Exhibit 99.03
HILTON HOTELS
EXECUTIVE DEFERRED COMPENSATION PLAN
EFFECTIVE AS OF JANUARY 1, 1997
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2000)
HILTON HOTELS
EXECUTIVE DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
PAGE
ARTICLE I
TITLE AND DEFINITIONS
1.1 - Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 - Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
PARTICIPATION
2.1 - Participation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
DEFERRAL ELECTIONS
3.1 - Elections to Defer Compensation. . . . . . . . . . . . . . . . . . . . . 8
3.2 - Investment Elections . . . . . . . . . . . . . . . . . . . . . . . . . .10
ARTICLE IV
DISTRIBUTION OPTION ACCOUNTS
4.1 - Compensation Deferrals . . . . . . . . . . . . . . . . . . . . . . . . .11
4.2 - Company Contribution . . . . . . . . . . . . . . . . . . . . . . . . . .11
4.3 - Investment Return. . . . . . . . . . . . . . . . . . . . . . . . . . . .12
ARTICLE V
VESTING
5.1 - Compensation Deferrals . . . . . . . . . . . . . . . . . . . . . . . . .12
5.2 - Company Contributions. . . . . . . . . . . . . . . . . . . . . . . . . .12
ARTICLE VI
DISTRIBUTIONS
6.1 - Distribution Option Accounts . . . . . . . . . . . . . . . . . . . . . .13
6.2 - Election of Distribution Option. . . . . . . . . . . . . . . . . . . . .14
6.3 - Retirement Distribution Option. . . . . . . . . . . . . . . . . . . . . 14
6.4 - In-Service Distribution Option. . . . . . . . . . . . . . . . . . . . . 14
6.5 - Benefits Under the Retirement Distribution Option . . . . . . . . . . . 14
6.6 - Benefits under the In-Service Distribution Option . . . . . . . . . . . 16
6.7 - Inability to Locate Participant. . . . . . . . . . . . . . . . . . . . .17
6.8 - Payment by Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
6.9 - Withdrawals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
6.10- Distributions on Disability. . . . . . . . . . . . . . . . . . . . . . .18
ARTICLE VII
DEATH BENEFITS
7.1 - In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
7.2 - Payment of Death Benefits. . . . . . . . . . . . . . . . . . . . . . . .19
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ARTICLE VIII
ARBITRATION
8.1 - Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
ARTICLE IX
ADMINISTRATION
9.1 - Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
9.2 - Committee Action . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
9.3 - Powers and Duties of the Committee . . . . . . . . . . . . . . . . . . .22
9.4 - Construction and Interpretation. . . . . . . . . . . . . . . . . . . . .23
9.5 - Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
9.6 - Compensation, Expenses and Indemnity . . . . . . . . . . . . . . . . . .24
9.7 - Quarterly Statements . . . . . . . . . . . . . . . . . . . . . . . . . .24
ARTICLE X
MISCELLANEOUS
10.1 - Unsecured General Creditor. . . . . . . . . . . . . . . . . . . . . . .25
10.2 - Restriction Against Assignment. . . . . . . . . . . . . . . . . . . . .25
10.3 - Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
10.4 - Amendment, Modification, Suspension or Termination. . . . . . . . . . .26
10.5 - Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
10.6 - Receipt or Release. . . . . . . . . . . . . . . . . . . . . . . . . . .26
10.7 - Payments on Behalf of Persons Under Incapacity. . . . . . . . . . . . .27
10.8 - Headings, etc. Not Part of Agreement. . . . . . . . . . . . . . . . . .27
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HILTON HOTELS
EXECUTIVE DEFERRED COMPENSATION PLAN
WHEREAS, Hilton Hotels Corporation (the "Company") established a
deferred compensation plan, effective as of January 1, 1997, to provide
supplemental retirement income benefits for a select group of management and
highly compensated employees through deferrals of salary and through the
Company's contributions; and
WHEREAS, the Company now wishes to amend and restate the Plan in order
to provide more attractive and flexible features for the participants and it
believes that the adoption of this amended and restated plan will be in the best
interests of the Company;
NOW, THEREFORE, the Plan is hereby amended and restated, effective
January 1, 2000, to read as follows:
ARTICLE I
TITLE AND DEFINITIONS
1.1 - TITLE.
This Plan shall be known as the Hilton Hotels Executive Deferred
Compensation Plan.
1.2 - DEFINITIONS.
Whenever the following words and phrases are used in this Plan, with
the first letter capitalized, they shall have the meanings specified below.
"Base Salary Deferral" shall mean that portion of Base Salary as to
which an Eligible Employee has made an annual irrevocable election to defer
receipt of until the date specified under the In-Service Distribution Option
and/or the Retirement Distribution Option.
"Beneficiary" or "Beneficiaries" shall mean the person or persons,
including a trustee, personal representative or other fiduciary, last designated
in writing by a Participant in accordance with procedures established by the
Committee to receive the benefits specified
hereunder in the event of the Participant's death. No Beneficiary designation
shall become effective until it is filed with the Committee. If there is no
Beneficiary designation in effect, or if there is no surviving designated
Beneficiary, then the Participant's surviving spouse shall be the Beneficiary.
If there is no surviving spouse to receive any benefits payable in accordance
with the preceding sentence, the duly appointed and currently acting personal
representative of the participant's estate (which shall include either the
Participant's probate estate or living trust) shall be the Beneficiary. In
any case where there is no such personal representative of the Participant's
estate duly appointed and acting in that capacity within 90 days after the
Participant's death (or such extended period as the Committee determines is
reasonably necessary to allow such personal representative to be appointed, but
not to exceed 180 days after the Participant's death), then Beneficiary shall
mean the person or persons who can verify by affidavit or court order to the
satisfaction of the Committee that they are legally entitled to receive the
benefits specified hereunder. In the event any amount is payable under the Plan
to a minor, payment shall not be made to the minor, but instead be paid (1) to
that person's living parent(s) to act as custodian, (2) if that person's parents
are then divorced, and one parent is the sole custodial parent, to such
custodial parent, or (3) if no parent of that person is then living, to a
custodian selected by the Committee to hold the funds for the minor under the
Uniform Transfers or Gifts to Minors Act in effect in the jurisdiction in which
the minor resides. If no parent is living and the Committee decides not to
select another custodian to hold the funds for the minor, then payment shall be
made to the duly appointed and currently acting guardian of the estate for the
minor or, if no guardian of the estate for the minor is duly appointed and
currently acting within 60 days after the date the amount becomes payable,
payment shall be deposited with the court having jurisdiction over the estate of
the minor.
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"Board of Directors" or "Board" shall mean the Board of Directors of Hilton
Hotels Corporation.
"Bonus Compensation Deferral" shall mean that portion of Bonus Compensation
as to which an Eligible Employee has made an annual irrevocable election to
defer receipt of until the date specified under the In-Service Distribution
Option and/or the Retirement Distribution Option.
"Change in Control" shall mean the first to occur of any of the following
events:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company, or any corporation controlled by the Company or (iv)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c); or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a
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majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or
(c) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly, more than
70% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business combination
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and (iii) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Committee appointed by the Board to administer
the Plan in accordance with Article IX, or its delegate.
"Company" shall mean Hilton Hotels Corporation, any successor corporation
and each corporation which is a member of a controlled group of corporations
(within the meaning of Section 414(b) of the Code) of which Hilton Hotels
Corporation is a component member.
"Company Contribution" shall equal the amount described in Section 4.2.
"Compensation" shall mean the total salary paid to the Eligible Employee,
including bonuses, in a Plan Year. An Eligible Employee's "Compensation" shall
consist of the Eligible Employee's "Base Salary" as in effect from time to time
during a Plan Year and the Eligible Employee's "Bonus Compensation" which shall
equal the amount of the incentive to be paid to an Eligible Employee under any
incentive plan of the Company.
"Compensation Deferral" means that portion of Compensation as to which a
Participant has made an annual irrevocable election to defer receipt until the
date specified under the In-Service Distribution Option and/or the Retirement
Distribution Option.
"Disabled" or "Disability" shall mean that a Participant is disabled due to
sickness or injury which qualifies the Participant for disability payments under
the Company's long term
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disability plan. A Participant shall be considered totally and permanently
disabled on the date he qualifies for such long term disability payments.
"Distribution Option" shall mean the two distribution options which are
available under the Plan, consisting of the Retirement Distribution Option and
the In-Service Distribution Option.
"Distribution Option Account" or "Accounts" shall mean, with respect to a
Participant, the Retirement Distribution Account and/or the In-Service
Distribution Account established on the books of account of the Company,
pursuant to Article IV, for each Participant.
"Effective Date" shall mean January 1, 1997. "Amendment Effective Date"
shall mean January 1, 2000.
"Eligible Employee" shall mean (i) officers of Hilton Hotels Corporation at
the Vice President level or higher, (ii) hotel general managers who are employed
by the Company, and (iii) Highly Compensated Employees who are selected by the
Committee to participate in the Plan pursuant to Section 2.1.
"Enrollment Agreement" shall mean the authorization form which an Eligible
Employee files with the Committee to participate in the Plan.
"Fund" or "Funds" shall mean one or more of the investments selected by the
Committee pursuant to Section 3.2(a).
"Highly Compensated Employee" shall mean an employee of the Company who the
Committee, in its discretion, anticipates will receive Compensation in excess of
the salary limitation contained in Section 401(a)(17) of the Code for the
applicable Plan Year.
"In-Service Distribution Account" shall mean the Account maintained for a
Participant to which Compensation Deferrals and Company Contributions are
credited pursuant to the In-Service Distribution Option.
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"In-Service Distribution Option" shall mean the Distribution Option
pursuant to which benefits are payable in accordance with Section 6.6.
"Investment Return" shall mean, for each Fund, an amount equal to the net
investment performance of such Fund on a given day, as determined by the
Committee.
"Participant" shall mean any Eligible Employee who elects to defer
Compensation in accordance with Section 3.1.
"Plan" shall mean the Hilton Hotels Executive Deferred Compensation Plan
set forth herein, in effect as of the Effective Date, or as amended from time to
time.
"Plan Year" shall mean the 12 consecutive month period beginning on a
January 1.
"Retirement" shall mean the termination of the Participant's employment
with the Company (for reasons other than death) at or after age 65, or, if the
Participant has 10 or more Years of Service, at or after age 55.
Notwithstanding the foregoing, a Participant who had completed at least 20 Years
of Service at the time of the Participant's Termination Date may elect to be
treated as eligible for "Retirement" and elect to have payments begin on the
first day of any month after the Participant's 55th birthday after providing the
Committee with at least 60 days written notice in the manner the Committee
prescribes.
"Retirement Distribution Account" shall mean the Account maintained for a
Participant to which Compensation Deferrals and Company Contributions are
credited pursuant to the Retirement Distribution Option.
"Retirement Distribution Option" shall mean the Distribution Option
pursuant to which benefits are payable in accordance with Section 6.5.
"Termination Date" shall mean the date of termination of a Participant's
employment with the Company.
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"Year of Vesting Service" shall mean a "Year of Service" as defined in the
Hilton Hotels Thrift Savings Plan.
ARTICLE II
PARTICIPATION
2.1 - PARTICIPATION.
Prior to December 31 of each Plan Year, the Committee shall designate which
Highly Compensated Employees shall become Eligible Employees for the following
Plan Year. An Eligible Employee designated as a Participant shall thereafter,
unless otherwise determined by the Committee, be eligible to make a Compensation
Deferral for each Plan Year by electing to defer a portion of his or her
Compensation in accordance with Section 3.1.
ARTICLE III
DEFERRAL ELECTIONS
3.1 - ELECTIONS TO DEFER COMPENSATION.
(a) Each Eligible Employee may elect to make a Compensation Deferral by
filing with the Committee an election that conforms to the requirements of this
Section 3.1, on an Enrollment Agreement provided by the Committee, no later than
December 31 of the Plan Year preceding the Plan Year for which the election is
to become effective and specifying whether the Participant elects a Base Salary
Deferral or a Bonus Compensation Deferral or a combination, the Distribution
Option Accounts to which such amounts will be credited and providing such other
information as the Committee shall require. The Enrollment Agreement must also
set forth the Participant's election as to the time and manner of distribution
from the Retirement Distribution Account and the In-Service Distribution Account
as further described in Article VI. The Committee may establish minimum or
maximum amounts that may be deferred under this Section and may change such
standards from time to time. Any such limits shall be
8
communicated by the Committee to the Plan Administrator and by the Plan
Administrator to the Participants prior to the commencement of a Plan Year.
(b) Notwithstanding anything herein to the contrary, no Eligible Employee
shall be permitted to defer Compensation which the Committee reasonably
determines is required to pay the Eligible Employee's portion of payroll taxes
and contributions towards benefits (including, but not limited to, medical,
life, dental and disability) provided to the Eligible Employee and his or her
dependents.
(c) Any Compensation Deferral made under paragraph (a) of this Section 3.1
shall remain in effect and be irrevocable, notwithstanding any change in the
Participant's Compensation, for the entire Plan Year for which it is effective.
Subject to the provisions of this Section 3.1, a Participant shall file a new
election for each Plan Year. Such election shall be made on an Enrollment
Agreement filed with the Committee by December 31 of a Plan Year to make a
Compensation Deferral for Compensation to be paid beginning on January 1 of the
immediately following Plan Year.
(d) The Committee may, in its discretion, permit Employees who first
become Eligible Employees after the beginning of a Plan Year, including
Employees who become Eligible Employees because they are promoted or hired by
the Company to a position of Vice President or hotel general manager on or after
January 1 of a Plan Year, to enroll in the Plan for that Plan Year by filing a
completed and fully executed Enrollment Agreement as soon as practicable
following the date the Employee becomes an Eligible Employee but, in any event,
within 30 days after such date. Notwithstanding the foregoing, however, any
Enrollment Agreement executed by an Eligible Employee, pursuant to this section,
to make a Compensation Deferral shall apply only to such amounts as are paid to
the Eligible Employee after the date on which such Enrollment Agreement is
filed.
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3.2 - INVESTMENT ELECTIONS.
(a) At the time of making the deferral elections described in Section 3.1,
the Participant shall designate, in a manner prescribed by the Committee, which
Funds the Participant's Accounts will be deemed to be invested in for purposes
of determining the Investment Return to be credited to those Accounts. The
Funds shall be as selected by the Committee from time to time and the Committee
may add, change, or delete Funds at any time. In making the designation pursuant
to this Section 3.2, the Participant may specify that all or any whole
percentage of his Accounts be deemed to be invested in one or more of the Funds.
A Participant may change the designation made under this Section 3.2, in a
manner prescribed by the Committee, on any business day. Such change shall be
effective as soon as administratively feasible after it is received.
(b) If a Participant fails to elect a type of Fund under this Section 3.2,
he or she shall be deemed to have elected an S & P 500 Index Fund (or, if no
such Fund exists, the Fund designated by the Committee).
(c) Although the Participant may designate the Funds according to
paragraph (a) above, the Committee shall select from time to time, in its sole
discretion, for each of the Funds described in paragraph (a), a commercially
available mutual fund or contract or an investment fund established with and
administered by an investment manager selected by the Committee. The Investment
Return of each such commercially available mutual fund, contract or investment
fund shall be used to determine the amount of earnings to be credited to
Participants' Accounts under Article IV although nothing set forth in this Plan
shall require an actual investment of monies in any such mutual fund or in any
other Fund designated as a deemed investment vehicle for Compensation Deferrals.
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ARTICLE IV
DISTRIBUTION OPTION ACCOUNTS
4.1 - COMPENSATION DEFERRALS.
The Committee shall establish and maintain a Distribution Option Account or
Accounts for each Participant under the Plan. Each Participant's Distribution
Option Account shall be further divided into separate subaccounts
("subaccounts"), each of which corresponds to a Fund elected by the Participant
pursuant to Section 3.2(a). A Participant's Distribution Option Account shall
be credited as follows:
As soon as practicable after the end of each calendar month, the Committee
shall credit the subaccounts of the Participant's Distribution Option Account
with an amount equal to the Compensation Deferral by the Participant during such
payroll period in accordance with the Participant's election under Section
3.2(a); that is, the portion of the Participant's Compensation Deferral that the
Participant has elected to be deemed to be invested in a certain Fund shall be
credited to the subaccount corresponding to that Fund.
4.2 - COMPANY CONTRIBUTION.
A Participant's Distribution Option Account shall be further credited with
the Company Contribution for that Participant as follows:
(a) As soon as practicable after the end of each calendar month, the
Committee shall credit the subaccounts of the Participant's Distribution Option
Account with an amount equal to the portion of the Company Contribution, if any,
which the Participant elected to be deemed to be invested in a certain type of
Fund. A Participant's Company Contribution for any payroll period shall be
equal to 50% of the Compensation Deferral by the Participant during such payroll
period in accordance with the Participant's election under Section 3.1(a),
disregarding any such deferral in excess of 10% of the Participant's
Compensation for such payroll period;
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(b) As of the last day of each month, forfeitures that occurred under
Section 5.2 during such month shall be returned to the Company for its
unrestricted use; and
(c) Notwithstanding the above paragraphs of this Section 4.2, from
time-to-time and in its sole discretion, the Board may provide that additional
Company Contribution be credited to some or all Participants, according to the
terms and conditions determined by the Board.
4.3 - INVESTMENT RETURN.
Each subaccount of a Participant's Distribution Option Account shall, as of
each business day, be credited with earnings and debited with losses in an
amount equal to that determined by multiplying the balance credited to such
subaccount as of the previous day by the Investment Return for the corresponding
Fund pursuant to Section 3.2(a).
ARTICLE V
VESTING
5.1 - COMPENSATION DEFERRAL.
A Participant's Compensation Deferral credited to his or her Distribution
Option Account shall be 100% vested at all times.
5.2 - COMPANY CONTRIBUTION.
(a) All Company Contributions credited to a Participant's Distribution
Option Account shall become nonforfeitable in the following increments: (1) 25%
upon the Participant's completion of two Years of Vesting Service, (2) an
additional 25% (50% total) upon completion of three Years of Vesting Service,
(3) an additional 25% (75% total) upon completion of four Years of Vesting
Service, and (4) the Distribution Option Account balance shall be fully
nonforfeitable in its entirety on and after the Participant's completion of five
Years of Vesting Service.
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(b) Notwithstanding paragraph (a) of this Section 5.2, a Participant's
Distribution Option Account balance shall be fully nonforfeitable in its
entirety should: (1) the Participant die while employed by the Company, (2) the
Participant become Disabled while employed by the Company, or (3) there occur a
Change of Control.
(c) When a Participant incurs a Termination Date, the portion of the
Company Contribution credited to his or her Distribution Option Account which is
not vested shall immediately be forever forfeited to the Company, and the
Company shall have no obligation to the Participant (or Beneficiary) with
respect to such forfeited amount.
ARTICLE VI
DISTRIBUTIONS
6.1 - DISTRIBUTION OPTION ACCOUNTS. The Committee shall establish and maintain
separate Distribution Option Accounts with respect to a Participant. A
Participant's Distribution Option Accounts may consist of the Retirement
Distribution Account and/or the In-Service Distribution Account as elected by
the Participant. The amount of Base Salary Deferrals and/or Bonus Compensation
Deferrals made pursuant to Section 3.1 shall be credited by the Company to the
Participant's Distribution Option Accounts as soon as practicable after the end
of each calendar month in which such Base Salary and/or Bonus Compensation would
otherwise have been paid, in accordance with the Distribution Option irrevocably
elected by the Participant in the Enrollment Agreement. Any amount once taken
into account as Base Salary and/or Bonus Compensation for purposes of this Plan
shall not be taken into account thereafter. Company Contributions, when
credited, are credited to the Distribution Option Accounts in the same
proportion as the Base Salary and/or Bonus Compensation they match. The
Participant's Distribution Option Accounts shall be reduced by the amount of
payments made by the Company to the Participant or the Participant's Beneficiary
pursuant to this Plan.
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6.2 - ELECTION OF DISTRIBUTION OPTION. In the Enrollment Agreement filed with
the Committee for each Plan Year, an Eligible Employee shall elect the time and
manner of payment pursuant to which the Eligible Employee's Distribution Option
Accounts for that Plan Year will be distributed. Annually, the Eligible
Employee shall allocate his Compensation Deferrals and Company Contributions
between the Distribution Options in increments of ten percent, provided, however
that 100 percent of such Deferrals and Company Contributions may be allocated to
one or the other of the Distribution Options.
6.3 - RETIREMENT DISTRIBUTION OPTION. Subject to Section 6.5, distribution of
the Participant's Retirement Distribution Account shall commence upon (a) the
Participant's Retirement, or (b) if later, the Participant's attainment of age
65 as elected by the Participant in the Enrollment Agreement pursuant to which
such Retirement Distribution Account was established.
6.4 - IN-SERVICE DISTRIBUTION OPTION. Subject to Section 6.6, the Participant's
In-Service Distribution Account shall be distributed commencing in the Plan Year
elected by the Participant in the Enrollment Agreement pursuant to which such
In-Service Distribution Account was established. Notwithstanding the foregoing,
no Participant may elect to receive a distribution of any amount credited to the
Participant's In-Service Distribution Account, including any attributable
Investment Return, prior to the beginning of the third Plan Year following the
Plan Year in which the Compensation Deferral giving rise to that distribution
was made.
6.5 - BENEFITS UNDER THE RETIREMENT DISTRIBUTION OPTION. Benefits under the
Retirement Distribution Option shall be paid to a Participant as follows:
(a) BENEFITS UPON RETIREMENT. In the case of a Participant whose
employment with the Company terminates on account of his Retirement, the
Participant's Retirement Distribution Account shall be distributed in one of the
following methods, as elected by the Participant in writing either in the
Enrollment Agreement or in a separate election made prior to
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the date of the Participant's Retirement: (i) in a lump sum; or (ii) in 5, 10,
15, or 20 quarterly, semi-annual or annual installments. Any lump-sum benefit
payable in accordance with this paragraph shall be paid in, but not later than
January 31 of the Plan Year following the Plan Year in which occurs the
Participant's Retirement or, if later, attainment of age 65 as elected by the
Participant in accordance with this Section or Section 6.3, in an amount equal
to the value of such Retirement Distribution Account as of the business day the
Funds are deemed to be liquidated to make the payment. Installment payments, if
any, shall commence not later than January 31 of the Plan Year following the
Plan Year in which occurs the Participant's Retirement or if later, attainment
of age 65, as elected by the Participant in accordance with this Section or
Section 6.3, in an amount equal to (i) the value of such Retirement Distribution
Account as of the business day the Funds are deemed to be liquidated to make the
payment, divided by (ii) the number of installment payments elected by the
Participant in the Enrollment Agreement pursuant to which such Retirement
Distribution Account was established. The remaining installments shall be paid
not later than January 31 of each succeeding Plan Year in an amount equal to (i)
the value of such Retirement Distribution Account as of the business day the
Funds are deemed to be liquidated to make the payment divided by (ii) the number
of installments remaining. A Participant may change the election regarding the
manner of payment as described in Section 6.1 of the Participant's Account at
any time prior to the end of the Plan Year in which occurs the Participant's
Retirement or attainment of age 65, if later, and elected as the distribution
date by the Participant in accordance with Section 6.3.
(b) BENEFITS UPON TERMINATION OF EMPLOYMENT. In the case of a
Participant whose Service with the Company terminates prior to the earliest date
on which the Participant is eligible for Retirement, other than on account of
becoming Disabled or by reason of death, the
15
vested portion of a Participant's Retirement Distribution Account shall be
distributed in a lump sum as soon as practicable following the Participant's
Termination Date.
6.6 - BENEFITS UNDER THE IN-SERVICE DISTRIBUTION OPTION. Benefits under the
In-Service Distribution Option shall be paid to a Participant as follows:
(a) IN-SERVICE DISTRIBUTIONS. In the case of a Participant who continues
in employment with the Company, the vested portion of a Participant's In-Service
Distribution Account shall be paid to the Participant commencing no later than
January 31 of the Plan Year(s) irrevocably elected by the Participant in the
Enrollment Agreement pursuant to which such In-Service Distribution Account was
established, which may be no earlier than the third Plan Year following the end
of the Plan Year in the Compensation Deferral giving rise to that distribution
was made, in one lump sum or in quarterly, semi-annual or annual installments
payable over 2, 3, 4, or 5 years. Any lump-sum benefit payable in accordance
with this paragraph shall be paid not later than January 31 of the Plan Year
elected by the Participant in accordance with Section 6.4, in an amount equal to
the vested value of the portion of such In-Service Distribution Account being
distributed as of the business day the Funds are deemed to be liquidated to make
the payment. Installment payments, if any, shall commence not later than
January 31 of the Plan Year as elected by the Participant in accordance with
Section 6.3, in an amount equal to (i) the vested value of such portion of such
In-Service Distribution Account as of the business day the Funds are deemed to
be liquidated to make the payment, divided by (ii) the number of installment
payments elected by the Participant in the Enrollment Agreement pursuant to
which such In-Service Distribution Account was established. The remaining
installments shall be paid not later than January 31 of each succeeding year in
an amount equal to (i) the vested value of such portion of the In-Service
Distribution Account as of the business day the Funds are deemed to be
liquidated to make the payment divided by (ii) the number of installments
remaining. If a
16
Participant is not fully vested when the In-Service Distribution Account is to
be paid, the non-vested portion at the date of first payment will automatically
be transferred to the Retirement Distribution Account.
(b) BENEFITS UPON TERMINATION OF EMPLOYMENT. In the case of a Participant
whose employment with the Company terminates prior to the date on which the
Participant's then In-Service Distribution Account would otherwise be
distributed, other than on account of becoming Disabled or by reason of death,
the vested portion of such In-Service Distribution Account shall be distributed
either (i) in a lump sum as soon as is practicable following the Participant's
Termination Date; (ii) in installments commencing on the date such In-Service
Distribution Account would otherwise have been distributed; or (iii) in a lump
sum on the date such In-Service Distribution Account would otherwise have been
distributed, all as irrevocably elected by the Participant in the Enrollment
Agreement pursuant to which such In-Service Distribution Account was
established; provided, however, that the Company may override a Participant's
election and cause a distribution under clause (i) notwithstanding any other
election by the Participant.
6.7 - INABILITY TO LOCATE PARTICIPANT.
In the event that the Committee is unable to locate a Participant or
Beneficiary within two years following the date the Participant was to commence
receiving payment, the entire amount allocated to the Participant's Deferral
Account and Company Contribution Account shall be forfeited. If, after such
forfeiture, the Participant or Beneficiary later claims such benefit, such
benefit shall be reinstated without interest or earnings from the date payment
was to commence under Section 6.1.
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6.8 - PAYMENT BY TRUST.
The Company may cause the payment of benefits under this Plan to be made in
whole or in part by the trustee of a trust designated by the Committee (the
"Trust"). The Committee may direct the Trustee to pay the Participant's or
Beneficiary's benefit at the time and in the amount described herein. In the
event the amounts allocated to the Participant under the Trust are not
sufficient to provide the full amount of benefit payable to the Participant, the
Company shall pay the remainder of such benefit.
6.9 - WITHDRAWALS.
Any Participant may receive a distribution as set forth in this Section 6.9
prior to termination of employment. Such distribution shall be paid in the
manner provided by the Committee. The Participant shall forever forfeit 10% of
the amount of the distribution to the Company, and the Company shall have no
obligation to the Participant (or Beneficiary) with respect to such forfeited
amount. The Committee may provide that the forfeiture shall reduce the
distribution, or shall reduce the Participant's Distribution Option Accounts
remaining in the Plan. The total of all distributions to a Participant under
this Section shall not exceed the lesser of: (1) the Participant's aggregate
Compensation Deferrals under Section 3.1; or (2) the then value of the
Participant's Distribution Option Accounts.
6.10 - DISTRIBUTIONS ON DISABILITY.
If a Participant becomes Disabled, such Participant's Account shall be
distributed pursuant to the Participant's Enrollment Agreement without regard to
such Disability.
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ARTICLE VII
DEATH BENEFITS
7.1 - IN GENERAL.
Upon the death of a Participant, and before his or her Distribution Option
Accounts has been paid in full (either in a lump sum or installment payments),
his or her Beneficiary shall receive the balance of the Participant's vested
Account as of the date of death, as adjusted by subsequent gains or losses prior
to distribution, in accordance with Section 7.2.
7.2 - PAYMENT OF DEATH BENEFITS.
The death benefit payable pursuant to Section 7.1 shall be paid to the
Participant's Beneficiary as elected by the Beneficiary in the manner permitted
under the provisions of Section 6.2, but if no such timely election was made,
the payment shall be made in the form of a cash lump sum payment within 90 days
of the Participant's death.
ARTICLE VIII
ARBITRATION
8.1 - ARBITRATION.
(a) A Participant or, following the Participant's death, a
Beneficiary (collectively referred to in this section as "Claimant") may, if he
desires, submit any claim for payment under the Plan or any dispute regarding
the interpretation of the Plan to arbitration. This right to select arbitration
shall be solely that of the Claimant, and the Claimant may decide whether or not
to arbitrate in his discretion. The "right to select arbitration" does not
impose on the Claimant a requirement to submit a dispute for arbitration. The
Claimant may, in lieu of arbitration, bring an action in appropriate civil
court. The Claimant retains the right to select arbitration, even if a civil
action (including, without limitation, an action for declaratory relief) is
brought by the Company or any other fiduciary of the Plan prior to the
commencement of arbitration. If
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arbitration is selected by the Claimant after a civil action concerning the
Claimant's dispute has been brought by a person other than the Claimant, the
Company, the trustee of any grantor trust that holds assets for the purpose of
making benefit payments under the Plan ("Trustee"), and the Claimant shall take
such actions as are necessary or appropriate, including dismissal of the civil
action, so that the arbitration can be timely heard. Once arbitration is
commenced, it may not be discontinued without the unanimous consent of all
parties to the arbitration. During the lifetime of the Participant only he can
use the arbitration procedure set forth in this section.
(b) Any claim for arbitration may be submitted as follows: if the
Claimant disagrees with an interpretation of the Plan by the Company or any
fiduciary of the Plan, or disagrees with the calculation of his benefit under
the Plan, such claim may be filed in writing with an arbitrator of the
Claimant's choice who is selected by the method described in the next four
sentences. The first step of the selection shall consist of the Claimant
submitting in writing a list of five potential arbitrators to the Company and to
the Trustee. Each of the five arbitrators must be either (1) a member of the
National Academy of Arbitrators located in the state of the Claimant's
principal residence or (2) a retired California Superior Court or Appellate
Court judge. Within one week after receipt of the list, the Trustee and the
Company shall jointly select one of the five arbitrators as the arbitrator of
the dispute in question. If the Trustee and Company fail to select an
arbitrator in a timely manner (including failure to select an arbitrator by
reason of disagreement between the Trustee and the Company as to the arbitrator
to be selected), the Claimant then shall designate one of the five arbitrators
as the arbitrator of the dispute in question.
(c) The arbitration hearing shall be held within seven days (or as
soon thereafter as possible) after the selection of the arbitrator. No
continuance of said hearing shall be allowed without the mutual consent of the
Claimant, the Trustee, and the Company. Absence from or nonparticipation at the
hearing by any party shall not prevent the issuance of an award. Hearing
20
procedures that will expedite the hearing may be ordered at the arbitrator's
discretion, and the arbitrator may close the hearing in his sole discretion when
he decides he has heard sufficient evidence to justify issuance of an award.
(d) The arbitrator's award shall be rendered as expeditiously as
possible and in no event later than one week after the close of the hearing. In
the event the arbitrator finds that the Claimant is entitled to the benefits he
claimed, the arbitrator shall order the Company and/or the Trustee to pay such
benefits, in the amounts and at such time as the arbitrator determines. The
obligation of the Trustee to pay such benefits shall not, however, exceed the
assets of the trust, and the Company shall be jointly and severally liable for
any amount that the Trustee is ordered to pay. The award of the arbitrator
shall be final and binding on the parties. The Company shall thereupon pay the
Claimant immediately the amount that the arbitrator orders to be paid in the
manner described in the award. The award may be enforced in any appropriate
court as soon as possible after its rendition. If any action is brought to
confirm the award, no appeal shall be taken by any party from any decision
rendered in such action.
(e) If the arbitrator determines either that the Claimant is
entitled to the claimed benefits or that the claim by the Claimant was made in
good faith, the arbitrator shall direct the Company to pay to the Claimant, and
Company agrees to pay to the Claimant in accordance with such order, an amount
equal to the Claimant's expenses in pursuing the claim, including attorneys'
fees.
ARTICLE IX
ADMINISTRATION
9.1 - COMMITTEE.
A committee shall be appointed by, and serve at the pleasure of, the Board
of Directors. The number of members comprising the Committee shall be
determined by the Board which may
21
from time to time vary the number of members. A member of the Committee may
resign by delivering a written notice of resignation to the Board. The Board may
remove any member by delivering a certified copy of its resolution of removal to
such member. Vacancies in the membership of the Committee shall be filled
promptly by the Board.
9.2 - COMMITTEE ACTION.
The Committee shall act at meetings by affirmative vote of a majority of
the members of the Committee. Any action permitted to be taken at a meeting may
be taken without a meeting if, prior to such action, a written consent to the
action is signed by all members of the Committee and such written consent is
filed with the minutes of the proceedings of the Committee. A member of the
Committee shall not vote or act upon any matter which relates solely to himself
or herself as a Participant. The Chairman or any other member or members of the
Committee designated by the Chairman may execute any certificate or other
written direction on behalf of the Committee.
9.3 - POWERS AND DUTIES OF THE COMMITTEE.
(a) The Committee, on behalf of the Participants and their Beneficiaries,
shall enforce the Plan in accordance with its terms, shall be charged with the
general administration of the Plan, and shall have all powers necessary to
accomplish its purposes, including, but not by way of limitation, the following:
(1) To select the mutual funds, contracts or investment funds to be
the Funds in accordance with Section 3.2(b) hereof;
(2) To construe and interpret the terms and provisions of this Plan
and to make factual determinations;
(3) To compute and certify to the amount and kinds of benefits
payable to Participants and their Beneficiaries;
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(4) To maintain all records that may be necessary for the
administration of the Plan;
(5) To provide for the disclosure of all information and the filing
or provision of all reports and statements to Participants,
Beneficiaries or governmental agencies as shall be required by
law;
(6) To make and publish such rules for the regulation of the Plan
and procedures for the administration of the Plan as are not
inconsistent with the terms hereof; and
(7) To appoint a plan administrator or any other agent, and to
delegate to them such powers and duties in connection with the
administration of the Plan as the Committee may from time to
time prescribe.
(8) On behalf of the Company, to select those Highly Compensated
Employees who shall be Eligible Employees.
9.4 - CONSTRUCTION AND INTERPRETATION.
(a) The Committee shall have full discretion to construe and interpret
the terms and provisions of this Plan, which interpretation or construction
shall be final and binding on all parties, including but not limited to, the
Company and any Participant or Beneficiary. The Committee shall administer such
terms and provisions in a uniform and nondiscriminatory manner and in full
accordance with any and all laws applicable to the Plan.
(b) Nothing contained in the Plan shall be construed to prevent the
Company from taking any action which is deemed by it to be appropriate or in its
best interest. No Participant, Beneficiary, or other person shall have any
claim against the Company as a result of such action. Any decisions, actions or
interpretations to be made under the Plan by the Company or the Board, or the
Committee acting on behalf of the Company, shall be made in its respective sole
23
discretion, not as a fiduciary, need not be uniformly applied to similarly
situated individuals and shall be final, binding and conclusive on all persons
interested in the Plan.
9.5 - INFORMATION.
To enable the Committee to perform its functions, the Company shall
supply full and timely information to the Committee on all matters relating to
the Compensation of all Participants, their death, Disability, or other cause of
termination, and such other pertinent facts as the Committee may require.
9.6 - COMPENSATION, EXPENSES AND INDEMNITY.
(a) The Committee is authorized at the expense of the Company to employ
such legal counsel as it may deem advisable to assist in the performance of its
duties hereunder. Expenses and fees in connection with the administration of
the Plan shall be paid by the Company.
(b) To the extent permitted by applicable state law, the Company shall
indemnify and save harmless the Committee and each member thereof, the Board of
Directors and any delegate of the Committee who is an employee of the Company
against any and all expenses, liabilities and claims, including legal fees to
defend against such liabilities and claims arising out of their discharge in
good faith of responsibilities under or incident to the Plan, other than
expenses and liabilities arising out of willful misconduct. This indemnity
shall not preclude such further indemnities as may be available under insurance
purchased by the Company or provided by the Company under any bylaw, agreement
or otherwise, as such indemnities are permitted under state law.
9.7 - QUARTERLY STATEMENTS.
Under procedures established by the Committee, a Participant shall
receive a statement with respect to such Participant's Accounts on a quarterly
basis as of each March 31, June 30, September 30 and December 31.
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ARTICLE X
MISCELLANEOUS
10.1 - UNSECURED GENERAL CREDITOR.
Participants and their Beneficiaries, heirs, successors, and assigns
shall have no legal or equitable rights, claims, or interest in any specific
property or assets of the Company. No assets of the Company shall be held under
any trust, or held in any way as collateral security for the fulfilling of the
obligations of the Company under this Plan. Any and all of the Company's assets
shall be, and remain, the general unpledged, unrestricted assets of the Company.
The Company's obligation under the Plan shall be merely that of an unfunded and
unsecured promise of the Company to pay money in the future, and the rights of
the Participants and Beneficiaries shall be no greater than those of unsecured
general creditors.
10.2 - RESTRICTION AGAINST ASSIGNMENT.
The Company shall pay all amounts payable hereunder only to the person or
persons designated by the Plan and not to any other person or corporation. No
part of a Participant's Accounts shall be liable for the debts, contracts, or
engagements of any Participant, his or her Beneficiary, or successors in
interest, nor shall a Participant's Accounts be subject to execution by levy,
attachment, or garnishment or by any other legal or equitable proceeding, nor
shall any such person have any right to alienate, anticipate, commute, pledge,
encumber, or assign any benefits or payments hereunder in any manner whatsoever.
If any Participant, Beneficiary or successor in interest is adjudicated bankrupt
or purports to anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge any distribution or payment from the Plan, voluntarily or involuntarily,
the Committee, in its discretion, may cancel such distribution or payment (or
any part thereof) to or for the benefit of such Participant, Beneficiary or
successor in interest in such manner as the Committee shall direct.
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10.3 - WITHHOLDING.
There shall be deducted from each payment made under the Plan or any
other compensation payable to the Participant (or Beneficiary) all taxes which
are required to be withheld by the Company in respect to such payment or this
Plan. The Company shall have the right to reduce any payment (or compensation)
by the amount of cash sufficient to provide the amount of said taxes.
10.4 - AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION.
The Company may amend, modify, suspend or terminate the Plan in whole or
in part, except that (a) no amendment, modification, suspension or termination
shall have any retroactive effect to reduce any amounts allocated to a
Participant's Accounts, and (b) Section 8.1 may not be amended with respect to
any Participant or Beneficiary following the date the Participant or Beneficiary
makes a claim for benefits under the Plan. In the event that this Plan is
terminated, the amounts credited to a Participant's Accounts (including any
previously unvested amounts) shall be distributed to the Participant or, in the
event of his or her death, his or her Beneficiary in a lump sum within thirty
(30) days following the date of termination.
10.5 - GOVERNING LAW.
This Plan shall be construed, governed and administered in accordance
with the laws of the State of California.
10.6 - RECEIPT OR RELEASE.
Any payment to a Participant or the Participant's Beneficiary in
accordance with the provisions of the Plan shall, to the extent thereof, be in
full satisfaction of all claims against the Committee, the Company and the
Trustee. The Committee may require such Participant or Beneficiary, as a
condition precedent to such payment, to execute a receipt and release to such
effect.
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10.7 - PAYMENTS ON BEHALF OF PERSONS UNDER INCAPACITY.
In the event that any amount becomes payable under the Plan to a person
who, in the sole judgement of the Committee, is considered by reason of physical
or mental condition to be unable to give a valid receipt therefore, the
Committee may direct that such payment be made to any person found by the
Committee, in its sole judgement, to have assumed the care of such person. Any
payment made pursuant to such determination shall constitute a full release and
discharge of the Committee and the Company.
10.8 - HEADINGS, ETC. NOT PART OF AGREEMENT.
Headings and subheadings in this Plan are inserted for convenience of
reference only and are not to be considered in the construction of the
provisions hereof.
IN WITNESS WHEREOF, the Company has caused this document to be executed
by its duly authorized officer on this 30th day of June, 1999.
HILTON HOTELS CORPORATION
By: /s/ Molly McKenzie-Swartz
------------------------------------------
Its:SENIOR VICE PRESIDENT
-----------------------------------------
HUMAN RESOURCES
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