Exhibit 99.01
AMENDMENT 1999-1
HILTON HOTELS RETIREMENT PLAN
WHEREAS, Hilton Hotels Corporation (the "Company") maintains
the Hilton Hotels Retirement Plan (the "Plan"); and
WHEREAS, the Company has the authority to amend the Plan on
behalf of itself and all Participating Affiliates (as defined in the Plan); and
WHEREAS, the Company and the Plan are defendants in a civil
action pending in the United States District Court for the District of Columbia
styled KIFAFI v. HILTON HOTELS RETIREMENT PLAN, ET. AL. (the "Action"); and
WHEREAS, the Plaintiff in such Action contends that the
formula under which benefits accrued under the Plan failed to satisfy the
requirements of Section 204(b)(1) of ERISA (commonly referred to as the
"anti-backloading" provision); and
WHEREAS, the Internal Revenue Service has previously
determined that the Plan satisfies the requirements of the Internal Revenue Code
applicable to a qualified plan, and such requirements include Code Section
411(b)(1), which is substantively identical to the anti-backloading provision of
ERISA; and
WHEREAS, the Company understands that the Plan satisfies the
anti-backloading provision without any amendment, but nonetheless intends to
amend the Plan to provide benefit increases to participants for the purpose of
eliminating any controversy regarding the propriety of the rate of benefit
accruals under the Plan.
NOW, THEREFORE, the Plan is hereby amended by adding the
following new Section 4.13:
4.13 BENEFIT INCREASE.
(a) The benefit attributable to each Participant shall be
the greater of the benefit determined without respect to this Section
4.13 (the "Pre-Amendment Benefit"), or the benefit determined under
this Section 4.13 (the "New Benefit"). The New Benefit attributable to
the Participant shall be the benefit determined as if Section 4.1(a) of
the Plan were the "Revised Section 4.1(a)," set forth in subsection (b)
of this Section 4.13.
(b) The "Revised Section 4.1(a)" is as follows:
'(a) A Participant may retire and
commence receiving his vested Normal Retirement Benefit on his
Normal Retirement Date. A Participant shall be 100% vested in
benefits under this Plan upon attainment of Normal Retirement
Age if the Participant is then an Employee. Except as
hereinafter provided, the amount of the monthly retirement
benefit payable each month for the life of a Participant,
commencing on his Normal Retirement Date and ending with the
benefit for the month during which his death occurs, which is
his Normal Retirement Benefit, shall be equal to the amount
determined by first multiplying (1) by (2), and then by
deducting (3), as follows:
(1) If the Participant had
completed 34 or more Years of Benefit Service as of
December 31, 1983, then (1) is the amount determined
by deducting (C) from the greater of (A) or (B), or,
if the Participant had not completed 34 or more Years
of Benefit Service as of December 31, 1983, then
(1) is the amount determined by deducting (C) from
(B):
(A) 1-1/2% of the Participant's
Average Monthly Compensation multiplied by
his Potential Years of Benefit Service, but
not more than 60% of such Average Monthly
Compensation.
(B) The sum of: (i) 2% of the
Participant's Average Monthly Compensation
multiplied by his Potential Years of Benefit
Service (up to a maximum of 25 years), plus
(ii)1/2% of his Average Monthly Compensation
multiplied by his Potential Years of Benefit
Service in excess of 25, but the sum of (i)
and (ii) shall not be more than 60% of such
Average Monthly Compensation.
(C) Fifty percent (50%) of the
"Potential Primary Social Security Benefit"
of the Participant. The Potential Primary
Social Security Benefit shall be calculated
in the same manner as set forth in the
definition of the Primary Social Security
Benefit in Section 1.2, except that the last
two sentences of the first paragraph of the
definition shall be replaced with the
following: "Such amount shall be determined
on the basis of (i) the Participant's period
of employment with the Participating
Employers and (ii), if a Participant retires
or otherwise incurs a Break in Employment
prior to age 65, by assuming the Participant
receives wages after such retirement or
other Break in Employment until age 65 at
the same rate the Participant received wages
at the time of such retirement or other
Break in Employment."
(2) A fraction, the numerator of
which is the Participant's years of Benefit Service,
and the denominator of which is the
Participant's Potential Years of Benefit Service.
For purposes of the Plan, "Potential Years of Benefit
Service" shall equal the greater of (i) the
Participant's actual Years of Benefit Service or (ii)
the Years of Benefit Service the Participant would
complete, if, after first becoming a Participant,
the Participant continued to serve as an active
employee and Participant in the Plan through the
Participant's Normal Retirement Date. Potential
Years of Benefit Service under this Section 4.13 are
calculated including all Years of Benefit Service
which would have been earned had Section 4.12 not
been adopted. The value of the fraction described in
this subsection shall not exceed one.
(3) The portion of the
Participant's Integrated Benefits not related to
Social Security benefits.'
(c) The New Benefit shall be calculated with respect to
all benefits attributable to each Participant (whether or not the
Participant was an active employee as of the date the amendment adding
Section 4.13 was adopted). The benefit attributable to a Participant
may be payable to the Participant, or may be payable in whole or in
part to an alternate payee under a qualified domestic relations order,
a joint or contingent annuitant receiving benefits following the
death of a Participant (including the surviving spouse under a
Qualified Joint and Survivor Annuity), or a surviving spouse entitled
to the Surviving Spouse Benefit under the Plan. Each such person
(including each Participant), for whom the New Benefit is greater
than the Pre-Amendment Benefit is referred to in this Section 4.13 as
an "Affected Person." Notwithstanding the foregoing, any former
Employee who was not vested under the Plan at the time of his or her
termination of employment shall not be an Affected Person, and shall
not be entitled to benefit under this Section 4.13.
(d) Except for the benefit increases set forth in this
Section 4.13, the benefit freeze enacted by adding Section 4.12 to the
Plan stays in effect. Accordingly, in calculating the Pre-Amendment
Benefit and the New Benefit, no Participant shall earn actual Years of
Benefit Service for service following December 31, 1996, and any
increases to Average Monthly Compensation based upon Compensation paid
after December 31, 1996 shall be disregarded.
(e) As soon as administratively feasible following the
adoption of the amendment which added this Section 4.13 to the Plan,
the Company shall cause the amendment to be submitted to the IRS with a
request that the IRS determine that the Plan, as amended, satisfies the
qualification requirements of Section 401(a) of the Code. It is
understood that such qualification requirements include satisfaction of
Code Section 411(b)(1) and the regulations issued thereunder. As soon
as administratively feasible following the adoption of the amendment,
the Company shall cause the New Benefits to be calculated. During
the period that the New Benefits are being calculated and pending
IRS approval, benefit payments shall temporarily continue at the
Pre-Amendment Benefit level. As soon as administratively feasible
following the later of the date the New Benefits have been calculated
or the date the IRS issues a favorable determination letter concerning
the amendment Plan, the payment amounts shall be revised as follows
(the
date on which an Affected Person's benefit payments are revised shall
be the Affected Person's "New Benefit Date"):
(1) If the Affected Person's Pre-Amendment
Benefit is greater than the Affected Person's New Benefit,
then no change to the Affected Person's Benefit shall be made.
(2) If the Affected Person's New Benefit is
greater than the Pre-Amendment Benefit, but no payments had
been made to the Affected Person before the New Benefit Date,
then the New Benefit shall apply to all payments made to the
Affected Person.
(3) If the Affected Person's New Benefit is
greater than the Pre-Amendment Benefit, and if payments
other than lump sum payments had been made under the
Pre-Amendment Benefit, then the New Benefit shall apply to all
payments made after the New Benefit Date, and in addition the
following retroactive payment shall be made. The retroactive
payment shall be a single lump sum payment equal to the sum of
the following amounts calculated with respect to each
Pre-Amendment Benefit payment made to the Affected Person
before the New Benefit Date: The amount determined by first
deducting (x) the monthly New Benefit from (y) the monthly New
Benefit, and then by increasing such remainder by (z) interest
on the remainder for the period from the date the
Pre-Amendment Benefit payment was made through the New Benefit
Date at an annual rate equal to the "applicable interest rate"
as described in section 417(e)(3) of the Code for the November
immediately preceding the Plan Year in which the retroactive
payment is made.
(4) If the Affected Person's New Benefit is
greater than the Pre-Amendment Benefit, and payment of the
Pre-Amendment Benefit had been made as a lump sum, then an
additional lump sum payment shall be made. The additional
lump sum payment shall be determined by first deducting (x)
the amount of the original lump sum payment, from (y) the
actuarial equivalent lump sum which would have been paid had
the New Benefit amount applied at the time the lump sum was
originally paid, and then by increasing such remainder by (z)
interest on the remainder for the period from the date the
original lump sum payment was made through the New Benefit
date at an annual rate equal to the "applicable interest rate"
as described in Section 417(e)(3) of the Code for the November
immediately preceding the Plan Year in which the retroactive
payment is made.
(5) If any portion of the benefits earned with
respect to a Participant had been split between a Participant
and an alternate payee pursuant to a qualified domestic
relations order, then any increase in benefits (including any
retroactive payments) shall be divided proportionately
according to the portion of the Pre-Amendment Benefit which
had been assigned to the alternate payee.
(6) If a Participant has died before the
Participant's New Benefit date, any additional benefits
payable on behalf of the Participant under this Section 4.13
shall be payable to the surviving beneficiary or
beneficiaries, if any, under the optional form of benefit, if
any, elected by the Participant, or, if there is no such
surviving beneficiary, to the Participant's surviving spouse
or, if there is no surviving beneficiary or surviving spouse,
to the Participant's estate.
(7) The benefit payments hereunder shall be
appropriately adjusted under the actuarial factors set forth
in the plan, including but not limited to the factors
applicable to early retirement benefits, qualified joint and
survivor annuities, and other optional forms of benefits.
IN WITNESS WHEREOF, this Amendment 1999-1 is hereby adopted
this_____ day of ______, 1999.
HILTON HOTELS CORPORATION
By:
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Its:
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