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EXHIBIT 10.27
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EXHIBIT 10.27
PROMUS HOTEL CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
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EXHIBIT 10.27
TABLE OF CONTENTS
PAGE
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ARTICLE 1 - PURPOSE 1
ARTICLE 2 - DEFINITIONS 1
2.1 Account 1
2.2 Beneficiary 2
2.3 Board 2
2.4 Change of Control 2
2.5 EDCP Committee 4
2.6 Compensation 4
2.7 Deferral Commitment 4
2.8 Deferral Period 4
2.9 Determination Date 4
2.10 Employer 4
2.11 Employment 4
2.12 Hardship 5
2.13 Interest 5
2.14 Participant 6
2.15 Participation Agreement 6
2.16 Plan Benefit 6
2.17 Retirement 6
2.18 Total and Permanent Disability 6
ARTICLE 3 - PARTICIPATION AND DEFERRAL COMMITMENTS 7
3.1 Eligibility and Participation 7
3.2 Form of Deferral; Maximum and Minimum Deferral 8
3.3 Modification of Deferred Commitment 9
ARTICLE 4 - DEFERRED COMPENSATION ACCOUNTS 9
4.1 Elective Deferred Compensation 9
4.2 Types of Account 9
4.3 Matching Contributions 9
4.4 Vesting of Accounts 10
4.5 Determination of Accounts 10
4.6 Statement of Accounts 10
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ARTICLE 5 - PLAN BENEFITS 11
5.1 Pre-Termination withdrawals 11
5.2 Retirement Benefit 11
5.3 Termination Benefit 12
5.4 Death Benefit 12
5.5 Disability Benefits 13
5.6 Hardship Distributions 13
5.7 Form of Benefit Payment 13
5.7A Amendment of Benefit Payment Election 14
5.8 Withholding; Payroll Taxes 15
5.9 Commencement of Payments 15
5.10 Full Payment of Benefits 16
5.11 Payment to Guardian 16
5.12 Spin-Off Transactions 16
ARTICLE 6 - BENEFICIARY DESIGNATION 17
6.1 Beneficiary Designation 17
6.2 Amendments 17
6.3 No Beneficiary Designation 17
6.4 Effect of Payment 18
ARTICLE 7 - ADMINISTRATION 18
7.1 Committee; Duties 18
7.2 Agents 18
7.3 Binding Effect of Decisions 18
7.4 Indemnity of Committee 18
ARTICLE 8 - CLAIMS PROCEDURE 19
8.1 Claim 19
8.2 Denial of Claim 19
ARTICLE 9 - AMENDMENT AND TERMINATION OF PLAN 20
9.1 Amendment 20
9.2 Employer's Right to Terminate Future Deferrals 20
ARTICLE 10 - MISCELLANEOUS 21
10.1 Unfunded Plan 21
10.2 Unsecured General Creditor 21
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10.3 Nonassignability 21
10.4 Not a Contract of Employment 21
10.5 Protective Provisions 22
10.6 Terms 22
10.7 Captions 22
10.8 Governing Law 22
10.9 Validity 22
10.10 Notice 22
10.11 Successors 23
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AMENDED AND RESTATED
ON FEBRUARY 26, 1997
PROMUS HOTEL CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
1. 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.
2. 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. (a) Account "Account" means the Retirement Account and the 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.
(b) Pre-1996 Retirement Account "Pre-1996 Retirement Account" means the
Retirement Account for deferrals of compensation during plan years
through 1995.
(c) Post-1995 Retirement Account "Post-1995 Retirement Account" means
the Retirement Account for deferrals of compensation for plan years
after 1995.
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(d) Pre-1996 Termination Account "Pre-1996 Termination Account"
means the Termination Account for deferrals of compensation
during plan years through 1996.
(e) Post-1995 Termination Account "Post-1995 Termination Account"
means the Termination Account for deferrals of compensation
during plan years after 1995.
2.2 Beneficiary. "Beneficiary" means the person, persons or 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 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 to have
occurred, subject to subparagraph (iv) hereof, if any of the events in
subparagraphs (i), (ii) or (iii) occur:
(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
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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 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
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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 EDCP Committee. "EDCP Committee" means the Executive Deferred
Compensation Committee appointed to administer the Plan pursuant to
Article VII.
2.6 Compensation. "Compensation" means the base salary and 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. (a) "Deferral Commitment" means a Salary 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 and
years prior thereto under the Promus Predecessor Plan.
(b) Pre-1996 deferrals means the deferral of
compensation during plan years through 1995.
(c) Post-1995 deferrals means the deferral of
compensation during the plan years after 1995.
2.8 Deferral Period. "Deferral Period" means the single 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 day of each
calendar month.
2.10 Employer. "Employer" means Promus, and directly or indirectly
affiliated or subsidiary corporations, any other affiliate designated
by the Board, or any successors to the businesses thereof.
2.11 Employment. "Employment," in the case of an employee, means the period
of time that a Participant is on the Employees payroll. A leave of
absence approved by the EDCP 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
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of a director, Employment means the active service on the Board by the
Participant.
2.12 Hardship. "Hardship" means the immediate and heavy financial
need of the Participant as determined by the EDCP 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.
(a) Termination Account Interest. (1) The interest rate applicable
to a pre-1996 Termination Account on each monthly Determination
Date shall be the greater of one-twelfth (1/12) of 8.5% or one-twelfth
(1/12) of the rate announced by Citibank, N.A. as its prime rate
("Citibank Prime Rate") at the beginning of each calendar quarter.(2)
The interest rate applicable to a post-1995 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 Citibank 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 EDCP Committee shall
select a substantially similar index.
(b) Retirement Account Interest. (1) For plan years through
1995, the effective annual yield applicable to a pre-1996
Retirement Account shall be as the Board determined prior to
January 1 of each year and be
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effective for the calendar year following the date it was determined.
For all calendar years after 1995, such rate shall be and is hereby
fixed at 15.5% for all pre-1996 Retirement Accounts provided that the
annual yield under this paragraph 2.13(b) for each plan year for a
pre-1996 Retirement Account 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. ("Moody's") (or any successor hereto) or, if such index is no long
published, a substantially similar index selected by the EDCP
Committee. (2) The effective annual yield applicable to a post-1995
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
review and approval by the Board prior to January 1 each year, provided
that the annual yield under this paragraph 2.13(b)(2) for each calendar
year for a post-1995 Retirement Account shall not in any event be less
than 150% of the annual average of Moody's for such year.
2.14 Participant. "Participant" means any individual who is 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 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 the
Participant as calculated in Article V.
2.17 Retirement. "Retirement" means termination of Employment with the
Employer on or after the earlier of the date the Participant attains
age fifty five (55) with ten (10) years of vested service or on or
after the date the Participant attains age sixty (60). For purposes of
this definition, years of vested 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 Disability" means
that due to sickness or accidental bodily injury the Participant:
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(a) is completely unable to perform any and every duty
pertaining to his occupation with the Employer, and
the period of disability is expected to last at least
24 months-
For purposes of this Plan, the EDCP Committee shall determine whether
or not a condition renders the Participant to be Totally and
Permanently Disabled based on evidence satisfactory to the EDCP
Committee. Such determination by the EDCP Committee shall be final and
binding.
3. PARTICIPATION AND DEFERRAL COMMITMENTS
3.1 Eligibility and Participation
(a) Eligibility. Eligibility to participate in the Plan is limited to
those employees of the Employer who are:
(i) in Job Grades 26 and above (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
participate in the Plan with respect to any Deferral Period by
filing a Participation Agreement with the EDCP Committee by a
date set by the Company but not later than December 31 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 EDCP Committee or the
Company 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 company. Employees whose
accounts are transferred to this Plan from the Promus
Predecessor Plan are also
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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 EDCP
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.
(d) Deferrals into the Plan will not be allowed after 1999.
3.2 Form of Deferral; Maximum and Minimum Deferral. The
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 fifty percent (50%) of
bonus payable during the Deferral Periods.
(b) Savings and Retirement Plan Exception. In addition
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 EDCP 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
herein, a director on the Board of Directors of Promus
shall not be permitted to defer any further director's
fees into this Plan.
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3.3 Modification of Deferred Commitment. A Deferral Commitment shall be
irrevocable except that the EDCP 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 EDCP
Committee, that the Participant has suffered a Hardship or that a bona
fide mistake occurred in filling out a form or responding to
instructions.
4. DEFERRED COMPENSATION ACCOUNTS
4.1 Elective Deferred Compensation. The amount of 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, the following
accounts shall be maintained for each Participant where applicable:
Pre-1996 Retirement Account
Pre-1996 Termination Account
Post-1995 Retirement Account
Post-1995 Termination Account
The amount of Compensation elected to be deferred shall be credited to
both the Retirement Account and the Termination Account.
4.3 Matching Contributions.
(a) Eligibility. Matching contributions shall be 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
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
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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 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 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 and the
earnings thereon (either at the Termination Date or Retirement
Date).
(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
Pre-1996 and Post-1995 and Termination Account Pre-1996 and Post-1995
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 EDCP Committee shall submit to each
Participant, within one hundred twenty (120) days after the close of
each
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calendar year and at such other time as determined by the EDCP
Committee, a statement setting forth the balance to the credit
of each Account maintained for the Participant.
5. PLAN BENEFITS
5.1 Pre-Termination Withdrawals
(a) Amount. At the time the Participation Agreement is 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 respective Pre-1996 or Post-1995 Retirement
Account and respective Pre-1996 or Post-1995 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 respective
Pre-1996 or Post-1995 Retirement Account or Termination
Account after all Pre-Termination 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 respective Pre-1996 or Post-1995 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
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(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. A participant or
Beneficiary shall receive either the Termination Account or the
Retirement Account as provided in the Plan, but not both.
5.4 Death Benefit. Upon the death of the Participant, the 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 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
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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 EDCP 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 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 Account and
Interest amortized over a period of time elected by the Participant
and approved by the Company 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
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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 EDCP 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 EDCP
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 EDCP 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.
5.7.A Amendment of Benefit Payment Election. Notwithstanding anything
contained herein to the contrary, Participants who have not yet begun
to receive their Retirement Benefit, Termination Benefit or Disability
Benefit shall have a one-time opportunity to amend their Participation
Agreement(s) to change their form of payment and time of payment with
respect to pre-1996 deferrals ("Qualified Deferrals"), subject to the
following rules:
(a) Such amendment may change the form of benefit payment (to
the extent permitted under 5.7) and/or the time of
commencement of benefit payments (to the extent permitted
under Section 5.9).
(b) Such amendment may not accelerate the date on which any
payment is due, but may extend the date on which a Qualified
Deferral would otherwise be paid, at such times and in such
amounts or increments as the Committee in its discretion
offers to Participants.
(c) Such amendment may amend one or more of the payment
elections made in a Participant's Participation Agreement, but
such
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amendment may be made only once and such amendment shall be
the only opportunity to amend any payment election for all
Qualified Deferrals. Example: The Participant will receive an
amendment form pursuant to this paragraph allowing the
Participant to change the payment election originally made in
each year's Participation Agreement. If the Participant does
not change the payment election made in a prior agreement,
there will be no further opportunity to change that payment
election.
(d) Such amendment must be made prior to the calendar year in
which the payments are due under the relevant Participation
Agreement and prior to the calendar year in which payments are
to commence under the relevant amended Participation
Agreement.
(e) No payment that is subject to an amended Participation
Agreement may be made sooner than the first anniversary after
the execution of the amended Participation Agreement.
(f) Such amendment shall be made in the manner designated by
the Committee, and, once filed with the Committee, shall be
irrevocable.
(g) Such amendment shall be made no earlier than December 1,
1997 and no later than a date designated by the Company in its
discretion, which shall be announced to all Participants in
advance.
5.8 Withholding; Payroll Taxes. The Employer shall withhold 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 EDCP 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 minor or
a person declared incompetent or to a person incapable of
handling the disposition of property, the EDCP 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 EDCP 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 EDCP
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
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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 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.
6. 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 EDCP Committee
and will be effective only when filed with the EDCP 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 EDCP 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
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distribution of the Participant's benefits, the EDCP
Committee, in its discretion, may direct the Employer to
distribute such Participant's benefits (or the balance thereof
to either:
(a) The surviving spouse;
(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 Employees obligations under this
Plan.
7. ADMINISTRATION
7.1 Committee: Duties. This Plan shall be administered by the
Employers Executive Deferred Compensation Committee ("EDCP
Committee"), which shall consist of not less than three (3)
individuals selected by the Chief Executive Officer of Promus.
Members of the EDCP Committee may be the Participants under
this Plan.
7.2 Agents. The EDCP Committee shall appoint an individual to
be the EDCP committee's agent with respect to the day-to-day
administration of the Plan. In addition, the EDCP 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
EDCP 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 EDCP Committee. The Employer shall indemnify
and hold harmless the members of the EDCP 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 EDCP
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Committee, EDCP Committee member, or such agent or employee of
the Employer.
8. 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 EDCP Committee a written
statement describing the nature of the claim and requesting a
determination of its validity under the terms of the Plan. The
EDCP 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 EDCP 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 EDCP Committee
shall, if requested, make copies of the Plan documents
available for examination by the claimant. The EDCP 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 EDCP Committee's decision of the
appeal may be reviewed by the Board, which shall have the
right to overrule the EDCP Committee.
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9. 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 EDCP 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 EDCP 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.
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10. 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 of management who, by virtue of their position with
the Employer, are uniquely informed as to the Employees
operations and have the ability to materially affect the
Employers 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
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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
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 EDCP 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 EDCP 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 EDCP 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.
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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.
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.
PROMUS HOTEL CORPORATION
By:
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Title
Attest:
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Title
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