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                                                                    EXHIBIT 10.6
 
                           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. 



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       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
 
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        (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
 
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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 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 

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    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.
 
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       (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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<PAGE>

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.
 
                                      10
<PAGE>

    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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