Exhibit
10.12.1


HILTON HOTELS CORPORATION

2004 OMNIBUS EQUITY COMPENSATION PLAN

STOCK UNIT GRANT


 


This STOCK UNIT GRANT,
dated as of <date> (the
“Date of Grant”), is delivered by Hilton Hotels Corporation (“Hilton”) to <name>.


RECITALS


The
Hilton Hotels Corporation 2004 Omnibus Equity Compensation Plan (the “Plan”)
provides for the grant of stock units (“Stock Units”) that equate to shares of
Hilton common stock on a one-for-one basis. 
Pursuant to the terms of the Plan, the Compensation Committee of Hilton’s
Board of Directors (the “Committee”) has decided to grant you Stock Units.


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


1.             Grant of Stock Units.  Subject to the terms and conditions set forth
in this Agreement and in the Plan, Hilton hereby grants to you  <#Units> Stock
Units.  The Stock Units are granted with
Dividend Equivalents (as defined below). 
Hilton will record the number of Stock Units and Dividend Equivalents
credited on your behalf in an Account (as defined below).


2.             Vesting;
Time and Form of Distribution.


(a)           Your Stock Units will vest in [25%]
increments commencing on January 5, <year>
and each January 5 thereafter until the Stock Units are fully vested; provided
that you continue to be employed by, or provide service to, the Company (as
defined below) as of each such January 5 (if any applicable January 5 is not a
business day, then the vesting day will be the next business day).  Unless the Committee determines otherwise, if
you cease to be employed by, or provide service to, the Company before your
Stock Units are fully vested, any Stock Units that are unvested as of the date
you cease to be employed by, or provide service to, the Company will be
immediately forfeited.


(b)           Subject to withholding under Section
5, you will receive a distribution of shares of Stock with respect to your
Stock Units as and when your Stock Units become vested in accordance with (a)
above, as soon as reasonably practicable following the vesting date; provided
that, if, at the time your Stock Units vest, you are among the top 5 most
highly compensated executive officers of the Company and you did not make an
election under the Hilton Hotels 2005 Executive Deferred Compensation Plan to defer
for the year in which your Stock Units vest all payments of Base Salary that
would cause your compensation (that is taken into account for purposes of
section 162(m) of the Internal Revenue Code) for such year to exceed the
$1,000,000 limit on deductible compensation under section 162(m) of the
Internal Revenue Code, then all of the shares of Stock attributable to the
Stock Units that vest in such calendar year will automatically be deferred as
of the date distribution would otherwise be made, pursuant to the terms and
conditions of the Deferral Program attached hereto as Exhibit A.


 





















 


3.             Dividend
Equivalents.  As and when dividends
are declared and paid with respect to Stock during each calendar year, Dividend
Equivalents attributable to the number of unvested shares of Stock underlying
your Stock Units will be credited to your Account.  Dividend Equivalents will be accrued as a
cash obligation and will not accrue interest. 
As of January 5 (or the next succeeding business day, if January 5 is
not a business day) of each calendar year, the accumulated Dividend Equivalents
credited to your Account with respect to the prior calendar year (less
applicable withholding taxes), will be converted to shares of Stock (based on
the Fair Market Value (as defined in the Plan) of the shares as of January 5
(or the next succeeding business day, if January 5 is not a business day)) and
distributed to you as soon as administratively practicable following such date;
provided that to receive a distribution, you must be employed by, or providing
service to, the Company as of the applicable January 5 (or the next succeeding
business day, if January 5 is not a business day).  If a fractional share remains after the
applicable withholding taxes are withheld and the accumulated Dividend
Equivalents are converted into shares, such fractional share will be
forfeited.  If your Stock Units are
deferred pursuant to Section 2(b) above, Dividend Equivalents will be credited
in accordance with Section 4 of the Deferral Program attached hereto as Exhibit
A.


4.             Change
of Control.  The provisions of the
Plan applicable to a Change of Control (as defined in the Plan) will apply to
your Stock Units, and, in the event of a Change of Control, the Committee may
take such actions as it deems appropriate pursuant to the Plan.


5.             Withholding.  Unless the Committee provides otherwise, the
number of shares of Stock distributed to you with respect to your Stock Units
will be reduced by a number of shares sufficient to satisfy the amount of any
withholding tax associated with the distribution.  If your Stock Units are deferred pursuant to
Section 2(b) above, your Stock Units will be taxed in accordance with Section 8
of the Deferral Program attached hereto as Exhibit A.


6.             Definitions.  For purposes of this Agreement, the following
terms will have the meanings set forth below:


(a)           “Account” means
a bookkeeping account established on Hilton’s records in your name to record
grants of Stock Units, as well as Stock Units deferred under the Plan.


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


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


(d)           “Dividend Equivalent”
means an amount determined by multiplying the number of shares subject to Stock
Units by the per-share cash dividend, or the per-share fair market value of any
dividend in consideration other than cash, paid by Hilton on its common stock.


(e)           “Employed by, or provide
service to, the Company” means employment or service with the
Company.


(f)            “Retirement”
means retirement from active employment or service with the Company at or after
age 62.


 


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(g)           “Stock Unit”
means a phantom unit representing a share of Stock.


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


7.             Grant
Subject to Plan Provisions.  This
grant is made pursuant to the Plan, the terms of which are incorporated herein
by reference, and in all respects will be interpreted in accordance with the
Plan.  The grant and distribution
attributable to the Stock Units and Dividend Equivalents are subject to interpretations,
regulations and determinations concerning the Plan established from time to
time by the Committee in accordance with the provisions of the Plan, including,
but not limited to, provisions pertaining to (a) the registration,
qualification or listing of the shares issued under the Plan, (b) changes in
capitalization, and (c) other requirements of applicable law and all Plan
provisions.  The Committee has the
authority to interpret and construe this Agreement pursuant to the terms of the
Plan, and its decisions are conclusive as to any questions arising hereunder.


8.             No
Employment or Other Rights.  The
grant of Stock Units does not confer upon you any right to be retained by, or
in the employ or service of, the Company and will not interfere in any way with
the right of the Company to terminate your employment or service at any
time.  The right of the Company to
terminate your employment or service at will at any time for any reason is
specifically reserved.  You will not have
any interest in any fund or specific assets of the Company by reason of this
grant or the Account established on your behalf.


9.             No
Stockholder Rights.  Neither you, nor
any person entitled to receive distribution in the event of your death, will
have any of the rights and privileges of a Hilton stockholder with respect to a
share of Stock, until that share of Stock has been issued.


10.           Assignment
and Transfers.  Your rights and
interests under this Agreement may not be sold, assigned, encumbered or
otherwise transferred, except in the event of your death, by will or by the
laws of descent and distribution.  If you
die, any distributions to be made under this Agreement after your death will be
paid to the personal representative of your estate, or the personal
representative under applicable law if you die intestate.  The rights, protections and obligations of
the Company hereunder extend to any successors or assigns of the Company and to
the Company’s parents, subsidiaries, and affiliates.  This Agreement may be assigned by the Company
without your consent.


11.           Applicable
Law.  The validity, construction,
interpretation and effect of this instrument will be governed by and construed
in accordance with the laws of the State of California, without giving effect
to the conflicts of laws provisions thereof.


12.           Notice.  Any notice to Hilton provided for in this
Agreement shall be addressed to Hilton Hotels Corporation in care of the
Corporate Secretary at 9336 Civic Center Drive, Beverly Hills, California,
90210, and any notice to you will be addressed to you at the current address
shown on the Company’s payroll, or to such other address as you may designate
to the Company in writing.  Any notice
shall be delivered by hand, sent by telecopy or enclosed in a properly sealed
envelope addressed as stated above, and deposited, postage prepaid, in a post
office regularly maintained by the United States Postal Service.


 


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IN WITNESS WHEREOF, Hilton has caused
its duly authorized officers to execute and attest this Agreement, and you have
executed this Agreement, effective as of the Date of Grant.


	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HILTON HOTELS CORPORATION

  
	
  Attest

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Corporate
  Secretary

  	
   

  	
  Title:
  Senior Vice President, Human Resources

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  I
  hereby accept the Stock Units described in this Agreement, and I agree to be
  bound by the terms of the Plan and this Agreement. I hereby further agree
  that all the decisions and determinations of the Committee will be final and
  binding.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Participant

  	
   

  	
   

  



 


If you do not
notify us (in accordance with Section 12) that you do not wish to accept the
Stock Units described in this Agreement, then you will be deemed to have
accepted the Stock Units described in this Agreement and to have agreed to be
bound by the terms of the Plan and this Agreement.


 


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EXHIBIT A


DEFERRAL PROGRAM


Except
to the extent otherwise provided herein, defined terms herein shall have the
same meaning as ascribed to such terms in the Plan.


1.             Deferral
Election.  If, at the time your Stock
Units vest, you are among the top 5 most highly compensated executive officers
of the Company and you did not make an election under the Hilton Hotels 2005
Executive Deferred Compensation Plan to defer for the year in which your Stock
Units vest all payments of Base Salary that would cause your compensation (that
is taken into account for purposes of section 162(m) of the Internal Revenue
Code) for such year to exceed the $1,000,000 limit on deductible compensation
under section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), then all of the shares of Stock attributable to the
Stock Units that vest in such calendar year will automatically be deferred as
of the date distribution would otherwise be made until after your separation from
service with the Company pursuant to the terms and conditions hereof.


2.             Account.  If your Stock Units are deferred, a number of
phantom shares equal to the number of units deferred will be credited to an
Account as of the date the Stock Units would have otherwise been
distributable.  No actual shares or other
assets will be held in your Account for your benefit.  As of the date the phantom shares are
credited to your Account, the shares of Stock attributable to your Stock Units
are considered earned and are non-forfeitable.


3.             Value
of Account.  The value of your
Account will be based upon the Fair Market Value of a share of Stock.  As the Fair Market Value of a share of Stock
increases or decreases, the value of your Account will increase or decrease
accordingly.


4.             Dividend
Equivalents.  When dividends are
declared and paid on Stock, your Account (as established pursuant to paragraph
2 above) will be credited with Dividend Equivalents.  Dividend Equivalents will be reinvested in
additional phantom shares.  Your Account
will not be credited with interest.


5.             Distribution
of Deferred Amounts.  You will be
entitled to receive a distribution of your Account in Stock upon your
separation from service with the Company. 
Distribution of your Account will be made in a lump sum as soon as
practicable following your separation date. 
Notwithstanding any provision of the Deferral Program to the contrary,
if you are a Key Employee (as defined below), distributions shall be postponed
to the first day of the seventh month following your date of separation from
service (or, if earlier, date of death).


For
purposes of the Deferral Program, you are a Key Employee if: you are (i) an
officer of the Company having annual compensation greater than $130,000
(adjusted for inflation and limited to 50 employees), (ii) a five percent
owner, or (iii) a one percent owner having annual compensation from the Company
greater than $150,000.  The Committee
will determine whether you are a “Key Employee” in a manner consistent with the
regulations issued under section 409A of the Code.


6.             Hardship
Distributions.  At any time prior to
distribution, if you incur an unforeseeable emergency, you may submit a written
request to the Committee for a hardship distribution of all


 


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or part of the amount then credited
to your Account as a result of deferrals under the Deferral Program.


For
purposes of the Deferral Program, an unforeseeable emergency means severe
financial hardship resulting from a sudden and unexpected illness or accident
involving you, your spouse or a member of your immediate family, loss of your
property due to casualty, or other similar extraordinary and unforeseeable
circumstance arising as a result of events beyond your control.  The amounts distributed with respect to an
emergency will not exceed the amounts necessary to satisfy such emergency plus
amounts necessary to pay taxes reasonably anticipated as a result of the
distribution, after taking into account the extent to which such hardship is or
may be relieved through reimbursement or compensation by insurance or
otherwise, or by liquidation of your assets (to the extent such liquidation
would not itself cause severe financial hardship).  The Committee will determine whether an
unforeseeable emergency has occurred based on the regulations set forth in
Treasury Regulation section 1.457-2(h)(4), in its sole discretion.


7.             Form
of Distribution.  All distributions
from your Account will be made in shares of Stock.  The value of all phantom shares credited to
your Account, including any reinvested Dividend Equivalents, will be converted
to shares of Stock on or immediately before the date of distribution.  If a fractional share remains after the
applicable withholding taxes are withheld and the accumulated Dividend
Equivalents are converted into shares, such fractional share will be forfeited.


8.             Taxation.


(a)           If your Stock Units are deferred, you
will not be subject to income tax on the deferred amounts until distribution is
made to you.  However, as of the vesting
date specified in your Stock Unit Grant Agreement, you will be required to pay
FICA and Medicare tax on the value of all of the shares, including the shares
deferred.  Your FICA and Medicare tax
obligation will be satisfied by reducing the number of units deferred by a
number of units sufficient to satisfy your FICA and Medicare tax
obligation.  The units withheld to cover
your FICA and Medicare tax obligation (in addition to being subject to FICA and
Medicare tax) will also be taxable to you as ordinary income at the supplemental
tax rate.  Additional units will be
withheld to cover the ordinary income tax.


(b)           When you receive a distribution, the
amount distributed to you will be taxable as ordinary income and will be
subject to tax withholding.  A number of
shares will be withheld from your distribution amount to satisfy the applicable
income tax withholding obligation.


9.             Claims
Procedure.


(a)           Claim for Benefits.  The Committee will advise you or your
beneficiary of any benefits to which you or your beneficiary are entitled under
the Deferral Program.  If you or your
beneficiary believe that the Committee has failed to provide you with any
benefit to which you believe you are entitled, you or your beneficiary may file
a written claim for benefits with the Pension and Thrift Committee.  The claim will be reviewed, and a response
provided, within a reasonable time after receiving the claim.  Any claimant who is denied a claim for
benefits will be provided with written notice setting forth:


•                                          the specific reason or
reasons for the denial;


 


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•                                          specific reference to
pertinent Deferral Program provisions on which the denial is based;


•                                          a description of any
additional material or information necessary for the claimant to perfect the
claim;


•                                          an explanation of the
claim review procedure; and


•                                          an explanation of the
claimant’s right to bring an action under section 502(a) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), after an adverse
benefit determination on review.


(b)           Appeal.  Within 60 days after receipt by a claimant of
a notice denying a claim under the Deferral Program, the claimant or a duly
authorized representative may request in writing a full and fair review of the
claim by the Compensation Committee.  The
Compensation Committee may extend the 60-day period where the nature of the
benefit involved or other attendant circumstances make such extension
appropriate.  In connection with such
review, the claimant or a duly authorized representative may review pertinent
documents and may submit issues and comments in writing.  The Compensation Committee will make a
decision promptly, and not later than 60 days after the Compensation Committee’s
receipt of a request for review, unless special circumstances (such as the need
to hold a hearing, if the Compensation Committee deems one necessary) require
an extension of time for processing, in which case a decision will be rendered
as soon as possible, but not later than 120 days after receipt of a request for
review.  The decision on review will be
in writing and will include specific reasons for the decision, written in a
manner calculated to be understood by the claimant, specific references to the
pertinent Deferral Program provisions on which the decision is based, and an
explanation of the claimant’s right to bring an action under section 502(a) of
ERISA.


 


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10.           Amendment
and Termination.  This Deferral
Program may be amended, suspended or terminated at any time by the Committee;
provided, however that no amendment, suspension or termination that occurs
after phantom shares have been credited to your Account with respect to
deferred Stock Units will adversely affect your rights in such phantom shares
without your consent.  Notwithstanding
the foregoing, the Committee may amend or terminate the Deferral Program
immediately at any time if the Committee deems such amendment or termination
appropriate to comply
with applicable law, to avoid adverse accounting
or tax consequences in connection with the Deferral Program or should the
financial accounting rules or tax laws applicable to the Deferral Program be
revised so as to subject Hilton to adverse accounting consequences or to
subject Hilton or Deferral Program participants to adverse tax consequences, in
connection with the Deferral Program, as determined by Hilton in its sole
discretion.  In addition, the Committee
reserves the right to freeze the Deferral Program at any time and to cease all
elections then in place to defer additional Stock Units.  Upon such an election, the Committee will
communicate to you that the Deferral Program has been frozen and that no Stock
Units will be deferred under the Deferral Program, regardless of any then
current election to the contrary. 
Deferrals of Stock Units will thereafter not be permitted until such
time, if any, as the Company elects to re-institute the Deferral Program.  Upon the occurrence of any of the events
described in this paragraph, distributions of phantom shares will continue to
be made in accordance with the terms of this Deferral Program, unless an
alternative method of distribution is permitted under applicable law.


11.           Miscellaneous.


(a)   Funding.  The Deferral Program is intended to be
maintained at all times as an unfunded program for federal income tax
purposes.  The Deferral Program is intended
to be a “top hat” plan, exempt from the substantive requirements of ERISA.  Your sole interest under the Deferral Program
is to receive the benefits provided under the Deferral Program as and when they
become due and payable in accordance with the terms of this Deferral
Program.  The Company need not maintain
any separate fund or account to provide any benefits provided under the
Deferral Program.  Neither you nor any
person claiming under or through you will have any right, title, or interest in
or to any of the assets of the Company and will have only general unsecured
creditor status with respect to benefits under the Deferral Program.


(b)   Nonalienation of Benefits.  No benefit or distribution under this
Deferral Program will be subject to alienation, anticipation, commutation,
pledge, encumbrance, or assignment, whether voluntarily or involuntarily,
contingently, or otherwise, except that you have the right to designate a
beneficiary to receive any amounts payable after your death.  The Company will not be in any way liable for
or subject to the debts, contracts, liabilities, engagements or torts of any
person entitled to benefits or distributions under the Deferral Program.


(c)   Beneficiary.  If distributions are to be made under the
Deferral Program after your death, such distributions will be made to personal
representative of your estate.


 


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