<PAGE>
As filed with the Securities and Exchange Commission on May 22, 1996
Registration No. 333-______________
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
HILTON HOTELS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-2058176
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
9336 CIVIC CENTER DRIVE, BEVERLY HILLS, CALIFORNIA 90210
(Address of Principal Executive Offices) (Zip Code)
1996 STOCK INCENTIVE PLAN
1996 CHIEF EXECUTIVE STOCK INCENTIVE PLAN
(Full title of the plans)
CHERYL L. MARSH, ESQ.
VICE PRESIDENT AND CORPORATE SECRETARY
HILTON HOTELS CORPORATION
9336 CIVIC CENTER DRIVE
BEVERLY HILLS, CALIFORNIA 90210
310/278-4321
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Title of Proposed maximum Proposed maximum Amount of
Securities to be Amount to be offering price aggregate offering Registration
registered registered per share price fee
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $2.50 1,500,000 Shares (1) $102.9375(2) $154,406,250(2) $53,244(2)
par value
Common Stock, $2.50 1,500,000 Shares (1) $74.6875(3) $112,031,250(3) $38,632(3)
par value
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
1. Plus an indeterminate number of shares which may be issued as a result of
anti-dilution provisions contained in each of the Plans.
2. Estimated solely for the purpose of calculating the registration fee
pursuant to Rules 457(c) and 457(h) under the Securities Act of 1933, as
amended (the "Act"), on the basis of the average of the high and low
prices of the Company's Common Stock as reported on the New York Stock
Exchange on May 16, 1996.
3. Calculated pursuant to Rule 457(h)(1) under the Act.
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<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents are incorporated herein by reference:
(a) The Annual Report on Form 10-K for the fiscal year ended December 31,
1995 filed by Hilton Hotels Corporation ("Hilton"), including those
portions of Hilton's Annual Report to Stockholders for such fiscal
year incorporated therein by reference.
(b) All other reports filed by Hilton pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since December 31, 1995.
(c) The shares of Common Stock which are the subject of this Registration
Statement are described in the Registrant's Registration Statement on
Form 10, as amended, pursuant to the Exchange Act, as initially filed
with the Securities Exchange Commission on June 5, 1947, which
Registration Statement is hereby incorporated by reference herein.
In addition to the foregoing, all documents subsequently filed by
Hilton pursuant to Section 13(a), 13(e), 14 and 15(d) of the Exchange Act
prior to the filing of a subsequent post-effective amendment to the
Registration Statement, which indicates that all shares of Common Stock
being offered hereby have been sold or which deregisters all shares of
Common Stock then remaining unsold, shall be deemed to be incorporated
herein by reference and be a part hereof from the date of filing such
documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable.
ITEM 6. INDEMNIFICATION.
Hilton has purchased for the benefit of its officers and directors and
those of certain subsidiaries, insurance policies, whereby the insurance
companies agree, among other things, that in the event any such officer or
director becomes legally obligated to make a payment (including legal fees
and expenses) in connection with an alleged wrongful act, such insurance
companies will pay Hilton up to $100,000,000. Wrongful act means any
breach
Page 2 of _____
<PAGE>
of duty, neglect, error, misstatement, misleading statement or other act
done by an officer or director of Hilton or any subsidiary.
Section 145 of the General Corporation Law of Delaware, as amended
(the ("DGCL"), Article XI of Hilton's Restated Certificate of
Incorporation, as amended, and Paragraph 34 of Hilton's By-Laws, as
amended, authorized and empower Hilton to indemnify its directors,
officers, employees and agents, and agreements with each of Hilton's
directors and officers (substantially in the form approved at the Annual
Meeting of Stockholders on May 7, 1987) provide for indemnification against
liabilities incurred in connection with, and related expenses resulting
from, any claim, action or suit brought against any such person as a result
of such person's relationship with Hilton, provided that such persons acted
in accordance with a stated standard of conduct in connection with the acts
or events on which such claim, action or suit is based. The finding of
either civil or criminal liability on the part of such persons in
connection with such acts or events is not necessarily determinative of the
question of whether such persons have met the required standard of conduct
and are, accordingly, entitled to be indemnified.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
Exhibit
Number Description of Document Page No.
------ ----------------------- --------
4.1 Form of Stock Option Agreement, together with
copy of the 1996 Stock Incentive Plan
4.2 Stock Option Agreement, together with a
copy of the 1996 Chief Executive Stock
Incentive Plan
5.1 Opinion of Neal, Gerber & Eisenberg
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Neal, Gerber & Eisenberg
(included in Exhibit 5.1)
24.1 Powers of Attorney (see II-6)
Page 3 of _____
<PAGE>
ITEM 9. UNDERTAKINGS.
The undersigned hereby undertakes:
1. That, for purposes of determining any liability under the Securities
Act of 1933, as amended (the "Securities Act"), each post-effective
amendment to this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
2. To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
3. That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act, that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
4. To include any material change to the information contained in this
Registration Statement.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted for directors, officers and
controlling persons of Hilton pursuant to the DGL, Hilton's Restated
Certificate of Incorporation, Hilton's By-Laws, as amended, or
otherwise, Hilton has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Hilton of expenses
incurred or paid by a director, officer or controlling person of
Hilton in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection
with the securities being registered, Hilton will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
Page 4 of _____
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
Hilton Hotels Corporation, a corporation organized and existing under the laws
of the State of Delaware, certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereto during authorized, in the City of Beverly Hills and State of California,
on the 8th day of May, 1996.
HILTON HOTELS CORPORATION (Registrant)
By: /s/ Cheryl L. Marsh
-----------------------------------
CHERYL L. MARSH
VICE PRESIDENT AND CORPORATE SECRETARY
Pursuant to the requirements of the Securities Act to 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
PRINCIPAL EXECUTIVE OFFICERS:
* *
- ------------------------------------ -----------------------------------
Barron Hilton, Chairman of the Board Eric M. Hilton
* *
- ------------------------------------ -----------------------------------
Stephen F. Bollenbach, President and Dieter H. Huckestein
Chief Executive Officer
PRINCIPAL FINANCIAL AND *
ACCOUNTING OFFICER: -----------------------------------
Robert L. Johnson
* *
- ------------------------------------ -----------------------------------
Steve Krithis, Senior Vice Donald R. Knab
President - Finance
DIRECTORS:
*
-----------------------------------
* Benjamin V. Lambert
- ------------------------------------
Raymond C. Avansino, Jr.
*
-----------------------------------
Donna F. Tuttle
*
- ------------------------------------
A. Steven Crown
*
-----------------------------------
Sam D. Young, Jr.
*
- ------------------------------------
Gregory R. Dillon
*By: /s/ Cheryl L. Marsh
-------------------------------
* Cheryl L. Marsh
- ------------------------------------ attorney-in-fact for each
Barron Hilton person named
May 8, 1996
Page 5 of _____
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and
officers of HILTON HOTELS CORPORATION, a Delaware corporation, which is about to
file a Registration Statement with the Securities and Exchange Commission,
Washington, D.C. 20549, under the provisions of the Securities Act of 1933, as
amended, with respect to the shares of its Common Stock par value $2.50 per
share, issuable upon exercise of options granted and to be granted under each of
its 1996 Stock Incentive Plan and its 1996 Chief Executive Stock Incentive Plan,
hereby constitutes and appoints Steve Krithis, William C. Lebo, Jr. and Cheryl
L. Marsh and each of them, his true and lawful attorneys-in-fact and agents with
full power of substitution and resubsititution, for him and in his name, place
and stead, in any and all capacities, to sign such Registration Statement and
any or all amendments thereto, and all other documents in connection therewith,
to be filed with the Securities and Exchange Commission, granting unto such
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every thing requisite and necessary to be done in and about
the premises, to all intents and purposes and as fully as they might or could do
in person, hereby ratifying and confirming all that such attorneys-in-fact and
agents, or their substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 23rd day of April, 1996.
/s/ Raymond C. Avansino, Jr. /s/ Robert L. Johnson
- ---------------------------------- -----------------------------------
Raymond C. Avansino, Jr., Director Robert L. Johnson, Director
/s/ Stephen F. Bollenbach /s/ Donald R. Knab
- ---------------------------------- -----------------------------------
Stephen F. Bollenbach, Donald R. Knab, Director
President and Chief Executive Officer
/s/ A. Steven Crown /s/ Steve Krithis
- ---------------------------------- -----------------------------------
A. Steven Crown, Director Steve Krithis, Senior Vice
President - Finance
/s/ Gregory R. Dillon /s/ Benjamin V. Lambert
- ---------------------------------- -----------------------------------
Gregory R. Dillon, Director Benjamin V. Lambert, Director
/s/ Barron Hilton /s/ Donna F. Tuttle
- ---------------------------------- -----------------------------------
Barron Hilton, Chairman of the Board Donna F. Tuttle, Director
/s/ Eric Hilton /s/ Sam D. Young, Jr.
- ---------------------------------- -----------------------------------
Eric Hilton, Director Sam D. Young, Jr., Director
/s/ Dieter H. Huckestein
- ----------------------------------
Dieter H. Huckestein, Director
Page 6 of _____
<PAGE>
Exhibit 4.1
[HILTON - LOGO]
Hotels Corporation
HILTON HOTELS CORPORATION
ID: 36-2058176
NOTICE OF GRANT OF STOCK OPTIONS
AND GRANT AGREEMENT
This Incentive Stock Option Agreement (the "Agreement") is made as of __________
between HILTON HOTELS CORPORATION (the "Company"), and ____________("Optionee").
You have been granted options to buy HILTON HOTELS CORPORATION Common Stock as
follows:
Non-Qualified Stock Option Grant No.:
Date of Grant:
Stock Option Plan: 96 Plan
Option Price per Share:
Total Number of Shares Granted:
Total Price of Shares Granted:
EXERCISABILITY OF OPTION. The Option is exercisable in while or in part from
time to time during its term, except that the shall not be exercisable until
such Option or portion thereof shall become fully vested in the Participant.
The Shares of the Common Stock received upon exercise of the option shall be
vested and exercisable only in accordance with the following schedule:
SHARES VESTING DATE EXPIRATION DATE
------ ------------ ---------------
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By your signature and Hilton's signature below, you and Hilton agree that these
options are granted under and governed by the terms and conditions of Hilton's
Stock Option Plans, as amended, all of which are attached and made a part of
this document.
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HILTON HOTELS CORPORATION OPTIONEE
By: /s/ Stephen F. Bollenbach By:
--------------------------- ---------------------------
STEPHEN F. BOLLENBACH
Date: Date:
------------------------- -------------------------
WORLD HEADQUARTERS
9336 Civic Center Drive, Beverly Hills, California 90210 Telephone 310-278-4321
Reservations 1-800-HILTONS
<PAGE>
EXHIBIT A
HILTON HOTELS CORPORATION
1996 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS
The purpose of the Plan is to give the Corporation a competitive advantage
in attracting, retaining and motivating officers and employees and to provide
the Corporation and its subsidiaries with a stock plan providing incentives more
directly linked to the profitability of the Corporation's businesses and
increases in shareholder value.
For purposes of the Plan, the following terms are defined as set forth
below:
a. "AFFILIATE" means a corporation or other entity controlled by the
Corporation and designated by the Committee from time to time as
such.
b. "AWARD" means a Stock Appreciation Right or a Stock Option.
c. "BOARD" means the Board of Directors of the Corporation.
d. "CHANGE IN CONTROL" and "CHANGE IN CONTROL PRICE" have the meanings
set forth in Sections 7(b) and (c), respectively.
e. "CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
f. "COMMISSION" means the Securities and Exchange Commission or any
successor agency.
g. "COMMITTEE" means the Committee referred to in Section 2.
h. "COMMON STOCK" means common stock, par value $2.50 per share, of the
Corporation.
i. "CORPORATION" means Hilton Hotels Corporation, a Delaware
corporation.
j. "DISABILITY" means permanent and total disability as determined under
procedures established by the Committee for purposes of the Plan.
k. "DISINTERESTED PERSON" means a member of the Board who qualifies as a
disinterested person as defined in Rule 16b-3(c)(2), as promulgated
by the Commission under the Exchange Act, or any successor definition
adopted by the Commission.
l. "RETIREMENT" means retirement from active employment with the
Corporation, a subsidiary or Affiliate at or after age 62.
m. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
n. "FAIR MARKET VALUE" means, except as provided in Section 6(b)(ii)(2),
as of any given date, the mean between the highest and lowest
reported sales prices of the Common Stock on the New York Stock Exchange
Composite Tape or, if not listed on such exchange, on any other national
securities exchange on which the Common Stock is listed or on NASDAQ. If
there is no regular public trading market for such Common Stock, the Fair
Market Value of the Common Stock shall be determined by the Committee in
good faith.
o. "INCENTIVE STOCK OPTION" means any Stock Option designated as, and
qualified as, an "incentive stock option" within the meaning of
Section 422 of the Code.
<PAGE>
p. "NONQUALIFIED STOCK OPTION" means any Stock Option that is not an
Incentive Stock Option.
q. "PLAN" means the Hilton Hotels Corporation 1996 Stock Incentive Plan,
as set forth herein and as hereinafter amended from time to time.
r. "RULE 16B-3" means Rule 16b-3, as promulgated by the Commission under
Section 16(b) of the Exchange Act, as amended from time to time.
s. "STOCK APPRECIATION RIGHT" means a right granted under Section 6.
t. "STOCK OPTION" means an option granted under Section 5.
u. "TERMINATION OF EMPLOYMENT" means the termination of the
participant's employment with the Corporation and any subsidiary or
Affiliate. A participant employed by a subsidiary or an Affiliate shall also
be deemed to incur a Termination of Employment if the subsidiary or
Affiliate ceases to be such a subsidiary or an Affiliate, as the case may
be, and the participant does not immediately thereafter become an employee
of the Corporation or another subsidiary or Affiliate. Temporary absences
from employment because of illness, vacation or leave of absence and
transfers among the Corporation and its subsidiaries and Affiliates shall
not be considered Terminations of Employment.
In addition, certain other terms used herein have definitions given to them
in the first place in which they are used.
SECTION 2. ADMINISTRATION
The Plan shall be administered by the Stock Option Committee or such other
committee of the Board as the Board may from time to time designate (the
"Committee"), which shall be composed of not less than two Disinterested
Persons, each of whom shall be an "outside director" for purposes of Section
162(m)(4) of the Code, and shall be appointed by and serve at the pleasure of
the Board.
The Committee shall have authority to make recommendations to the Board of
Directors as to the granting of Awards pursuant to the terms of the Plan to
officers and employees of the Corporation and its subsidiaries and Affiliates.
Among other things, the Committee shall have the authority, subject to the
terms of the Plan:
(a) To select the officers and employees to whom Awards may from time to
time be granted;
(b) Determine whether and to what extent Incentive Stock Options,
Nonqualified Stock Options and Stock Appreciation Rights or any combination
thereof are to be granted hereunder;
(c) Determine the number of shares of Common Stock to be covered by each
Award granted hereunder;
(d) Determine the terms and conditions of any Award granted hereunder
(including, but not limited to, the option price (subject to Section 5(a)),
any vesting condition, restriction or limitation (which may be related to
the performance of the participant, the Corporation or any subsidiary or
Affiliate) and any vesting acceleration or forfeiture waiver regarding any
Award and the shares of Common Stock relating thereto, based on such factors
as the Committee shall determine;
(e) Modify, amend or adjust the terms and conditions of any Award, at
any time or from time to time; and
A-2
<PAGE>
(f) Determine to what extent and under what circumstances Common Stock
and other amounts payable with respect to an Award shall be deferred.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any agreement relating thereto)
and to otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in office,
except that the members thereof may (i) delegate to an officer of the
Corporation the authority to make decisions pursuant to paragraphs (c), (f),
(g), (h) and (i) of Section 5 (provided that no such delegation may be made that
would cause Awards or other transactions under the Plan to cease to be exempt
from Section 16(b) of the Exchange Act) and (ii) authorize any one or more of
their number or any officer of the Corporation to execute and deliver documents
on behalf of the Committee.
Any determination made by the Committee or pursuant to delegated authority
pursuant to the provisions of the Plan with respect to any Award shall be made
in the sole discretion of the Committee or such delegate at the time of the
grant of the Award or, unless in contravention of any express term of the Plan,
at any time thereafter. All decisions made by the Committee or any appropriately
delegated officer pursuant to the provisions of the Plan shall be final and
binding on all persons, including the Corporation and Plan participants.
SECTION 3. COMMON STOCK SUBJECT TO PLAN
The total number of shares of Common Stock reserved and available for grant
under the Plan shall be 1,500,000. No participant may be granted Awards covering
in excess of 150,000 shares of Common Stock in any calendar year. Shares subject
to an Award under the Plan may be authorized and unissued shares or may be
treasury shares.
If any Stock Option (and related Stock Appreciation Right, if any)
terminates without being exercised, shares subject to such Awards shall again be
available for distribution in connection with Awards under the Plan.
In the event of any change in corporate capitalization, such as a stock
split or a corporate transaction, any merger, consolidation, separation,
including a spin-off, or other distribution of stock or property of the
Corporation, any reorganization (whether or not such reorganization comes within
the definition of such term in Section 368 of the Code) or any partial or
complete liquidation of the Corporation, the Committee or Board may make such
substitution or adjustments in the aggregate number and kind of shares reserved
for issuance under the Plan, in the number, kind and option price of shares
subject to outstanding Stock Options and Stock Appreciation Rights, in the
number and kind of shares subject to other outstanding Awards granted under the
Plan and/or such other equitable substitution or adjustments as it may determine
to be appropriate in its sole discretion; PROVIDED, HOWEVER, that the number of
shares subject to any Award shall always be a whole number. Such adjusted option
price shall also be used to determine the amount payable by the Corporation upon
the exercise of any Stock Appreciation Right associated with any Stock Option.
SECTION 4. ELIGIBILITY
Full-time (30 hours per week) officers and employees of the Corporation, its
subsidiaries and Affiliates who are responsible for or contribute to the
management, growth and profitability of the business of the
A-3
<PAGE>
Corporation, its subsidiaries and Affiliates are eligible to be granted Awards
under the Plan. No grant shall be made under this Plan to a director who is not
an officer or a salaried employee of the Corporation, its subsidiaries or
Affiliates.
SECTION 5. STOCK OPTIONS
Stock Options may be granted alone or in addition to other Awards granted
under the Plan and may be of two types: Incentive Stock Options and Nonqualified
Stock Options. Any Stock Option granted under the Plan shall be in such form as
the Committee may from time to time approve.
The Committee shall have the authority to grant any optionee Incentive Stock
Options, Nonqualified Stock Options or both types of Stock Options (in each case
with or without Stock Appreciation Rights); PROVIDED, HOWEVER, that grants
hereunder are subject to the aggregate limit on grants to individual
participants set forth in Section 3. Incentive Stock Options may be granted only
to employees of the Corporation and its subsidiaries (within the meaning of
Section 424(f) of the Code). To the extent that any Stock Option is not
designated as an Incentive Stock Option or even if so designated does not
qualify as an Incentive Stock Option, it shall constitute a Nonqualified Stock
Option.
Stock Options shall be evidenced by option agreements, the terms and
provisions of which may differ. An option agreement shall indicate on its face
whether it is intended to be an agreement for an Incentive Stock Option or a
Nonqualified Stock Option. The grant of a Stock Option shall occur on the date a
majority of the independent directors of the Corporation ratify by resolution
the Committee's recommendation with respect to the individuals to be
participants in any grant of a Stock Option, the number of shares of Common
Stock to be subject to such Stock Option to be granted to such individual and
specifies the terms and provisions of the Stock Option. The Corporation shall
notify a participant of any grant of a Stock Option, and a written option
agreement or agreements shall be duly executed and delivered by the Corporation
to the participant. Such agreement or agreements shall become effective upon
execution by the Corporation and the participant.
Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options shall be interpreted, amended or altered nor
shall any discretion or authority granted under the Plan be exercised so as to
disqualify the Plan under Section 422 of the Code or, without the consent of the
optionee affected, to disqualify any Incentive Stock Option under such Section
422.
Stock Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions as the
Committee shall deem desirable:
(a) OPTION PRICE. The option price per share of Common Stock purchasable
under a Stock Option shall be determined by the Committee and set
forth in the option agreement, and shall not be less than the Fair Market
Value of the Common Stock subject to the Stock Option on the date of grant.
(b) OPTION TERM. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more
than ten years after the date the Stock Option is granted.
(c) EXERCISABILITY. Except as otherwise provided herein, Stock Options
shall be exercisable at such time or times and subject to such terms
and conditions as shall be determined by the Committee. If the Committee
provides that any Stock Option is exercisable only in installments, the
Committee may at
A-4
<PAGE>
any time waive such installment exercise provisions, in whole or in part,
based on such factors as the Committee may determine. In addition, the
Committee may at any time accelerate the exercisability of any Stock Option.
(d) METHOD OF EXERCISE. Subject to the provisions of this Section 5,
Stock Options may be exercised, in whole or in part, at any time
during the option term by giving written notice of exercise to the
Corporation specifying the number of shares of Common Stock subject to the
Stock Option to be purchased.
Such notice shall be accompanied by payment in full of the purchase
price by certified or bank check or such other instrument as the Committee
may accept. Payment, in full or in part, may also be made in the form of
unrestricted Common Stock already owned by the optionee of the same class as
the Common Stock subject to the Stock Option (based on the Fair Market Value
of the Common Stock on the date the Stock Option is exercised).
Payment for any shares subject to a Stock Option may also be made by
delivering a properly executed exercise notice to the Corporation, together
with a copy of irrevocable instructions to a broker to deliver promptly to
the Corporation the amount of sale or loan proceeds to pay the purchase
price, and, if requested, by the amount of any federal, state, local or
foreign withholding taxes. To facilitate the foregoing, the Corporation may
enter into agreements for coordinated procedures with one or more brokerage
firms.
No shares of Common Stock shall be issued until full payment therefor
has been made. An optionee shall have all of the rights of a shareholder of
the Corporation holding the class or series of Common Stock that is subject
to such Stock Option (including, if applicable, the right to vote the shares
and the right to receive dividends), when the optionee has given written
notice of exercise, has paid in full for such shares and, if requested, has
given the representation described in Section 11(a).
(e) NONTRANSFERABILITY OF STOCK OPTIONS. No Stock Option shall be
transferable by the optionee other than (i) by will or by the laws of
descent and distribution; or (ii) in the case of a Nonqualified Stock
Option, pursuant to a qualified domestic relations order (as defined in the
Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder) whether directly or indirectly or by means
of a trust or partnership or otherwise, under the applicable option
agreement. All Stock Options shall be exercisable, subject to the terms of
this Plan, during the optionee's lifetime, only by the optionee or by the
guardian or legal representative of the optionee or, in the case of a
Nonqualified Stock Option, its alternative payee pursuant to such qualified
domestic relations order, it being understood that the terms "holder" and
"optionee" include the guardian and legal representative of the optionee
named in the option agreement and any person to whom an option is
transferred by will or the laws of descent and distribution or, in the case
of a Nonqualified Stock Option, pursuant to a qualified domestic relations
order.
(f) TERMINATION BY DEATH. Unless otherwise determined by the Committee,
if an optionee's employment terminates by reason of death, any Stock
Option held by such optionee may thereafter be exercised, to the extent then
exercisable, or on such accelerated basis as the Committee may determine,
for a period of one year (or such other period as the Committee may specify
in the option agreement) from the date of such death or until the expiration
of the stated term of such Stock Option, whichever period is the shorter.
A-5
<PAGE>
(g) TERMINATION BY REASON OF DISABILITY. Unless otherwise determined by
the Committee, if an optionee's employment terminates by reason of
Disability, any Stock Option held by such optionee may thereafter be
exercised by the optionee, to the extent it was exercisable at the time of
termination, or on such accelerated basis as the Committee may determine,
for a period of six months(or such other period as the Committee may specify
in the option agreement) from the date of such termination of employment or
until the expiration of the stated term of such Stock Option, whichever
period is the shorter; provided, however, that if the optionee dies within
such period, any unexercised Stock Option held by such optionee shall,
notwithstanding the expiration of such period, continue to be exercisable to
the extent to which it was exercisable at the time of death for a period of
12 months from the date of such death or until the expiration of the stated
term of such Stock Option, whichever period is the shorter. In the event of
termination of employment by reason of Disability, if an Incentive Stock
Option is exercised after the expiration of the exercise periods that apply
for purposes of Section 422 of the Code, such Stock Option will thereafter
be treated as a Nonqualified Stock Option.
(h) TERMINATION BY REASON OF RETIREMENT. Unless otherwise determined by
the Committee, if an optionee's employment terminates by reason of
Retirement, any Stock Option held by such optionee may thereafter be
exercised by the optionee, to the extent it was exercisable at the time of
such Retirement, or on such accelerated basis as the Committee may
determine, for a period of two years (or such other period as the Committee
may specify in the option agreement) from the date of such termination of
employment or until the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that if the optionee
dies within such period any unexercised Stock Option held by such optionee
shall, notwithstanding the expiration of such period, continue to be
exercisable to the extent to which it was exercisable at the time of death
for a period of 12 months from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter. In the event of termination of employment by reason of Retirement,
if an Incentive Stock Option is exercised after the expiration of the
exercise periods that apply for purposes of Section 422 of the Code, such
Stock Option will thereafter be treated as a Nonqualified Stock Option.
(i) OTHER TERMINATION. Unless otherwise determined by the Committee: (A)
if an optionee incurs a Termination of Employment, all Stock Options
held by such optionee shall thereupon terminate; and (B) if an optionee
incurs a Termination of Employment for any reason other than death,
Disability or Retirement, any Stock Option held by such optionee, to the
extent then exercisable, or on such accelerated basis as the Committee may
determine, may be exercised, with the consent of the Corporation, for the
lesser of three months from the date of such Termination of Employment or
the balance of such Stock Option's term; PROVIDED, HOWEVER, that if the
optionee dies within such three-month period, any unexercised Stock Option
held by such optionee shall, notwithstanding the expiration of such
three-month period, continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of 12 months from the date of
such death or until the expiration of the stated term of such Stock Option,
whichever period is the shorter. Notwithstanding the foregoing, if an
optionee incurs a Termination of Employment at or after a Change in Control
(as defined Section 7(b)), other than by reason of death, Disability or
Retirement, any Stock Option held by such optionee shall be exercisable for
the lesser of (1) six months and one day from the date of such Termination
of Employment, and (2) the balance of such Stock Option's term. In the event
of Termination of Employment, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of
Section 422 of the Code, such Stock Option will thereafter be treated as a
Nonqualified Stock Option.
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(j) CHANGE IN CONTROL CASH-OUT. Notwithstanding any other provision of
the Plan, during the 60-day period from and after a Change in Control
(the "Exercise Period"), unless the Committee shall determine otherwise at
the time of grant, an optionee shall have the right, whether or not the
Stock Option is fully exercisable and in lieu of the payment of the exercise
price for the shares of Common Stock being purchased under the Stock Option
and by giving notice to the Corporation, to elect (within the Exercise
Period) to surrender all or part of the Stock Option to the Corporation and
to receive cash, within 30 days of such notice, in an amount equal to the
amount by which the Change in Control Price per share of Common Stock on the
date of such election shall exceed the exercise price per share of Common
Stock under the Stock Option (the "Spread") multiplied by the number of
shares of Common Stock granted under the Stock Option as to which the right
granted under this Section 5(j) shall have been exercised; PROVIDED,
HOWEVER, that if the Change in Control is within six months of the date of
grant of a particular Stock Option held by an optionee who is an officer or
director of the Corporation and is subject to Section 16(b) of the Exchange
Act no such election shall be made by such optionee with respect to such
Stock Option prior to six months from the date of grant. However, if the end
of such 60-day period from and after a Change in Control is within six
months of the date of grant of a Stock Option held by an optionee who is an
officer or director of the Corporation and is subject to Section 16(b) of
the Exchange Act, such Stock Option shall be cancelled in exchange for a
cash payment to the optionee, effected on the day which is six months and
one day after the date of grant of such Option, equal to the Spread
multiplied by the number of shares of Common Stock granted under the Stock
Option. Notwithstanding the foregoing, if any right granted pursuant to this
Section 5(j) would make a Change in Control transaction ineligible for
pooling of interests accounting under APB No. 16 that but for this Section
5(j) would otherwise be eligible for such accounting treatment, the
Committee shall have the ability to substitute the cash payable pursuant to
this Section 5(j) with Stock with a Fair Market Value equal to the cash that
would otherwise be payable hereunder.
SECTION 6. STOCK APPRECIATION RIGHTS
(a)GRANT AND EXERCISE. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan.
In the case of a Nonqualified Stock Option, such rights may be granted either at
or after the time of grant of such Stock Option. In the case of an Incentive
Stock Option, such rights may be granted only at the time of grant of such Stock
Option. A Stock Appreciation Right shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option.
A Stock Appreciation Right may be exercised by an optionee in accordance
with Section 6(b) by surrendering the applicable portion of the related Stock
Option in accordance with procedures established by the Committee. Upon such
exercise and surrender, the optionee shall be entitled to receive an amount
determined in the manner prescribed in Section 6(b). Stock Options which have
been so surrendered shall no longer be exercisable to the extent the related
Stock Appreciation Rights have been exercised.
(b)TERMS AND CONDITIONS. Stock Appreciation Rights shall be subject to such
terms and conditions as shall be determined by the Committee, including
the following:
(i) Stock Appreciation Rights shall be exercisable only at such time or
times and to the extent that the Stock Options to which they relate are
exercisable in accordance with the provisions of Section 5 and this Section
6; PROVIDED, HOWEVER, that a Stock Appreciation Right shall not be
exercisable during the first six months of its term by an optionee who is
actually or potentially subject to Section 16(b) of the Exchange Act, except
that this limitation shall not apply in the event of death or Disability of
the optionee prior to the expiration of the six-month period.
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(ii) Upon the exercise of a Stock Appreciation Right, an optionee shall
be entitled to receive an amount in cash, shares of Common Stock or both,
equal in value to the excess of the Fair Market Value
of one share of Common Stock over the option price per share specified in
the related Stock Option multiplied by the number of shares in respect of
which the Stock Appreciation Right shall have been exercised, with the
Committee having the right to determine the form of payment.
In the case of Stock Appreciation Rights relating to Stock Options
held by optionees who are actually or potentially subject to Section
16(b) of the Exchange Act, the Committee:
(1) May require that such Stock Appreciation Rights be exercised
for cash only in accordance with the applicable "window period"
provisions of Rule 16b-3; and
(2) In the case of Stock Appreciation Rights relating to
Nonqualified Stock Options, may provide that the amount to be paid in
cash upon exercise of such Stock Appreciation Rights during a Rule
16b-3 "window period" shall be based on the highest of the daily
means between the highest and lowest reported sales prices of the
Common Stock on the New York Stock Exchange or other national
securities exchange on which the shares are listed or on NASDAQ, as
applicable, on any day during such "window period."
(iii) Stock Appreciation Rights shall be transferable only to permitted
transferees of the underlying Stock Option in accordance with Section 5(e).
(iv) Upon the exercise of a Stock Appreciation Right, the Stock Option
or part thereof to which such Stock Appreciation Right is related shall be
deemed to have been exercised for the purpose of the limitation set forth in
Section 3 on the number of shares of Common Stock to be issued under the
Plan, but only to the extent of the number of shares covered by the Stock
Appreciation Right at the time of exercise based on the value of the Stock
Appreciation Right at such time.
SECTION 7. CHANGE IN CONTROL PROVISIONS
(a)IMPACT OF EVENT. Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change in Control, any Stock Options and
Stock Appreciation Rights outstanding as of the date such Change in Control is
determined to have occurred, and which are not then exercisable and vested,
shall become fully exercisable and vested to the full extent of the original
grant; PROVIDED, HOWEVER, that in the case of the holder of Stock Appreciation
Rights who is actually subject to Section 16(b) of the Exchange Act, such Stock
Appreciation Rights shall have been outstanding for at least six months at the
date such Change in control is determined to have occurred.
(b)DEFINITION OF CHANGE IN CONTROL. For purposes of the Plan, a "Change in
Control" shall mean the happening of any of the following events:
(i) An acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of 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 (1) the then outstanding shares of
common stock of the Corporation (the "Outstanding Corporation Common Stock")
or (2) the combined voting power of the then outstanding voting securities
of the Corporation entitled to vote generally in the election of directors
(the "Outstanding Corporation Voting Securities")(a "Control Purchase");
excluding, however, the following: (1) Any acquisition directly from the
Corporation, other than an acquisition by virtue of the exercise of a
conversion privilege unless the security being so converted was itself
acquired directly from the Corporation, (2) Any acquisition by the
Corporation,
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(3) Any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any corporation controlled by
the Corporation, (4) Any acquisition by any corporation pursuant to a
transaction which complies with clauses (1), (2) and (3) of subsection (iii)
of this Section 7(b), or (5) Any acquisition by Barron Hilton, the
Charitable Remainder Unitrust created by Barron Hilton to receive shares
from the Estate of Conrad N. Hilton, or the Conrad N. Hilton Fund; or
(ii) A change in the composition of the Board such that the individuals
who, as of the effective date of the Plan, constitute the Board (such Board
shall be hereinafter referred to as the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board; PROVIDED, HOWEVER,
for purposes of this Section 7(b), that any individual who becomes a member
of the Board subsequent to the effective date of the Plan, whose election,
or nomination for election by the Corporation's shareholders, was approved
by a vote of at least a majority of those individuals who are members of the
Board and who were also members of the Incumbent Board (or deemed to be such
pursuant to this proviso) shall be considered as though such individual were
a member of the Incumbent Board; but, PROVIDED FURTHER, that any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual
or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board shall not be so considered as a member of the
Incumbent Board (a "Board Change"); or
(iii) The approval by the shareholders of the Corporation of a
reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of the Corporation ("Corporate
Transaction"); excluding however, such a Corporate Transaction pursuant to
which (1) all or substantially all of the individuals and entities who are
the beneficial owners, respectively, of the Outstanding Corporation Common
Stock and Outstanding Corporation Voting Securities immediately prior to
such Corporate Transaction will beneficially own, directly or indirectly,
more than 60% of, respectively, the 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 Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns the
Corporation or all or substantially all of the Corporation's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Corporation Common Stock and Outstanding
Corporation Voting Securities, as the case may be, (2) no Person (other than
the Corporation, any employee benefit plan (or related trust) of the
Corporation or such corporation resulting from such Corporate Transaction)
will beneficially own, directly or indirectly, 20% or more of, respectively,
the outstanding shares of common stock of the corporation resulting from
such Corporate Transaction or the combined voting power of the outstanding
voting securities of such corporation entitled to vote generally in the
election of directors except to the extent that such ownership existed prior
to the Corporate Transaction, and (3) individuals who were members of the
Incumbent Board will constitute at least a majority of the members of the
board of directors of the corporation resulting from such Corporate
Transaction; or
(iv) The approval by the stockholders of the Corporation of a complete
liquidation or dissolution of the Corporation.
(c)CHANGE IN CONTROL PRICE. For purposes of the Plan, "Change in Control
Price" means the higher of (i) the highest reported sales price, regular
way, of a share of Common Stock in any transaction reported on the New York
Stock Exchange Composite Tape or other national exchange on which such shares
are listed or
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on NASDAQ during the 60-day period prior to and including the date of a Change
in Control or (ii) if the Change in Control is the result of a tender or
exchange offer or a Corporate Transaction, the highest price per share of Common
Stock paid in such tender or exchange offer or Corporate Transaction; PROVIDED,
HOWEVER, that (x) in the case of a Stock Option which (A) is held by an optionee
who is an officer or director of the Corporation and is subject to Section 16(b)
of the Exchange Act and (B) was granted within 240 days of the Change in
Control, then the Change in Control Price for such Stock Option shall be the
Fair Market Value of the Common Stock on the date such Stock Option is exercised
or deemed exercised and (y) in the case of Incentive Stock Options and Stock
Appreciation Rights relating to Incentive Stock Options, the Change in Control
Price shall be in all cases the Fair Market Value of the Common Stock on the
date such Incentive Stock Option or Stock Appreciation Right is exercised. To
the extent that the consideration paid in any such transaction described above
consists all or in part of securities or other noncash consideration, the value
of such securities or other noncash consideration shall be determined in the
sole discretion of the Board.
SECTION 8. TERM, AMENDMENT AND TERMINATION
The Plan will terminate ten years after the effective date of the Plan.
Under the Plan, Awards outstanding as of such date shall not be affected or
impaired by the termination of the Plan.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would (i) impair the rights of
an optionee under a Stock Option or a recipient of a Stock Appreciation Right
theretofore granted without the optionee's or recipient's consent, except such
an amendment made to cause the Plan to qualify for the exemption provided by
Rule 16b-3, or (ii) disqualify the Plan from the exemption provided by Rule
16b-3. In addition, no such amendment shall be made without the approval of the
Corporation's shareholders to the extent such approval is required by law or
agreement.
The Committee may amend the terms of any Stock Option or other Award
theretofore granted, prospectively or retroactively, but no such amendment shall
impair the rights of any holder without the holder's consent except such an
amendment made to cause the Plan or Award to qualify for the exemption provided
by Rule 16b-3.
Subject to the above provisions, the Board shall have authority to amend the
Plan to take into account changes in law and tax and accounting rules as well as
other developments, and to grant Awards which qualify for beneficial treatment
under such rules without stockholder approval.
SECTION 9. UNFUNDED STATUS OF PLAN
It is presently intended that the Plan constitute an "unfunded" plan for
incentive and deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Common Stock or make payments; PROVIDED, HOWEVER, that unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
SECTION 10. GENERAL PROVISIONS
(a) The Committee may require each person purchasing or receiving shares
pursuant to an Award to represent to and agree with the Corporation in writing
that such person is acquiring the shares without a view to the distribution
thereof. The certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer.
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Notwithstanding any other provision of the Plan or agreements made pursuant
thereto, the Corporation shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock under the Plan prior to
fulfillment of all of the following conditions:
(1) Listing or approval for listing upon notice of issuance, of such
shares on the New York Stock Exchange, Inc., or such other securities
exchange as may at the time be the principal market for the Common Stock;
(2) Any registration or other qualification of such shares of the
Corporation under any state or federal law or regulation, or the maintaining
in effect of any such registration or other qualification which the
Committee shall, in its absolute discretion upon the advice of counsel, deem
necessary or advisable; and
(3) Obtaining any other consent, approval, or permit from any state or
federal governmental agency which the Committee shall, in its absolute
discretion after receiving the advice of counsel, determine to be necessary
or advisable.
(b) Nothing contained in the Plan shall prevent the Corporation or any
subsidiary or Affiliate from adopting other or additional compensation
arrangements for its employees.
(c) Adoption of the Plan shall not confer upon any employee any right to
continued employment, nor shall it interfere in any way with the right of the
Corporation or any subsidiary or Affiliate to terminate the employment of any
employee at any time.
(d) No later than the date as of which an amount first becomes includible in
the gross income of the participant for federal income tax purposes with respect
to any Award under the Plan, the participant shall pay to the Corporation, or
make arrangements satisfactory to the Committee regarding the payment of, any
federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the
Corporation, withholding obligations may be settled with Common Stock, including
Common Stock that is part of the Award that gives rise to the withholding
requirement. The obligations of the Corporation under the Plan shall be
conditional on such payment or arrangements, and the Corporation and its
Affiliates shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment otherwise due to the participant. The Committee may
establish such procedures as it deems appropriate, including making irrevocable
elections, for the settlement of withholding obligations with Common Stock.
(e) The Committee shall establish such procedures as it deems appropriate
for a participant to designate a beneficiary to whom any amounts payable in the
event of the participant's death are to be paid or by whom any rights of the
participant, after the participant's death, may be exercised.
(f) In the case of a grant of an Award to any employee of a subsidiary of
the Corporation, the Corporation may, if the Committee so directs, issue or
transfer the shares of Common Stock, if any, covered by the Award to the
subsidiary, for such lawful consideration as the Committee may specify, upon the
condition or understanding that the subsidiary will transfer the shares of
Common Stock to the employee in accordance with the terms of the Award specified
by the Committee pursuant to the provisions of the Plan.
(g) The Plan and all Awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware,
without reference to principles of conflict of laws.
SECTION 11. EFFECTIVE DATE OF PLAN
The Plan shall be effective as of January 18, 1996, provided that it is
approved and adopted by at least a majority of the shares voted of Common Stock
of the Corporation within 12 months after such date.
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EXHIBIT B
HILTON HOTELS CORPORATION
1996 CHIEF EXECUTIVE STOCK INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS
The purpose of the Plan is to give the Corporation a competitive advantage
by attracting, retaining and motivating a Chief Executive Officer ("CEO") and to
link the CEO's interests more directly to the profitability of the Corporation's
businesses and increases in shareholder value.
For purposes of the Plan, the following terms are defined as set forth
below:
a. "AFFILIATE" means a corporation or other entity controlled by the
Corporation and designated by the Committee from time to time as
such.
b. "BOARD" means the Board of Directors of the Corporation.
c. "CHANGE OF CONTROL" and "CHANGE OF CONTROL PRICE" have the meanings
set forth in Sections 6(b) and (c), respectively.
d. "CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
e. "COMMISSION" means the Securities and Exchange Commission or any
successor agency.
f. "COMMITTEE" means the Committee referred to in Section 2.
g. "COMMON STOCK" means common stock, par value $2.50 per share, of the
Corporation.
h. "CORPORATION" means Hilton Hotels Corporation, a Delaware
corporation.
i. "DISABILITY" means permanent and total disability as determined under
procedures established by the Committee for purposes of the Plan.
j. "DISINTERESTED PERSON" means a member of the Board who qualifies as a
disinterested person as defined in Rule 16b-3(c)(2), as promulgated
by the Commission under the Exchange Act, or any successor definition
adopted by the Commission.
k. "EMPLOYMENT AGREEMENT" means the Employment Agreement by and between
Hilton Hotels Corporation and Stephen F. Bollenbach dated as of the
1st day of February 1996.
l. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
m. "FAIR MARKET VALUE" means, except as provided in Section 5(g), as of
any given date, the mean between the highest and lowest reported
sales prices of the Common Stock on the New York Stock Exchange Composite
Tape or, if not listed on such exchange, on any other national securities
exchange on which the Common Stock is listed or on NASDAQ. If there is no
regular public trading market for such Common Stock, the Fair Market Value
of the Common Stock shall be determined by the Committee in good faith.
n. "PLAN" means the Hilton Hotels Corporation 1996 Chief Executive Stock
Incentive Plan, as set forth herein and as hereinafter amended from
time to time.
o. "RULE 16B-3" means Rule 16b-3, as promulgated by the Commission under
Section 16(b) of the Exchange Act, as amended from time to time.
<PAGE>
p. "STOCK OPTION" means an option granted under Section 5.
q. "TERMINATION OF EMPLOYMENT" means the termination of the CEO's
employment with the Corporation and any subsidiary or Affiliate.
Temporary absences from employment because of illness, vacation or leave of
absence shall not be considered Terminations of Employment.
In addition, certain other terms used herein have definitions given to them
in the first place in which they are used.
SECTION 2. ADMINISTRATION
The Plan shall be administered by the Stock Option Committee or such other
committee of the Board as the Board may from time to time designate (the
"Committee"), which shall be composed of not less than two Disinterested
Persons, each of whom shall be an "outside director" for purposes of Section
162(m)(4) of the Code, and shall be appointed by and serve at the pleasure of
the Board.
The Committee shall have plenary authority to grant Stock Options pursuant
to the terms of the Plan to the CEO.
Among other things, the Committee shall have the authority, subject to the
terms of the Plan, to:
(a) Recommend to the Board of Directors whether and to what extent Stock
Options are to be granted hereunder;
(b) Determine the number of shares of Common Stock to be covered by each
Stock Option granted hereunder;
(c) Determine the terms and conditions of any Stock Option granted
hereunder (including, but not limited to, the option price (subject to
Section 5(a)), any vesting condition, restriction or limitation (which may
be related to the performance of the optionee or the Corporation) and any
vesting acceleration or forfeiture waiver regarding any Stock Option and the
shares of Common Stock relating thereto, based on such factors as the
Committee shall determine;
(d) Modify, amend or adjust the terms and conditions of any Stock
Option, at any time or from time to time; and
(e) Determine to what extent and under what circumstances Common Stock
and other amounts payable with respect to a Stock Option shall be deferred.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms and provisions of the
Plan and any Stock Option issued under the Plan (and any agreement relating
thereto) and to otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in office,
except that the members thereof may (i) delegate to an officer of the
Corporation the authority to make decisions pursuant to paragraphs (c) and (f)
of Section 5 (provided that no such delegation may be made that would cause
Stock Options or other transactions under the Plan to cease to be exempt from
Section 16(b) of the Exchange Act) and (ii) authorize any one or more of their
number or any officer of the Corporation to execute and deliver documents on
behalf of the Committee.
Any determination made by the Committee or pursuant to delegated authority
pursuant to the provisions of the Plan with respect to any Stock Option shall be
made in the sole discretion of the Committee or
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such delegate at the time of the grant of the Stock Option or, unless in
contravention of any express term of the Plan, at any time thereafter. All
decisions made by the Committee or any appropriately delegated officer pursuant
to the provisions of the Plan shall be final and binding on all persons,
including the Corporation and the CEO.
SECTION 3. COMMON STOCK SUBJECT TO PLAN
The total number of shares of Common Stock reserved and available for grant
under the Plan shall be 1,500,000. The CEO may not be granted Stock Options
covering in excess of 1,500,000 shares of Common Stock in any calendar year.
Shares subject to a Stock Option under the Plan may be authorized and unissued
shares or may be treasury shares.
If any Stock Option terminates without being exercised, shares subject to
such Stock Option shall again be available for distribution in connection with
Stock Options under the Plan.
In the event of any change in corporate capitalization, such as a stock
split or a corporate transaction, any merger, consolidation, separation,
including a spin-off, or other distribution of stock or property of the
Corporation, any reorganization (whether or not such reorganization comes within
the definition of such term in Section 368 of the Code) or any partial or
complete liquidation of the Corporation, the Committee or Board may make such
substitution or adjustments in the aggregate number and kind of shares reserved
for issuance under the Plan, in the number, kind and option price of shares
subject to outstanding Stock Options, in the number and kind of shares subject
to other outstanding Stock Options granted under the Plan and/or such other
equitable substitution or adjustments as it may determine to be appropriate in
its sole discretion; PROVIDED, HOWEVER, that the number of shares subject to any
Stock Option shall always be a whole number.
SECTION 4. ELIGIBILITY
Only the CEO is eligible to be granted Stock Options under the Plan.
SECTION 5. STOCK OPTIONS
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
The Committee shall have the authority to grant the CEO Stock Options,
PROVIDED, HOWEVER, that grants hereunder are subject to the aggregate annual
limit on grants set forth in Section 3. Stock Options shall be evidenced by
option agreements, the form, terms and provisions of which may differ. The grant
of a Stock Option shall occur on the date (the "Grant Date") a majority of the
independent directors of the Corporation ratify by resolution the Committee's
recommendation with respect to the numbers of shares of Common Stock to be
subject to such Stock Option and the terms and provisions of the Stock Option.
Unless the Committee shall determine otherwise, Stock Options granted under
the Plan shall be subject to the following terms and conditions and shall
contain such additional terms and conditions as the Committee shall deem
desirable:
(a) OPTION PRICE. The option price per share of Common Stock purchasable
under a Stock Option shall be determined by the Committee and set
forth in the Employment Agreement.
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(b) OPTION TERM. The term of each Stock Option shall be fixed by the
Committee.
(c) EXERCISABILITY. Except as otherwise provided herein, Stock Options
shall be exercisable at such time or times and subject to such terms
and conditions as shall be determined by the Committee. If the Committee
provides that any Stock Option is exercisable only in installments, the
Committee may at any time waive such installment exercise provisions, in
whole or in part, based on such factors as the Committee may determine. In
addition, the Committee may at any time accelerate the exercisability of any
Stock Option.
(d) METHOD OF EXERCISE. Subject to the provisions of this Section 5,
Stock Options may be exercised, in whole or in part, at any time
during the option term by giving written notice of exercise to the
Corporation specifying the number of shares of Common Stock subject to the
Stock Option to be purchased.
Such notice shall be accompanied by payment in full of the purchase
price by certified or bank check or such other instrument as the Committee
may accept. If approved by the Committee, payment, in full or in part, may
also be made in the form of unrestricted Common Stock already owned by the
optionee of the same class as the Common Stock subject to the Stock Option
(based on the Fair Market Value of the Common Stock on the date the Stock
Option is exercised).
Payment for any shares subject to a Stock Option may also be made by
delivering a properly executed exercise notice to the Corporation, together
with a copy of irrevocable instructions to a broker to deliver promptly to
the Corporation the amount of sale or loan proceeds to pay the purchase
price, and, if requested, by the amount of any federal, state, local or
foreign withholding taxes. To facilitate the foregoing, the Corporation may
enter into agreements for coordinated procedures with one or more brokerage
firms.
No shares of Common Stock shall be issued until full payment therefor
has been made. The optionee shall have all of the rights of a shareholder of
the Corporation holding the class or series of Common Stock that is subject
to such Stock Option (including, if applicable, the right to vote the shares
and the right to receive dividends), when the optionee has given written
notice of exercise and has paid in full for such shares.
(e) NONTRANSFERABILITY OF STOCK OPTIONS. No Stock Option shall be
transferable by the optionee other than (i) by will or by the laws of
descent and distribution; or (ii) pursuant to a qualified domestic relations
order (as defined in the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended. All Stock Options shall be exercisable,
subject to the terms of this Plan, during the optionee's lifetime, only by
the optionee or by the guardian or legal representative of the optionee or
its alternative payee pursuant to such qualified domestic relations order,
it being understood that the terms "holder" and "optionee" include the
guardian and legal representative of the optionee and any person to whom an
option is transferred by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order.
(f) TERMINATION. Unless otherwise determined by the Committee and
subject to the terms of the Employment Agreement, if the optionee's
employment terminates for any reason prior to the fifth anniversary of the
Grant Date, any Stock Option held by the optionee, to the extent such option
has become exercisable on or before the date of such termination (including
without limitation, any portion that becomes exercisable because of such
termination) shall remain exercisable until the earlier to occur of (x) the
first anniversary of such date of termination or (y) the fifth anniversary
of the Grant Date.
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(g) CASHING OUT OF STOCK OPTION. On receipt of written notice of
exercise, the Committee may elect to cash out all or part of the
portion of the shares of Common Stock for which a Stock Option is being
exercised by paying the optionee an amount, in cash or Common Stock, equal
to the excess of the Fair Market Value of the Common Stock over the option
price times the number of shares of Common Stock for which the Option is
being exercised on the effective date of such cash-out.
Cash-outs pursuant to this Section 5(g) shall comply with the "window
period" provisions of Rule 16b-3, to the extent applicable, and the
Committee may determine Fair Market Value based on the highest and lowest
reported sales prices of the Common Stock on the New York Stock Exchange or
other national securities exchange on which the shares are listed or on
NASDAQ, as applicable, on any day during such "window period".
(h) CHANGE OF CONTROL CASH-OUT. The Committee may, but need not,
determine at the time of grant that, during the 60-day period from
and after a Change of Control (the "Exercise Period"), the optionee shall
have the right, whether or not the Stock Option is fully exercisable and in
lieu of the payment of the exercise price for the shares of Common Stock
being purchased under the Stock Option and by giving notice to the
Corporation, to elect (within the Exercise Period) to surrender all or part
of the Stock Option to the Corporation and to receive cash, within 30 days
of such notice, in an amount equal to the amount by which the Change of
Control Price per share of Common Stock on the date of such election shall
exceed the exercise price per share of Common Stock under the Stock Option
(the "Spread") multiplied by the number of shares of Common Stock granted
under the Stock Option as to which the right granted under this Section 5(h)
shall have been exercised; PROVIDED, HOWEVER, that if the Change of Control
is within six months of the date of grant of a particular Stock Option, no
such election shall be made by the optionee with respect to such Stock
Option prior to six months from the date of grant. However, if the end of
such 60-day period from and after a Change of Control is within six months
of the date of grant of a Stock Option, such Stock Option shall be canceled
in exchange for a cash payment to the optionee, effected on the day which is
six months and one day after the date of grant of such Option, equal to the
Spread multiplied by the number of shares of Common Stock granted under the
Stock Option. Notwithstanding the foregoing, if any right granted pursuant
to this Section 5(h) would make a Change of Control transaction ineligible
for pooling of interests accounting under APB No. 16 that but for this
Section 5(h) would otherwise be eligible for such accounting treatment, the
Committee shall have the ability to substitute the cash payable pursuant to
this Section 5(h) with Stock with a Fair Market Value equal to the cash that
would otherwise be payable hereunder.
SECTION 6. CHANGE OF CONTROL PROVISIONS
(a)IMPACT OF EVENT. Notwithstanding any other provision of the Plan to the
contrary, unless the Committee shall determine otherwise, in the event of
a Change of Control, any Stock Options outstanding as of the date such Change of
Control is determined to have occurred, and which are not then exercisable and
vested, shall become fully exercisable and vested to the full extent of the
original grant.
(b)DEFINITION OF CHANGE OF CONTROL. For purposes of the Plan, a "Change of
Control" shall mean the happening of any of the following events:
(i) An acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of 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 (1) the then outstanding shares of
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<PAGE>
common stock of the Corporation (the "Outstanding Corporation Common Stock")
or (2) the combined voting power of the then outstanding voting securities
of the Corporation entitled to vote generally in the election of directors
(the "Outstanding Corporation Voting Securities")(a "Control Purchase");
excluding, however, the following: (1) Any acquisition directly from the
Corporation, other than an acquisition by virtue of the exercise of a
conversion privilege unless the security being so converted was itself
acquired directly from the Corporation, (2) Any acquisition by the
Corporation, (3) Any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any corporation
controlled by the Corporation, (4) Any acquisition by any corporation
pursuant to a transaction which complies with clauses (1), (2) and (3) of
subsection (iii) of this Section 6(b), or (5) Any acquisition by Barron
Hilton, the Charitable Remainder Unitrust created by Barron Hilton to
receive shares from the Estate of Conrad N. Hilton, or the Conrad N. Hilton
Fund (together, the "Hilton Interests"); or
(ii) A change in the composition of the Board such that the individuals
who, as of the effective date of the Plan, constitute the Board (such Board
shall be herein after referred to as the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board; PROVIDED, HOWEVER,
for purposes of this Section 6(b), that any individual who becomes a member
of the Board subsequent to the effective date of the Plan, whose election,
or nomination for election by the Corporation's shareholders, was approved
by a vote of at least a majority of those individuals who are members of the
Board and who were also members of the Incumbent Board (or deemed to be such
pursuant to this proviso) shall be considered as though such individual were
a member of the Incumbent Board; but, PROVIDED FURTHER, that any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual
or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board shall not be so considered as a member of the
Incumbent Board (a "Board Change"); or
(iii) The approval by the shareholders of the Corporation of a
reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of the Corporation ("Corporate
Transaction"); excluding however, such a Corporate Transaction pursuant to
which (1) all or substantially all of the individuals and entities who are
the beneficial owners, respectively, of the Outstanding Corporation Common
Stock and Outstanding Corporation Voting Securities immediately prior to
such Corporate Transaction will beneficially own, directly or indirectly,
more than 50% of, respectively, the 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 Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns the
Corporation or all or substantially all of the Corporation's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Corporation Common Stock and Outstanding
Corporation Voting Securities, as the case may be, (2) no Person (other than
the Hilton Interests, the Corporation, any employee benefit plan (or related
trust) of the Corporation or such corporation resulting from such Corporate
Transaction) will beneficially own, directly or indirectly, 20% or more of,
respectively, the outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the combined voting power of
the outstanding voting securities of such corporation entitled to vote
generally in the election of directors except to the extent that such
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<PAGE>
ownership existed prior to the Corporate Transaction, and (3) individuals
who were members of the Incumbent Board will constitute at least a majority
of the members of the board of directors of the corporation resulting from
such Corporate Transaction; or
(iv) The approval by the stockholders of the Corporation of a complete
liquidation or dissolution of the Corporation.
(c)CHANGE OF CONTROL PRICE. For purposes of the Plan, "Change of Control
Price" means the higher of (i) the highest reported sales price, regular
way, of a share of Common Stock in any transaction reported on the New York
Stock Exchange Composite Tape or other national exchange on which such shares
are listed or on NASDAQ during the 60-day period prior to and including the date
of a Change of Control or (ii) if the Change of Control is the result of a
tender or exchange offer or a Corporate Transaction, the highest price per share
of Common Stock paid in such tender or exchange offer or Corporate Transaction;
PROVIDED, HOWEVER, that in the case of a Stock Option which (A) is held by an
optionee who is an officer or director of the Corporation and is subject to
Section 16(b) of the Exchange Act and (B) was granted within 240 days of the
Change of Control, then the Change of Control Price for such Stock Option shall
be the Fair Market Value of the Common Stock on the date such Stock Option is
exercised or deemed exercised. To the extent that the consideration paid in any
such transaction described above consists all or in part of securities or other
noncash consideration, the value of such securities or other noncash
consideration shall be determined in the sole discretion of the Board.
SECTION 7. TERM, AMENDMENT AND TERMINATION
The Plan will terminate five years after the effective date of the Plan.
Under the Plan, Stock Options outstanding as of such date shall not be affected
or impaired by the termination of the Plan.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would (i) impair the rights of
the optionee under a Stock Option theretofore granted without the optionee's
consent, except such an amendment made to cause the Plan to qualify for the
exemption provided by Rule 16b-3, or (ii) disqualify the Plan from the exemption
provided by Rule 16b-3. In addition, no such amendment shall be made without the
approval of the Corporation's shareholders to the extent such approval is
required by law or agreement.
The Committee may amend the terms of any Stock Option theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
the holder without the holder's consent except such an amendment made to cause
the Plan or Stock Option to qualify for the exemption provided by Rule 16b-3.
Subject to the above provisions, the Board shall have authority to amend the
Plan to take into account changes in law and tax and accounting rules as well as
other developments, and to grant Stock Options which qualify for beneficial
treatment under such rules without stockholder approval.
SECTION 8. UNFUNDED STATUS OF PLAN
It is presently intended that the Plan constitute an "unfunded" plan for
incentive and deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Common Stock or make payments; PROVIDED, HOWEVER, that unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
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<PAGE>
SECTION 9. GENERAL PROVISIONS
(a) Notwithstanding any other provision of the Plan or agreements made
pursuant thereto, the Corporation shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock under the Plan prior to
fulfillment of all of the following conditions:
(1) Listing or approval for listing upon notice of issuance, of such
shares on the New York Stock Exchange, Inc., or such other securities
exchange as may at the time be the principal market for the Common Stock;
(2) Any registration or other qualification of such shares of the
Corporation under any state or federal law or regulation, or the maintaining
in effect of any such registration or other qualification which the
Committee shall, in its absolute discretion upon the advice of counsel, deem
necessary or advisable; and
(3) Obtaining any other consent, approval, or permit from any state or
federal governmental agency which the Committee shall, in its absolute
discretion after receiving the advice of counsel, determine to be necessary
or advisable.
(b) Nothing contained in the Plan shall prevent the Corporation or any
subsidiary or Affiliate from adopting other or additional compensation
arrangements for its employees.
(c) Adoption of the Plan shall not confer upon the CEO any right to
continued employment, nor shall it interfere in any way with the right of the
Corporation or any subsidiary or Affiliate to terminate the employment of the
CEO at any time.
(d) No later than the date as of which an amount first becomes includible in
the gross income of the CEO for federal income tax purposes with respect to any
Stock Option under the Plan, the CEO shall pay to the Corporation, or make
arrangements satisfactory to the Committee regarding the payment of, any
federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the
Corporation, withholding obligations may be settled with Common Stock, including
Common Stock that is part of the Stock Option that gives rise to the withholding
requirement. The obligations of the Corporation under the Plan shall be
conditional on such payment or arrangements, and the Corporation and its
Affiliates shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment otherwise due to the optionee. The Committee may
establish such procedures as it deems appropriate, including making irrevocable
elections, for the settlement of withholding obligations with Common Stock.
(e) The Committee shall establish such procedures as it deems appropriate
for the CEO to designate a beneficiary to whom any amounts payable in the event
of the CEO's death are to be paid or by whom any rights of the CEO, after the
CEO's death, may be exercised.
(f) The Plan and all Stock Options made and actions taken thereunder shall
be governed by and construed in accordance with the laws of the State of
Delaware, without reference to principles of conflict of laws.
SECTION 10. EFFECTIVE DATE OF PLAN
The Plan shall be effective as of February 1, 1996, provided that it is
approved and adopted by at least a majority of the shares of Common Stock of the
Corporation voting at its annual meeting scheduled to be held on May 9, 1996.
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Exhibit 4.2
- --------------------------------------------------------------------------------
NOTICE OF GRANT OF STOCK OPTIONS HILTON HOTELS CORPORATION
AND GRANT AGREEMENT ID: 36-2058176
9336 Civic Center Drive
Post Office Box 5567
Beverly Hills, CA 90210
- --------------------------------------------------------------------------------
STEPHEN F. BOLLENBACH
HILTON HOTELS CORPORATION
9336 CIVIC CENTER DRIVE
BEVERLY HILLS CA 90210
ID: ###-##-####
You have been granted options to buy HILTON HOTELS CORPORATION common stock as
follows:
Non-Qualified Stock Option Grant No. L-4484
Date of Grant 01/30/96
Stock Option Plan 96CE
Option Price per Share $74.6875
Total Number of Shares Granted 1,500,000
Total Price of Shares Granted $112,031,250.00
- --------------------------------------------------------------------------------
By your signature and HILTON's signature below, you and HILTON agree
that these options are granted under and governed by the terms and
conditions of HILTON's Stock Option Plans, as amended, all of which
are attached and made a part of this document.
- --------------------------------------------------------------------------------
- -------------------------------------------------- -------------------------
For HILTON HOTELS CORPORATION Date
- -------------------------------------------------- -------------------------
Optionee Date
<PAGE>
EXHIBIT 5.1
LAW OFFICES
NEAL GERBER & EISENBERG
TWO NORTH LA SALLE STREET
CHICAGO, ILLINOIS 60602
TELEPHONE FACSIMILE
(312) 269-8000 (312) 269-1747
May 20, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: HILTON HOTELS CORPORATION
REGISTRATION STATEMENT ON FORM S-8
----------------------------------
Ladies and Gentlemen:
We are counsel to Hilton Hotels Corporation, a Delaware corporation (the
"Company"), and in such capacity we have assisted in the preparation and
filing with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Act"), of the Company's Registration Statement on
Form S-8 (the "Registration Statement") relating to 3,000,000 shares of the
Company's common stock, par value $2.50 per share (the "Common Stock"), to
be issued from time to time upon the exercise of options granted and to be
granted, pursuant to each of the Company's 1996 Stock Incentive Plan and the
1996 Chief Executive Stock Incentive Plan (together the "Plans").
As such counsel, we have examined the Plans, the Company's Restated
Certificate of Incorporation, as amended, the Company's By-laws, as amended,
the minute book of the Company and such other papers, documents and
certificates of public officials and certificates of officers of the Company
as we have deemed relevant and necessary as the basis for the opinions
hereinafter expressed. In such examinations, we have assumed the genuineness
of all signatures and the authenticity of all documents submitted to us as
originals and the conformity to original documents of all documents submitted
to us as conformed or photostatic copies.
Based on the foregoing, we are of the opinion that:
1. The issuance from time to time by the Company of up to
3,000,000 shares of Common Stock upon the exercise of options granted
and to be granted pursuant to the Plans as
<PAGE>
Securities and Exchange Commission
May 20, 1996
Page 2
described in the prospectuses to be delivered to participants in the
respective Plans (the "Prospectuses") has been duly and validly authorized
by all necessary corporate action on the part of the Company.
2. When issued and paid for as described in the respective
Prospectuses and in accordance with the respective Plans, the 3,000,000
shares available for issuance under the Plans will be duly and validly
issued and outstanding, fully paid and non-assessable shares of Common
Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Interests of Named Experts and Counsel" in Item 5 of Part II of the
Registration Statement.
The opinions expressed above are limited to the laws of the State of
Illinois, the General Corporation of Law of the State of Delaware and the
federal laws of the United States, and are limited to the specific legal
matters expressly addressed herein. No opinion is expressed with respect to
the laws of any other jurisdiction or any legal matter not addressed herein.
Very truly yours,
/s/ NEAL, GERBER & EISENBERG
------------------------
NEAL, GERBER & EISENBERG
<PAGE>
Exhibit 23.1
ARTHUR ANDERSEN LLP
As independent public accountants, we hereby consent to the incorporation by
reference in the Preliminary Prospectus on Form S-8 registration statement of
our reports dated February 1, 1996 included or incorporated by reference in
Hilton Hotels Corporation's Form 10-K for the year ended December 31, 1995.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Los Angeles, California
May 21, 1995
