PARK PLACE ENTERTAINMENT CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
PARK PLACE ENTERTAINMENT CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
The following constitutes the provisions of the Park Place
Entertainment Corporation Employee Stock Purchase Plan, effective on the date
on which the common stock may commence trading on the New York Stock Exchange
(the "Effective Date").
1. PURPOSE
The purpose of this Plan is to provide Eligible Employees with an
incentive to advance the best interests of Park Place Entertainment
Corporation by providing a method whereby they may voluntarily purchase
Common Stock at a favorable price and upon favorable terms. This Plan
is not intended to meet the requirements of Section 423 of the Code.
2. DEFINITIONS
Capitalized terms used herein which are not otherwise defined shall
have the following meanings.
"ACCOUNT" shall mean the bookkeeping account maintained by the Company,
or by a recordkeeper on behalf of the Company, for a Participant
pursuant to Section 7(a).
"BOARD" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"COMMITTEE" shall mean the committee appointed by the Board to
administer this Plan pursuant to Section 12.
"COMMON STOCK" shall mean the Common Stock, $0.01 par value per share,
of the Company.
"COMPANY" shall mean Park Place Entertainment Corporation, a Delaware
corporation.
"COMPENSATION" shall mean the following: regular wages and salary,
overtime, shift premium, shift differential, vacation pay, incentive
compensation, and
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bonuses. Compensation also includes amounts contributed as
salary reduction contributions to any plan or program qualifying
under Section 401(k), 125 or 129 of the Code; and tips, tokens and
gratuities, but only to the extent that such tips, tokens and
gratuities are actually reported as income subject to income tax
withholding on Internal Revenue Service Form W-2 for an Eligible
Employee. Any other form of remuneration is excluded from
Compensation, including tip income (except as specifically provided
above), prizes, awards, housing allowances, income resulting from
the exercise of stock options or other acquisition of shares of
Company stock, auto allowances, and other forms of imputed income.
"CONTRIBUTIONS" shall mean the amounts credited to the Account of a
Participant pursuant to Section 7(a).
"ELIGIBLE EMPLOYEE" shall mean any employee of the Company or of any
Participating Subsidiary, except that any employee who has not as of
the Grant Date completed at least 12 months of continuous full-time
employment or whose customary employment is for less than 30 hours per
week shall not be an Eligible Employee. In addition, no person whose
employment is subject to the terms of a collective bargaining agreement
shall be an Eligible Employee, unless the terms of such agreement
specifically extend the benefits of this Plan to such employee. For
purposes of determining whether an employee has completed at least 12
months of continuous full-time employment, periods of employment with
Hilton Hotels Corporation, Grand Casinos, Inc. and their "subsidiaries"
(as determined in the same manner as provided below in the definition
of a Subsidiary of the Company), with the Company, and with any
Participating Subsidiary that was a Participating Subsidiary at the
time of such employment, shall be included. Periods of employment with
any such employers prior to the Effective Date shall be included. At
the sole discretion of the Committee, periods of employment with a
Subsidiary of the Company that was not a Participating Subsidiary at
the time of such employment, with predecessors thereof, or with any
other employer, may also be taken into account.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934 as
amended from time to time, and the rules and regulations thereunder and
interpretation thereof.
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"EXERCISE DATE" shall mean the first business day of the first month
following the end of the Offering Period.
"FAIR MARKET VALUE" shall mean the closing price of a Share on the New
York Stock Exchange on such date (or, in the event that the Common
Stock is not traded on such date, on the immediately preceding date),
as reported in The Wall Street Journal. In the event the Common Stock
is not listed on the New York Stock Exchange, the "Fair Market Value"
shall be the closing price of the Common Stock for such date (or, in
the event that the Common Stock is not traded on such date, on the
immediately preceding trading date), on The Nasdaq Stock Market
("NASDAQ") or, if such price is not reported, the mean of the bid and
asked prices per Share on NASDAQ or, if such prices are not listed or
reported, as determined by the Committee (or its delegate) in its
discretion.
"GRANT DATE" shall mean the first business day of each Offering Period
commencing on or after the Effective Date.
"OFFERING PERIOD" shall mean the period of six consecutive months
commencing on each January 1 and the period of six consecutive months
commencing on each July 1.
"OPTION" shall mean the nonqualified stock option to acquire Shares
granted to a Participant pursuant to Section 8.
"OPTION PRICE" shall mean the exercise price per share of an Option as
determined in accordance with Section 8(b).
"PARTICIPANT" shall mean an Eligible Employee who has elected to
participate in this Plan and who has filed a valid and effective
Subscription Agreement pursuant to Section 6.
"PARTICIPATING SUBSIDIARY" shall mean a Subsidiary which has been
designated in writing by the Committee as a "Participating Subsidiary"
and which by resolution of its board of directors or other governing
body elects to participate in the Plan and to authorize the Board and
the Committee to act on its behalf in all matters relating to the Plan.
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"PLAN" shall mean this Park Place Entertainment Corporation Employee
Stock Purchase Plan, as amended from time to time.
"SHARE" shall mean a share of Common Stock.
"SUBSCRIPTION AGREEMENT" shall mean the agreement filed by an Eligible
Employee with the Company pursuant to Section 6 to participate in this
Plan.
"SUBSIDIARY" shall mean any corporation or other entity in an unbroken
chain of corporations or other entities (beginning with the Company) in
which each corporation or other entity (other than the last corporation
or other entity) owns, directly or in combination with the Company or
one or more other Subsidiaries, stock or other equity interests
possessing 50% or more of the total combined voting power of all
classes of stock or other equity interests in one or more of the other
corporations or other entities in the chain.
"TERMINATION OF EMPLOYMENT" shall mean the cessation or termination of
a Participant's employment with the Company or any Participating
Subsidiary for any cause or reason whatsoever, including but not
limited to disability, death, or resignation, whether voluntary or
involuntary, with or without cause or otherwise; but a change of
employment from the Company or any Participating Subsidiary to the
Company or any other Participating Subsidiary shall not be considered a
Termination of Employment.
3. ELIGIBILITY
Any person employed as an Eligible Employee on a Grant Date shall be
eligible to participate in this Plan during the Offering Period
commencing on such Grant Date, subject to the satisfaction by such
person of the requirements of Section 6.
4. STOCK SUBJECT TO THIS PLAN; SHARE LIMITATION
The total number of Shares to be made available for purchase under this
Plan is 5,000,000 authorized and unissued or treasury shares of Common
Stock, subject to adjustments pursuant to Section 17. The aggregate
number of Shares an Eligible Employee may purchase under this Plan
during each Offering Period shall not
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exceed 3,500 Shares, subject to adjustments pursuant to Section 17. In
the event that all of the Shares made available under this Plan are
subscribed prior to the expiration of this Plan, this Plan may be
terminated in accordance with Section 18.
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5. OFFERING PERIODS
During the term of this Plan, the Company will offer Options to
purchase Shares to all Participants during each Offering Period. Except
as indicated by the third sentence of Section 6, each Option shall
become effective on the Grant Date. The term of each Option is six
months and shall end on the Exercise Date. Offering Periods shall
continue until this Plan is terminated in accordance with Section 18,
or, if earlier, until no Shares remain available for Options pursuant
to Section 4.
6. PARTICIPATION
An Eligible Employee may become a participant in this Plan by
completing a Subscription Agreement on a form approved by the Committee
(or its delegate) in the manner prescribed by the Committee or its
delegate. A Subscription Agreement must be filed with the Company prior
to the applicable Grant Date for the first Offering Period for which
such Subscription Agreement is intended to be effective, and must set
forth the percentage of such Eligible Employee's Compensation to be
credited to the Participant's Account as Contributions. Notwithstanding
the preceding sentence, at the discretion of the Committee, a
Subscription Agreement filed for an Offering Period but after the
commencement thereof shall be given effect for Compensation for the
portion of the Offering Period following the date of receipt of such
Subscription Agreement by the Committee, as well as for Compensation
for subsequent Offering Periods to the extent provided below. An
Eligible Employee may elect to contribute, in whole percentages, not
less than 1% and not more than 10% of such Eligible Employee's
Compensation during an Offering Period; provided, however, that a
Participant may not make Contributions in excess of $12,500 during any
Offering Period. A Subscription Agreement shall evidence the
authorization and consent by an Eligible Employee to the Company's
withholding from his or her Compensation of the amount of his or her
Contributions. A Subscription Agreement shall remain in force for
subsequent Offering Periods, unless and until (i) an Eligible Employee
executes and timely files a new Subscription Agreement modifying his or
her deferral percentage or (ii) there is a termination, pursuant to the
provisions of this Plan, of such Eligible Employee's participation in
the Plan.
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7. METHOD OF PAYMENT OF CONTRIBUTIONS
(a) The Company shall maintain on its books, or cause to be
maintained by a recordkeeper reporting to the Committee, an
Account in the name of each Participant. The percentage of
Compensation elected to be applied as Contributions by a
Participant shall be deducted from such Participant's
Compensation on each payday during the period for payroll
deductions set forth below and such payroll deductions shall be
credited to that Participant's Account as of each such payday. A
Participant may not make any additional payments into his or her
Account. A Participant's Account shall be reduced by any amounts
used to pay the Option Price of Shares acquired, or by any
amounts distributed, pursuant to the terms hereof.
(b) Payroll deductions shall commence as of the first day of the
payroll period which coincides with or immediately follows the
applicable Grant Date (or on such other date as may be determined
by the Committee in circumstances described in the third sentence
of Section 6), and shall end on the last day of the payroll
period which coincides with or immediately precedes the
applicable Exercise Date, unless sooner terminated by the
Participant or otherwise as provided in paragraph (c) of this
Section and in Section 11.
(c) A Participant may terminate his or her participation in this
Plan, as provided in Section 11, by completing and filing with
the Company, in such manner as the Committee (or its delegate)
may prescribe, a new Subscription Agreement or such other form or
notice that the Committee may prescribe or deem acceptable for
this purpose. Such change shall be effective as soon as
administratively practicable after its receipt by the Company.
8. GRANT OF OPTION
(a) On each Grant Date, or on such other date as is determined
pursuant to the parenthetical clause in Section 7(b) where
relevant, each Eligible Employee who elects to participate during
that Offering Period shall be granted an Option to purchase a
number of Shares. The Option shall be
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exercised on the Exercise Date as provided in Section 9. The
number of Shares subject to the Option shall be determined by
dividing the Participant's Account balance as of the applicable
Exercise Date by the Option Price (as determined pursuant to
Section 8(b)) and rounding down to the nearest whole number.
(b) The Option Price per Share of the Shares subject to an Option
shall be the lesser of: (i) 95% of the Fair Market Value of a
Share on the applicable Grant Date, or (ii) 95% of the Fair
Market Value of a Share on the applicable Exercise Date.
9. EXERCISE OF OPTION
A Participant's Option for the purchase of Shares shall be exercised
automatically on the Exercise Date for that Offering Period, without
any further action on the Participant's part, and the maximum number of
Shares subject to such Option shall be purchased at the Option Price
with the balance of such Participant's Account. If any amount (which is
not sufficient to purchase a whole Share) remains in a Participant's
Account after the exercise of his or her Option on the Exercise Date,
such amount shall be retained in the Participant's Account during the
next Offering Period and used to pay the Option Price of Shares on the
next Exercise Date, if he or she is a Participant during such Offering
Period, or if he or she is not a Participant during such Offering
Period, such amount shall be refunded to the Participant as soon as
administratively practicable. The Shares purchased upon exercise of an
Option shall be deemed to be transferred to the Participant on the
applicable Exercise Date.
10. DELIVERY
As soon as administratively practicable after each Exercise Date, but
subject to compliance with the requirements of this Plan, including,
without limitation, the provisions of Section 21 (relating to taxes),
the Company shall either (i) deliver to each Participant a certificate
representing the Shares purchased upon exercise of his or her Option,
or (ii) in the event the Company implements an alternative arrangement
providing for delivery to a recordkeeping service that maintains
records regarding the ownership
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of Shares by Participants, deliver such certificate or other
evidence of ownership of such Shares to such recordkeeping service.
11. TERMINATION OF PARTICIPATION; TERMINATION OF EMPLOYMENT; REDUCTION IN
SERVICE
(a) A Participant may terminate his or her participation in the Plan
during an Offering Period by giving written notice to the Company
in such manner as the Committee (or its delegate) may determine.
As soon as practicable after such notice is provided, the
Participant's Contributions shall cease and no further
Contributions shall be made for the Offering Period.
Notwithstanding such termination, on the Exercise Date for such
Offering Period the Participant's remaining Account balance shall
be used to pay the Option Price of Shares pursuant to Section 9.
(b) Upon a Participant's Termination of Employment with the Company
or a Participating Subsidiary for any reason (including, but not
limited to, death or retirement) at any time prior to an Exercise
Date, the balance of the Participant's Account shall be paid in
cash to him or her, or, in the event of such Participant's death,
to the person or persons entitled thereto under Section 13, and
such Participant's Option for the Offering Period shall be
automatically terminated.
(c) In the event that during an Offering Period a Participant is no
longer an Eligible Employee, such Participant shall be determined
to have terminated participation in the Plan and the full amount
of his or her Account shall be paid to him or her in cash.
(d) A Participant's termination of participation in the Plan during
an Offering Period for any reason precludes the Participant from
again participating in this Plan during that Offering Period.
However, such termination shall not have any effect upon his or
her ability to participate in any succeeding Offering Period,
provided that the applicable eligibility and participation
requirements are met. A Participant's termination from Plan
participation shall be deemed to be a
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revocation of that Participant's Subscription Agreement and
such participant must file a new Subscription Agreement to
resume Plan participation in any succeeding Offering Period.
12. ADMINISTRATION
The Board shall appoint the Committee that shall supervise and
administer this Plan and shall have full power and discretion to adopt,
amend and rescind any rules deemed desirable and appropriate for the
administration of this Plan and not inconsistent with the terms of this
Plan, and to make all other determinations necessary or advisable for
the administration of this Plan. No member of the Committee shall be
entitled to act on or decide any matter relating solely to himself or
herself or any of his or her rights or benefits under this Plan. The
Committee shall have full power and discretionary authority to construe
and interpret the terms and conditions of this Plan, which construction
or interpretation shall be final and binding on all parties including
the Company, each Participant and his or her beneficiaries, spouse,
estate and other heirs, and each Participating Subsidiary. The
composition of the Committee shall be in accordance with the
requirements to obtain or retain any available exemption from Section
16(b) of the Exchange Act.
13. DESIGNATION OF BENEFICIARY
(a) A Participant may file, in a manner prescribed by the Committee
(or its delegate), a written designation of a beneficiary who is
to receive any Shares or cash from such Participant's Account
under this Plan in the event of such Participant's death. If a
Participant's death occurs subsequent to the end of an Offering
Period but prior to the delivery to him or her of any Shares
deliverable under the terms of this Plan, such Shares and any
remaining balance of such Participant's Account shall be paid to
such beneficiary (or such other recipient as is determined
pursuant to Section 13(b)) as soon as administratively
practicable after the Company receives notice of such
Participant's death, and any outstanding unexercised Option
granted to such Participant shall terminate. If a Participant's
death occurs at any other time, the balance of such
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Participant's Account shall be paid to such beneficiary (or
such other recipient as is determined pursuant to Section
13(b)) in cash as soon as administratively practicable after
the Company receives notice of such Participant's death and
such Participant's Option shall terminate. If a Participant is
married at the time of filing of a designation of beneficiary
and the designated beneficiary is not his or her spouse, the
consent of the person then married to the Participant shall be
required for such designation to be effective.
(b) Beneficiary designations may be changed by a Participant (and his
or her spouse, if required) at any time on forms provided and in
the manner prescribed by the Committee (or its delegate). If a
Participant dies with no validly designated beneficiary under
this Plan who is living at the time of such Participant's death,
the Company shall deliver all Shares and/or cash payable pursuant
to the terms hereof to the executor or administrator of the
estate of the Participant, or if no such executor or
administrator has been appointed, the Company may deliver such
Shares and/or cash to the spouse or to any one or more dependents
or relatives of the Participant, or to such other person as is
determined by the Company to be entitled to such property under
applicable law.
14. TRANSFERABILITY
Neither Contributions credited to a Participant's Account nor any
Options or rights with respect to the exercise of Options or rights to
receive Shares under this Plan may be assigned, transferred, pledged or
otherwise disposed of by the Participant in any way (other than by
will, the laws of descent and distribution, or as provided in Section
13). Any such attempt at assignment, transfer, pledge or other
disposition shall be void and of no force or effect.
15. USE OF FUNDS; INTEREST; DIVIDENDS
All Contributions received or held by the Company under this Plan will
be included in the general assets of the Company and may be used for
any corporate purpose, and need not be set aside in a segregated
account. It is
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intended that the Plan constitute an "unfunded" plan for incentive
compensation, and Participants shall have no interest in any amounts
set aside by the Company to purchase Shares under the Plan or
otherwise. No interest or dividends will be paid to any Participant
or credited to his or her Account under this Plan.
16. REPORTS
Statements shall be provided to Participants as soon as
administratively practicable following each Exercise Date. Each
Participant's statement shall set forth, as of such Exercise Date, that
Participant's Account balance immediately prior to the exercise of his
or her Option, the Fair Market Value of a Share, the Option Price, the
number of Shares purchased and his or her remaining Account balance, if
any.
17. ADJUSTMENTS OF AND CHANGES IN THE STOCK
In the event that the Shares shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the
Company or of another corporation (whether by reason or merger,
consolidation, recapitalization, stock split, combination of shares, or
otherwise), or if the number of Shares shall be increased through a
stock split or the payment of a stock dividend, then there shall be
substituted for or added to each Share theretofore reserved for sale
under this Plan, the number and kind of shares of stock or other
securities into which each outstanding Share shall be so changed, or
for which each such Share shall be exchanged, or to which each such
Share is entitled, as the case may be, for the number or kind of
securities which may be sold under this Plan and the purchase price per
Share shall be appropriately adjusted consistent with such change in
such manner as the Committee (or its delegate) may deem equitable to
prevent substantial dilution of enlargement of rights granted to, or
available for, Eligible Employees under this Plan.
In making any adjustments hereunder, or in determining that no such
adjustments are necessary, the Committee may rely upon the advice of
either or both of legal counsel and independent accountants. The
determination of the Committee as to adjustments, if any, shall be
binding and conclusive.
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18. TERM OF PLAN; AMENDMENT OR TERMINATION
(a) This Plan shall become effective on the Effective Date. This
Plan shall terminate at the close of business on the Exercise
Date for the Offering Period ending December 31, 2008, unless
sooner terminated pursuant to this Section 18.
(b) The Board may at any time in its discretion modify or amend,
in whole or in part, any provision of or otherwise alter,
suspend or terminate this Plan as it may deem advisable,
provided, however, that no such Board action may, without the
consent of an Eligible Employee, adversely affect any Option
theretofore granted to an Eligible Employee.
19. NOTICES
All notices or other communications by a Participant to the Company or
a Participating Subsidiary that are contemplated by this Plan shall be
deemed to have been duly given when received in the form and manner
specified by the Committee (or its delegate) at the location or
locations, or by the person or persons, designated by the Committee (or
its delegate) for that purpose. If such a designation is not made, any
such notice shall be addressed to the Company as follows: 3930 Howard
Hughes Parkway, Suite 400, Las Vegas, Nevada 89109, Attention:
Secretary.
20. CONDITIONS UPON ISSUANCE OF SHARES
Shares shall not be issued with respect to an Option unless the
exercise of such Option and the issuance and delivery of such Shares
complies with all applicable provisions of law, domestic or foreign,
including, without limitation, the Securities Act of 1933, as amended,
the Exchange Act, any applicable state securities laws, the rules and
regulations promulgated thereunder, and the requirements of any stock
exchange or other established securities market upon which the Shares
may then be listed.
As a condition precedent to the exercise of any Option, if, in the
opinion of counsel for the Company such representation is necessary or
appropriate under applicable law, the Company may require any person
exercising such Option to represent and warrant that
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the Shares subject thereto are being acquired only for investment
and without any present intention to sell or distribute such Shares.
21. WITHHOLDING OF TAXES
Upon the exercise of an Option, the Participant to whom the Option was
granted shall be required to pay to the Company the amount of any
federal, state, local or foreign taxes which the Company is required to
deduct, withhold or pay over with respect to the exercise of such
Option, and the Company shall have the right to deduct from any wages
or other compensation paid to the Participant by the Company (including
through the withholding of Shares purchased upon the exercise of an
Option, if then authorized by the Committee and applicable law) the
amount of any tax required to be deducted, withheld or paid over with
respect to an Option which is not otherwise paid. The Company shall not
be required to make any delivery of any Shares under this Plan until
the amounts of all taxes described in the preceding sentence relating
to such Shares have been received by the Company.
22. ADDITIONAL RESTRICTIONS OF RULE 16b-3
The terms and conditions of Options granted hereunder to, and the
purchase of Shares by persons subject to Section 16 of the Exchange Act
shall comply with the applicable provisions of Rule 16b-3 promulgated
thereunder ("Rule 16b-3"). This Plan shall be deemed to contain, and
Options shall contain, and the Shares issued upon exercise thereof
shall be subject to, such additional conditions and restrictions as the
Committee (or its delegate) may determine, in its discretion, are
required by Rule 16b-3 to qualify for the maximum exemption available
from Section 16 of the Exchange Act.
23. GOVERNMENT REGULATIONS
This Plan, the grant of Options and the transfer by the Company of
Shares pursuant to the exercise of Options hereunder, and all related
transactions between the Company and the Participant shall be subject
to all applicable federal, state, local and foreign laws, rules and
regulations and to such approvals by regulatory or governmental
agencies as may be required.
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24. EMPLOYEE'S RIGHTS
Nothing in this Plan shall confer on any Eligible Employee any right to
continue in the service of the Company or any Subsidiary, or prevent,
interfere with or limit in any way the right of the Company or any
Subsidiary to terminate any Eligible Employee's employment or service
on the Board at any time. No employee shall have any rights as a
shareholder until a certificate for Shares has been issued in the
Participant's name (or such Shares have otherwise been delivered
pursuant to Section 10) following exercise of his or her Option.