**Exhibit 10.12.2**

 

HILTON HOTELS CORPORATION2004 OMNIBUS EQUITY COMPENSATION PLANPERFORMANCE UNIT GRANT

 

This PERFORMANCE UNITGRANT (the “Agreement”), dated as of **<dateof grant>** (the “Date of Grant”), is delivered by Hilton HotelsCorporation (“Hilton”) to **<name>**.

 

RECITALS

 

TheHilton Hotels Corporation 2004 Omnibus Equity Compensation Plan (the “Plan”)provides for the grant of performance units (“Performance Units”) that relateto shares of Hilton common stock. Pursuant to the terms of the Plan, the Compensation Committee of Hilton’sBoard of Directors (the “Committee”) has decided to grant you PerformanceUnits.

 

NOW,THEREFORE, the parties to this Agreement, intending to be legally bound hereby,agree as follows:

 

1.                                       Grantof Performance Units.  Subject to theterms and conditions set forth in this Agreement and in the Plan, Hilton herebygrants to you **<#units>**PerformanceUnits.  The Performance Units arecontingently awarded and will be earned and distributable if and to the extentthat the performance goals and other conditions set forth in this Agreement aremet.  Hilton will record the number ofPerformance Units credited on your behalf in an Account (as definedbelow).  The number of Performance Unitsset forth above is equal to the target number of shares of Stock that you willearn for 100% achievement of the Performance Goals described in Section 2below (the “Target Award”).

 

2.                                       PerformanceGoals.

 

(a)                                  Thedistribution of shares of Stock attributable to your Performance Units iscontingent upon achievement of the performance goal(s) described in theattached Exhibit A for the Performance Period (as defined below) and yourcontinuing to be employed by, or providing service to, the Company (as definedbelow) through the last day of the Performance Period.

 

(b)                                 TheCommittee may, but only to the extent consistent with the requirements of section 162(m)of the Internal Revenue Code permitting a federal income tax deduction forPerformance Unit grants designated as “qualified performance-based compensation,”at any time prior to the end of the Performance Period, change the performancemeasures or the performance goals to reflect a change in the corporatestructure or shares of Hilton or a comparison group member company, or anyother change of a significant nature that affects the applicability forcomparison between Hilton and a comparison group used in measuring performance.

 

(c)                                  Atthe end of the Performance Period, the Committee will determine whether and towhat extent the performance goals have been met and the number of PerformanceUnits you have earned, if any.  Except asdescribed in Section 3 below, you must be employed by, or

 

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providingservice to, the Company on the last day of the Performance Period in order toearn your Performance Units, unless the Committee determines otherwise.

 

3.                                       Terminationof Employment or Service or Transfer.

 

(a)                      If, at leastone year after the beginning of the Performance Period but prior to the end,you cease to be employed by, or provide service to, the Company on account ofyour Retirement (as defined below), Disability (as defined below) or death, youwill earn a pro-rata portion of your Performance Units, if the performancegoals and the requirements of this Agreement are met as of the last day of thePerformance Period.  The prorated portionwill be determined as the number of Performance Units that would have beenearned if you had remained employed through the last day of the PerformancePeriod multiplied by a fraction, the numerator of which is the number of daysthat you were actively employed by, or provided services to, the Company duringthe Performance Period and the denominator of which is the number of days inthe Performance Period. ** **If you cease to be employed by, orprovide service to, the Company on account of Retirement, Disability or death,the prorated number of Performance Units will be distributed in accordance withSection 4.

 

(b)                     If yourbusiness unit is transferred out of the Company, or asa result of a sale or****transfer ofassets and, as a consequence, you cease to be employed by or provide service tothe Company, the Committee may take such action with respect to yourPerformance Units as the Committee determines.

 

4.                                       Timeand Form of Payment with Respect to Performance Units.  You will receive a distribution with respectto your Performance Units (to the extent earned) after the end of thePerformance Period but no later than the March 31 following the end of thePerformance Period, in shares of Stock.

 

5.                                       Withholding.  Unless the Committee provides otherwise, thenumber of shares of Stock distributed to you will be reduced by a number ofshares sufficient to satisfy the amount of any withholding tax associated withthe distribution.

 

6.                                       Changeof Control.  The provisions of thePlan applicable to a Change of Control (as defined in the Plan) will apply toyour Performance Units, and, in the event of a Change of Control, the Committeemay take such actions as it deems appropriate pursuant to the Plan.

 

7.                                       Definitions.  For purposes of this Agreement, the followingterms will have the meanings set forth below:

 

(a)                      “*Account*” means a bookkeeping account established on Hilton’srecords in your name to record grants of Performance Units.

 

(b)                     “*Company*” means Hilton, any successor corporation and eachcorporation which is a member of a controlled group of corporations of whichHilton is a component member.

 

(c)                      “*Disabled*” or “*Disability*”means that you are considered totally and permanently disabled for purposes ofthe Company’s long-term disability plan.

 

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(d)                     “*Employed by, or provide service to, the Company*” meansemployment or service with the Company.

 

(e)                      “*Performance Period*” means the three-year period beginning onDecember 31, **<year>**and ending December 31, **<year>**.

 

(f)                        “*Performance Unit*” means a phantom unit representing a shareof Stock.

 

(g)                     “*Retirement*” means retirement from active employment orservice with the Company at or after age 62.

 

(h)                     “*Stock*” means a share of Hilton common stock.

 

8.                                       GrantSubject to Plan Provisions. This grant is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respectsshall be interpreted in accordance with the Plan.  The grant and distribution of PerformanceUnits are subject to interpretations, regulations and determinations concerningthe Plan established from time to time by the Committee in accordance with theprovisions of the Plan, including, but not limited to, provisions pertaining to(a) the registration, qualification or listing of the shares issued under thePlan, (b) changes in capitalization, and (c) other requirements of applicablelaw and all Plan provisions.  TheCommittee has the authority to interpret and construe this Agreement pursuantto the terms of the Plan, and its decisions are conclusive as to any questionsarising hereunder.

 

9.                                       NoEmployment or Other Rights.  Thegrant of Performance Units does not confer upon you any right to be retainedby, or in the employ or service of, the Company and will not interfere in anyway with the right of the Company to terminate your employment or service atany time.  The right of the Company toterminate your employment or service at will at any time for any reason isspecifically reserved.  You will not haveany interest in any fund or specific assets of the Company by reason of thisgrant or the Account established on your behalf.

 

10.                                 NoStockholder Rights.  Neither you, norany person entitled to receive distribution in the event of your death, willhave any of the rights and privileges of a Hilton stockholder with respect to ashare of Stock, until that share of Stock has been issued.

 

11.                                 Assignmentand Transfers.  Your rights andinterests under this Agreement may not be sold, assigned, encumbered orotherwise transferred except, in the event of your death, by will or by thelaws of descent and distribution.  If youdie, any distributions to be made under this Agreement after your death will bepaid to the personal representative of your estate, orthe personal representative under applicable law if you die intestate.  The rights, protections and obligations ofthe Company hereunder extend to any successors or assigns of the Company and tothe Company’s parents, subsidiaries, and affiliates.  This Agreement may be assigned by the Companywithout your consent.

 

12.                                 ApplicableLaw.  The validity, construction,interpretation and effect of this instrument will be governed by and construedin accordance with the laws of the State of California, without giving effectto the conflicts of laws provisions thereof.

 

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13.                                 Notice.  Any notice to Hilton provided for in thisAgreement shall be addressed to Hilton Hotels Corporation in care of theCorporate Secretary at 9336 Civic Center Drive, Beverly Hills, California,90210, and any notice to you will be addressed to you at the current addressshown on the Company’s payroll, or to such other address as you may designateto the Company in writing.  Any noticeshall be delivered by hand, sent by telecopy or enclosed in a properly sealedenvelope addressed as stated above, and deposited, postage prepaid, in a postoffice regularly maintained by the United States Postal Service.

 

**[SIGNATUREPAGE FOLLOWS]**

 

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INWITNESS WHEREOF, Hilton has caused its duly authorized officers to execute andattest to this Agreement, and you have executed this Agreement, effective as ofthe Date of Grant.

 
|                 | HILTON HOTELS  CORPORATION                     |
|----------------------|------------------------------------------------|
| Attest               |                                           |
|                 |                                           |
|                 |                                           |
|                 |                                           | By: |   |   |
| Corporate  Secretary | Title: Senior  Vice President, Human Resources |
|                      |                                                |  |  |  |

 

 

I hereby accept thePerformance Units described in this Agreement, and I agree to be bound by theterms of the Plan and this Agreement.  Ihereby further agree that all the decisions and determinations of the Committeewill be final and binding.

 
|        |   |
|-------------|--------|
| Participant |   |

 

**If you donot sign and return this Agreement to us by <date>,or if you do not notify us (in accordance with Section 13) that you do notwish to accept the Performance Units described in this Agreement, then you willbe deemed to have accepted the Performance Units described in this Agreementand to have agreed to be bound by the terms of the Plan and this Agreement.**

 

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