Exhibit 10(7)
PROMUS HOTEL CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
PAGE
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ARTICLE I - PURPOSE 1
ARTICLE II - DEFINITIONS 1
2.1 Account 1
2.2 Beneficiary 1
2.3 Board 1
2.4 Change of Control 1
2.5 Committee 3
2.6 Compensation 3
2.7 Deferral Commitment 3
2.8 Deferral Period 3
2.9 Determination Date 3
2.10 Employer 3
2.11 Employment 4
2.12 Hardship 4
2.13 Interest 4
2.14 Participant 5
2.15 Participation Agreement 5
2.16 Plan Benefit 5
2.17 Retirement 5
2.18 Total and Permanent Disability 5
Article III - PARTICIPATION AND DEFERRAL COMMITMENTS 6
3.1 Eligibility and Participation 6
3.2 Form of Deferral; Maximum and Minimum Deferral 7
3.3 Modification of Deferred Commitment 7
ARTICLE IV - DEFERRED COMPENSATION ACCOUNTS 8
4.1 Elective Deferred Compensation 8
4.2 Types of Account 8
4.3 Matching Contributions 8
4.4 Vesting of Accounts 8
4.5 Determination of Accounts 9
4.6 Statement of Accounts 9
ARTICLE V - PLAN BENEFITS 9
5.1 Pre-Termination Withdrawals 9
5.2 Retirement Benefit 10
5.3 Termination Benefit 10
5.4 Death Benefit 10
5.5 Disability Benefits 11
5.6 Hardship Distributions 11
5.7 Form of Benefit Payment 12
5.8 Withholding; Payroll Taxes 12
5.9 Commencement of Payments 12
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TABLE OF CONTENTS
(Continued)
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5.10 Full Payment of Benefits 13
5.11 Payment to Guardian 13
5.12 Spin-Off Transactions 13
ARTICLE VI - BENEFICIARY DESIGNATION 14
6.1 Beneficiary Designation 14
6.2 Amendments 14
6.3 No Beneficiary Designation 15
6.4 Effect of Payment 15
ARTICLE VII - ADMINISTRATION 15
7.1 Committee; Duties 15
7.2 Agents 15
7.3 Binding Effect of Decisions 15
7.4 Indemnity of Committee 15
ARTICLE VIII - CLAIMS PROCEDURE 16
8.1 Claim 16
8.2 Denial of Claim 16
ARTICLE IX - AMENDMENT AND TERMINATION OF PLAN 17
9.1 Amendment 17
9.2 Employer's Right to Terminate Future Deferrals 17
ARTICLE X - MISCELLANEOUS 17
10.1 Unfunded Plan 17
10.2 Unsecured General Creditor 18
10.3 Nonassignability 18
10.4 Not a Contract of Employment 18
10.5 Protective Provisions 18
10.6 Terms 19
10.7 Captions 19
10.8 Governing Law 19
10.9 Validity 19
10.10 Notice 19
10.11 Successors 19
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PROMUS HOTEL CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
ARTICLE I
PURPOSE
The purpose of this Executive Deferred Compensation Plan
(hereinafter referred to as the "Plan") is to provide supplemental funds
for retirement or death for certain Directors and key management employees
(and their beneficiaries) of Promus Hotel Corporation (hereinafter referred
to as "Promus") and certain of its subsidiaries which elect to participate
in the Plan. It is intended that the Plan will aid in retaining and
attracting Directors and employees of exceptional ability by providing such
individuals with these benefits. This plan shall be effective as of the
later of June 30, 1995 or the date of the distribution of a dividend of
common stock in Promus to the shareholders of the Promus Companies
Incorporated.
ARTICLE II
DEFINITIONS
For the purposes of this Plan, the following words and phrases
shall have the meanings indicated, unless the context clearly indicates
otherwise:
2.1 Account. "Account" means the Retirement Account and the
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Termination Account maintained by the Employer with respect to each
Participant's deferred compensation pursuant to Article IV, including
accounts transferred from The Promus Companies Incorporated Executive
Deferred Compensation Plan (The "Promus Predecessor Plan"). The existence
of these accounts shall not require any segregation of assets.
2.2 Beneficiary. "Beneficiary" means the person, persons or
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entity designated by the Participant, or as provided in Article VI, to
receive any Plan benefits payable after the Participant's death.
2.3 Board. "Board" means the Board of Directors of Promus or
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the Human Resources Committee (or its successor committee) of such Board of
Directors or any other Committee designated by the Board of Directors of
Promus.
2.4 Change of Control. A "Change of Control" shall be deemed
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to have occurred, subject to subparagraph (iv) hereof, if any of the events
in subparagraphs (i), (ii) or (iii) occur:
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(i) Any "person" (as such term is used in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than an employee benefit plan of Promus, or a
trustee or other fiduciary holding securities under an employee
benefit plan of Promus, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of 25% or more of Promus's then outstanding voting securities carrying
the right to vote in elections of persons to the Board of Directors,
regardless of comparative voting power of such voting securities, and
regardless of whether or not the Board of Directors shall have
approved such Change in Control; or
(ii) During any period of two consecutive years,
individuals who at the beginning of such period constitute the Board
of Directors and any new director (other than a director designated by
a person who shall have entered into an agreement with Promus to
effect a transaction described in subparagraphs (i) or (iii) of this
paragraph) whose election by the Board of Directors or nomination for
election by Promus's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; or
(iii) The holders of securities of Promus entitled to vote
thereon approve the following:
(A) A merger or consolidation of Promus with any
other corporation regardless of which entity is the surviving
company, other than a merger or consolidation which would result
in the voting securities of Promus carrying the right to vote in
elections of persons to the Board of Directors outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80% of Promus's then
outstanding voting securities carrying the right to vote in
elections of persons to the Board of Directors, or such
securities of such surviving entity outstanding immediately after
such merger or consolidation, or
(B) A plan of complete liquidation of Promus or an
agreement for the sale or disposition by Promus of all or
substantially all of Promus's assets.
(iv) Notwithstanding the definition of a "Change in
Control" of Promus as set forth in this paragraph 2.4, the Human
Resources Committee of the Board of Directors (the "Committee") shall
have full and final authority, which
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shall be exercised in its discretion, to determine conclusively
whether a Change in Control of Promus has occurred, and the date of
the occurrence of such Change in Control and any incidental matters
relating thereto, with respect to a transaction or series of
transactions which have resulted or will result in a substantial
portion of the assets or business of Promus (as determined immediately
prior to the transaction or series of transactions by the Committee in
its sole discretion which determination shall be final and conclusive)
being held by a corporation at least 80% of whose voting securities
are held, immediately following such transaction or series of
transactions, by holders of the voting securities of Promus
(determined immediately prior to such transaction or series of
transactions). The Committee may exercise such discretionary
authority without regard to whether one or more of the transactions in
such series of transactions would otherwise constitute a Change in
Control of Promus under the definition set forth in this paragraph
2.4.
2.5 Committee. "Committee" means the Deferred Compensation
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Committee appointed to administer the Plan pursuant to Article VII.
2.6 Compensation. "Compensation" means the base salary and
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bonus or director's fees paid to the Participant by the Employer during the
calendar year, before reduction for amounts deferred pursuant to this Plan
or any other plan. Compensation does not include expense reimbursements, or
any form of non-cash compensation and benefits.
2.7 Deferral Commitment. "Deferral Commitment" means a Salary
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Deferral Commitment, a Bonus Deferral Commitment, or a Fee Deferral
Commitment made by the Participant pursuant to Article III and for which a
Participation Agreement has been filed. A Deferral Commitment shall
include any deferral commitment made by a Participant for 1995 under the
Promus Predecessor Plan.
2.8 Deferral Period. "Deferral Period" means the single
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calendar year for which the Participant has made a Deferral Commitment.
The initial Deferral Period shall commence as soon as administratively
feasible after the effective date of this Plan.
2.9 Determination Date. "Determination Date" means the last
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day of each calendar month.
2.10 Employer. "Employer" means Promus, and directly or
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indirectly affiliated or subsidiary corporations, any other affiliate
designated by the Board, or any successors to the businesses thereof.
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2.11 Employment. "Employment," in the case of an employee,
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means the period of time that a Participant is on the Employer's payroll.
A leave of absence approved by the Committee shall not be deemed a
termination of Employment. A Participant who enters salary continuation
status shall not be deemed to have terminated Employment. In the case of a
director, Employment means the active service on the Board by the
Participant.
2.12 Hardship. "Hardship" means the immediate and heavy
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financial need of the Participant as determined by the Committee.
Financial needs shall be limited to the following situations:
(a) Financial obligations incurred by the Participant
because of sickness, accident, death, disability, or other medical
need in the Participant's immediate family which the Participant is
not able to pay out of liquid assets or current cash flow.
(b) Financial requirements to purchase necessary shelter
and related necessities for the Participant and the Participant's
immediate family which the Participant is unable to purchase out of
liquid assets or current cash flow or otherwise reasonably finance.
(c) Financial requirements for education for the
Participant or a member of the Participant's immediate family which
the Participant is unable to pay out of liquid assets or current cash
flow.
For purposes of this definition, the term "immediate family"
means wife, husband, child, father, mother, or a related dependent residing
with the Participant.
2.13 Interest.
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(a) Termination Account Interest. The interest rate
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applicable to a Termination Account on each monthly Determination Date
shall be the greater of one-twelfth (1/12) of the rate approved by the
Board prior to January 1 of each plan year or one-twelfth (1/12) of
the rate announced by Citibank, N.A. as its prime rate at the
beginning of each calendar quarter during the plan year. The rate to
be approved by the Board shall be submitted by Company management to
the Board for review and approval prior to January 1 of each plan
year. If the Citibank Prime rate is no longer available, the
Committee shall select a substantially similar index.
(b) Retirement Account Interest. The effective annual
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yield applicable to a Retirement Account shall be determined prior to
January 1 of each year and be effective for the calendar year
following the date it is determined. Such rate shall be submitted by
Company management for
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review and approval by the Board prior to January 1 each year. The
annual yield under this paragraph 2.13(b) for each plan year shall not
be less than one hundred fifty percent (150%) of the annual average of
the Moody's Average Corporate Bond Yield for such year as published by
Moody's Investors Service, Inc. (or any successor hereto) or, if such
index is no long published, a substantially similar index selected by
the Committee; provided, however, that for Participants who are
entitled to the Retirement Account Interest who retire or terminate
active service during 1995, such rate will be locked-in at the
retirement rate approved for 1995 until such Participants' Account is
fully distributed.
2.14 Participant. "Participant" means any individual who is
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participating or has participated in this Plan as provided in Article III
or has participated in the Promus Predecessor Plan and whose account in the
Promus Predecessor Plan (in whole or in part) has been transferred to this
Plan.
2.15 Participation Agreement. "Participation Agreement" means
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the agreement filed by the Participant prior to the beginning of the
Deferral Period. A new Participation Agreement shall be filed by the
Participant for each Deferral Period.
2.16 Plan Benefit. "Plan Benefit" means the benefit payable to
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the Participant as calculated in Article V.
2.17 Retirement. "Retirement" means termination of Employment
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with the Employer on or after the earlier of the date the Participant
attains age fifty five (55) with ten (10) years of credited service or on
or after the date the Participant attains age sixty (60). For purposes of
this definition, years of credited service will be credited in accordance
with the provisions of The Promus Hotel Corporation Savings and Retirement
Plan. The Board reserves the right to provide different retirement
requirements for different participants.
2.18 Total and Permanent Disability. "Total and Permanent
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Disability" means that due to sickness or accidental bodily injury the
Participant:
(a) is completely unable to perform any and every duty
pertaining to his occupation with the Employer, and
(b) after a twenty-four (24) month period of disability,
is completely unable to engage in any and every gainful occupation for
which he is reasonably fitted by education, training and experience.
For purposes of this Plan, the Committee shall determine whether
or not a condition renders the Participant to
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be Totally and Permanently Disabled based on evidence satisfactory to the
Committee. Such determination by the Committee shall be final and binding.
ARTICLE III
PARTICIPATION AND DEFERRAL COMMITMENTS
3.1 Eligibility and Participation.
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(a) Eligibility. Eligibility to participate in the Plan
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is limited to those employees of the Employer who are:
(i) in Job Grades 1-12 (or equivalent grades) or in
other Job Grades which may be declared eligible by the Board's Human
Resources Committee, and
(ii) designated as a Participant by the Chief
Executive Officer of Promus.
Non-employee Directors of the Board whose accounts have been transferred to
the Plan from the Promus Predecessor Plan are also Participants except that
no non-employee Directors may make further deferrals into the Plan after
June 30, 1995.
(b) Participation. An eligible employee may elect to
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participate in the Plan with respect to any Deferral Period by filing a
Participation Agreement with the Committee by December 15 of the calendar
year immediately preceding the Deferral Period. In the event that an
individual first becomes eligible to Participate during a calendar year, a
Participation Agreement must be filed no later than thirty (30) days
following notification of the individual by the Committee of his
eligibility to Participate, and such Participation Agreement shall be
effective only with regard to Compensation earned and payable following the
filing of the Participation Agreement with the Committee. Employees whose
accounts are transferred to this Plan from the Promus Predecessor Plan are
also Participants and their deferred elections for 1995 will carry over for
the remainder of 1995 under this Plan.
(c) Unless an exception is specifically made by the
Committee, in its sole discretion, and except for the purpose described in
paragraph 5.4(b) below, a Participant shall not be permitted to defer under
this Plan amounts payable to the Participant after (i) the Participant's
death; or (ii) if a Participant is placed on salary continuation during a
Deferral Period, the earlier of the date the Participant ceases to receive
a continuation of salary or the commencement of a new Deferral Period; or
(iii) the Employer has terminated future deferrals pursuant to paragraph
9.2 of this Plan.
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(d) Deferrals into the Plan will not be allowed after
1995.
3.2 Form of Deferral; Maximum and Minimum Deferral. The
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Participant may elect in the Participation Agreement any of the following
Deferral Commitments:
(a) Salary and Bonus Commitment. During the Deferral
---------------------------
Period following the calendar year in which the Participation
Agreement is filed, the Participant may elect to defer, except as
provided in (b) below, (1) up to twenty-five percent (25%) of base
salary payable during the Deferral Period, and (2) up to one hundred
per cent (100%) of bonus (fifty percent (50%) of bonus for Job Grades
9-12 or equivalent grades) payable during the Deferral Period;
provided, however, that commencing with the 1991 Deferral Period with
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respect to bonus deferrals, all participants will be limited to
deferring a maximum of 50% of bonus.
(b) Savings and Retirement Plan Exception. In addition
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to the deferral permitted under (a) above, any Participant that
participates at the maximum before-tax percentage allowed by the
Employer's Savings and Retirement Plan maintained by the Employer
shall be deemed to have elected to defer under this Plan that portion
of eligible Savings and Retirement Plan earnings which the Participant
elected to defer under the Savings and Retirement Plan, up to six
percent (6%) (or such other maximum before-tax percentage allowed by
the Savings and Retirement Plan), which could not be deferred on a
before-tax basis under the Savings and Retirement Plan due to any law
or regulation as determined by the Committee, but excluding any amount
which was actually deferred into the Savings and Retirement Plan but
distributed back to the employee in a following Plan year.
(c) Limitation on Deferrals. Notwithstanding anything
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herein: (i) an employee who has five (5) years of active deferrals of
salary and/or bonus into this Plan including deferrals under the
Predecessor Promus Plan or the Holiday Corporation plan which was the
predecessor to the Predecessor Promus Plan (the "Predecessor Holiday
Plan") shall not be permitted to defer any further bonus into this
Plan, and (ii) a director on the Board of Directors of Promus shall
not be permitted to defer any further director's fees into this Plan.
3.3 Modification of Deferred Commitment. A Deferral
-----------------------------------
Commitment shall be irrevocable except that the Committee may reduce the
amount to be deferred or waive the remainder of the Deferral Commitment
upon a finding, based upon uniform standards established by the Committee,
that the Participant has suffered a Hardship or that a bona fide mistake
occurred in filling out a form or responding to instructions.
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ARTICLE IV
DEFERRED COMPENSATION ACCOUNTS
4.1 Elective Deferred Compensation. The amount of
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Compensation that the Participant elects to defer shall be withheld and
credited to the Participant's Account as the Compensation becomes payable.
Any withholding of taxes or other amounts with respect to deferred
Compensation which is required by state, federal or local law may be
withheld from the Participant's non-deferred Compensation.
4.2 Types of Account. For record-keeping purposes only, a
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Retirement Account and a Termination Account shall be maintained for each
Participant. The amount of Compensation elected to be deferred shall be
credited to both the Retirement Account and the Termination Account.
4.3 Matching Contributions.
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(a) Eligibility. Matching contributions shall be
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credited to Participants in this Plan who are eligible to participate
in the Employer's Savings and Retirement Plan and elect to make a
Basic Contribution equal to the maximum rate at which a Participant
may elect before-tax contributions under the Employer's Savings and
Retirement Plan and such before-tax contribution is limited due to any
law or regulation.
(b) Amount. The Employer shall credit to each employee
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Participant's Account a matching contribution for each calendar year
equal to one hundred percent (100%) of the Participant's Compensation
elected to be deferred under this Plan for the year, such Compensation
being limited for purposes of this calculation to a maximum of six
percent (6%) of the Participant's eligible Savings and Retirement Plan
earnings (which shall not include bonus amounts or board fees). The
matching contribution amount shall be offset by the actual matching
contribution allocated to the Participant for the year under the
Employer's Savings and Retirement Plan.
(c) Time of Credit. The Employer matching contribution
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shall be credited to a Participant's Account as of the last day of the
calendar year or the date the Participant's employment ends, if
earlier.
4.4 Vesting of Accounts. Each Participant shall be vested in
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the amounts credited to such Participant's Account and earnings thereon as
follows:
(a) Amounts Deferred. A Participant shall be one hundred
----------------
percent (100%) vested at all times in the amount of Compensation
elected to be deferred under this Plan.
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(b) Employer Matching Contributions. A Participant who
-------------------------------
terminates Employment for reasons other than Retirement, Total and
Permanent Disability or Death shall be vested in the Employer matching
contributions made for any particular year in accordance with the
vesting provisions in the Employer's Savings and Retirement Plan and
as it may be amended from time to time.
(c) Retirement, Disability or Death. A Participant shall
-------------------------------
be one hundred percent (100%) vested in all amounts at Retirement, or
upon Total and Permanent Disability or Death.
4.5 Determination of Accounts. Each Participant's Retirement
-------------------------
Account and Termination Account as of each Determination Date shall consist
of the balance of the Participant's Account as of the immediately preceding
Determination Date, plus the Participant's elective deferred Compensation
credited, matching contributions and Interest earned, minus the amount of
any distributions made since the immediately preceding Determination Date.
Interest earned shall be calculated as of each Determination Date based
upon the average daily balance of the account since the preceding
Determination Date. Interest earned on the Retirement Account shall be
calculated so as to achieve the annual yield provided by paragraph 2.13(b).
4.6 Statement of Accounts. The Committee shall submit to each
---------------------
Participant, within one hundred twenty (120) days after the close of each
calendar year and at such other time as determined by the Committee, a
statement setting forth the balance to the credit of each Account
maintained for the Participant.
ARTICLE V
PLAN BENEFITS
5.1 Pre-Termination Withdrawals.
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(a) Amount. At the time the Participation Agreement is
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filed, the Participant may elect to receive fifty percent (50%) of the
Deferral Commitment during each of the 8th, 9th, 10th, and 11th years
after the year during which the Participation Agreement is filed. The
total Pre-Termination Withdrawal shall be limited to the Termination
Account balance at the time of the withdrawal.
(b) Remaining Account Balance. The amount of the
-------------------------
withdrawal shall reduce the Retirement Account and Termination Account
balances. Any remaining Account balances shall continue to be
credited with Interest in accordance with paragraph 4.5. Any amounts
remaining in the
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Retirement Account or Termination Account after all PreTermination
Withdrawals shall be paid in accordance with this Article V.
5.2 Retirement Benefit. The Employer shall pay a Plan Benefit
------------------
equal to the amount of the Participant's Retirement Account to each
Participant who terminates Employment:
(a) by reason of Retirement,
(b) by reason of Total and Permanent Disability,
(c) within a twenty-four (24) month period after a Change
of Control,
(d) while participating as a director and terminates from
Employment on the Employer's Board due to:
(i) not being re-elected as a director,
(ii) Total and Permanent Disability, or
(iii) termination within a twenty-four (24) month
period after a Change of Control.
A non-employee director whose account in the Promus Predecessor
Plan (in whole or in part) was transferred to the Plan from the Promus
Predecessor Plan will be entitled to the Retirement Account benefit upon
resigning, retiring or otherwise terminating Board service.
5.3 Termination Benefit. The Employer shall pay a Plan
-------------------
Benefit equal to the amount of the Participant's Termination Account to
each Participant who terminates Employment for all reasons other than those
for which a Retirement Benefit or Death Benefit shall be paid.
5.4 Death Benefit. Upon the death of the Participant, the
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Employer shall pay to the Participant's Beneficiary an amount determined as
follows:
(a) If the Participant dies prior to termination of
Employment with the Employer, the amount payable under this paragraph
shall be in lieu of any other benefit payment under this Plan and
shall equal:
(i) the Participant's Retirement Account Balance,
plus;
(ii) if the Participant died during active Employment
(or if such participant's death occurs after active employment
has ceased by reason of a sickness or injury which thereafter
results in the participant's
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death), three (3) times the sum of all amounts deferred by the
Participant under this Plan (not including interest or earnings
thereon) until the date of death.
(b) For purposes of calculating the Death Benefit under
paragraph 5.4(a):
(i) "amounts deferred" shall include salary, bonus,
and any other Compensation that the Participant may be permitted
to defer hereunder which the Participant shall have elected in
writing to defer under this Plan from inception of the Plan
(including the Predecessor Promus Plan) to the date of death
including any deferred bonus or other deferred Compensation
hereunder which would be payable to the Participant or to the
Participant's estate or beneficiary after the Participant's
death, except that "amounts deferred" shall not include any
salary elected to be deferred under this Plan but not yet payable
at the time of the Participant's death.
(ii) the Participant's Retirement Account Balance
shall not include any Compensation which is not payable on the
day before the Participant's death even if such amounts become
payable on or after the Participant's death and even if the
Participant had elected in writing to defer such amounts under
this Plan.
(c) If the Participant dies after termination of
Employment with the Employer, the amount payable shall be equal to the
remaining unpaid balance of the Participant's appropriate Account.
5.5 Disability Benefits. If the Participant terminates
-------------------
Employment by reason of Total and Permanent Disability, the amount payable
shall equal the Retirement Account balance.
5.6 Hardship Distributions. Upon a finding that the
----------------------
Participant has suffered a Hardship, the Committee may, in its sole
discretion, allow distributions from the Participant's Account prior to the
time otherwise specified for payment of benefits under the Plan. The
amount of such distribution shall be limited to the amount reasonably
necessary to meet the Participant's requirements during the Hardship. The
amount of such distribution shall reduce the Termination Account balance
and Retirement Account balance.
5.7 Form of Benefit Payment. The Plan Death Benefit payable
-----------------------
under paragraph 5.4(a)(ii) of this Plan shall be paid within 90 days of
death in a lump sum with no interest accruing from the date of death until
the date of payment. The Plan Retirement Benefit, Death Benefit payable
under paragraph
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5.4(a)(i) or 5.4(c), Disability Benefits, and Termination Benefit shall be
paid in one of the following forms as elected by the Participant in the
Participation Agreement:
(a) Installments. Equal monthly installments of the
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Account and Interest amortized over a period of time elected by the
Participant not to exceed 15 years unless a longer period up to 20
years for an individual Participant is or has been authorized by the
Board including prior authorization by The Promus Companies
Incorporated. Interest shall be credited to the remaining portion of
the Account Balance in accordance with paragraph 4.5. If the
Participant is receiving the Retirement Account, Interest shall be
equal to an amount in accordance with paragraph 2.12(b). If the
Participant is receiving the Termination Account, Interest shall be
equal to an amount in accordance with paragraph 2.13(a); and/or
(b) A lump sum payment.
(c) Any other form selected by the Participant, which has
written approval of the Committee.
(d) If the Participant fails to elect the form of benefit
payment, the benefits shall be paid in accordance with 5.7(a) over a
period of fifteen (15) years. However, the Committee may, in its sole
discretion, provide for an alternate form of benefit payment to the
Participant, if payment is made pursuant to paragraph 5.2(c) or
5.2(d)(3).
(e) If a Plan Death Benefit is payable in installments
under paragraph 5.4(a)(i), the Committee may, in its sole discretion,
determine that payment of the Death Benefit shall be accelerated and
paid in a lump sum to the Beneficiary.
5.8 Withholding; Payroll Taxes. The Employer shall withhold
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from payments made hereunder any taxes required to be withheld from the
Participant's wages for the federal or any state or local government.
5.9 Commencement of Payments. Payment shall commence at the
------------------------
discretion of the Committee, but not later than sixty (60) days after the
end of the month in which the Participant Retires, dies, becomes Totally
and Permanently Disabled or otherwise terminates Employment with the
Employer and is entitled to payment pursuant to his or her Participation
Agreement (unless a later commencement date not later than age 60 is or has
been authorized by the Board for an individual Participant including prior
authorization by The Promus Companies Incorporated). For purposes of this
paragraph 5.9, termination of Employment shall include when a Participant
is no longer entitled to any payments of salary or salary continuation.
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5.10 Full Payment of Benefits. Notwithstanding any other
------------------------
provision of this Plan, all benefits shall be paid no later than the date
of the Participant attains age eighty five (85).
5.11 Payment to Guardian. If a Plan benefit is payable to
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minor or a person declared incompetent or to a person incapable of handling
the disposition of property, the Committee may direct payment of such Plan
benefit to the guardian, legal representative or person having the care and
custody of such minor or incompetent person. The Committee may require
proof of incompetency, minority, incapacity or guardianship as it may deem
appropriate prior to distribution of the Plan benefit. Such distribution
shall completely discharge the Committee and the Employer from all
liability with respect to such benefit.
5.12 Spin-Off Transactions. Notwithstanding anything in the
---------------------
Plan to the contrary, in the event of any business of Promus or its
subsidiaries is spun-off and a Participant becomes an employee or director
of the company owning the spun-off business (the "Spin-Off Company") which
adopts a deferred compensation plan that is substantially the same as the
Plan, then the Human Resources Committee of the Board of Directors of
Promus in its discretion may determine as follows prior to the spin-off:
(a) any director-Participant who resigns as a director
the Company and who, within 90 days, commences service as a director
of the Spin-Off Company will not be treated as having terminated
service or employment as a director for purposes of paying Plan
benefits, and his or her entire Account balance and all obligations
associated therewith will be transferred to the corresponding Plan of
the Spin-Off Company;
(b) a transfer of employment of a Participant to the
Spin-Off Company in connection with the spin-off will not be
considered a termination of employment for purposes of paying Plan
benefits or of forfeiting matching contributions and interest thereon;
(c) a transferred Participant's Account balance as of the
effective date of the spin-off and all obligations related thereto
will be transferred to the corresponding plan of the Spin-Off Company;
(d) any Participant who will immediately after the
effective date of the spin-off continue to be employed by Promus (or a
subsidiary thereof) and will also be employed by the Spin-Off Company
(or a subsidiary thereof) will have the right to designate in writing
(to be signed prior to the effective date of the spin-off) a
percentage (from zero to 100%) of his or her Account Balance as of
such effective date that will be transferred to the Spin-Off Company
(such percentage being applied to the balances
13
attributable to each year of deferral) which transfer will include the
transfer of all obligations associated therewith. (To the extent such
designation is not made, the Participant's Account will remain in the
Plan pursuant to its terms.); and
(e) Any employee or director transferring to the Spin-Off
Company will receive credit for and will be vested in the Retirement
Account Interest Rate under the Plan and under the Spin-Off Company's
corresponding plan if such Rate is earned or otherwise vested or
credited under the Plan on or prior to the effective date of the spin-
off;
(f) Except to the extent related to that portion of a
Participant's Account balance that is retained in the Plan pursuant to
the above Section 5.12(e), no benefits will be payable under the Plan
to a Participant whose Account balance (or portion thereof) is
transferred to the Spin-Off Company.
ARTICLE VI
BENEFICIARY DESIGNATION
6.1 Beneficiary Designation. Each Participant shall have the
-----------------------
right, at any time, to designate any person or persons as his Beneficiary
or Beneficiaries (both principal as contingent) to whom payment under this
Plan shall be paid in the event of his death prior to complete distribution
to the Participant of the benefits due him under the Plan. Each
beneficiary designation shall be in a written form prescribed by the
Committee and will be effective only when filed with the Committee during
the Participant's lifetime. If the Participant's Compensation is community
property, any Beneficiary Designation shall be valid or effective only as
permitted under applicable law.
6.2 Amendments. Any Beneficiary designation may be changed by
----------
the Participant without the consent of any designated Beneficiary by the
filing of a new Beneficiary Designation with the Committee. The filing of
a new Beneficiary Designation form will cancel all Beneficiary Designations
previously filed.
6.3 No Beneficiary Designation. If any Participant fails to
--------------------------
designate a Beneficiary in the manner provided above, or if the Beneficiary
designated by a deceased Participant dies before the Participant or before
complete distribution of the Participant's benefits, the Committee, in its
discretion, may direct the Employer to distribute such Participant's
benefits (or the balance thereof) to either:
(a) The surviving spouse;
14
(b) The Participant's children, except that if any of the
children predecease the Participant but leave issue surviving, then
such issue shall take by right of representation the share the parent
would have taken if living;
(c) The Participant's estate.
6.4 Effect of Payment. The payment to the Beneficiary shall
-----------------
completely discharge the Employer's obligations under this Plan.
ARTICLE VII
ADMINISTRATION
7.1 Committee; Duties. This Plan shall be administered by the
-----------------
Employer's Deferred Compensation Committee, which shall consist of not less
than three (3) individuals selected by the Chief Executive Officer of
Promus. Members of the Committee may be the Participants under this Plan.
7.2 Agents. The Committee shall appoint an individual to be
------
the Committee's agent with respect to the day-to-day administration of the
Plan. In addition, the Committee may, from time to time, employ other
agents and delegate to them such administrative duties as it sees fit, and
may from time to time consult with counsel who may be counsel to the
Employer.
7.3 Binding Effect of Decisions. The decision or action of
---------------------------
the Committee in respect of any question arising out of or in connection
with the administration, interpretation and application of the Plan and the
rules and regulations promulgated hereunder shall be final and conclusive
and binding upon all persons having any interest in the Plan.
7.4 Indemnity of Committee. The Employer shall indemnify and
----------------------
hold harmless the members of the Committee or any agents or employees of
the Employer against any and all claims, loss, damage, expense, or
liability arising from any action or failure to act with respect to this
Plan, except in the case of willful misconduct by the Committee, Committee
member, or such agent or employee of the Employer.
ARTICLE VIII
CLAIMS PROCEDURE
8.1 Claim. Any Participant, former Participant, Beneficiary,
-----
or legal representative thereof, may file a claim for benefits under the
Plan by submitting to the Committee a
15
written statement describing the nature of the claim and requesting a
determination of its validity under the terms of the Plan. The Committee
shall issue a ruling and written notice with respect to the claim within 30
days after such claim is received. If the claim is wholly or partially
denied, written notice shall be furnished to the claimant, which notice
shall set forth in a manner calculated to be understood by the claimant;
(a) the specific reason or reasons for denial;
(b) specific reference to pertinent Plan provisions on
which the denial is based;
(c) a description of any additional materials or
information necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary; and
(d) an explanation of the claims review procedures.
8.2 Denial of Claim. Any Participant, former Participant, or
---------------
Beneficiary (or their authorized representatives) whose claim for benefits
has been denied, may appeal such denial be resubmitting to the Committee a
written statement requesting a further review of the decision within sixty
(60) days of the date the claimant receives notice of such denial. The
statement shall set forth the reasons supporting the claim, the reasons
such claim should not have been denied, and any other issues or comments
which the claimant deems appropriate with respect to the claim. The
Committee shall, if requested, make copies of the Plan documents available
for examination by the claimant. The Committee shall issue a ruling and
written notice within sixty (60) days after the date the claim is
resubmitted. Such written notice shall include specific reasons for the
decision, written in a manner calculated to be understood by the claimant,
with specific references to the pertinent Plan provisions on which the
decision is based. The Committee's decision of the appeal may be reviewed
by the Board, which shall have the right to overrule the Committee.
16
ARTICLE IX
AMENDMENT AND TERMINATION OF PLAN
9.1 Amendment.
---------
(a) The Board may at any time amend the Plan in whole or
in part, and may impose different requirements for different
Participants, provided, however, that (i) no amendment shall be
effective to decrease or restrict the amount accrued to that date on
any Account maintained pursuant to any existing Deferral Commitment
under the Plan; and (ii) on amounts that have been deferred up to the
date of amendment, no amendment shall be effective to reduce the
minimum interest credited or to be credited to Termination Accounts
until their payment date or reduce the minimum interest credited or to
be credited to Retirement Accounts until their payment date as
provided in paragraph 2.13, without the consent of all Participants
(or a Beneficiary in case a Participant is then deceased) who may be
affected by such change; and (iii) no amendment shall be effective to
alter the form of payment as elected by a Participant in any
Participation Agreement.
(b) The Committee may make administrative amendments to
the Plan including but not limited to amendments to clarify the Plan
language and to simplify and implement various administrative
procedures, including matters relating to the calculation of death
benefits and payments to Beneficiaries, which the Committee determines
are consistent with the purpose and intent of the Plan.
9.2 Employer's Right to Terminate Future Deferrals. The Board
----------------------------------------------
may at any time terminate further deferrals into the Plan, by any person
and may reject additional Participants in the Plan, if, in its sole
judgment, such termination would be in the best interest of the Employer.
Benefits from deferrals up to the point of termination of further deferrals
shall be paid in the form elected by the Participant in his or her
Participation Agreement and otherwise in accordance with this Plan,
including crediting of interest, until all payments are complete.
ARTICLE X
MISCELLANEOUS
10.1 Unfunded Plan. This Plan is an unfunded plan maintained
-------------
primarily to provide Deferred Compensation benefits for a select group of
management employees or highly compensated employees. This Plan is not
intended to create an investment contract, but to provide tax planning
opportunities and retirement benefits to eligible individuals who have
elected to participate in the Plan. Eligible individuals are select
members
17
of management who, by virtue of their position with the Employer, are
uniquely informed as to the Employer's operations and have the ability to
materially affect the Employer's profitability and operations.
10.2 Unsecured General Creditor. The Participants and their
--------------------------
Beneficiaries, heirs, successors, and assigns shall have no legal or
equitable rights, interest, or claims in any property or assets of the
Employer, nor shall they be Beneficiaries of, or have any rights, claims,
or interests in any life insurance policies, annuity contracts or the
proceeds therefrom owned or which may be acquired by the Employer
("Policies"). Such Policies or other assets of the Employer shall not be
held as collateral security for the fulfilling of the obligations of the
Employer under this Plan. The Policies shall be the general, unpledged,
unrestricted assets of the Employer, and the Employer may transfer, assign,
sell, or use such policies without restriction. The Employer's obligation
under the Plan shall be merely that of an unfunded and unsecured promise of
the Employer to pay money in the future. No Employer shall have any
obligation under this Plan with respect to individuals other than that of
the Employer's employees or directors or Beneficiaries thereof.
10.3 Nonassignability. Neither the Participant nor any other
----------------
person shall have any right to commute, sell, assign, transfer, pledge,
anticipate, mortgage, or otherwise encumber, transfer, hypothecate, or
convey in advance of actual receipt the amounts, if any, payable hereunder,
or any part thereof, which are, and all rights to which are, expressly
declared to be unassignable and non-transferable. No part of the amounts
payable shall, prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgments, alimony, or separate
maintenance owed by the Participant or any other person, nor be
transferable by operation of law in the event of the Participant's or any
other person's bankruptcy or insolvency.
10.4 Not a Contract of Employment. The terms and conditions of
----------------------------
this Plan shall not be deemed to constitute a contract of employment
between the Employer and the Participant, and the Participant (or his
Beneficiary) shall have no rights against the Employer except as may
otherwise be specifically provided herein. Moreover, nothing in this Plan
shall be deemed to give the Participant the right to be retained in the
service of the Employer or to interfere with the right of the Employer to
discipline or discharge the Participant at any time.
10.5 Protective Provisions. The Participant will cooperate
---------------------
with the Employer by furnishing any and all information requested by the
Employer, in order to facilitate the payment of benefits hereunder, and by
taking such physical examinations as the Employer may deem necessary and
taking such other action as may be requested by the Employer.
Notwithstanding the other provisions of this Plan, no death benefits in
excess of the
18
Retirement Account balance shall be paid if during the first two (2) years
of participation (including participation under the Promus Predecessor
Plan) death occurs as a result of suicide. The Committee shall have sole
discretion to determine whether death occurs as a result of suicide.
10.6 Terms. Whenever any words are used herein in the
-----
masculine, they shall be construed as though they were used in the feminine
in all cases where they would so apply; and wherever any words are used
herein in the singular or in the plural, they shall be construed as though
they were used in the plural or the singular, as the case may be, in all
cases where they would so apply.
10.7 Captions. The captions of the articles, sections, and
--------
paragraphs of this Plan are for convenience only and shall not control or
affect the meaning or construction of any of its provisions.
10.8 Governing Law. The provisions of this Plan shall be
-------------
construed and interpreted according to the laws of the State of Tennessee.
10.9 Validity. In case any provision of this Plan shall be
--------
held illegal or invalid for any reason, said illegality or invalidity shall
not affect the remaining parts hereof, but this Plan shall be construed and
enforced as if such illegal and invalid provision had never been inserted
herein.
10.10 Notice. Any notice or filing required or permitted to be
------
given to the Committee under the Plan shall be sufficient if in writing and
hand delivered, or sent by registered or certified mail, to any member of
the Committee, the Chief Executive Officer of the Employer, or the
Employer's Statutory Agent. Such notice shall be deemed given as of the
date of delivery or, if delivery is made by mail, as of the date shown on
the postmark on the receipt for registration or certification.
10.11 Successors. The provisions of this Plan shall bind and
----------
inure to the benefit of the Employer and its successors and assigns. The
term successors as used herein shall include any corporate or other
business entity which shall, whether by merger, consolidation, purchase or
otherwise acquire all or substantially all of the business and assets of
the Employer, and successors of any such corporation or other business
entity.
19
IN WITNESS WHEREOF, and pursuant to resolution of the Board of
Directors of the respective undersigned corporations, such corporations
have caused this instrument to be executed by its duly authorized officers
effective as of June 30, 1995.
PROMUS HOTEL CORPORATION
By:
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Title
Attest:
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Title
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