new Trustee in
place of any then acting Trustee of the Trust Fund.
83
ARTICLE X
MISCELLANEOUS
SECTION 10.1 LOANS TO PARTICIPANTS.
(a) Each Participant shall have the right, subject to prior approval by
the Committee, to borrow from his Accounts. Application for a loan must be
submitted by a Participant to the Committee on such form(s) as the Committee
may require. Approval shall be granted or denied as specified in Subsection
(b), on the terms specified in Subsection (c). For purposes of this Section
10.1, but only to the extent required by Department of Labor Regulations
Section 2550.408b-1, the term "Participant" shall include any Employee,
former Employee, Beneficiary or alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the Code, who is a party in
interest and has an interest in the Plan that is not contingent.
(b) The Committee shall grant any loan which meets each of the
requirements of paragraphs (i), (ii) and (iii) below:
(i) The amount of the loan, when added to the outstanding
balance of all other loans to the Participant from the Plan or any
other qualified plan of the Company or any Affiliate Company shall
not exceed the lesser of:
(1) $50,000, reduced by the excess, if any, of a Participant's
highest outstanding balance of all loans from the Plan or any other
84
qualified plan maintained by the Company or an Affiliated Employer
during the preceding 12 months over the outstanding balance of such
loans on the loan date, or
(2) 50% of the value of the vested balance of the Participant's
Compensation Deferral Account, Participant Contribution Account and
Rollover Account;
(ii) The loan shall be for at least $1,000; and
(iii) No more than one loan may be outstanding to a Participant at
any time.
(c) Each loan granted shall, by its terms, satisfy each of the
following additional requirements:
(i) Each loan must be repaid within five years (except that
if the Committee is satisfied that the loan proceeds are being used
to purchase the principal residence of a Participant, the Committee
may, in its discretion, establish a term of up to 10 years for
repayment);
(ii) Each loan must require substantially level amortization
over the term of the loan, with payments not less frequently than
quarterly; and
(iii) Each loan must be adequately secured, with the security to
consist of the balance of the Participant's Accounts.
85
(1) In the case of any Participant who is an active Employee,
automatic payroll deductions shall be required as additional security.
(2) In the case of any other Participant, the outstanding loan
balance may at no time exceed 50% of the outstanding vested balance
of the Participant's Accounts. If such limit is at any time exceeded,
or if the Participant fails to make timely repayment, the loan will
be treated as in default and become immediately payable in full.
(3) The investment gain or loss attributable to the loan shall
not be included in the calculation or allocation of the increase or
decrease in fair market value of the Investment Funds. Instead, the
entire gain or loss (including any gain or loss attributable to
interest payments or default) shall be allocated to the Accounts of
the Participant.
(iv) Each loan shall bear reasonable rate of interest, which rate
shall be the prime rate (as determined by the Committee) as of the last
day of the quarter preceding the quarter in which the loan is made, plus
one percent. Furthermore, the Participant's Accounts shall be charged a
setup fee of $75 at the
86
time the loan is made; such setup fee shall be paid to the Plan's
recordkeeper.
(d) All loan payments shall be transmitted by the Company to the
Trustee as soon as practicable but not later than the end of the month during
which such amounts were received or withheld. Each loan may be prepaid in
full at any time. Any prepayment shall be paid directly to the Trustee in
accordance with procedures adopted by the Committee.
(e) Each loan shall be evidenced by a promissory note executed by the
Participant and payable in full to the Trustee, not later than the earliest
of (1) a fixed maturity date meeting the requirements of Subsection (c)(i)
above, (2) the Participant's death, or (3) the termination of the Plan. Such
promissory note shall evidence such terms as are required by this section.
(f) The Committee shall have the power to modify the above rules or
establish any additional rules with respect to loans extended pursuant to
this section. Such rules may be included in a separate document or documents
and shall be considered a part of this Plan; provided, each rule and each
loan shall be made only in accordance with the regulations and rulings of the
Internal Revenue Service and Department of Labor and other applicable state
or federal law. The Committee shall act in its sole discretion to ascertain
whether the requirements of such regulations and rulings and this section
have been met.
87
SECTION 10.2 LIMITS ON EMPLOYEES' RIGHTS. Neither the action of the
Company in establishing this Plan, nor any action taken by it or the
Committee under the provisions hereof, nor any provision of this Plan shall
be construed as giving to any Employee of the Company the right to be
retained in its employ or any right to any payment whatsoever, except to the
extent of the benefits provided for by this Plan to be paid from the Trust
Fund. The Company expressly reserves its rights at any time to dismiss any
Employee without any liability for any claim against the Trust Fund for any
payment whatsoever except to the extent provided for in this Plan, or against
the Company. This Plan is strictly a voluntary undertaking on the part of
the Company and shall not be deemed to constitute a contract between the
Company and any Employee, or to be a consideration for, or an inducement or
condition of, the employment of any Employee.
SECTION 10.3 TRANSFERS OF PARTICIPANTS. A Participant who leaves the
employment of a Company or entity participating in the Plan and forthwith is
employed by transfer to another Company or entity participating in the Plan,
shall continue to be a Participant, and his vesting and benefit accumulation
shall continue without interruption.
A Participant who leaves the employment of a Company or entity
participating in the Plan, and forthwith is employed by transfer (not an
authorized leave of absence)
88
to an Affiliated Employer or entity or property not participating in the
Plan, may continue to be a Participant, and, subject to the provisions of the
definition of Year of Service contained in Article I, his vesting shall
continue without interruption, but he may no longer continue to contribute to
the Plan.
SECTION 10.4 CONTEXT TO CONTROL. The headings of articles and sections
are included solely for convenience of reference, and if there be any
conflict between such headings and the text of this Plan, the text shall
control.
SECTION 10.5 CONSTRUCTION. The masculine gender shall be deemed to
include the feminine, and the singular the plural, unless the context clearly
indicates to the contrary.
SECTION 10.6 QUALIFIED DOMESTIC RELATIONS ORDERS. Notwithstanding any
other provision of this Plan to the contrary, the Committee may comply with
the terms of a qualified domestic relations order (within the meaning of such
term under Section 414(p) of the Internal Revenue Code). Consistent with the
preceding sentence, payments to an alternate payee pursuant to a qualified
domestic relations order may be made prior to the time the Participant
attains "earliest retirement age" (as defined in Section 414(p)(4)(B) of the
Internal Revenue Code).
SECTION 10.7 ACTION BY PARTICIPANT OR OTHER PERSON. Whenever an
election or consent or similar action is authorized by a Participant or other
person, such
89
election, consent or action shall be taken in such form and manner as is
satisfactory to the Committee, in addition to satisfying applicable
requirements of the Plan.
SECTION 10.8 RECEIPT OR RELEASE. Any payment to any Participant or
Beneficiary in accordance with the provisions of the Plan shall, to the
extent thereof, be in full satisfaction of all claims against the Trustee,
the Committee, and the Company. The Trustee may require such Participant or
Beneficiary, as a condition precedent to such payment, to execute a receipt
and release to such effect.
SECTION 10.9 PERSONS UNDER INCAPACITY. In the event any amount is
payable under the Plan to a person for whom a conservator has been legally
appointed, the payment shall be distributed to the duly appointed and
currently acting conservator, without any duty on the part of the Committee
to supervise or inquire into the application of any funds so paid.
SECTION 10.10 TOP-HEAVY PLAN REQUIREMENTS. For any Plan Year for which
this Plan is a top-heavy plan as defined in Section B.3 of Appendix B,
attached hereto, and despite any other provisions of this Plan to the
contrary, this Plan will be subject to the provisions of Appendix B.
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ARTICLE XI
LAW GOVERNING AND SEVERABILITY
This Plan shall be construed, regulated and administered under ERISA,
and to the extent federal law is inapplicable, under the laws of the State of
California, and the Committee and the Trustee shall be liable to account only
in the courts of that State. All contributions received by the Trustee
hereunder shall be deemed to have been received in that State.
In the event any provision of this Plan shall be held illegal or invalid
for any reason, said illegality or invalidity shall not affect the remaining
provisions of this Plan, which shall be fully severable, and this Plan shall
be construed and enforced as if said illegal or invalid provisions had never
been inserted.
This Restatement is executed this ____________ day of __________, 1996
HILTON HOTELS CORPORATION
By _______________________
Its ______________________
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APPENDIX A
ANNUAL ADDITION LIMITS
Section 4.3 of the Plan shall be construed in accordance with this
Appendix A. Unless the context clearly requires otherwise, words and phrases
used in this Appendix A shall have the same meanings that are assigned to
them under the Plan.
A.1 - DEFINITIONS.
As used in this Appendix A, the following terms shall have the meanings
specified below.
"Annual Additions" shall mean the sum credited to a Participant's
Accounts for any Plan Year of (a) Company contributions, (b) voluntary
contributions, (c) forfeitures, (d) amounts credited after March 31, 1984 to
an individual medical account, as defined in Section 415(l)(2) of the Code
which is part of a Defined Benefit Plan maintained by the Company, and (e)
amounts derived from contributions paid or accrued after December 31, 1985,
in taxable years ending after such date, which are attributable to
post-retirement medical benefits allocated to the separate account required
with respect to a key employee (as defined in Section B.2(e) of Appendix B to
the Plan) under a welfare benefit plan (as defined in Section 419(e) of the
Code) maintained by the Company.
A-1
"Defined Benefit Plan" means a plan described in Section 414(j) of the
Code.
"Defined Contribution Plan" means a plan described in Section 414(i) of
the Code.
"Defined Benefit Plan Fraction" shall mean a fraction, the numerator of
which is the projected annual benefit (determined as of the close of the
relevant Plan Year) of the Participant under all Defined Benefit Plans
maintained by one or more Related Companies, and the denominator of which is
the lesser of (a) the product of 1.25 multiplied by the dollar limitation in
effect under Section 415(b)(1)(A) of the Code for the Plan Year, or (b) the
product of 1.4 multiplied by the amount which may be taken into account under
Section 415(b)(1)(B) of the Code with respect to the Participant for the Plan
Year.
"Defined Contribution Plan Fraction" shall mean a fraction, the
numerator of which is the sum of the annual additions to a Participant's
accounts under all Defined Contribution Plans maintained by one or more
Related Companies, and the denominator of which is the sum of the lesser of
(a) or (b) for such Plan Year and for each prior Plan Year of service with
one or more Related Companies, where (a) is the product of 1.25 multiplied by
the dollar limitation in effect under Section 415(c)(1)(A) of the Code for
the Plan Year (determined without regard to Section 415(c)(6) of the Code),
and (b) is the product of 1.4 multiplied by the amount which may be taken
into account under
A-2
Section 415(c)(1)(B) of the Code (or Section 415(c)(7) of the Code, if
applicable) with respect to the Participant for the Plan Year. Solely for
purposes of this definition, contributions made directly by an Employee to a
Defined Benefit Plan which maintains a qualified cost-of-living arrangement
as such term is defined in Section 415(k)(2) shall be treated as Annual
Additions. Notwithstanding the foregoing, the numerator of the Defined
Contribution Plan Fraction shall be adjusted pursuant to Treasury Regulations
1.415-7(d)(1), Questions T-6 and T-7 of Internal Revenue Service Notice
83-10, and Questions Q-3 and Q-14 of Internal Revenue Service Notice 87-21.
"Section 415 Compensation" shall mean a Participant's earned income,
wages, salaries, and fees for professional services, and other amounts
received for personal services actually rendered in the course of employment
with an employer maintaining a plan (including, but not limited to,
commissions paid salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips and bonuses),
and excluding the following:
(a) Employer contributions to a plan of deferred compensation which
are not included in the Employee's gross income for the taxable year in
which contributed or employer contributions under a simplified employee
pension plan to the extent such contributions are
A-3
deductible by the Employee, or any distributions from a plan of
deferred compensation;
(b) Amounts realized from the exercise of a non-qualified 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;
(c) Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
(d) Other amounts which received special tax benefits, or
contributions made by the employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity described
in section 403(b) of the Code (whether or not the amounts are
actually excludable from the gross income of the Employee).
Compensation for any limitation year is the compensation actually paid or
includible in gross income during such year.
A.2 - ANNUAL ADDITION LIMITATIONS.
(a) The compensation limitation of Section 4.3 of the Plan shall not
apply to any contribution for medical benefits (within the meaning of Section
419A(f)(2)) after separation from service which is treated as an Annual
Addition. In the event that Annual Additions to all the
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accounts of a Participant would exceed the limitations of Section 4.3 of the
Plan, they shall be reduced in the following priority: (1) return of
voluntary contributions to the Participant; (2) reduction of Company
contributions.
(b) If any Company or any Affiliated Employer contributes amounts, on
behalf of Participants covered by the Plan, to other Defined Contribution
Plans, the limitation on Annual Additions provided in Article IV of the Plan
shall be applied to Annual Additions in the aggregate to the Plan and such
other plans. Reduction of Annual Additions, where required, shall be
accomplished by first refunding any voluntary contributions to Participants,
then by reducing contributions under such other plans pursuant to the
directions of the fiduciary for administration of such other plans or under
priorities, if any, established by the terms of such other plans, and then,
if necessary, by reducing contributions under the Plan.
(c) In any case where a Participant under the Plan is also a
participant under a Defined Benefit Plan or a Defined Benefit Plan and other
Defined Contribution Plans maintained by the Company or an Affiliated
Employer, the sum of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction shall not exceed 1.0. Reduction of contributions
to or benefits from all plans, where required, shall be accomplished by first
reducing benefits under such other Defined Benefit Plan or plans, then by
allocating any excess in the manner set out above with
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respect to the Plan, and finally by reducing contributions or allocating any
excess contributions with respect to other Defined Contribution Plans, if
any; provided, however, that adjustments necessary under this or the next
preceding paragraph may be made in a different manner and priority pursuant
to the agreement of the Committee and the administrators of all other plans
covering such Participant, provided such adjustments are consistent with
procedures and priorities prescribed by Treasury Regulations under Section
415 of the Code.
(d) In the event the limitations of Section 4.3 of the Plan or this
Appendix A are exceeded and the conditions specified in Treasury Regulations
Section 1.415-6(b)(6) are met, the Committee may elect to apply the
procedures set forth in Treasury Regulations Section 1.415-6(b)(6).
A-6
APPENDIX B
TOP-HEAVY PROVISIONS
Section 10.10 of the Plan shall be construed in accordance with this
Appendix B. Definitions in this Appendix B shall govern for the purposes of
this Appendix B. Any other words and phrases used in this Appendix B,
however, shall have the same meanings that are assigned to them under the
Plan, unless the context clearly requires otherwise.
B.1 - GENERAL.
This Appendix B shall be effective for Plan Years beginning on or after
January 1, 1984. This Appendix B shall be interpreted in accordance with
Section 416 of the Code and the regulations thereunder.
B.2 - DEFINITIONS.
(a) The "Benefit Amount" for any Employee means (1) in the case of any
defined benefit plan, the present value of his normal retirement benefit,
determined on the Valuation Date as if the Employee terminated on such
Valuation Date, plus the aggregate amount of distributions made to such
Employee within the five-year period ending on the Determination Date (except
to the extent already included on the Valuation Date) and (2) in the case of
any defined contribution plan, the sum of the amounts credited,
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on the Determination Date, to each of the accounts maintained on behalf of
such Employee (including accounts reflecting any nondeductible employee
contributions) under such plan plus the aggregate amount of distributions
made to such Employee within the five-year period ending on the Determination
Date. For purposes of this Section, the present value shall be computed using
a 5% interest assumption and the mortality assumptions contained in the
defined benefit plan for benefit equivalence purposes, provided that, if more
than one defined benefit plan is being aggregated for top-heavy purposes, the
actuarial assumptions which shall be used for testing top-heaviness are those
of the plan with the lowest interest assumption, provided further that if the
lowest interest assumption is the same for two or more plans, the actuarial
assumptions used shall be that of the plan with the greatest value of assets
on the applicable date.
(b) "Company" means any company (including unincorporated
organizations) participating in the Plan or plans included in the
"aggregation group" as defined in this Appendix B.
(c) "Determination Date" means the last day of the preceding Plan Year
or, in the case of the first Plan Year of the Plan, the last day of the Plan
Year.
(d) "Employees" means employees, former employees, beneficiaries, and
former beneficiaries who have
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a Benefit Amount greater than zero on the Determination Date.
(e) "Key Employee" means any Employee who, during the Plan Year
containing the Determination Date or during the four preceding Plan Years, is:
(1) one of the ten Employees of a Company having annual compensation
from such Company of more than the limitation in effect under Section
415(c)(1)(A) of the Code and owning (or considered as owning within the
meaning of Section 318 of the Code) both more than a 1/2% interest and the
largest interest in such Company (if two Employees have the same interest
the Employee having the greater annual compensation from the Company shall
be treated as having a larger interest);
(2) a 5% owner of a Company;
(3) a 1% owner of a Company who has an annual compensation above
$150,000; or
(4) an officer of a Company having an annual compensation greater
than 50% of the amount in effect under Section 415(b)(1)(A) of the Code
for any such Plan Year (however, no more than the lesser of (A) 50
employees or (B) the greater of 3 employees or 10% of the Company's
employees shall be treated as officers). For purposes of determining the
number of employees taken into account under this Section B.2(e)(4),
employees described in Section 414(q)(8) of the Code shall be excluded.
For Plan Years commencing after
B-3
December 31, 1996, "Section 414(q)(8)" in the preceding sentence shall
be replaced with "Section 414(q)(5)."
(f) A "Non-Key Employee" means an Employee who is not a Key Employee.
(g) "Valuation Date" means the first day (or such other date which is
used for computing plan costs for minimum funding purposes) of the 12-month
period ending on the Determination Date.
(h) A "Year of Service" shall be calculated using the Plan rules that
normally apply for determining vesting service.
These definitions shall be interpreted in accordance with Section 416(i)
of the Code and the regulations thereunder and such rules are hereby
incorporated by reference. The term "Key Employee" shall not include any
officer or employee of an entity referred to in Section 414(d) of the Code.
For the purpose of this subsection, "compensation" shall mean compensation as
defined in Section 414(q)(7) of the Code and shall be determined without
regard to Sections 125, 402(a)(8), 402(h)(1)(B) or, in the case of employer
contributions made pursuant to a salary reduction agreement, Section 403(b).
For Plan Years commencing after December 31, 1996, "Section 414(q)(7)" in the
preceding sentence shall be replaced with "Section 414(q)(4)."
B-4
B.3 - TOP-HEAVY DEFINITION.
The Plan shall be top-heavy for any Plan Year if, as of the
Determination Date, the "top-heavy ratio" exceeds 60%. The top-heavy ratio
is the sum of the Benefit Amounts for all employees who are Key Employees
divided by the sum of the Benefit Amounts for all Employees. For purposes of
this calculation only, the following rules shall apply:
(a) The Benefit Amounts of all Non-Key Employees who were Key
Employees during any prior Plan Year shall be disregarded.
(b) The Benefit Amounts of all employees who have not performed
any services for any Company at any time during the five-year period
ending on the Determination Date shall be disregarded; provided,
however, if an Employee performs no services for five years and then
again performs services, such Employee's Benefit Amount shall be taken
into account.
(c) (1) REQUIRED AGGREGATION. This calculation shall be made by
aggregating any plans, of the Company or an Affiliated Employer,
qualified under Section 401(a) of the Code in which a Key Employee
participates or which enables this Plan to meet the requirements
of Section 401(a)(4) or 410 of the Code; all plans so aggregated
constitute the "aggregation group."
(2) PERMISSIVE AGGREGATION. The Company may also aggregate
any such plan to the extent that
B-5
such plan, when aggregated with this aggregation group, continues to
meet the requirements of Section 401(a)(4) and Section 410 of the
Code.
If an aggregation group includes two or more defined benefit plans,
the actuarial assumptions used in determining an Employee's Benefit
Amount shall be the same under each defined benefit plan and shall
be specified in such plans. The aggregation group shall also
include any terminated plan which covered a Key-Employee and which
was maintained within the five-year period ending on the
Determination Date.
(d) This calculation shall be made in accordance with
Section 416 of the Code (including 416(g)(3)(B) and (g)(4)(A)) and
the regulations thereunder and such rules are hereby incorporated
by reference. For purposes of determining the accrued benefit of a
Non-Key Employee who is a Participant in a defined benefit plan,
this calculation shall be made using the method which is used for
accrual purposes for all defined benefit plans of the Company, or
if there is no such method, as if such benefit accrued not more
rapidly than the slowest accrual rate permitted under Section
411(b)(1)(C) of the Code.
B-6
B.4 - VESTING.
Notwithstanding the vesting provisions of the Plan, if the Plan is
top-heavy for any Plan Year, any Participant who completes one Hour of
Service during any day of such Plan Year or any subsequent Plan Year and who
terminates during any day of such Plan Year or any subsequent Plan Year shall
be entitled to a vested benefit which is the greater of his vested interest
pursuant to Section 5.2 of the Plan, or a vested interest at least equal to
the product of (x) the benefit such Participant would receive under the Plan
if he was 100% vested on the date of such termination times (y) the
percentage shown below:
NUMBER OF COMPLETED
YEARS OF SERVICE PERCENTAGE
-------------------- ----------
2 20%
3 40%
4 60%
5 80%
6 100%
Notwithstanding the foregoing, the nonforfeitable percentage of a
Participant's benefit under the Plan shall not be less than that determined
under the Plan without regard to the preceding vesting schedule. Such
benefit shall be payable in accordance with the provisions of the Plan
regarding payments to terminated Participants.
B-7
Notwithstanding the preceding paragraph, if the Plan is no longer
top-heavy in a Plan Year following a Plan Year in which it was top-heavy, a
Participant's vesting percentage shall be computed under the vesting schedule
that otherwise exists under the Plan. However, in no event shall a
Participant's vested percentage in his accrued benefit be reduced. In
addition, a Participant shall have the option of remaining under the vesting
schedule set forth in this Section if he has completed three years of Vesting
Service. The period for exercising such option shall begin on the first day
of the Plan Year for which the Plan is no longer top-heavy and shall end 60
days after the later of such first day or the day the Participant is issued
written notice of such option by the Company or the Committee.
B.5 - MINIMUM BENEFITS OR CONTRIBUTIONS, COMPENSATION
LIMITATIONS AND SECTION 415 LIMITATIONS.
If the Plan is top-heavy for any Plan Year, the following provisions
shall apply to such Plan Year:
(a) (1) Except to the extent not required by Section 416 of the
Code or any other provision of law, notwithstanding any other provision
of this Plan, if the Plan and all other plans which are part of the
aggregation group are defined contribution plans, each Participant (and
any other Employee required by Section 416 of the Code) other than Key
employees shall receive an allocation of employer contributions and
forfeitures
B-8
from a plan which is part of the aggregation group at least equal to
3% (or, if lesser, the largest percentage allocated to any Key Employee
for the Plan Year) of such Participant's compensation for such Plan Year
(the "defined contribution minimum"). For purposes of this subsection,
salary reduction contributions on behalf of a Key Employee must be taken
into account. For purposes of this subsection, a non-Key Employee shall
be entitled to a contribution if he is employed on the last day of the
Plan Year (1) regardless of his level of compensation, (2) without regard
to whether he has made any mandatory contributions required under the
Plan, and (3) regardless of whether he has less than 1,000 Hours of
Service (or the equivalent) for the accrual computation period.
(2) Except to the extent not required by Section 416 of the Code or
any other provision of law, notwithstanding any other provisions of the
Plan, if the Plan or any other plan which is part of the aggregation group
is a defined benefit plan each Participant who is a participant in any
such defined benefit plan (who is not a Key Employee) who accrues a full
Year of Service during such Plan Year shall be entitled to an annual
normal retirement benefit from a defined benefit plan which is part of the
aggregation group which shall not be less than the product of
B-9
(1) the employee's average compensation for the five consecutive years when
the employee had the highest aggregate compensation and (2) the lesser of
2% per Year of Service or 20% (the "defined benefit minimum"). A Non-Key
Employee shall not fail to accrue a benefit merely because he is not
employed on a specified date or is excluded from participation because (1)
his compensation is less than a stated minimum or (2) he fails to make
mandatory employee contributions. For purposes of calculating the defined
benefit minimum, (1) compensation shall not include compensation in Plan
Years after the last Plan Year in which the Plan is top-heavy and (2) a
Participant shall not receive a Year of Service in any Plan Year before
January 1, 1984 or in any Plan Year in which the Plan is not top-heavy.
This defined benefit minimum shall be expressed as a life annuity (with no
ancillary benefits) commencing at normal retirement age. Benefits paid in
any other form or time shall be the actuarial equivalent (as provided in
the plan for retirement benefit equivalence purposes) of such life annuity.
Except to the extent not required by Section 416 of the Code or any other
provisions of law, each Participant (other than Key Employees) who is not a
participant in any such defined benefit plan shall receive the defined
contribution minimum (as defined in paragraph (a)(1) above).
B-10
(3) If a non-Key Employee is covered by plans described in both
paragraphs (1) and (2) above, he shall be entitled only to the minimum
described in paragraph (1), except that for the purpose of paragraph
(1) "3% (or, if lesser, the largest percentage allocated to any key
employee for the Plan Year)" shall be replaced by "5%". Notwithstanding
the preceding sentence, if the accrual rate under the plan described in
(2) would comply with this Section B.5 absent the modifications required
by this Section, the minimum described in paragraph (1) above shall not
be applicable.
(b) For purposes of this Section, "compensation" shall mean all
earnings included in the Employee's Form W-2 for the calendar year that
ends within the Plan Year, not in excess of $200,000, adjusted at the
same time and in the same manner as under Section 415(d) of the Code.
(c) (1) Unless the Plan qualifies for an exception under Section
B.5(c)(2), "1.0" shall be substituted for "1.25" in the definitions of
Defined Benefit Plan Fraction and Defined Contribution Plan Fraction
used in Appendix A to the Plan.
(2) A Plan qualifies for an exception from the rule of Section
B.5(c)(1) if the Benefit Amount of all Employees who are Key Employees
does not exceed 90%
B-11
of the sum of the Benefit Amounts for all Employees and one of the
following requirements is met:
(A) A defined benefit minimum of 3% per Year of Service
(up to 30%) is provided;
(B) For Participants covered only by a defined contribution
plan, a defined contribution minimum of 4% is provided;
(C) For Participants covered by both types of plans, benefits
from the defined contribution minimum are comparable to the 3%
defined benefit minimum;
(D) The plan provides a floor offset where the floor is a 3%
defined benefit minimum; or
(E) A defined contribution minimum of 7-1/2% of compensation
is provided for any non-Key Employee who is covered under both a
defined benefit plan and a defined contribution plan (each of which
is top-heavy) of a Company.
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APPENDIX C
SPECIAL EMPLOYEE
CLASSIFICATION
NAME OF EMPLOYER LIMITATION
- - ---------------- -----------------
Plan Sponsor:
Hilton Hotels Corporation None
Controlled Group Members:
Palmer House Company None
Hotel Waldorf Astoria Corp. None
Hilton Washington Corporation None
Hotel Equipment Corporation None
Hilton Casinos, Inc. None
Hilton San Diego Corporation None
Hilton Inns, Inc. None
Hilton New Jersey Corp. None
Benco, Inc. None
Conrad International Investment Corp. None
Conrad International Hotel Corp. None
Non-Controlled Group Subsidiaries:
Hilton Hawaiian Village Joint Venture None
Hilton Service Corporation None
Managed Properties:
Palacio Del Rio, Inc. (Hilton Palacio Del Rio) None
S.A. Hotel, Inc. None
Bristol Corporation (Anchorage Westward Hilton) None
SPECIAL EMPLOYEE
CLASSIFICATION
NAME OF EMPLOYER LIMITATION
- - ---------------- -----------------
International Rivercenter (New Orleans Hilton) None
Koar-Pasadena Investment Partnership, G.P.
(Pasadena Hilton) None
Hotelerama Associates Limited
(Fontainebleu Hilton) None
Fortuna Ent. LP (Los Angeles Airport Hilton) None
Kuilima Resort Company (Turtle Bay Hilton) None
Anaheim Hotel Partnership None
C-2