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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 5)*
HILTON HOTELS CORPORATION
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $2.50 PER SHARE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
4329 48 10 9
- --------------------------------------------------------------------------------
(CUSIP Number)
PETER F. ZIEGLER, GIBSON, DUNN & CRUTCHER LLP, 333 SOUTH GRAND AVENUE, LOS
ANGELES, California 90071
- --------------------------------------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS)
April 2, 1998
- --------------------------------------------------------------------------------
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement / /. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such
class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
- --------------------------------------------------------------------------------
CUSIP No. 4328 48 10 9 Page 2 of Pages
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WILLIAM BARRON HILTON
SSN ###-##-####
- --------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a / /
(b / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 46,946,838
-------------------------------------------------------
BENEFICIALLY
8 SHARED VOTING POWER
OWNED BY
16,498,736 (Reporting Person disclaims
EACH beneficial ownership as to these shares.)
-------------------------------------------------------
REPORTING
9 SOLE DISPOSITIVE POWER
PERSON
46,946,838
WITH -------------------------------------------------------
10 SHARED DISPOSITIVE POWER
16,498,736 (Reporting Person disclaims
Beneficial ownership as to these shares.)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
63,445,574 (Reporting Person disclaims beneficial ownership as to
16,498,838 of these shares.)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
25.7
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 of
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This statement relates to the Common Stock, par value $2.50 per share
(the "Common Stock"), of Hilton Hotels Corporation (the "Company"). The address
of the principal executive offices of the Company is 9336 Civic Center Drive,
Beverly Hills, California 90209. This Amendment No. 5 is intended to amend,
restate and supersede the Schedule 13D filed by William Barron Hilton on or
about January 15, 1979, as heretofore amended. All references to number of
shares of Common Stock herein have been adjusted for stock splits, the most
recent of which was a 4 for 1 stock split effected on September 19, 1996.
ITEM 2. IDENTITY AND BACKGROUND.
The person filing this statement is William Barron Hilton ("Barron
Hilton"). His business address is 9336 Civic Center Drive, Beverly Hills,
California 90209. His present principal occupation is that of Chairman of the
Board of the Company which is primarily engaged in the ownership and management
of hotels and hotel casinos in the United States of America and in foreign
countries. Its address is stated under Item 1 above.
Barron Hilton has never been convicted in a criminal proceeding (as
defined in Schedule 13D to exclude traffic violations or similar misdemeanors)
and has never been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction as a result of which he was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Barron Hilton is a citizen of the United States of America.
<PAGE>
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As is more fully described under Item 5, the acquisition of beneficial
interest in the Common Stock to which this Schedule 13D, as amended, relates,
does not constitute a purchase and is not expected to result in a purchase.
Initially, such acquisition occurred upon the death of Conrad Nicholson Hilton
under whose Last Will and Testament (the "Will") Barron Hilton had and exercised
an option to purchase shares of the Common Stock in the decedent's Estate.
Subsequently, Barron Hilton became co-special administrator and later
co-executor of the Estate, sharing voting and dispositive powers over the shares
of the Common Stock owned by the Estate while serving in those capacities.
Disputes ensued over the number of shares of Common Stock that were subject to
the option. The parties settled those disputes and, under the terms of the
First Amended Settlement Agreement described in Item 5, in lieu of making any
payment in exercise of the option to purchase shares from the Estate, Barron
Hilton on May 8, 1989 received 16,216,584 shares of the aggregate shares of
Common Stock in the Estate outright and 24,000,000 of such shares in a
charitable remainder unitrust, and the remaining 14,041,728 of such shares were
distributed to the Conrad W. Hilton Foundation (the "Foundation") of which
Barron Hilton is one of eleven directors, sharing voting and dispositive powers
over the Foundation's shares with its other directors (however, Barron Hilton
disclaims beneficial ownership of the shares of Common Stock owned by the
Foundation).
ITEM 4. PURPOSE OF TRANSACTION.
(a) DISPOSITION OF SHARES HELD BY THE TRUST.
On April 2, 1998, the Company filed a Form S-3 Registration Statement
with respect to the sale from time to time by that certain charitable remainder
unitrust u/d/t May 8, 1989 (the "Trust"), of which Barron Hilton is sole
trustee, of up to 24,000,000 shares of
2
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Common Stock which represent the entire holdings of the Trust at the date
hereof. The net proceeds from the sale of any of the shares of Common Stock
will be reinvested by the Trust. As more fully described in Item 5 below,
Barron Hilton is entitled to 60% and the Foundation 40% of the Trust's annual
income and the principal of the Trust will be distributed to the Foundation on
Barron Hilton's death, but not before the Trust's 20th anniversary in 2009. In
deciding to sell the shares of Common Stock held by the Trust, Barron Hilton, as
trustee of the Trust, has concluded that it would be prudent as a trust
fiduciary to diversify the assets of the Trust well in advance of their
distribution to the Foundation so that the ultimate distribution to the
Foundation would not cause further concentration of the Foundation's holdings of
shares of Common Stock and to generate higher current income for the Trust. The
Foundation currently owns 16,498,736 shares of Common Stock or approximately
6.7% of the shares of Common Stock outstanding.* Barron Hilton does not intend
to dispose of any of his personal holdings of shares of Common Stock which
aggregate to 22,946,838 shares, or approximately 9.3% of the shares outstanding.
(b) ACQUISITION OF SHARES FROM THE ESTATE.
Barron Hilton's purposes in originally acquiring shares of the Common
Stock held in the Estate of Conrad Nicholson Hilton, or beneficial interest (as
defined in Rule 13d-3) in such shares, was (1) to increase his holdings of
shares of the Common Stock, (2) to fulfill his obligations as a co-executor of
the Estate with respect to such shares, (3) to fulfill his obligations as a
director of the Foundation to which the residuum of the Estate is to be
distributed, (4) to
- -------------------
* All percentages of shares outstanding are based on 246,507,045 shares of
Common Stock outstanding at March 12, 1998 as reported in the Company's Form
10-K for its fiscal year ended December 31, 1997.
3
<PAGE>
carry out the intent of Conrad Nicholson Hilton as set forth
in his Will, and (5) to effect a good faith compromise and settlement of the
disputes regarding the exercise of his option under the Will.
(c) Other than as disclosed in the filings of the Company with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended, including the information set forth under the caption "General
Information -- Recent Developments -- Potential Spin-off or Business
Combination," in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 (as such information may be supplemented, amended or
superseded after the date hereof pursuant to other filings by the Company),
and in the filings of the Company with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, Barron Hilton presently has
no plans or proposals which relate to or would result in:
(i) his acquisition of additional securities of the Company,
or his disposition of any securities of the Company, except as otherwise
described immediately above in the Item 4;
(ii) an extraordinary corporate transaction, such as a merger,
reorganization, spin-off or liquidation, involving the Company or any of
its subsidiaries;
(iii) a sale or transfer of a material amount of assets of the
Company or any of its subsidiaries;
(iv) any change in the present Board of Directors or management
of the Company, including any plans or proposals to change the number or
term of directors or to fill any existing vacancies on the Board of
Directors, other than as may be recommended from time to time by the
Nominating Committee of the Board of Directors;
(v) any material change in the present capitalization or
dividend policy of the Company;
(vi) any other material change in the Company's business or
corporate structure;
4
<PAGE>
(vii) changes in the Company's charter, by-laws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any person;
(viii) causing a class of securities of the Company to be
delisted from a national securities exchange or to cease to be authorized
to be quoted in an inter-dealer quotation system of a registered national
securities association;
(ix) a class of equity securities of the Company becoming
eligible for termination of registration pursuant to Section 12(g)(4) of
the Securities Exchange Act of 1934; or
(x) any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) SHARES DIRECTLY OWNED BY BARRON HILTON.
Barron Hilton is the record and beneficial owner (through revocable
community property and separate property trusts) of an aggregate of 22,946,838
shares of the Common Stock, representing approximately 9.3% of the shares of
Common Stock outstanding, which includes as discussed below 248,064 shares of
Common Stock distributed to him by the Estate on October 16, 1980 in accordance
with a specific bequest and 16,216,584 shares of Common Stock distributed on
May 8, 1989 pursuant to the terms of the First Amended Settlement Agreement.
Barron Hilton has the sole power to vote and to dispose of such 22,946,838
shares, and no person other than Barron Hilton has the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale of,
such shares.
5
<PAGE>
(b) SHARES OWNED BY THE ESTATE.
Conrad Nicholson Hilton, the father of Barron Hilton, died on January
3, 1979. On the date of death, the Estate of Conrad Nicholson Hilton (the
"Estate") became the beneficial owner of an aggregate of 54,605,600 shares of
Common Stock, representing approximately 28% of the total number of such shares
outstanding on December 31, 1978.
The Last Will and Testament of Conrad Nicholson Hilton (the "Will")
appointed Barron Hilton and James E. Bates as co-executors. As such, on January
15, 1979 they filed a petition for the probate of the Will and for letters
testamentary with the Superior Court in Los Angeles, California (the "Probate
Court"). However, a contest of the Will was filed on March 12, 1979, and
pending the termination of that contest the Probate Court appointed Barron
Hilton and James E. Bates as special administrators (with the powers of general
administrators) of the Estate. The will contest was resolved by a judgment
entered against the contestant on May 16, 1980, and thereupon the Will was
admitted to probate and the Probate Court issued letters testamentary appointing
Barron Hilton and James E. Bates as co-executors of the Estate. Although the
contestant appealed from the judgment against her, the judgment was affirmed on
appeal in December 1982.
After certain specific bequests the Will bequeathed the residue and
remainder of the Estate to the Conrad N. Hilton Foundation, a California
charitable corporation (the "Foundation"). This residual bequest contained
additional provisions under which, if any part of such residue "is, at the time
of the distribution thereof, in excess of the permitted holdings of a private
foundation, as those holdings are defined in the Tax Reform act of 1969, or any
amendment thereto," Barron Hilton was granted an option to purchase that excess
at the values as appraised in the Estate, authorizing the executors to accept in
payment therefor interest-bearing
6
<PAGE>
installment promissory notes executed by Barron Hilton and payable in equal
annual installments for not to exceed a period of ten years.
The shares of the Common Stock owned by the Estate constituted the
principal asset in the residuum of the Estate, and under Barron Hilton's
analysis all of those shares were "in excess of the permitted holdings of a
private foundation; within the meaning of the provisions of the Will referred to
above. Accordingly, Barron Hilton, having previously given written notice of
his intention to purchase all of the shares of Common Stock covered by the
option granted to him under the Will, filed a petition with the Probate Court on
November 13, 1980 requesting an order authorizing the co-executors of the Estate
to transfer and convey all such shares subject to the option to him.
For a period of time following Barron Hilton's November 1980 petition,
representatives of the Foundation, the co-executor of the Estate and Barron
Hilton attempted to negotiate the detailed terms of his exercise of the option,
including the price to be paid and the terms of payment. Ultimately, however,
the interested parties - - who by then included the Attorney General of the
State of California in his oversight capacity with respect to charitable
organizations, such as the Foundation - - did not succeed in reconciling their
differences as to the interpretation and effect of the provisions of the Will
regarding Barron Hilton's option. The legal and factual issues raised by those
provisions were therefore addressed in proceedings initiated by various
interested parties before several tribunals and agencies. These proceedings
included those initiated by applications to the Internal Revenue Service filed
by Barron Hilton in December 1983 and January 1984 for rulings that all of the
shares of Common Stock owned by the Estate would be "excess holdings" if
distributed to the Foundation; proceedings initiated by applications to the
Internal Revenue Service filed by the Foundation in February 1984 in
7
<PAGE>
opposition to those of Barron Hilton; proceedings initiated by further
applications to the Internal Revenue Service filed by the Foundation in October
1985 for rulings that the foundation had changed its nature from that of a
private foundation to a "support organization" and had thereby avoided the
effect of the rules relating to excess holdings; trial proceedings in the
probate Court to interpret the Will and determine its application; proceedings
before the Federal District Court for the Central District of California to set
aside as erroneous certain rulings issued by the Internal Revenue Service; and
appellate proceedings before the California District Court of Appeal and the
California Supreme Court to reverse portions of a June 1986 order of the Probate
Court.
On January 31, 1986, the Internal Revenue Service ruled in effect that
all of the shares of Common Stock in the Estate were "excess holdings" subject
to Barron Hilton's option. However, on January 31 and February 7, 1986 the
Internal Revenue Service issued various rulings to the Foundation, giving effect
to the Foundation's termination as a private foundation and reclassification as
a support organization. On April 18, 1986, after a trial of approximately three
weeks, the Probate Court announced its findings, and on June 11, 1986 it issued
its order to the effect that the Foundation had effectively become a support
organization, had become entitled to all of the shares of Common Stock in the
residual Estate, and that none of such shares were subject to Barron Hilton's
option. The Probate Court also held that the Foundation may make an
anticipatory assignment of its interest in the residual Estate, but that the
executor of the Estate may not exercise his power of sale with respect to the
shares of Common Stock in the Estate so as to defeat Barron Hilton's option
should any shares be subject to that option.
On November 16, 1987 the Federal District Court ruled that the private
letter rulings obtained by the Foundation from the Internal Revenue Service on
January 31 and
8
<PAGE>
February 7, 1986 were erroneously issued and were invalid, and a final judgment
on that decision was issued on January 21, 1988. On March 28, 1988, the
District Court of Appeal ruled on the Probate Court's June 11, 1986 order,
reversing it in part, affirming it in part and remanding the matter to the
Probate Court for further proceedings. The appellate court held that all of the
shares of Common Stock held in the Estate were "excess holdings" within the
meaning of the Will and, as such, subject to Barron Hilton's option, affirming
the Probate Court's decision that the executor may not exercise his power of
sale so as to defeat the option. The California Supreme Court declined to
review the decision of the District Court of Appeal.
Following the conclusion of these various proceedings, the interested
parties negotiated a compromise and settlement regarding the respective rights
and interests in the shares of Common Stock owned by the Estate as between the
Foundation and Barron Hilton. A petition for court approval of their First
Amended Settlement Agreements dated January 30, 1989, was submitted to the
Probate Court, heard on February 2, 1989 and granted on February 6, 1989, by an
order that became final on April 7, 1989, to be implemented upon the
satisfaction of specified conditions.
The conditions to the order approving the First Amended Settlement
Agreement were satisfied on April 26, 1989, and the settlement was implemented
on May 8, 1989 as follows: Barron Hilton received a distribution from the
Estate of 16,216,584 shares of Common Stock; 14,041,728 shares were included in
the residuum of the Estate and were distributed to the Foundation; and the other
24,000,000 shares of Common Stock were distributed by the Estate to the Trust of
which Barron Hilton is the sole trustee. Barron Hilton is entitled to 60% and
the Foundation 40% of the Trust's annual income (or, if less, of 9% of the
annually redetermined
9
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value of the Trust's assets). The Trust will terminate and its principal will
be distributed to the Foundation on Barron Hilton's death, but not before the
trust's 20th anniversary in 2009.
(c) SHARES OWNED BY THE FOUNDATION.
The Foundation, of which Barron Hilton is one of eleven directors, was
the record and beneficial owner of an aggregate of 2,457,008 shares of Common
Stock (prior to the distribution of the Estate as described above), and together
with the 14,041,728 shares of Common Stock received in the distribution of the
Estate is the record and beneficial owner of 16,498,736 shares of Common Stock,
or approximately 6.7% of the shares of Common Stock outstanding. The names,
addresses and occupations of the other directors of the Foundation, who share
with Barron Hilton the power to vote and to dispose of such shares, are as
follows: Robert Buckley, M.D., a specialist in internal medicine, whose address
in 2333 Pinto Lane, Las Vegas, Nevada 89107; Mr. Gregory R. Dillon, Vice
Chairman Emeritus of the Company, whose address is 9336 Civic Center Drive,
Beverly Hills, California 90210; Mr. William H. (Bill) Edwards, retired
executive of the Company, whose address is 10350 Wilshire Blvd., Suite 901, Los
Angeles, California 90024; Mr. James R. Galbraith, retired executive of the
Company, whose address is 3946 Encino Hills Place, Encino, California 91436; Mr.
Steven M. Hilton, Vice President-Programs of the Foundation, whose address is
10100 Santa Monica Blvd., Suite 740, Los Angeles, California 90067; Mr. William
B. (Barry) Hilton, Jr., real estate developer, whose address is 28775 Sea Ranch
Way, Malibu, California 90265; Mr. Eric M. Hilton, Director of the Company,
whose address is 7819 Bermuda Dunes Lane, Las Vegas, Nevada 89113; and Mr.
Donald H. Hubbs, President of the Foundation, whose address is 10100 Santa
Monica Blvd., Suite 740, Los Angeles, California 90067. Each of such persons is
a citizen of the United States of America, and, to the best of Barron Hilton's
knowledge, none of such persons has ever been
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convicted in a criminal proceeding (as defined in Schedule 13D to exclude
traffic violations or similar misdemeanors) or been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which such person was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws. Barron Hilton disclaims beneficial ownership of the
shares of Common Stock owned by the Foundation.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Reference is made to the First Amended Settlement Agreement and the
Trust and the other information set forth under Item 5. The Trust and the
Company have entered into a registration rights agreement with respect to the
sale of the 24,000,000 shares of Common Stock held by the Trust as described in
Item 4 above. There are no other contracts, arrangements, understandings or
relationships (legal or otherwise) between Barron Hilton and any other person
with respect to any securities of the Company, including but not limited to
transfer or voting of any of the securities, finder's fees, joint ventures, loan
or options arrangements, puts or calls, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 3.1 First Amended Settlement Agreement dated January
30, 1989 between the Conrad N. Hilton Foundation
and William Barron Hilton.**
Exhibit 3.2 Form of Charitable Remainder Unitrust
Declaration of William Barron Hilton (attached
to Exhibit 3.1 as Exhibit 1 thereto).**
Exhibit 3.3 Registration Rights Agreement, dated April 1,
1998 by and between the Company and the Trust.
- -----------------
** Previously filed with Amendment No. 3 to this Schedule 13D.
11
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this amendment to statement is true,
complete and correct.
April 2, 1998
/s/ WILLIAM BARRON HILTON
-----------------------------------
William Barron Hilton
12
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INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
NO.
Exhibit First Amended Settlement
3.1 Agreement dated January 30,
1989 between The Conrad N.
Hilton Foundation and William
Barron Hilton.*
Exhibit Form of Charitable Remainder
3.2 Unitrust Declaration of
William Barron Hilton
(attached to Exhibit 3.1 as
Exhibit 1 thereto).*
Exhibit Registration Rights
3.3 Agreement, dated April 1,
1998 by and between the
Company and the Trust.
- --------------------
* Previously filed with Amendment No. 3 to this Schedule 13D.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
DATED AS OF APRIL 1, 1998
BY AND AMONG
HILTON HOTELS CORPORATION
AND
THE
CHARITABLE REMAINDER UNITRUST U/D/T MAY 8, 1989
<PAGE>
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is
made and entered into as of April 1, 1998, by and among Hilton Hotels
Corporation, a Delaware corporation (the "Company") and the Charitable
Remainder Unitrust u/d/t May 8, 1989 (the "Selling Stockholder").
WHEREAS, the Selling Stockholder is the owner of
24,000,000 shares ("Shares") of the common stock, $2.50 par value (the
"Common Stock"), of the Company;
WHEREAS, the Company does not currently have the
contractual right to impose any restrictions on the resale of the Shares and
the Company desires to provide for certain restrictions on the resale of such
Shares so that the Company can monitor the orderly distribution thereof and
restrict sales during such periods as the Company deems advisable;
WHEREAS, the Selling Stockholder has agreed to the
Company's imposition of restrictions on the resale of its Shares provided
that the Company grants certain registration rights to the Selling
Stockholder;
WHEREAS, it is in the best interests of the Company and
its stockholders that the Company enter into this Agreement to restrict the
sale of the Shares at certain times and to facilitate the orderly
distribution of the Shares;
NOW, THEREFORE, the parties hereby agree as follows:
1. DEFINITIONS.
EXCHANGE ACT: The Securities Exchange Act of
1934,as amended.
SECURITIES ACT: The Securities Act of 1933, as
amended.
SEC: The Securities and Exchange Commission.
TRANSFER RESTRICTED SECURITIES: Any Shares
held by the Trust until distributed to the public pursuant to an effective
registration statement or distributed to the public pursuant to Rule 144
under the Securities Act or which are eligible for sale to the public under
Rule 144(k); PROVIDED that a security that has ceased to be a Transfer
Restricted Security cannot thereafter become a Transfer Restricted Security.
2. SHELF REGISTRATION.
(a) The Company shall use its commercially
reasonable efforts to file a "shelf" registration statement on Form S-3 under
the Securities Act (the "Shelf Registration Statement") relating to the
resale by the Trust of Transfer Restricted Securities. The Company agrees to
use its commercially reasonable efforts to keep the Shelf Registration
Statement continuously effective for the resale by the Trust of Transfer
Restricted Securities (the "Effective Period") until the earlier of (i) the
date that all the Transfer Restricted Securities covered by the Shelf
Registration Statement have been sold pursuant thereto; and (ii) one year
from the date of the filing of the Registration Statement with the SEC, as
such period may be extended pursuant
2
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to Section 3 hereof, unless the Company shall agree in its sole discretion in
writing to extend the period during which it will keep the Shelf Registration
Statement effective.
(b) If the Shelf Registration Statement ceases
to be effective during the Effective Period, the Company shall use its
commercially reasonable efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof.
(c) The Company shall supplement or amend the
Shelf Registration Statement if required by the policies, rules, regulations
or instructions applicable to the registration form used by the Company, if
required by the Securities Act, or if reasonably requested by the Selling
Stockholder.
3. HOLD-BACK AGREEMENTS. The Trust agrees not to
(i) effect any public sale or distribution of the Shares pursuant to the
Shelf Registration Statement, (ii) make any sale of the Shares pursuant to
Rule 144 or Rule 144A or (iii) otherwise conduct marketing activities with
respect to the Shares during any period designated by the Company (a
"Hold-Back Period"). The Company shall give the Selling Stockholder at least
one day's notice prior to a Hold-Back Period. The Effective Period will be
extended by such number of days equal to the number of days the Selling
Stockholder was subject to the requirements of this subparagraph.
4. REGISTRATION EXPENSES. All expenses incident
to the filing of the Registration Statement and the sale of Shares
thereunder, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, fees and expenses of counsel for the Company and for the Selling
Stockholder and of all independent certified public accountants of the
Company (including the expenses of any special audit and "cold comfort"
letters required by or incident to such performance), and underwriters' fees
and expenses (including discounts, commissions or fees of underwriters,
selling brokers, dealer managers or similar securities industry professionals
relating to the distribution of the Shares and legal expenses of such
persons), will be borne by the Selling Stockholder, regardless of whether the
Shelf Registration Statement becomes effective. The Company will pay its
internal expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties).
5. INDEMNIFICATION.
The Company agrees to indemnify and hold
harmless, to the full extent permitted by law, the Selling Stockholder, any
officer, trustee and employee of the Selling Stockholder and each person who
controls the Selling Stockholder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act), against all losses,
claims, damages, liabilities and reasonable expenses (including reasonable
attorneys' fees) arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in the Shelf Registration Statement,
or the Prospectus contained in such Shelf Registration Statement (which shall
include any Prospectus Supplement) or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as the same arise
out of or are based upon information furnished to the Company by such
indemnified party expressly for use therein; PROVIDED, HOWEVER, that the
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Company shall not be liable in any case to the extent that any such loss,
claim, damage, liability or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission in the
Prospectus, if (a) such untrue statement or alleged untrue statement,
omission or alleged omission is corrected in an amendment or supplement to
the Prospectus delivered to the indemnified party prior to the sale of the
Shares, (b) such indemnified party thereafter failed to deliver such
Prospectus as so amended or supplemented prior to or concurrently with the
sale of the Shares to the person asserting such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission in the Prospectus,
or (c) such untrue statement or alleged untrue statement, omission or alleged
omission is contained in a Prospectus which is the subject of a notice
delivered by the Company pursuant to Section 3 hereof and such indemnified
party shall have breached its obligation to refrain from selling Shares
pursuant to Section 3.
(b) The Selling Stockholder agrees to
indemnify and hold harmless, to the full extent permitted by law, the Company
and its directors, officers and employees and each person who controls the
Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers and employees of such
controlling persons against all losses, claims, damages, liabilities and
reasonable expenses (including reasonable attorneys' fees) arising out of or
based upon any untrue or alleged untrue statement of a material fact or any
omission or alleged omission of a material fact required to be stated in the
Shelf Registration Statement or Prospectus or necessary to make the
statements therein not misleading, to the extent, but only to the extent,
that such untrue statement or omission is contained in any information so
furnished by or on behalf of the Selling Stockholder to the Company
specifically for use in such Shelf Registration Statement or Prospectus. In
no event shall the liability of the Selling Stockholder hereunder be greater
in amount than the dollar amount of the proceeds received by the Selling
Stockholder upon the sale of the Shares giving rise to such indemnification
obligation.
(c) Any person entitled to indemnification
hereunder will (i) give prompt notice to the indemnifying party of any claim
with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided, however, that any
person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the
fees and expenses of such counsel shall be at the expense of such person
unless (a) the indemnifying party has agreed to pay such fees or expenses, or
(b) the indemnifying party shall have failed to assume the defense of such
claim and employ counsel reasonably satisfactory to such person or (c) in the
reasonable judgment of any such person, based upon advice of its counsel, a
conflict of interest may exist between such person and the indemnifying party
with respect to such claims (in which case, if the person notifies the
indemnifying party in writing that such person elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party
shall not have the right to assume the defense of such claim on behalf of
such person). If such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement
made without its consent (but such consent will not be unreasonably
withheld). The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason
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of such settlement or judgment. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is
a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding. An indemnifying party who is not entitled to, or elects not
to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between
such indemnified party and any other of such indemnified parties with respect
to such claim, in which event the indemnifying party shall be obligated to
pay the fees and expenses of such additional counsel or counsels.
(d) If the indemnification provided for in
this Section 5 is unavailable to an indemnified party or is insufficient to
hold such indemnified party harmless for any losses in respect of which this
Section 5 would otherwise apply by its terms, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
have a joint and several obligation to contribute to the amount paid or
payable by such indemnified party as a result of such losses, in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party, on the one hand, and such indemnified party, on the other
hand, in connection with the actions, statements or omissions that resulted
in such losses as well as any other relevant equitable considerations. The
relative fault of such indemnifying party, on the one hand, and indemnified
party, on the other hand, shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission to state
a material fact, has been taken by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent any such action, statement or omission. The amount paid or payable
by a party as a result of any losses shall be deemed to include any legal or
other fees or expenses incurred by such party in connection with any
proceeding, to the extent such party would have been indemnified for such
expenses if the indemnification provided for in Section 5(a) or 5(b) was
available to such party.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provision of this Section 5(d), the
Selling Stockholder shall not be required to contribute any amount in excess
of the amount by which the total price at which the Shares sold by such
indemnifying party and distributed to the public were offered to the public
exceeds the amount of any damages that such indemnifying party has otherwise
been required to pay by reasons of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(e) The indemnity, contribution and expense
reimbursement obligations under this Section 5 shall be in addition to any
liability each indemnifying party
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may otherwise have; PROVIDED that any payment made by the Company which
results in the indemnified party receiving from any source(s)
indemnification, contribution or reimbursement of an amount in excess of the
actual loss, liability or expenses incurred by such indemnified party, shall
be refunded to the Company by the indemnified party receiving such excess
payment.
6. AMENDMENTS AND WAIVERS. The provisions of this
Agreement may not be amended without the written consent of the Company and
the Selling Stockholder.
7. NOTICES. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, telex, telecopier, or air courier
guaranteeing overnight delivery:
(a) if to the Selling Stockholder, to the
attention of Barron Hilton, c/o Hilton Hotels Corporation, 9336 Civic Center
Drive, Beverly Hills, California 90209; and
(b) if to the Company, initially at its
address set forth in the Shelf Registration Statement.
8. ASSIGNMENT. This Agreement may not be assigned
by the Selling Stockholder without the prior written consent of the Company.
9. COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
10. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the internal laws of the State
of New York.
11. SEVERABILITY. In the event that one or more of
the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in every other respect and
of the remaining provisions contained herein shall not be affected or
impaired thereby.
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IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first written above.
HILTON HOTELS CORPORATION
/s/ THOMAS E. GALLAGHER
----------------------------------------
By: Thomas E. Gallagher
Its: Executive Vice President &
General Counsel
CHARITABLE REMAINDER UNITRUST
U/D/T MAY 8, 1989
/s/ WILLIAM BARRON HILTON
----------------------------------------
By: William Barron Hilton
Its: Trustee
