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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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(MARK ONE)
X FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
/ / FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NO. 1-10410
HARRAH'S ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Exhibit 3(1)
CERTIFICATE OF INCORPORATION
OF
THE PROMUS COMPANIES INCORPORATED
FIRST: The name of the Corporation is The Promus Companies
Incorporated.
SECOND: The address of the registered office of the Corporation in
the State of Delaware is The Corporation Trust Center, 1209 Orange Street,
in the City of Wilmington, County of New Castle. The name of its
registered agent at that address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of Delaware as set forth in Title 8 of the Delaware Code
(the "GCL").
FOURTH: A. The total number of shares of stock which the Corporation
shall have authority to issue is 125,150,000, consisting of 120,000,000
shares of Common Stock, par value $1.50 per share (the "Common Stock"),
150,000 shares of Preferred Stock, par value of $100.00 per share (the
"Preferred Stock"), and 5,000,000 shares of Special Stock, par value $1.12 1/2
per share (the "Special Stock").
B. Shares of Preferred Stock may be issued from time to time in one
or more series, as provided for herein or as provided for by the Board of
Directors as permitted hereby. All shares of Preferred Stock shall be of
equal rank and shall be identical, except in respect of the terms fixed
herein for the series provided for herein or fixed by the Board of
Directors for series provided for by the Board of Directors as permitted
hereby. All shares of any one series shall be identical in all respects
with all the other shares of such series, except the shares of any one
series issued at different times may differ as to the dates from which
dividends thereon may be cumulative.
The Board of Directors is hereby authorized, by resolution or
resolutions, to establish, out of the unissued shares of Preferred Stock
not then allocated to any series of Preferred Stock, additional series of
Preferred Stock. Before any shares of any such additional series are
issued, the Board of Directors shall fix and determine, and is hereby
expressly empowered to fix and determine, by resolution or resolutions, the
distinguishing characteristics and the relative rights, preferences,
privileges and immunities of the shares thereof, so far as not inconsistent
with the provisions of this Article
FOURTH. Without limiting the generality of the foregoing, the Board of
Directors may fix and determine:
1. The designation of such series, the number of shares which
shall constitute such series and the par value, if any, of such
shares;
2. The rate of dividend, if any, payable on shares of such
series;
3. Whether the shares of such series shall be cumulative,
non-cumulative or partially cumulative as to dividends, and the dates
from which any cumulative dividends are to accumulate;
4. Whether the shares of such series may be redeemed, and, if
so, the price or prices at which and the terms and conditions on which
shares of such series may be redeemed;
5. The amount payable upon shares of such series in the event
of the voluntary or involuntary dissolution, liquidation on winding up
of the affairs of the Corporation;
6. The sinking fund provisions, if any, for the redemption of
shares of such series;
7. The voting rights, if any, of the shares of such series;
8. The terms and conditions, if any, on which shares of such
series may be converted into shares of capital stock of the
Corporation of any other class or series;
9. Whether the shares of such series are to be preferred over
shares of capital stock of the Corporation of any other class or
series as to dividends, or upon the voluntary or involuntary
dissolution, liquidation, or winding up of the affairs of the
Corporation, or otherwise; and
10. Any other characteristics, preferences, limitations,
rights, privileges, immunities or terms not inconsistent with the
provisions of this Article FOURTH.
C. Shares of Special Stock may be issued from time to time in one or
more classes or series as provided in this Section C of Article FOURTH.
Subpart I of this Section C sets forth provisions respecting the
Special Stock as a class. Subpart II vests in the Board of Directors
authority to designate series of Special
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Stock and to determine and fix the distinguishing characteristics and
rights, privileges and immunities thereof.
SUBPART I. The Special Stock as a Class
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1. General. Shares of Special Stock may be issued from time to time
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in one or more series, as provided for by the Board of Directors as
permitted hereby. All shares of Special Stock shall be of equal rank and
shall be identical, except in respect of the terms fixed by the Board of
Directors for series provided for by the Board of Directors as permitted
hereby. All shares of any one series shall be identical in all respects
with all the other shares of such series, except the shares of any one
series issued at different times may differ as to the dates from which
dividends thereon may be cumulative.
2. Status of Reacquired Shares. Shares of any series of Special
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Stock which have been redeemed, purchased or otherwise acquired by the
Corporation, or which are no longer deemed to be outstanding by virtue of
funds or securities necessary for redemption or payment having been set
aside or deposited in trust or otherwise, or which, if convertible, have
been converted into shares of stock of the Corporation of any other class
or series, shall, upon appropriate filing and recording to the extent
required by law, have the status of authorized and unissued shares of
Special Stock and may be reissued as part of any series of Special Stock
provided for by the Board of Directors as permitted hereby.
SUBPART II. Series of Special Stock
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The Board of Directors is hereby authorized, by resolution or
resolutions, to establish, out of the unissued shares of Special Stock not
then allocated to any series of Special Stock, additional series of Special
Stock. Before any shares of any such additional series are issued, the
Board of Directors shall fix and determine, and is hereby expressly
empowered to fix and determine, by resolution or resolutions, the
distinguishing characteristics and the relative rights, preferences,
privileges and immunities of the shares thereof, so far as not inconsistent
with the provisions of this Article FOURTH. Without limiting the
generality of the foregoing, the Board of Directors may fix and determine:
1. The designation of such series, the number of shares which
shall constitute such series and the par value, if any, of such
shares;
2. The rate of dividend, if any, payable on shares of such
series;
3. Whether the shares of such series shall be cumulative,
non-cumulative or partially cumulative as to
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dividends, and the dates from which any cumulative dividends are to
accumulate;
4. Whether the shares of such series may be redeemed, and, if
so, the price or prices at which and the terms and conditions on which
shares of such series may be redeemed;
5. The amount payable upon shares of such series in the event
of the voluntary or involuntary dissolution, liquidation or winding up
of the affairs of the Corporation;
6. The sinking fund provisions, if any, for the redemption of
shares of such series;
7. The voting rights, if any, of the shares of such series;
8. The terms and conditions, if any, on which shares of such
series may be converted into shares of capital stock of the
Corporation of any other class or series;
9. Whether the shares of such series are to be preferred over
shares of capital stock of the Corporation of any other class or
series as to dividends, or upon the voluntary or involuntary
dissolution, liquidation, or winding up of the affairs of the
Corporation, or otherwise; and
10. Any other characteristics, preferences, limitations,
rights, privileges, immunities or terms not inconsistent with the
provisions of this Article FOURTH.
D. Except as otherwise provided in this Certificate of Incorporation
(including this Section D of Article FOURTH and including the resolutions
adopted by the Board of Directors pursuant to Section B or C of this
Article FOURTH), each holder of Common Stock shall be entitled to one vote
for each share of Common Stock held by him on all matters submitted to
stockholders for a vote and each holder of Preferred Stock or Special Stock
of any series that is Voting Stock shall be entitled to such number of
votes for each share held by him as may be specified in the resolutions
providing for the issuance of such series.
(a) Definitions. The following definitions shall apply to this
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Section D of Article FOURTH:
"Affiliate" and "Associate" shall have the meanings given to such
terms in Article NINTH.
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A person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "Beneficially Own," shares of Capital Stock:
(i) which such person or any of such person's Affiliates or
Associates, directly or indirectly, has the sole or shared right to
vote or dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided that a person shall
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not be deemed the "Beneficial Owner" of, or to "Beneficially Own," any
security under this subparagraph (i) as a result of an agreement,
arrangement or understanding to vote such security that: (A) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not reportable by such person on Schedule 13D
under the Exchange Act (or any comparable or successor report) without
giving effect to any applicable waiting period; or
(ii) which are Beneficially Owned, directly or indirectly, by
any other person (or any Affiliate or Associate thereof) with which
such person (or any of such person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to subparagraph (i) above)
or disposing of any Capital Stock;
provided further that: (x) no director or officer of the Corporation (nor
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any Affiliate or Associate of any such director or officer) shall, solely
by reason of any or all of such directors or officers acting in their
capacities as such, be deemed the "Beneficial Owner" of or to "Beneficially
Own" any shares of Capital Stock that are Beneficially Owned by any other
such director or officer; (y) in the case of any employee stock ownership
or similar plan of the Corporation or of any Subsidiary in which the
beneficiaries thereof possess the right to vote the shares of Voting Stock
held by such plan, no such plan nor any trustee with respect thereto (nor
any Affiliate or Associate of such trustee), solely by reason of such
capacity of such trustee, shall be deemed the "Beneficial Owner" of or to
"Beneficially Own" the shares of Voting Stock held under such plan; and (z)
no person shall be deemed the "Beneficial Owner" of or to "Beneficially
Own" any shares of Voting Stock held in any voting trust, employee stock
ownership plan or any similar plan or trust
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if such person does not possess the right to vote such shares.
"Capital Stock" shall have the meaning given to such term in Article
NINTH.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
The term "person" shall mean any individual, firm, company or other
entity.
"Subsidiary" shall have the meaning given to such term in Article
NINTH.
"Substantial Stockholder" shall mean any person (other than any
Subsidiary, any employee benefit plan of the Corporation or any Subsidiary,
or any person organized, appointed or established by the Corporation or any
Subsidiary for or pursuant to the terms of any such plan) who Beneficially
Owns shares of Voting Stock that would, before giving effect to the
reduction in votes prescribed in paragraph (b), represent more than the
Threshold Percentage of the total number of votes entitled to be cast by
the holders of all outstanding shares of Voting Stock.
"Threshold Percentage" for any person shall equal 10%, except that it
shall be adjusted as follows:
(i) If the percentage of the votes entitled to be cast in
respect of all outstanding shares of Voting Stock represented by the
votes entitled to be cast in respect of the shares of Voting Stock
that are Beneficially Owned by any person, before giving effect to the
reduction in votes prescribed in paragraph (b), is increased above the
Threshold Percentage previously applicable to such person solely as a
result of any decrease in the number of outstanding shares of Voting
Stock, then the Threshold Percentage for such person shall be adjusted
upward to reflect the percentage increase in the votes that may be
cast in respect of the shares of Voting Stock that are Beneficially
owned by such person, before giving effect to the reduction in votes
prescribed in paragraph (b), caused by such decrease in the number of
outstanding shares of Voting Stock.
(ii) If the Threshold Percentage for any person is greater than
10% and the percentage of the votes entitled to be cast in respect of
all shares of Voting Stock represented by the votes entitled to be
cast in respect of the shares of Voting Stock that
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are Beneficially Owned by such person, before giving effect to the
reduction in votes prescribed in paragraph (b), decreases for any
reason (including as a result of a sale or other disposition by such
person of any shares of Voting Stock or any increase in the number of
outstanding shares of Voting Stock), then such person's Threshold
Percentage shall be adjusted downward so as to equal the greater of:
(x) 10%; or (y) the percentage of the votes entitled to be cast in
respect of all outstanding shares of Voting Stock represented by the
votes entitled to be cast in respect of the shares of Voting Stock
that are Beneficially Owned by such person before giving effect to the
reduction in votes prescribed in paragraph (b).
"Voting Stock" shall have the meaning given to such term in Article
NINTH.
(b) Limitation of Votinq Riqhts.
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(i) So long as a Substantial Stockholder Beneficially Owns shares of
Voting Stock that would, before giving effect to the reduction of votes
prescribed by this paragraph (b), carry votes in excess of his Threshold
Percentage of the votes entitled to be cast in respect of all outstanding
shares of Voting Stock, and any other provision of this Certificate of
Incorporation notwithstanding, the record holders of the shares of Voting
Stock that are Beneficially Owned by the Substantial Stockholder shall have
limited voting rights on any matter requiring their vote or consent as set
forth in this paragraph (b). As to any shares of Voting Stock Beneficially
Owned by a Substantial Stockholder that would, before giving effect to the
reduction of votes prescribed by this paragraph (b), carry votes in excess
of his Threshold Percentage of the votes entitled to be cast in respect of
all outstanding shares of Voting Stock, the record holders thereof shall be
entitled to cast one one-hundredth (1/100) of the votes which the holders
of such shares would, but for the provisions of this paragraph (b), be
entitled to cast. The aggregate voting power, so limited, of the record
holders of the shares of Voting Stock that are Beneficially Owned by the
Substantial Stockholder shall be allocated proportionately among such
record holding as follows: Each such record holder shall be entitled, with
respect to the shares of Voting Stock that are Beneficially Owned by the
Substantial Stockholder and held of record by such record holder, to a
number of votes equal to the product of (x) the aggregate number of votes
that would have been carried by such shares before giving effect to the
reduction in votes prescribed by this paragraph (b), multiplied by (y) the
fraction obtained by dividing (A) the number of votes carried by the shares
of Voting Stock that are Beneficially Owned by the Substantial Stockholder
after giving effect to the reduction in votes prescribed by this paragraph
(b), by (B) the
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number of votes carried by the shares of Voting Stock that are Beneficially
Owned by the Substantial Stockholder before giving effect to the reduction
in votes prescribed by this paragraph (b).
(ii) Notwithstanding the foregoing subparagraph (b)(i), so long as
there are seven or more persons who Beneficially Own shares of Voting
Stock, the record holders of the shares of Voting Stock that are
Beneficially Owned by a Substantial Stockholder collectively shall not be
entitled to cast in respect of such shares, on any matter submitted to
stockholders for vote or consent, a number of votes in excess of the sum of
(x) the applicable Threshold Percentage plus (y) 5%, of the number of votes
entitled to be cast in respect of all outstanding shares of Voting Stock
(with the number of votes being determined in each case after giving effect
to the reduction in votes prescribed by paragraph (b)). If the preceding
sentence reduces the total number of votes that the record holders of the
shares of Voting Stock that are Beneficially Owned by a Substantial
Stockholder are entitled to cast in respect of such shares, such reduction
shall be effected, and the number of votes that each such record holder is
entitled to cast in respect of such shares shall be determined, in
accordance with the allocation provisions of subparagraph (b)(i).
(c) Factual Determinations.
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(i) The Board of Directors shall have the power and duty to construe
and apply the provisions of this Section D of Article FOURTH and to make
all determinations necessary or desirable to implement such provisions,
including but not limited to determining: (v) the number of shares of
Voting Stock that are Beneficially Owned by any person; (w) whether a
person is an Affiliate or Associate of another person; (x) whether a person
has an agreement, arrangement, or understanding with another person as to
the matters referred to in the definition of Beneficial Ownership; (y) the
application of any other definition of operative provision of this Section
D of Article FOURTH to the given facts; and (z) any other matter relating
to the applicability or effect of this Section D of Article FOURTH.
(ii) The Board of Directors shall have the right to demand that any
person who it believes is or may be a Substantial Stockholder (or who holds
of record shares of Capital Stock that are Beneficially Owned by any person
that the Board of Directors believes is or may be a Substantial
Stockholder) supply the Corporation with complete information as to: (x)
the record holders of all shares of Capital Stock that are Beneficially
Owned by such person; (y) the number of shares of each class or series of
Capital Stock that are Beneficially Owned by such person and held of record
by each such record holder and the numbers of the stock certificates
evidencing
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such shares; and (z) any other matter relating to the applicability or
effect of this Section D of Article FOURTH as the Board of Directors may
reasonably request. Each such person shall furnish such information within
10 days after the receipt of such demand.
(iii) Any construction, application or determination made by the
Board of Directors pursuant to this Section D of Article FOURTH in good
faith and on the basis of such information and assistance as was then
reasonably available for such purpose shall be conclusive and binding upon
the Corporation and its stockholders, including any Substantial
Stockholder.
(d) Ouorum. Except as otherwise provided by law, the presence, in
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person or by proxy, of the holders of record of shares of Capital Stock
entitling the holders thereof to cast a majority of the votes entitled to
be cast by the holders of shares of Capital Stock entitled to vote (after
giving effect to the reduction in votes prescribed in paragraph (b)) shall
constitute a quorum at all meetings of the stockholders, and any quorum
requirement or any requirement for stockholder consent or approval shall be
determined after giving effect to the reduction in votes prescribed in
paragraph (b).
(e) No Derogation of Fiduciary Obliqations. Nothing contained in
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this Section D of Article FOURTH shall be construed to relieve any
Substantial Stockholder from any fiduciary obligation imposed by law.
(f) Severability. If any provision of this Section D of Article
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FOURTH is determined to be invalid, void, illegal or unenforceable, the
remaining provisions of this Section D of Article FOURTH shall continue to
be valid and enforceable and shall in no way be affected, impaired or
invalidated.
(g) Termination. The limitation on voting rights prescribed by this
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Section D of Article FOURTH shall terminate and be of no force and effect
as of the earliest to occur of
(i) the close of business on April 16, 1992; or
(ii) the date that any person other than Holiday Inns, Inc. or
Holiday Corporation becomes the Beneficial Owner of shares of Voting
Stock representing at least 75% of the total number of votes entitled
to be cast in respect of all outstanding shares of Voting Stock,
before giving effect to the reduction in votes prescribed by paragraph
(b); or
(iii) the date (the "Reference Date") one day prior to the date
on which, as a result of such limitation of voting rights, the Common
Stock will be delisted from (including by ceasing to be temporarily or
provisionally authorized for listing with) the New York Stock Exchange
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(the "NYSE") or the American Stock Exchange (the "AMEX"), or be no
longer authorized for inclusion (including by ceasing to be
provisionally or temporarily authorized for inclusion) on the National
Association of Securities Dealers, Inc. Automated Quotation
System/National Market System ("NASDAQ/NMS"); provided, however, that
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(a) such termination shall not occur until the earlier of (x) the 90th
day after the Reference Date or (y) the first day on or after a
Reference Date that there is not pending a proceeding under the rules
of the NYSE, the AMEX or the NASDAQ/NMS or any other administrative or
judicial proceeding challenging such delisting or removal of
authorization of the Common Stock, an application for listing of the
Common Stock with the NYSE or the AMEX or for authorization for the
Common Stock to be included on the NASDAQ/NMS, or an appeal with
respect to any such application, and (b) such termination shall not
occur by virtue of such delisting or lack of authorization if on or
prior to the earlier of the 90th day after the Reference Date or the
day on which no proceeding, application or appeal of the type
described in (y) above is pending, the Common Stock is approved for
listing or continued listing on the NYSE or the AMEX or authorized for
inclusion or continued inclusion on the NASDAQ/NMS (including any such
approval or authorization which is temporary or provisional). Nothing
contained herein shall be construed so as to prevent the Common Stock
from continuing to be listed with the NYSE or AMEX or continuing to be
authorized for inclusion on the NASDAQ/NMS in the event that the NYSE,
AMEX or NASDAQ/NMS, as the case may be, adopts a rule or is governed
by an order, decree, ruling or regulation of the Securities and
Exchange Commission which provides in whole or in part that companies
having common stock with differential voting rights listed on the NYSE
or the AMEX or authorized for inclusion on the NASDAQ/NMS may continue
to be so listed or included.
E. Notwithstanding any other provision of this Certificate of
Incorporation to the contrary, but subject to the provisions of any
resolutions of the Board of Directors adopted pursuant to this Article
FOURTH creating any series of Preferred Stock, Special Stock or any other
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, outstanding shares of Common Stock,
Preferred Stock, Special Stock or any other class or series of stock of the
Corporation shall always be subject to redemption by the Corporation, by
action of the Board of Directors, if in the judgment of the Board of
Directors such action should be taken, pursuant to Section 151(b) of the
GCL or any other applicable provision of law, to the extent necessary to
prevent the loss or secure the reinstatement of any license or franchise
from any governmental agency held by the Corporation or any Subsidiary to
conduct any portion of the business of the Corporation or any Subsidiary,
which license or franchise is
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conditioned upon some or all of the holders of the Corporation's stock of
any class or series possessing prescribed qualifications. The terms and
conditions of such redemption shall be as follows:
(a) the redemption price of the shares to be redeemed pursuant
to this Section E of Article FOURTH shall be equal to the Fair Market
Value of such shares or such other redemption price as required by
pertinent state or federal law pursuant to which the redemption is
required;
(b) the redemption price of such shares may be paid in cash,
Redemption Securities or any combination thereof;
(c) if less than all the shares held by Disqualified Holders are
to be redeemed, the shares to be redeemed shall be selected in such
manner as shall be determined by the Board of Directors, which may
include selection first of the most recently purchased shares thereof,
selection by lot or selection in any other manner determined by the
Board of Directors;
(d) at least 30 days' written notice of the Redemption Date
shall be given to the record holders of the shares selected to be
redeemed (unless waived in writing by any such holder), provided that
the Redemption Date may be the date on which written notice shall be
given to record holders if the cash or Redemption Securities necessary
to effect the redemption shall have been deposited in trust for the
benefit of such record holders and subject to immediate withdrawal by
them upon surrender of the stock certificates for their shares to be
redeemed;
(e) from and after the Redemption Date or such earlier date as
mandated by pertinent state or federal law, any and all rights of
whatever nature, which may be held by the owners of shares selected
for redemption (including without limitation any rights to vote or
participate in dividends declared on stock of the same class or series
as such shares), shall cease and terminate and they shall thenceforth
be entitled only to receive the cash or Redemption Securities payable
upon redemption; and
(f) such other terms and conditions as the Board of Directors
shall determine.
For purposes of this Section E of Article FOURTH:
(i) "Disqualified Holder" shall mean any holder of shares of stock of
the Corporation of any class (or classes) or series whose holding of such
stock, either individually or when taken together with the holding of
shares of stock of the
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Corporation of any class (or classes) or series by any other holders, may
result, in the judgment of the Board of Directors, in the loss of, or the
failure to secure the reinstatement of, any license or franchise from any
governmental agency held by the Corporation or any Subsidiary to conduct
any portion of the business of the Corporation or any Subsidiary.
(ii) "Fair Market Value" of a share of the Corporation's stock of any
class or series shall mean the average Closing Price for such as share for
each of the 45 most recent days of which shares of stock of such class or
series shall have been traded preceding the day on which notice of
redemption shall be given pursuant to paragraph (d) of this Section E of
Article FOURTH; provided, however, that if shares of stock of such class or
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series are not traded on any securities exchange or in the over-the-counter
market, "Fair Market Value" shall be determined by the Board of Directors
in good faith; and provided further, however, that "Fair Market Value" as
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to any stockholder who purchased any stock of the class (or classes) or
series subject to redemption within 120 days of a Redemption Date need not
(unless otherwise determined by the Board of Directors) exceed the purchase
price paid by him for any stock of such class (or classes) or series of the
Corporation. "Closing Price" on any day means the reported closing sales
price or, in case no such sale takes place, the average of the reported
closing bid and asked prices on the Composite Tape for the New York Stock
Exchange-Listed Stocks, or, if stock of the class or series in question is
not quoted on such Composite Tape, on the New York Stock Exchange, or, if
such stock is not listed on such Exchange, on the principal United States
securities exchange registered under the Securities Exchange Act of 1934 on
which such stock is listed, or, if such stock is not listed on any such
exchange, the highest closing sales price or bid quotation for such stock
on the National Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use, or if no such prices or
quotations are available, the fair market value on the day in question as
determined by the Board of Directors in good faith.
(iii) "Redemption Date" shall mean the date fixed by the Board of
Directors for the redemption of any shares of stock of the Corporation
pursuant to this Section E of Article FOURTH.
(iv) "Redemption Securities" shall mean any debt or equity securities
of the Corporation, any Subsidiary or any other corporation, or any
combination thereof, having such terms and conditions as shall be approved
by the Board of Directors and which, together with any cash to be paid as
part of the redemption price, in the opinion of any nationally recognized
investment banking firm selected by the Board of Directors (which may be a
firm which provides other investment banking, brokerage or other services
to the Corporation), has a value, at the time notice of redemption is given
pursuant to paragraph (d) of this Section E of Article FOURTH, at least
equal to the
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Fair Market Value of the shares to be redeemed pursuant to this Section E
of Article FOURTH (assuming, in the case of Redemption Securities to be
publicly traded, such Redemption Securities were fully distributed and
subject only to normal trading activity).
(v) "Subsidiary" shall mean any corporation more than 50% of whose
outstanding stock entitled to vote generally in the election of directors
is owned by the Corporation, by one or more Subsidiaries or by the
Corporation and one or more Subsidiaries.
FIFTH: A. The Board of Directors shall have the power to make,
adopt, alter, amend, change or repeal the Bylaws of the Corporation by
resolution adopted by the affirmative vote of a majority of the entire
Board of Directors.
B. Stockholders may not make, adopt, alter, amend, change or repeal
the Bylaws of the Corporation except upon the affirmative vote of at least
75% of the votes entitled to be cast by the holders of all outstanding
shares then entitled to vote generally in the election of directors, voting
together as a single class.
SIXTH: The business and affairs of the Corporation shall be managed
by or under the direction of the Board of Directors, which shall consist of
not less than three or more than seventeen directors, the exact number of
directors to be determined from time to time by resolution adopted by
affirmative vote of a majority of the entire Board of Directors. The Board
of Directors shall be divided into three classes, designated Class I, Class
II and Class III. Each class shall consist, as nearly as may be possible,
of one-third of the total number of directors constituting the entire Board
of Directors. At the 1990 annual meeting of stockholders, Class I
directors shall be elected for a one-year term, Class II directors for a
two-year term and Class III directors for a three-year term. At each
succeeding annual meeting of stockholders, beginning in 1991, successors to
the class of directors whose term expires at that annual meeting shall be
elected for a three-year term. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as possible,
and any additional director of any class elected to fill a vacancy
resulting from an increase in such class shall hold office for a term that
shall coincide with the remaining term of that class, but in no case will a
decrease in the number of directors shorten the term of any incumbent
director. A director shall hold office until the annual meeting for the
year in which his term expires and until his successor shall be elected and
shall qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office. Any vacancy on the Board of
Directors that results from an increase in the number of
13
directors may be filled by a majority of the Board of Directors then in
office, provided that a quorum is present, and any other vacancy occurring
in the Board of Directors may be filled by a majority of the directors then
in office, even if less than a quorum, or by a sole remaining director.
Any director elected to fill a vacancy not resulting from an increase in
the number of directors shall have the same remaining term as that of his
predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock or Special Stock issued by the
Corporation shall have the right, voting separately by class or series, to
elect directors at an annual or special meeting of stockholders, the
election, term of office, filling of vacancies and other features of such
directorships shall be governed by the terms of this Certificate of
Incorporation applicable thereto (including the resolutions of the Board of
Directors pursuant to Article FOURTH), and such Directors so elected shall
not be divided into classes pursuant to this Article SIXTH unless expressly
provided by such terms.
SEVENTH: Special meetings of the stockholders of the Corporation, for
any purpose or purposes, may only be called at any time by a majority of
the entire Board of Directors or by either the Chairman or the President of
the Corporation.
EIGHTH: No stockholder action may be taken except at an annual or
special meeting of stockholders of the Corporation and stockholders may not
take any action by written consent in lieu of a meeting.
NINTH: A. In addition to any affirmative vote required by law or
this Certificate of Incorporation (including any resolutions of the Board
of Directors pursuant to Article FOURTH hereof) or the Bylaws of the
Corporation, and except as otherwise expressly provided in Section B of
this Article NINTH, a Business Combination (as hereinafter defined) with,
or proposed by or on behalf of, any Interested Stockholder (as hereinafter
defined) or any Affiliate or Associate (as hereinafter defined) of any
Interested Stockholder or any person who thereafter would be an Affiliate
or Associate of such Interested Stockholder shall require the affirmative
vote of (i) not less than 75% of the votes entitled to be cast by the
holders of all the then outstanding shares of Voting Stock (as hereinafter
defined), voting together as a single class and (ii) not less than a
majority of the votes entitled to be cast by holders of all the then
outstanding Voting Stock, voting together as a single class, excluding
Voting Stock beneficially owned by such Interested Stockholder. Such
affirmative vote shall be required notwithstanding the fact that no vote
may be required, or that a lesser percentage or separate class vote may be
specified, by law or in any agreement with any national securities exchange
or otherwise;
14
B. The provisions of Section A of this Article NINTH shall not be
applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote, if any, as is
required by law or by any other provision of this Certificate of
Incorporation (including any resolutions of the Board of Directors pursuant
to Article FOURTH hereof) or the Bylaws of the Corporation, or any
agreement with any national securities exchange, if all the conditions
specified in either of the following Paragraphs 1 or 2 are met or, in the
case of Business Combination not involving the payment of consideration to
the holders of the Corporation's outstanding Capital Stock (as hereinafter
defined), if the condition specified in the following Paragraph 1 is met:
1. The Business Combinations shall have been approved, either
specifically or as a transaction which is in an approved category of
transactions, by a majority (whether such approval is made prior to or
subsequent to the acquisition of, or announcement or public disclosure
of the intention to acquire, beneficial ownership of the Voting Stock
that caused the Interested Stockholder to become an Interested
Stockholder) of the Continuing Directors (as hereinafter defined).
2. All of the following conditions shall have been met:
a. The aggregate amount of cash and the Fair Market Value
(as hereinafter defined), as of the date of the consummation of
the Business Combination of consideration other than cash to be
received per share by holders of Common Stock in such Business
Combination shall be at least equal to the highest amount
determined under clauses (i) and (ii) below:
(i) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the
Interested Stockholder for any share of Common Stock in
connection with the acquisition by the Interested
Stockholder of beneficial ownership of shares of Common
Stock (x) within the two-year period immediately prior to
the first public announcement of the proposed Business
Combination (the "Announcement Date") or (y) in the
transaction in which it became an Interested Stockholder,
whichever is higher, in either case as adjusted for any
subsequent stock split, stock dividend, subdivision or
reclassification with respect to Common Stock; and
(ii) the Fair Market Value per share of
15
Common Stock on the Announcement Date or on the date on
which the Interested Stockholder became an Interested
Stockholder (the "Determination Date"), whichever is higher,
as adjusted for any subsequent stock split, stock dividend,
subdivision or reclassification with respect to Common
Stock.
b. The aggregate amount of cash and the Fair Market Value,
as of the date of the consummation of the Business Combination,
of consideration other than cash to be received per share by
holders of shares of each class or series of outstanding Capital
Stock, other than Common Stock, shall be at least equal to the
highest amount determined under clauses (i), (ii) and (iii)
below:
(i) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the
Interested Stockholder for any share of such class or series
of Capital Stock in connection with the acquisition by the
Interested Stockholder of beneficial ownership of shares of
such class or series of Capital Stock (x) within the
two-year period immediately prior to the Announcement Date
or (y) in the transaction in which it became an Interested
Stockholder, whichever is higher, in either case as adjusted
for any subsequent stock split, stock dividend, subdivision
or reclassification with respect to such class or series of
Capital Stock;
(ii) the Fair Market Value per share of such class or
series of Capital Stock on the Announcement Date or on the
Determination Date, whichever is higher, as adjusted for any
subsequent stock split, stock dividend, subdivision or
reclassification with respect to such class or series of
Capital Stock; and
(iii) (if applicable) the highest preferential amount
per share to which the holders of shares of such class or
series of Capital Stock would be entitled in the event of
any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation regardless of
whether the Business Combination to be consummated
constitutes such an event.
The provisions of this Paragraph 2(b) shall be required to be met
with respect to every class or
16
series of outstanding Capital Stock, whether or not the
Interested Stockholder has previously acquired beneficial
ownership of any shares of a particular class or series of
Capital Stock.
c. The consideration to be received by holders of a
particular class or series of outstanding Capital Stock shall be
in cash or in the same form as previously has been paid by or on
behalf of the Interested Stockholder in connection with its
direct or indirect acquisition of beneficial ownership of shares
of such class or series of Capital Stock. If the consideration
so paid for shares of any class or series of Capital Stock varied
as to form, the form of consideration for such class or series of
Capital Stock shall be either cash or the form used to acquire
beneficial ownership of the largest number of shares of such
class or series of Capital Stock previously acquired by the
Interested Stockholder.
d. After the Determination Date and prior to the
consummation of such Business Combination: (i) except as
approved by a majority of the Continuing Directors, there shall
have been no failure to declare and pay at the regular date
therefor any full periodic dividends (whether or not cumulative)
payable in accordance with the terms of any outstanding Capital
Stock; (ii) there shall have been no reduction in the annual rate
of dividends paid on the Common Stock (except as necessary to
reflect any stock split, stock dividend or subdivision of the
Common Stock), except as approved by a majority of the Continuing
Directors; (iii) there shall have been an increase in the annual
rate of dividends paid on the Common Stock as necessary to
reflect any reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction that
has the effect of reducing the number of outstanding shares of
Common Stock, unless the failure so to increase such annual rate
is approved by a majority of the Continuing Directors; and (iv)
such Interested Stockholders shall not have become the beneficial
owner of any additional shares of Capital Stock except as part of
the transaction that results in such Interested Stockholder
becoming an Interested Stockholder and except in a transaction
that, after giving effect thereto, would not result in any
increase in the Interested Stockholder's percentage beneficial
ownership of any class or series of Capital Stock.
e. A proxy or information statement describing the
proposed Business Combination and complying with the requirements
of the Securities Exchange Act of
17
1934 and the rules and regulations thereunder (the "Act") (or any
subsequent provisions replacing such Act, rules or regulations)
shall be mailed to all stockholders of the Corporation at least
30 days prior to the consummation of such Business Combination
(whether or not such proxy or information statement is required
to be mailed pursuant to such Act or subsequent provisions). The
proxy or information statement shall contain on the first page
thereof, in a prominent place, any statement as to the
advisability (or inadvisability) of the Business Combination that
the Continuing Directors, or any of them, may choose to make and,
if deemed advisable by a majority of the Continuing Directors,
the opinion of an investment banking firm selected by a majority
of the Continuing Directors as to the fairness (or not) of the
terms of the Business Combination from a financial point of view
to the holders of the outstanding shares of Capital Stock other
than the Interested Stockholder and its Affiliates or Associates,
such investment banking firm to be paid a reasonable fee for its
services by the Corporation.
f. Such Interested Stockholder shall not have made any
major change in the Corporation's business or equity capital
structure without the approval of a majority of the Continuing
Directors.
C. The following definitions shall apply with respect to this
article NINTH:
1. The term "Business Combination" shall mean:
a. any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (i) any Interested
Stockholder or (ii) any other company (whether or not itself an
Interested Stockholder) which is, or after such merger or
consolidation would be, an Affiliate or Associate of an
Interested Stockholder; or
b. any sale, lease, exchange, mortgage, pledge, transfer
or other disposition or security arrangement, investment, loan,
advance, guarantee, agreement to purchase or sell, agreement to
pay, extension of credit, joint venture participation or other
arrangement (in one transaction or a series of transactions) with
or for the benefit of any Interested Stockholder or any Affiliate
or Associate of any Interested Stockholder involving any assets,
securities or commitments of the Corporation, any Subsidiary or
any Interested Stockholder or any Affiliate or Associate of any
Interested Stockholder which (except for any arrangement, whether
as
18
employee or consultant or otherwise, other than as director,
pursuant to which any Interested Stockholder or any Affiliate or
Associate thereof shall, directly or indirectly, have any control
over or responsibility for the management of any aspect of the
business or affairs of the Corporation, with respect to which
arrangement the value test set forth below shall not apply),
together with all other such arrangements (including all
contemplated future events), has an aggregate Fair Market Value
and/or involves aggregate commitments of $100,000,000 or more or
constitutes more than 5 percent of the book value of the total
assets (in the case of transactions involving assets or
commitments other than capital stock) or 5 percent of the
stockholders' equity (in the case of transactions in capital
stock) of the entity in question (the "Substantial Part"), as
reflected in the most recent fiscal year-end consolidated balance
sheet of such entity existing at the time the stockholders of the
Corporation would be required to approve or authorize the
Business Combination involving the assets, securities and/or
commitments constituting any Substantial Part; provided, that if
--------
stockholders' equity is negative, the fair market value of the
outstanding Capital Stock at the date of such balance sheet shall
be used in lieu thereof in determining if a transaction involves
a Substantial Part; or
c. the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation or for any
amendment to the Corporation's Bylaws; or
d. any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation, or
any merger or consolidation of the Corporation with any of its
Subsidiaries or any other transaction (whether or not with or
otherwise involving an Interested Stockholder) that has the
effect, directly or indirectly, of increasing the proportionate
share of any class or series of Capital Stock, or any securities
convertible into Capital Stock or into equity securities of any
Subsidiary, that is beneficially owned by any Interested
Stockholder or any affiliate or Associate of any Interested
Stockholder; or
e. any agreement, contract or other arrangement providing
for any one or more of the actions specified in the foregoing
clauses (a) to (d).
2. The term "Capital Stock" shall mean all capital stock of the
Corporation authorized to be issued from time to time under Article
FOURTH of this Certificate of
19
Incorporation, and the term "Voting Stock" shall mean all Capital
Stock which by its terms may be voted on all matters submitted to
stockholders of the Corporation generally.
3. The term "person" shall mean any individual, firm, company
or other entity and shall include any group comprised of any person
and any other person with whom such person or any Affiliate or
Associate of such person has any agreement, arrangement or
understanding, directly or indirectly, for the purpose of acquiring,
holding, voting or disposing of Capital Stock.
4. The term "Interested Stockholder" shall mean any person
(other than the Corporation or any Subsidiary and other than any
profit-sharing, employee stock ownership or other employee benefit
plan of the Corporation or any Subsidiary or any trustee of or
fiduciary with respect to any such plan when acting in such capacity)
who (a) is, or has announced or publicly disclosed a plan or intention
to become, the beneficial owner of Voting Stock representing ten
percent or more of the votes entitled to be cast by the holders of all
the then outstanding shares of Voting Stock (without giving effect to
the reduction in votes prescribed by Section D of Article FOURTH); or
(b) is an Affiliate or Associate of the Corporation and at any time
within the two-year period immediately prior to the date in question
was the beneficial owner of Voting Stock representing ten percent or
more of the votes entitled to be cast by the holders of all the then
outstanding shares of Voting Stock (without giving effect to the
reduction in votes prescribed by Section D of Article FOURTH).
5. A person shall be a "beneficial owner" of any Capital Stock
(a) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; (b) which such person or
any of its Affiliates or Associates has, directly or indirectly, (i)
the right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding; or (c) which is beneficially owned, directly or
indirectly, by any other person with which such person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Capital Stock; provided that: (x) no
--------
director or officer of the Corporation (nor any Affiliate or Associate
of any such director or officer) shall, solely by reason of any or
all of such directors or officers acting in their capacities as such,
be deemed the "beneficial owner" of any shares of
20
Capital Stock that are beneficially owned by any other such director
or officer; (y) in the case of any employee stock ownership or similar
plan of the Corporation or of any Subsidiary in which the
beneficiaries thereof possess the right to vote the shares of Voting
Stock held by such plan, no such plan nor any trustee with respect
thereto (nor any Affiliate or Associate of such trustee), solely by
reason of such capacity of such trustee, shall be deemed the
"beneficial owner" of the shares of Voting Stock held under such plan;
and (z) no person shall be deemed the "beneficial owner" of any shares
of Voting Stock held in any voting trust, employee stock ownership
plan or any similar plan or trust if such person does not possess the
right to vote such shares. For the purposes of determining whether a
person is an Interested Stockholder pursuant to Paragraph 4 of this
section C, the number of shares of Capital Stock deemed to be
outstanding shall include shares deemed beneficially owned by such
person through application of this Paragraph 5 of Section C, but shall
not include any other shares of Capital Stock that may be issuable
pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
6. The terms "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 under the Act
as in effect on the date that Article NINTH is approved by the Board
(the term "registrant" in said Rule 12b-2 meaning in this case the
Corporation).
7. The term "Subsidiary" means any company of which a majority
of any class of equity security is beneficially owned by the
Corporation; provided, however, that for the purposes of the
-------- -------
definition of Interested Stockholder set forth in Paragraph 4 of this
Section C, the term "Subsidiary" shall mean only a company of which a
majority of each class of equity security is beneficially owned by the
Corporation.
8. The term "Continuing Director" means any member of the Board
of Directors of the Corporation (the "Board of Directors"), while such
person is a member of the Board of Directors, who is not an Affiliate
or Associate or representative of the Interested Stockholder and was a
member of the Board of Directors prior to the time that the Interested
Stockholder became an Interested Stockholder, and any successor of a
Continuing Director while such successor is a member of the Board of
Directors, who is not an affiliate or associate or representative of
the Interested Stockholder and is recommended or elected to succeed
the Continuing director by a majority of the Continuing Directors.
9. The term "Fair Market Value" means (a) in the
21
case of cash, the amount of such cash; (b) in the case of stock the
highest closing sales price during the 30-day period immediately
preceding the date in question of a share of such stock on the
Composite Tape for New York Stock Exchange - Listed Stocks, or, if
such stock is not quoted on the Composite Tape, on the New York Stock
Exchange, or, if such stock is not listed on such Exchange, on the
principal United States securities exchange registered under the Act
on which such stock is listed, or, if such stock is not listed on any
such exchange, the highest closing sales price or bid quotation with
respect to a share of such stock during the 30-day period preceding
the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any similar system then
in use, or if no such quotations are available, the fair market value
on the date in question of a share of such stock as determined by a
majority of the Continuing Directors in good faith; and (c) in the
case of property other than cash or stock, the fair market value of
such property on the date in question as determined in good faith by a
majority of the Continuing Directors.
10. In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to be
received" as used in Paragraphs 2.a and 2.b of Section B of this
Article NINTH shall include the shares of Common Stock and/or the
shares of any other class or series of Capital Stock retained by the
holders of such shares.
D. A majority of the Continuing Directors shall have the power and
duty to determine for the purposes of this Article NINTH, on the basis of
information known to them after reasonable inquiry, all questions arising
under this Article NINTH including, without limitation, (a) whether a
person is an Interested Stockholder, (b) the number of shares of Capital
Stock or other securities beneficially owned by any person, (c) whether a
person is an Affiliate or Associate of another, (d) whether a Proposed
Action (as hereinafter defined) is with, or proposed by, or on behalf of,
an Interested Stockholder or an Affiliate or Associate of an Interested
Stockholder, (e) whether the assets that are the subject of any Business
Combination have, or the consideration to be received for the issuance or
transfer of securities by the Corporation or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of $100,000,000 or more,
and (f) whether the assets or securities that are the subject of any
Business Combination constitute a Substantial Part. Any such determination
made in good faith shall be binding and conclusive on all parties.
22
E. Nothing contained in this Article NINTH shall be construed to
relieve any Interested Stockholder from any fiduciary obligation imposed by
law.
F. The fact that any Business Combination complies with the
provisions of Section B of this Article NINTH shall not be construed to
impose any fiduciary duty, obligation or responsibility on the Board of
Directors, or any member thereof, to approve such Business Combination or
recommend its adoption or approval to the stockholders of the Corporation,
nor shall such compliance limit, prohibit or otherwise restrict in any
manner the Board of Directors, or any member thereof, with respect to
evaluations of or actions and responses taken with respect to such Business
Combination.
G. For the purpose of this Article NINTH, a Business Combination or
any proposal to amend, repeal or adopt any provision of this Certificate of
Incorporation inconsistent with this Article NINTH (collectively, "Proposed
Action") is presumed to have been proposed by, or on behalf of, an
Interested Stockholder or a person who thereafter would become such if (1)
after the Interested Stockholder became such, the Proposed Action is
proposed following the election of any director of the Corporation who with
respect to such Interested Stockholder, would not qualify to serve as a
Continuing Director or (2) such Interested Stockholder, Affiliate,
Associate or person votes for or consents to the adoption of any such
Proposed Action, unless as to such Interested Stockholder, Affiliate,
Associate or person, a majority of the Continuing Directors makes a good
faith determination that such Proposed Action is not proposed by or on
behalf of such Interested Stockholder, Affiliate, Associate or person,
based on information known to them after reasonable inquiry.
H. Notwithstanding any other provisions of this Certificate of
Incorporation or the Bylaws of the Corporation (and notwithstanding the
fact that a lesser percentage or separate class vote may be specified by
law, this Certificate of Incorporation or the Bylaws of the Corporation),
any proposal to amend, repeal or adopt any provision of this Certificate of
Incorporation inconsistent with this Article NINTH which is proposed by or
on behalf of an Interested Stockholder or an Affiliate or Associate of an
Interested Stockholder shall require the affirmative vote of (i) the
holders of not less than 75% of the votes entitled to be cast by the
holders of all the then outstanding shares of Voting Stock, voting together
as a single class, and (ii) the holders of not less than a majority of the
votes entitled to be cast by the holders of all the then outstanding shares
of Voting Stock, voting together as a single class, excluding Voting Stock
beneficially owned by such Interested Stockholder, provided, however, that
-------- -------
this Section H shall not apply to, and such vote shall not be required for,
any amendment, repeal or adoption
23
unanimously recommended by the Board of Directors if all of such directors
are persons who would be eligible to serve as Continuing Directors within
the meaning of Section C, Paragraph 8 of this Article NINTH.
TENTH: A. Subject to Section C of this Article TENTH, the
Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
---- ----------
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interest of the Corporation, or, with respect to any criminal action or
proceeding, had reasonable cause to believe his conduct was unlawful.
B. Subject to Section C of this Article TENTH, the Corporation shall
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interest of the Corporation; except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless and only to the extent
that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and
24
reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
C. Any indemnification under this Article TENTH (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section A or Section B of this
Article TENTH, as the case may be. Such determination shall be made (i) by
the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (ii)
if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion, or (iii) by the stockholders. To the extent, however,
that a director, officer, employee or agent of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding described in Section A or Section B of this Article TENTH, or in
defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith, without the necessity of
authorization in the specific case.
D. For purposes of any determination under Section C of this Article
TENTH, a person shall be deemed to have acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interest of the
Corporation, and, with respect to any criminal action or proceeding, to
have had no reasonable cause to believe his conduct was unlawful, if his
action is based on the records or books of account of the Corporation or
another enterprise, or on information supplied to him by the officers of
the Corporation or another enterprise in the course of their duties, or on
the advice of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the Corporation or another
enterprise by an independent certified public accountant or by an appraiser
or other expert selected with reasonable care by the Corporation or another
enterprise. The term "another enterprise" as used in this Section D of
Article TENTH shall mean any other corporation or any partnership, joint
venture, trust or other enterprise of which such person is or was serving
at the request of the Corporation as a director, officer, employee or
agent. The provisions of this Section D shall not be deemed to be
exclusive or to limit in any way the circumstances in which a person may be
deemed to have met the applicable standard of conduct set forth in Sections
A or B of this Article TENTH as the case may be.
E. Notwithstanding any contrary determination in the specific case
under Section C of this Article TENTH, and notwithstanding the absence of
any determination thereunder, any director, officer, employee or agent may
apply to any court
25
of competent jurisdiction in the State of Delaware for indemnification to
the extent otherwise permissible under Sections A and B of this Article
TENTH. The basis of such indemnification by a court shall be a
determination by such court that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standards of conduct set forth in Sections A or B of this
Article TENTH, as the case may be. Notice of any application for
indemnification pursuant to this Section E of Article TENTH shall be given
to the Corporation promptly upon the filing of such application.
F. Expenses incurred in defending or investigating a threatened or
pending action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of the director, officer,
employee or agent to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Corporation as authorized
in this Article TENTH.
G. The indemnification and advancement of expenses provided by this
Article TENTH shall not be deemed exclusive of any other rights to which
any person seeking indemnification or advancement of expenses may be
entitled under any Bylaw, agreement, contract, vote of stockholders or
disinterested directors or pursuant to the direction (howsoever embodied)
of any court of competent jurisdiction or otherwise, both as to action in
his official capacity and as to action in another capacity while holding
such office, it being the policy of the Corporation that indemnification
of, and advancement of expenses to, the persons specified in Sections A and
B of this Article TENTH shall be made to the fullest extent permitted by
law. The provisions of this Article TENTH shall not be deemed to preclude
the indemnification of, and advancement of expenses to, any person who is
not specified in Sections A or B of this Article TENTH but whom the
Corporation has the power or obligation to indemnify under the provisions
of the General Corporation Law of the State of Delaware, or otherwise. The
indemnification provided by this Article TENTH shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of
such person.
H. The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power or the
obligation to indemnify him
26
against such liability under the provisions of this Article TENTH.
I. For purposes of this Article TENTH, reference to "the Corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at
the request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, shall stand in the same position under the provisions
of this Article TENTH with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation
if its separate existence had continued.
ELEVENTH: Whenever a compromise or arrangement is proposed between
this Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application
in a summary way of this Corporation or of any creditor or stockholder
thereof or on the application of any receiver or receivers appointed for
this Corporation under the provisions of Section 291 of the GCL or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of the
GCL, order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority
in number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and
to any reorganization of this Corporation as a consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of this
Corporation, as the case may be, and also on this Corporation.
TWELFTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of Incorporation, in
the manner now or thereafter prescribed by statute, and all rights
conferred upon stockholders herein are granted subject to this reservation.
27
THIRTEENTH: No director of this Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law, (iii) under
Section 174 of the GCL, or (iv) for any transaction from which the director
derived an improper personal benefit. If the GCL is hereafter amended to
authorize corporate action further limiting or eliminating the personal
liability of directors, then the liability of each director of the
Corporation shall be limited or eliminated to the fullest extent permitted
by the GCL as so amended from time to time.
FOURTEENTH: The name and mailing address of the incorporator is:
E. O. Robinson, Jr.
The Promus Companies Incorporated
1023 Cherry Road
Memphis, Tennessee 38117
28
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, do make this certificate, herein
declaring and certifying that this is my act and deed and the facts herein
stated are true, and accordingly have hereunto set my hand this 31st day of
October, 1989.
/s/ E. O. Robinson, Jr.
------------------------
E. O. Robinson, Jr.
29
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
The Promus Companies Incorporated, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of The Promus
Companies Incorporated, resolutions were duly adopted setting forth a
proposed amendment of the Certificate of Incorporation of said corporation,
declaring said amendment to be advisable and in the best interest of the
corporation and its stockholders, and directing that the proposed amendment
be considered at the next annual meeting of the stockholders of said
corporation. The resolutions setting forth the proposed amendment are as
follows:
RESOLVED, that the Board of Directors of the Company hereby approves
and sets forth the following proposed amendment (the "Proposed Amendment")
to Article FOURTH of the Company's Certificate of Incorporation:
(1) That paragraph A of Article FOURTH of the Certificate of
Incorporation of the Company be amended to read in its entirety as follows:
"A. The total number of shares which the Corporation shall have
authority to issue is 365,150,000, consisting of 360,000,000 shares of
Common Stock, par value $.10 per share (the "Common Stock"), 150,000
shares of Preferred Stock, par value of $100.00 per share (the
"Preferred Stock"), and 5,000,000 shares of Special Stock, par value
$1.12 1/2 per share (the "Special Stock")."
(2) That the following additional paragraph be inserted immediately
after paragraph A of Article FOURTH of the Company's Certificate of
Incorporation:
"Simultaneously with the effective date of the amendment of paragraph
A of Article FOURTH to read as set forth above (the "Effective Date"),
each share of the Common Stock, par value $1.50 per share, of the
Corporation issued and outstanding or held as treasury shares
immediately prior to the Effective Date shall, automatically and
without further action on the part of the holder thereof, have a par
value of $.10 per share and each existing certificate representing
such shares shall represent the same number of shares of Common Stock,
with a par value of $.10 per share."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, an annual meeting of the stockholders of said corporation was
held upon notice in accordance with Section 222 of the General Corporation
Law of the State of Delaware, at which meeting the necessary number of
shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by E. O. Robinson, Jr., its Senior Vice President and attested by
Vincent G. De Young, its Assistant Secretary, the 29th day of April, 1994.
By: /s/ E. O. ROBINSON, JR.
--------------------------
E. O. Robinson, Jr.
Senior Vice President
ATTEST:
/s/ VINCENT G. DE YOUNG
- ----------------------
Vincent G. De Young
Assistant Secretary
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
The Promus Companies Incorporated, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of The Promus
Companies Incorporated, resolutions were duly adopted setting forth a
proposed amendment of the Certificate of Incorporation of said corporation,
declaring said amendment to be advisable and in the best interest of the
corporation and its stockholders, and directing that the proposed amendment
be considered at the next annual meeting of the stockholders of said
corporation. The resolutions setting forth the proposed amendment are as
follows:
RESOLVED, that the Board of Directors of the Company hereby approves
and sets forth the following proposed amendment (the "Proposed Amendment")
to Section E of Article FOURTH of the Company's Certificate of
Incorporation:
That Section E of Article FOURTH of the Certificate of Incorporation
of the Company be amended to read in its entirety as follows:
Notwithstanding any other provision of this Certificate of
Incorporation to the contrary, but subject to the provisions of any
resolutions of the Board of Directors adopted pursuant to this Article
FOURTH creating any series of Preferred Stock, Special Stock or any other
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, outstanding shares of Common Stock,
Preferred Stock, Special Stock or any other class or series of stock of the
Corporation shall always be subject to redemption by the Corporation, by
action of the Board of Directors, if, in the judgment of the Board of
Directors, any holder of such stock is determined by any gaming regulatory
agency to be unsuitable, has an application for a license or permit
rejected, or has a previously issued license or permit rescinded,
suspended, revoked or not renewed, as the case may be, whether or not any
of the foregoing is final and nonappealable, or if such action otherwise
should be taken, pursuant to Section 151(b) of the GCL or any other
applicable provision of law, to the extent necessary to avoid any
regulatory sanctions against, or to prevent the loss of or secure the
reinstatement of any license, franchise or entitlement from any
governmental agency held by, the Corporation, any Affiliate of the
Corporation or any entity in which the Corporation or such Affiliate is an
owner, which license, franchise or entitlement is (i) conditioned upon some
or all of the holders of the Corporation's stock of any class or series
possessing prescribed qualifications, or (ii) needed to allow the conduct
of any portion of the business of the Corporation or any such Affiliate or
other entity. The terms and conditions of such redemption shall be as
follows:
(a) the redemption price of the shares to be redeemed pursuant
to this Section E of Article FOURTH shall be equal to the Fair Market
Value of such shares (excluding any dividends thereon not entitled to
be received pursuant to paragraph (e) of this Section E of Article
FOURTH) or such other redemption price as required by any applicable
law, regulation or rule;
(b) the redemption price of such shares may be paid in cash,
Redemption Securities or any combination thereof;
(c) if less than all the shares held by Disqualified Holders are
to be redeemed, the shares to be redeemed shall be selected in such
manner as shall be determined by the Board of Directors, which may
include selection first of the most recently purchased shares thereof,
selection by lot or selection in any other manner determined by the
Board of Directors;
(d) at least 30 days' written notice of the Redemption Date
shall be given to the record holders of the shares selected to be
redeemed (unless waived in writing by any such holder), provided that
the Redemption Date may be the date on which written notice shall be
given to record holders if the cash or Redemption Securities necessary
to effect the redemption shall have been deposited in trust for the
benefit of such record holders and subject to immediate withdrawal by
them upon surrender of the stock certificates for their shares to be
redeemed;
(e) from and after the Redemption Date or such earlier date as
mandated by any applicable law, regulation or rule, any and all rights
of whatever nature, which may be held by the owners of shares selected
for redemption (including without limitation any rights to vote or
participate in dividends declared on stock of the same class or series
as such shares), shall cease and terminate and they shall thenceforth
be entitled only to receive the cash or Redemption Securities payable
upon redemption; and
(f) such other terms and conditions as the Board of Directors
shall determine.
For purposes of this Section E of Article FOURTH:
(i) "Disqualified Holder" shall mean any holder of shares of
stock of the Corporation of any class (or classes) or series who,
either individually or when taken together with any other holders of
shares of stock of the Corporation of any class (or classes) or
series, in the judgment of the Board of Directors, is determined by
any gaming regulatory agency to be unsuitable, or has an application
for a license or permit rejected, or has a previously issued license
or permit rescinded, suspended, revoked or not renewed, as the case
may be, whether or not any of the foregoing is final and
nonappealable, or whose holding
2
of such stock, either individually or when taken together with the
holding of shares of stock of the Corporation of any class (or
classes) or series by any other holders, may result, in the judgment
of the Board of Directors, in any regulatory sanctions against, or the
loss of or the failure to secure the reinstatement of any license,
franchise or entitlement from any governmental agency held by, the
Corporation, any Affiliate of the Corporation or any entity in which
the Corporation or such Affiliate is an owner.
(ii) "Fair Market Value" of a share of the Corporation's
stock of any class or series shall mean the average Closing Price for
such share for each of the 45 most recent days of which shares of
stock of such class or series shall have been traded preceding the day
on which notice of redemption shall be given pursuant to paragraph (d)
of this Section E of Article FOURTH; provided, however, that if shares
-------- -------
of stock of such class or series are not traded on any securities
exchange or in the over-the-counter market, "Fair Market Value" shall
be determined by the Board of Directors in good faith; and provided
--------
further, however, that "Fair Market Value" as to any stockholder who
------- -------
purchased any stock of the class (or classes) or series subject to
redemption within 120 days of a Redemption Date need not (unless
otherwise determined by the Board of Directors) exceed the purchase
price paid by him for any stock of such class (or classes) or series
of the Corporation. "Closing Price" on any day means the reported
closing sales price or, in case no such sale takes place, the average
of the reported closing bid and asked prices on the Composite Tape for
the New York Stock Exchange-Listed Stocks, or, if such stock is not listed
on such Exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934 on which such
stock is listed, or, if such stock is not listed on any such exchange,
the highest closing sales price or bid quotation for such stock on the
National Association of Securities Dealers, Inc. Automated Quotations
System or any system then in use, or if no such prices or quotations
are available, the fair market value on the day in question as
determined by the Board of Directors in good faith.
(iii) "Redemption Date" shall mean the date fixed by the
Board of Directors for the redemption of any shares of stock of the
Corporation pursuant to this Section E of Article FOURTH.
(iv) "Redemption Securities" shall mean any debt or equity
securities of the Corporation, any Subsidiary or any other
corporation, or any combination thereof, having such terms and
conditions as shall be approved by the Board of Directors and which,
together with any cash to be paid as part of the redemption price, in
the opinion of any nationally recognized investment banking firm
selected by the Board of Directors (which may be a firm which provides
other investment banking, brokerage or other services to the
Corporation), has a value, at the time notice of redemption is given
pursuant to paragraph (d) of this Section E of Article FOURTH, at
least equal to the Fair Market Value of the shares to be redeemed
3
pursuant to this Section E of Article FOURTH (assuming, in the case of
Redemption Securities to be publicly traded, such Redemption
Securities were fully distributed and subject only to normal trading
activity).
(v) "Subsidiary" shall mean any corporation more than 50% of
whose outstanding stock entitled to vote generally in the election of
directors is owned by the Corporation, by one or more Subsidiaries or
by the Corporation and one or more Subsidiaries.
(vi) "Affiliate" shall have the meaning ascribed to such
term in Rule 12b-2 under the Act as in effect on the date that Article
FOURTH is approved by the Board (the term "registrant" in said Rule
12b-2 meaning in this case the Corporation).
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, an annual meeting of the stockholders of said corporation was
held upon notice in accordance with Section 222 of the General Corporation
Law of the State of Delaware, at which meeting the necessary number of
shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by E. O. Robinson, Jr., its Senior Vice President and attested by
Stephen H. Brammell, its Assistant Secretary, the 26th day of May 1995.
By: /s/ E. O. Robinson, Jr.
__________________________
E. O. Robinson, Jr.
Senior Vice President
ATTEST:
/s/ Stephen H. Brammell
________________________
Stephen H. Brammell
Assistant Secretary
4
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
THE PROMUS COMPANIES INCORPORATED
The Promus Companies Incorporated, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of The Promus
Companies Incorporated, resolutions were duly adopted setting forth a
proposed amendment of the Certificate of Incorporation of said corporation,
declaring said amendment to be advisable and in the best interest of the
corporation and its stockholders, and directing that the proposed amendment
be considered at the next annual meeting of the stockholders of said
corporation. The resolutions setting forth the proposed amendment are as
follows:
RESOLVED, that the Board of Directors of the Company hereby approves
and sets forth the following proposed amendment (the "Proposed Amendment")
to Article FIRST of the Company's Certificate of Incorporation:
That Article FIRST of the Certificate of Incorporation of the Company
be amended to read in its entirety as follows:
"FIRST: The name of the Corporation is Harrah's Entertainment, Inc."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, an annual meeting of the stockholders of said corporation was
held upon notice in accordance with Section 222 of the General Corporation
Law of the State of Delaware, at which meeting the necessary number of
shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by E. O. Robinson, Jr., its Senior Vice President and attested by
Stephen H. Brammell, its Assistant Secretary, the 30th day of June, 1995.
By: /s/ E. O. Robinson, Jr.
__________________________
E. O. Robinson, Jr.
Senior Vice President
ATTEST:
/s/ Stephen H. Brammell
________________________
Stephen H. Brammell
Assistant Secretary
2
EXHIBIT 4(12)
TO: Harrah's Operating Company, Inc. ("Counterparty")
Attn: Katie Weien
Rapidfax: (901) 762-8998
FROM: Bank of America National Trust and Savings Association ("BofA")
185 Berry Street
San Francisco, CA 94107
Derivative Products Operations
Phone No.: (415) 624-1111
Rapidfax No.: (415) 624-1101
DATE: December 21, 1995
RE: USD 50,000,000.00 Swap Transaction
Dear Sir/Madam:
The purpose of this letter agreement is to confirm the terms and
conditions of the Transaction entered into between us on the Trade Date
specified below (the "Swap Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the Agreement specified
below.
The definitions and provisions contained in the 1991 ISDA Definitions
(as published by the International Swaps and Derivatives Association, Inc.)
are incorporated into this Confirmation. In the event of any inconsistency
between those definitions and provisions and this Confirmation, this
Confirmation will govern.
1. This Confirmation supplements, forms part of, and is subject to,
the Interest Rate and Currency Exchange Agreement dated as of May 13, 1993,
as amended and supplemented from time to time (the "Agreement"), between
you and us. All provisions contained in the Agreement govern this
Confirmation except as expressly modified below.
THIS FACSIMILE TRANSMISSION WILL BE THE ONLY WRITTEN COMMUNICATION
REGARDING THIS SWAP TRANSACTION. Pursuant to ISDA guidelines, this
facsimile transmission will be sufficient for all purposes to evidence a
binding supplement to the Agreement. However, should you have an internal
requirement for confirmations with an original signature, we request that
you sign and return this Confirmation by facsimile, whereupon, we will add
an original signature to the fully executed Confirmation, and forward it to
you by mail.
December 21, 1995
Page 2
2. The terms of the particular Swap Transaction to which this
Confirmation relates are as follows:
Notional Amount: USD 50,000,000.00
Trade Date: December 20, 1995
Effective Date: December 22, 1995
Termination Date: March 22, 2000, subject to adjustment in
accordance with the Modified Following
Business Day Convention
Fixed Amounts:
Fixed Rate Payer: Counterparty
Fixed Rate Payer Payment Dates: The 22nd of every March, June,
September and December, beginning
with March 22, 1996 and ending on
and including the Termination Date
Fixed Amount: Calculation x Fixed x Fixed Rate Day
Amount Rate Count Fraction
Fixed Rate: 6.94500%
Fixed Rate Day Count Fraction: Actual/360
Floating Amounts:
Floating Rate Payer: BofA
Floating Rate Payer
Payment Dates: Same as Fixed Rate Payor Payment Dates
Floating Rate for Initial
Calculation Period: 5.66797%
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: Three (3) Months
Spread: None
December 21, 1995
Page 3
Floating Rate Day
Count Fraction: Actual/360
Reset Dates: First day of each Calculation Period
Compounding: Inapplicable
Business Day: New York and London
Business Day Convention: Modified Following
Calculation Agent: BofA
3. Account Details
Payments to BofA: Fed Funds to Bank of America NT and SA
San Francisco ABA NO. 1210-0035-8 BISD
Acct No. 33006-83980 Attn: IRS
Operations
Payments to Counterparty: Fed Funds to First Tennessee Bank
Memphis Tennessee ABA No. 0840-
0002-6 Account Harrah's Operating
Co. Inc. Account No. 841-900
4. Offices:
Office of BofA: The San Francisco Head Office
Office of Counterparty: Memphis, TN
Variations to the Agreement
for this Swap Transaction: None
Please confirm your agreement to be bound by the terms stated herein
by executing the copy of this Confirmation enclosed for that purpose and
returning it to us or by sending to us a telex or letter, within 24 hours
of receipt of this Confirmation to Bank of America NT & SA San Francisco
Telex No. 249839 Answer Back OPRST UR or Rapifax No. 415-624-1101
Attention: Derivative Products Operations, substantially in the form
below:
Quote
We acknowledge receipt of your rapidfax dated December 21, 1995 with
respect to the Swap Transaction entered into on December 20, 1995 between
Harrah's Operating Company, Inc.
December 21, 1995
Page 4
and Bank of America National Trust and Savings Association with a Notional
Amount of USD 50,000,000.00 and a Termination Date of March 22, 2000, and
confirm our agreement to be bound by the terms specified in such rapidfax.
Unquote
Yours sincerely,
For and on behalf of:
Bank of America National
Trust and Savings Association
By: /s/Robert Oxenburgh
------------------------
Name: Robert Oxenburgh
------------------------
Title: Vice President
------------------------
Confirmed as of the
date first above written:
Harrah's Operating Company, Inc.
By: /s/William S. McCalmont By:
--------------------------- ------------------------
Name: William S. McCalmont Name:
--------------------------- ------------------------
Title: Vice President & Treasurer Title:
--------------------------- ------------------------
LC(51220S1Z)
EXHIBIT 4(13)
CONFIRMATION FOR U.S. DOLLAR RATE SWAP TRANSACTION
UNDER EXISTING IRCEA
TO: HARRAH'S OPERATING COMPANY, INC.
ATTN: KATIE WEIEN
TEL: 901-762-8838
FAX: 901-762-8998
FROM: NationsBank, N.A.
233 S. Wacker Drive
Chicago, Illinois 60606
JEFF MCNEILL/JIM O'DONNELL
Date: 21DEC95
Our Reference #: 441010
The purpose of this letter agreement is to confirm the terms and conditions
of the Swap Transaction entered into between us on the Trade Date specified
below (the "Swap Transaction"). This letter agreement constitutes a
"Confirmation" as referred to in the Interest Rate and Currency Exchange
Agreement specified below.
The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc.) are
incorporated into this Confirmation. In the event of any inconsistency
between those definitions and provisions and this Confirmation, this
Confirmation will govern.
1. This Confirmation supplements, forms part of, and is subject to, the
Interest Rate and Currency Exchange Agreement dated as of 18MAY93, as
amended and supplemented from time to time (the "Agreement"), between you
and us. All provisions contained in the Agreement shall govern this
Confirmation except as expressly modified below.
2. The terms of the Swap Transaction to which this Confirmation relates
are as follows:
Currency/Notional Amount: USD 50,000,000.00
Trade Date: 20DEC95
Effective Date: 22DEC95
Termination Date: 22MAR00, subject to adjustment in
accordance with the Modified Following
Business Day Convention.
Fixed Amounts:
Payer of Fixed: HARRAH'S OPERATING COMPANY, INC.
Fixed Payer Payment Dates: EACH MARCH 22, JUNE 22, SEPTEMBER 22,
AND DECEMBER 22, COMMENCING MARCH 22,
1996 AND ENDING MARCH 22, 2000, SUBJECT
TO ADJUSTMENT IN ACCORDANCE WITH THE
MODIFIED FOLLOWING BUSINESS DAY
CONVENTION.
Fixed Rate Payer Business
Day Convention: MODIFIED FOLLOWING BUSINESS DAY
Fixed Rate Payer
Business Days: NEW YORK, LONDON
Fixed Rate: 6.951%
Fixed Rate Payer Day
Count Fraction: ACTUAL/360
Floating Amounts:
Payer of Floating: NATIONSBANK, N.A.
Floating Payer Reset
Dates: First Day of each Calculation Period
Floating Payer Payment
Dates: EACH MARCH 22, JUNE 22, SEPTEMBER 22, AND
DECEMBER 22, COMMENCING MARCH 22, 1996 AND
ENDING MARCH 22, 2000, SUBJECT TO ADJUSTMENT
IN ACCORDANCE WITH THE MODIFIED FOLLOWING
BUSINESS DAY CONVENTION.
Floating Rate Payer
Business Days: NEW YORK, LONDON
Floating Rate Payer
Business Day Convention: MODIFIED FOLLOWING BUSINESS DAY
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: 3 Months
Spread: NONE
Floating Rate for Initial
Calculation Period: 5.66797%
Floating Rate Payer
Day Count Fraction: ACTUAL/360
Averaging: INAPPLICABLE
Rounding Factor: One-Hundred-Thousandth of One Percent
Calculation Agent: NationsBank, N.A.
Assignment: This Swap Transaction may be assigned
only with prior written consent.
Legal and Out-of-Pocket
Expenses: For each party's own account.
Governing Law: The Laws of the State of New York.
Recording of Conversations: Each party to this Agreement
acknowledges and agrees to the tape or
electronic recording of conversations
between the parties to this Agreement
whether by one or other or both of the
parties, and that any such recordings
may be submitted in evidence in any
action or proceeding relating to the
Agreement or any Transaction.
Payments to NationsBank: Payment to HARRAH'S OPERATING
NATIONSBANK N.A. (CAROLINAS), COMPANY, INC.:
CHARLOTTE
ABA 053000196
ACCT: 10852016511
ATTN: DERIVATIVE OPERATIONS
Please confirm that the foregoing correctly sets forth the terms and
conditions of our agreement by responding within three (3) Business Days by
either (i) returning via telecopier an executed copy of this Confirmation
to the attention of Marge Szymczak, Fax No. (312) 234-3160; Telephone No.
(312) 234-2934, or (ii) sending a telex to Marge Szymczak (Telex No.
4330469, answerback: CRT CGO) substantially to the following effect: "We
acknowledge receipt of your fax dated 21DEC95 with respect to a Swap
Transaction between HARRAH'S OPERATING COMPANY, INC. and NationsBank, N.A.
with a Notional Amount of USD 50,000,000.00 and a Termination Date of
22MAR00 and confirm that such fax correctly sets forth the term of our
agreement relating to the Swap Transaction described therein. Very truly
yours, , by (specify
name and title of authorized officer)." Failure to respond within such
period shall not affect the validity or enforceability of this Swap
Transaction, and shall be deemed to be an affirmation of the terms and
conditions contained herein, absent manifest error.
NationsBank, N.A. is pleased to have concluded
this transaction with you.
Yours Sincerely,
NationsBank, N.A.
By: /s/John Stocchetti
----------------------------------
John Stocchetti, Senior Vice President
Authorized Signatory
Confirmed as of the date first written above:
HARRAH'S OPERATING COMPANY, INC.
By: /s/William S. McCalmont
----------------------------------
Authorized Signatory
EXHIBIT 10(22)
EXECUTIVE FINANCIAL
COUNSELING
[LOGO]
PLAN HIGHLIGHTS
Harrah's & You:
A Winning Team
As an executive with Harrah's
Entertainment, Inc. or its subsidiaries
(the Company), you are now receiving
competitive compensation to match your
on-the-job responsibilities. If you do
not have a financial background,
however, you may not really know the
most effective ways to manage your
resources to achieve your financial
objectives, both now and for the future.
We are pleased to provide you with the
Harrah's Entertainment Executive
Financial Counseling Plan (the Plan)
detailed in this brochure--designed to
help you and your colleagues achieve
stability in personal and tax matters
through professional financial and tax
advice.
Eligibility
Persons eligible are a select group of management employees. These are
employees of the Company or its subsidiaries in grades 25 and above.
Statement of Policy
The Company or its subsidiary will pay directly to the service provider, or
reimburse you with documentation of payment, up to the following maximums for
covered services:
Grade Annual Amount
- -----------------------------
35 and above $15,000
31-34 7,500
28-30 3,000
25-27 1,500
HOW THE PLAN WORKS
Plan years are calendar years, and all account balances renew on January 1
each year. Charges will normally be drawn out of your account based upon the
date the counseling was performed. Unused account balances cannot be carried
over to the next year. Prorated amounts will be available to new hires and to
persons promoted to eligible positions during the Plan year.
COVERED SERVICES
A covered service is any professional advice or professional service that
provides financial or tax assistance. The Company reserves the right to decide
whether a service is covered under the Plan. A sample list of current covered
services is included in this policy. In general, participants shall be
reimbursed only for expenses which are eligible to be included as miscellaneous
expenses for IRS itemizing purposes, except that expenses incurred for estate
planning including the preparation of wills shall also be covered. (See Tax
Effects at right.)
PAYMENT
Invoices should be made out to Harrah's Operating Company, Inc. and
must be approved by you prior to the Company's making payment to the
service provider. The invoice should describe the financial or tax services
that were rendered and should recite and identify that portion of the bill
which can be itemized as a miscellaneous expense for IRS purposes. (In
general, only counseling expenses relating to tax advice or production of
income are itemizable. See Tax Effects below.) You should initial the
invoice to indicate your approval, and you are encouraged to submit it to
the Harrah's Memphis Compensation Department within 10 days after you
receive it.
TAX EFFECTS
The costs paid by the Company or its subsidiary under the Plan are
taxable income to you and are subject to federal withholding at a 28
percent rate (plus FICA and any applicable state taxes). The withholding
tax will be deducted from regular salary after the reimbursement is paid.
However, you may be able to claim a portion of the costs as a tax deduction
on your federal income tax return.
According to current tax laws, there is a limit on the deductibility
of miscellaneous expenses which are itemized. These miscellaneous itemized
expenses, which include the cost of financial and tax planning services
provided under this policy, will only be deductible to the extent that they
exceed 2 percent of your adjusted gross income. The expense of a will and
estate planning is not eligible to be itemized as an expense for IRS
purposes except for the cost of tax advice given in connection with the
will. You should consult your personal tax adviser if you have any
questions regarding how these tax laws apply to you.
PRORATION GUIDELINES
Participants entering the Plan during a calendar year will be eligible
to use a prorated share of their account during the year of hire or date of
promotion to an eligible position based upon the quarter of the year hired
or promoted.
Hired/Promoted Pro Grades Grades Grades Grades
During the Qtr. Rata 35 and above 31-34 28-30 25-27
1/1 - 3/31 100% $15,000 $ 7,500 $ 3,000 $ 1,500
4/1 - 6/30 75% $11,250 $ 5,625 $ 2,250 $ 1,125
7/1 - 9/30 50% $ 7,500 $ 3,750 $ 1,500 $ 750
10/1 - 12/31 25% $ 3,750 $ 1,875 $ 750 $ 375
For those employees promoted from one eligible grade to another during
the year (i.e., from grade 26 to grade 28), their account balances will be
prorated for the time spent in each grade (i.e., one quarter of the year as
a grade 26 = $375 and three quarters of the year as a grade 28 = $2,250.
Total for the year is $2,625).
Charges will be drawn out of the employee's account based upon the
date the counseling was performed. The account balance will be left open
during the month of January and will be used to clear invoices of charges
incurred in the previous year. After January, only charges incurred in the
current year will be accepted and will be charged against your allowance
for the current year. Unused account balances are not carried over to the
next year.
SAMPLE LIST OF COVERED SERVICES
1. Preparation of tax returns.
2. Advice concerning taxes and tax planning including deductibility of
various items.
3. Advice and assistance on producing income.
4. Advice or counseling on investments in businesses, stocks, bonds, or
other securities.
5. Advice on tax consequences of divorce.
6. Tax advice and related assistance concerning trusts for children or
family members.
7. Responding to IRS audits.
8. Retirement income counseling and related tax advice.
9. Advice on business expenses, casualty losses and purchasing any
property for investment.
10. Advice regarding taxes on stock options and other benefit plans.
11. Advice and assistance on estate taxes and estate tax planning
including the preparation of wills.
Note: Travel and hotel expenses (e.g., to a tax planning seminar) are
not covered.
TERMINATION OR DEATH OF PARTICIPANT
Termination of the employee during the calendar year covered by the
Plan normally cancels the employee's eligibility and forfeits any remaining
allowance, unless salary continuation is offered in which case eligibility
to use the remainder of an existing allowance may be offered through the
salary continuation period.
In the event of death of the employee during a calendar year covered
by the Plan and if a balance remains in the employee's account, the total
balance will be assigned to the employee's beneficiary, executor or estate
for financial counseling covered services that are rendered during the
remainder of the covered calendar year.
Invoices for covered services performed prior to death, during a
salary continuation period, or before a termination date will be accepted
for payment to the extent covered by the account balance.
MISCELLANEOUS
Questions concerning application and interpretation of the Plan
may occur from time to time. The Company reserves the discretionary
right to decide questions and to interpret the Plan. The Company's
decisions on all questions and matters of application and
interpretation shall be binding on each participant.
This Plan replaces any prior policy or plan. The Plan is
discretionary and the Company may amend or terminate it at any time.
Payments under the Plan will be made by the participating subsidiary.
MOST COMMONLY ASKED QUESTIONS
Can I use any of my remaining balance in one year during the next year?
Only for bills that are received by the Company in January of the next
year, which relate to services given in the prior year. After January 31,
all fees will be applied to your current account balance.
HOW SHOULD THE COUNSELING SERVICE PREPARE THE INVOICE?
Invoices should be prepared as follows:
Billed To: Harrah's Operating Company, Inc.
--------------------------------------------
For Services Rendered To: (Participant's Name)
----------------------------------------------
Of: (Subsidiary's Name)
-----------------------
WHAT SHOULD I DO WHEN I RECEIVE AN INVOICE?
You should review the charges, indicate your approval by initialing the
invoice, and mail the invoice within 10 days directly to:
Harrah's Memphis
Compensation Department
Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, TN 38117
HOW DO I KNOW WHEN THE INVOICE HAS BEEN PAID?
You will receive a confirmation memo from the Harrah's Memphis
Compensation Department after your invoice is processed. This memo will
include notification to your payroll manager to update your W-2 earnings by
the fees amount. You will also receive a statement of your account upon
each payment of fees.
IS THERE A DEADLINE FOR PROCESSING INVOICES?
Invoices for services rendered in the current year should be submitted
as early as possible to ensure that they will be properly reflected on your
W-2 earnings. You are encouraged to submit the invoice within 10 days of
receiving it in order to speed processing.
All invoices need to be processed by mid-December of a Plan year or
earlier in order for fees to be applied to your W-2 earnings for that year.
Invoices received after December 15 will not be processed until January.
The account balance will be left open during the month of January and will
be used to clear invoices or charges incurred in the previous year.
Payments in January of any year will be included in your W-2 earnings for
that year (not the previous year). After January, only charges incurred in
the current year will be accepted and will be charged against your
allowance for the current year. Unused account balances are not carried
over to the next year.
WHAT HAPPENS IF I EXCEED MY ACCOUNT BALANCE?
All fees exceeding individual account balances are paid by you.
Harrah's Entertainment, Inc.
Harrah's Memphis
Compensation Department
1023 Cherry Road
Memphis, TN 38117
901-762-8922
January 1996
[LOGO]
EXHIBIT 10(26)
[HARRAH'S LOGO]
ANNUAL MANAGEMENT BONUS PLAN
1995
HARRAH'S ENTERTAINMENT, INC.
ANNUAL MANAGEMENT BONUS PLAN
As a member of management, you can have a major impact on the overall
performance of your property and of Harrah's Entertainment, Inc. (the
Company). The Harrah's Entertainment, Inc. Annual Management Bonus Plan
(the Plan) is designed to reward you for meeting your personal performance
objectives in years when your Operating Unit meets its performance
objectives. The Plan has uniform bonus calculation procedures with
specific objectives for each Operating Unit as well as overall objectives
for the company. This means that although there is one plan, covering all
properties, divisions, and corporate, your specific bonus award is tied to
your individual performance, your Operating Unit's performance, and to the
performance of the entire company.
The purposes of the Plan are to reward you for superior work and motivate
you toward delivering better customer service and achieving better business
results, to tie your goals and interests into those of the company and its
stockholders, and to attract and retain top managers.
This document describes eligibility, personal performance objectives that
are directly tied to the performance planning and evaluation process,
Operating Unit performance objectives, assignment of bonus points, the
bonus pool, the payment of bonus awards, and administrative matters.
Personal Eligibility
To be eligible, you must be a full-time employee of an Operating Unit in a
salary grade 20 or above. An Operating Unit is a business unit identified
for participation in the Plan by the President and Chief Executive Officer
and currently comprises Harrah's Corporate, various Operating Divisions,
and each Harrah's Casino and Riverboat. You may not be a participant in
any other bonus plan of the Company or its subsidiaries. You must have
been employed in an eligible position before October 1 of the Plan year,
have at least a "Successful" performance rating, and be actively working at
the time bonuses are distributed to receive your bonus award.
Prorations/Transfers
If an eligible employee is promoted during the year, pro-rata bonus awards
are calculated based on their earnings, individual performance and grade in
each position.
If, however, an employee is promoted from a grade 5-19 into a grade 20 or
above, the promotion must have taken place on or before October 1 for the
employee to be eligible for a prorated payment under this plan.
In cases of promotions and/or transfers between Operating Units, pro-rata
bonus awards for eligible participants are calculated based on their
earnings, individual performance, operating unit bonus points and grade in
each Operating Unit. The calculation of prorata bonus awards is generally
made following completion of the plan year.
1
Individual Performance Objectives
At the beginning of each year, you and your supervisor will develop
specific performance objectives for you to achieve. These objectives
should be recorded on your performance appraisal document under the
appropriate performance standard. One hundred bonus points are then
assigned by your supervisor to these personal bonus objectives. Your
objectives and bonus points will be approved and retained by your
supervisor. The objectives should be easy to quantify and verify.
Performance objectives should be modified during the year if business
conditions dictate. Objectives that have been revised will also be
retained by your supervisor.
Operating Unit Performance Objectives
Operating Unit bonus objectives are established for each Plan year. These
will generally consist of a combination of measurements related to the
objectives of the Company and each of its Operating Units on items such as
operating income, pre-tax earnings, return on sales and customer
satisfaction ratings. The objectives may change annually to support the
business mission of the company. The objectives are assigned target
points. The objectives and assigned target points are recommended by the
Chairman of the Board and the President and Chief Executive Officer to the
Human Resources Committee of the Board of Directors for approval. Total
target points for each Operating Unit is 100. Additional stretch points
may be awarded according to specific parameters set each year.
Meeting Operating Unit Objectives
Assignment of Bonus Points
At the end of each Plan year, bonus points will be assigned to each
Operating Unit based upon achievement of Plan objectives. The Operating
Unit bonus points will be combined with the points earned by the Company.
The final point total will be used to create the Operating Unit's bonus
pool. Commencing with the plan year 1996, an Operating Unit may qualify
for a limited bonus of 25% of the amount achieved by using bonus points
earned by the Company (Harrah's brand performance) even if the Operating
Unit is not eligible for a bonus based on its own performance.
Meeting Operating Unit Objectives
The Bonus Pool
A payout pool for each Operating Unit will be established according to the
unit's combined bonus point total. The bonus pool is calculated by
multiplying all eligible participants' eligible earnings by the appropriate
bonus percentage as shown on the Bonus Matrix. The appropriate bonus
percentage is determined by both the participants' salary grades and bonus
points earned by the Operating Unit.
For example, at 100 bonus points for the Operating Unit, the bonus for pool
calculations for a grade 23 is 15 percent of eligible earnings.
An Operating Unit's total bonus pool is calculated by summing all
appropriate bonus percentages of the Operating Unit's eligible
participants.
2
Meeting Individual Objectives
Shortly after the end of the Plan year, you will meet with your supervisor
to compare your individual performance against the performance standards on
the appraisal document and with your previously established objectives.
The assessment determines how many of your personal 100 assigned objective
points have been met.
The supervisor will then recommend a bonus award for you and other eligible
employees reporting to him or her, in relation to the individual
performance bonus points earned. The supervisor must keep in mind that the
total bonus pool must not be exceeded. When an Operating Unit's
performance rises above the "100" point target, the available bonus dollars
contributed to the pool will increase; this is called "stretch bonus."
However, even when an Operating Unit is in stretch, individual awards
should not automatically rise above the "100" point line. Only those
eligible participants whose performance contributed to the achievement of
stretch bonus should be considered for stretch awards. Calculation is up
to the discretion of your supervisor and the Operating Unit's senior
managers. The maximum individual award is found on the 150 point line of
the Stretch Bonus matrix (see page 7).
When Operating Unit performance falls short of objectives, the Bonus Pool
will be accordingly reduced. Individual awards should be scaled back to
reflect the available pool dollars. For example, at 90 bonus points for
the Operating Unit, the bonus for pool calculations for a grade 23 is 14
percent of eligible earnings.
Approval and Payment of Annual Bonus Plan Awards
Each supervisor will submit bonus award recommendations to the Memphis
Compensation department with two levels of approval unless the next level
of supervision is a Corporate Senior Vice President or a Division
President. In these cases, no further approvals are required. The Memphis
Compensation department will accumulate overall bonus recommendations and
submit them for appropriate approvals. The Chairman of the Board and the
President and Chief Executive Officer review and approve bonus
recommendations and recommend Operating Unit bonus points to the Human
Resources Committee. The Human Resources Committee approves total bonus
points achieved for performance against Operating Unit objectives and the
individual bonus awards of the Chairman of the Board and the President and
Chief Executive Officer. Bonus awards are generally distributed to
employees by March 15 of the year following the Plan year dependent on the
eligibility of both the Operating Unit and the employee. Bonus awards may
be distributed earlier with the approval of the Chairman of the Board, the
President and Chief Executive Officer and the Human Resources Committee.
3
Miscellaneous
The Human Resources Committee may approve a discretionary pro-rata bonus if
active employment was terminated during the Plan year by death, disability,
or retirement (age 55 with 10 or more years of service).
Employees who have been on Leave of Absence are eligible to participate in
the Plan if their Operating Unit qualifies. Employees who are on Leave of
Absence at the time of bonus payments are eligible to receive their award,
if any, when they return to active employment. If they do not return to
active employment, their payment is forfeited.
The eligible earnings used in bonus calculations excludes imputed income
and previous bonuses.
Eligibility for this Plan does not provide anyone a right to continued
employment.
Administrative Matters
The Plan is completely discretionary. No legal rights or obligations are
created by the Plan. Accordingly, the Company may terminate the Plan or
amend its provisions at any time, and no interest is created that can be
assigned, encumbered, or transferred by an employee. No rights in any
specific funds or assets will exist by reason of this Plan.
The Memphis Compensation department administers the Plan and has full power
to adopt and enforce administrative rules and procedures to make
administrative interpretations. The Human Resources Committee has full
power to decide substantive issues, to make amendments to the Plan and to
terminate the Plan. The Human Resources Committee may adjust any
objectives or bonus points if it determines such adjustment is necessary or
appropriate.
No member of the Memphis Compensation department, the Human Resources
Committee, or other persons involved in administering this Plan or making
decisions concerning bonuses will have any personal liability to any
employee.
4
EXAMPLES 1 THROUGH 4
Assume: Calculation
- --------------------------------------------- ---------------
EXAMPLE 1: Grade 21 employee
Eligible earnings $59,000
Combination of Operating unit and (10%) = $ 5,900
Company earns 100 bonus points
Employee earns 100 points - Actual Award (10%) = $ 5,900
EXAMPLE 2: Grade 23 employee
Eligible earnings $69,000
Combination of Operating unit and (14%) = $9,660
Company earns 95 bonus points
Employee earns 80 points - Actual Award (12%) = $ 8,280
EXAMPLE 3:
Grade 26 employee promoted/transfers into a Grade 27 position in a different
operating unit during the plan year. Bonus is prorated based on earnings,
individual performance and grade for each operating unit.
Step 1: Grade 26 employee - Operating Unit #1
Eligible pro-rata earnings $48,000
Combination of Operating unit and (28%) = $13,440
Company earns 110 bonus points
Employee earns 115 points - pro-rata #1 (29%) = $13,920
Step 2: Grade 27 employee - Operating Unit #2
Eligible pro-rata earnings $55,000
Combination of Operating unit and (30%) = $16,500
Company earns 100 bonus points
Employee earns 100 points - pro-rata #2 (30%) = $16,500
Step 3: Actual Award
Pro-rata #1 + pro-rata #2 $30,420
5
1995 TARGET BONUS MATRIX
------------------------
ANNUAL MANAGEMENT PLAN
----------------------
1995 Salary Grade
Bonus ---------------------------------------------------------
Points 29 28 27 26 25 24 23 22 21 20
------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
100 40% 35% 30% 25% 22% 20% 15% 10% 10% 10%
99 36 32 28 24 22 20 15 10 10 10
98 33 30 26 24 22 20 15 10 10 10
97 30 28 25 23 21 19 15 10 10 10
96 29 27 25 23 21 19 14 10 10 10
95 29 27 25 23 21 19 14 10 10 10
94 28 26 24 22 21 19 14 9 9 9
93 28 26 24 22 20 19 14 9 9 9
92 28 26 24 22 20 18 14 9 9 9
91 27 25 24 22 20 18 14 9 9 9
90 27 25 23 21 20 18 14 9 9 9
89 27 25 23 21 20 18 13 9 9 9
88 26 25 23 21 19 18 13 9 9 9
87 26 24 23 21 19 17 13 9 9 9
86 26 24 22 20 19 17 13 9 9 9
85 26 24 22 20 19 17 13 9 9 9
84 25 24 22 20 18 17 13 8 8 8
83 25 23 22 20 18 17 12 8 8 8
82 25 23 21 19 18 16 12 8 8 8
81 24 23 21 19 18 16 12 8 8 8
80 24 22 21 19 18 16 12 8 8 8
79 24 22 21 19 17 16 12 8 8 8
78 23 22 20 18 17 16 12 8 8 8
77 23 22 20 18 17 15 12 8 8 8
76 23 21 20 18 17 15 11 8 8 8
75 23 21 20 18 17 15 11 8 8 8
74 22 21 19 18 16 15 11 7 7 7
73 22 20 19 17 16 15 11 7 7 7
72 22 20 19 17 16 14 11 7 7 7
71 21 20 18 17 16 14 11 7 7 7
70 21 20 18 17 15 14 11 7 7 7
69 21 19 18 16 15 14 10 7 7 7
68 20 19 18 16 15 14 10 7 7 7
67 20 19 17 16 15 13 10 7 7 7
66 20 18 17 16 15 13 10 7 7 7
65 20 18 17 16 14 13 10 7 7 7
64 19 18 17 15 14 13 10 6 6 6
63 19 18 16 15 14 13 9 6 6 6
62 19 17 16 15 14 12 9 6 6 6
61 18 17 16 15 13 12 9 6 6 6
60 18 17 16 14 13 12 9 6 6 6
59 18 17 15 14 13 12 9 6 6 6
58 17 16 15 14 13 12 9 6 6 6
57 17 16 15 14 13 11 9 6 6 6
56 17 16 15 13 12 11 8 6 6 6
55 17 15 14 13 12 11 8 6 6 6
54 16 15 14 13 12 11 8 5 5 5
53 16 15 14 13 12 11 8 5 5 5
52 16 15 14 12 11 10 8 5 5 5
51 15 14 13 12 11 10 8 5 5 5
50 15 14 13 12 11 10 8 5 5 5
6
1995 STRETCH BONUS MATRIX
-------------------------
ANNUAL MANAGEMENT PLAN
----------------------
1995 Salary Grade
Bonus -----------------------------------------------------------
Points 29 28 27 26 25 24 23 22 21 20
------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
150 60% 53% 45% 38% 33% 30% 23% 15% 15% 15%
149 59 52 44 37 33 30 22 15 15 15
148 58 51 44 37 33 30 22 15 15 15
147 57 51 43 36 32 29 22 15 15 15
146 57 50 43 36 32 29 22 15 15 15
145 56 50 43 36 32 29 22 15 15 15
144 56 50 43 36 32 29 22 14 14 14
143 55 49 42 35 31 29 21 14 14 14
142 55 49 42 35 31 28 21 14 14 14
141 55 49 42 35 31 28 21 14 14 14
140 54 48 41 35 31 28 21 14 14 14
139 54 48 41 35 31 28 21 14 14 14
138 53 47 40 34 30 28 21 14 14 14
137 53 47 40 34 30 27 21 14 14 14
136 53 47 40 34 30 27 20 14 14 14
135 53 47 40 34 30 27 20 14 14 14
134 53 46 39 33 29 27 20 13 13 13
133 52 46 39 33 29 27 20 13 13 13
132 52 46 39 33 29 26 20 13 13 13
131 52 45 39 33 29 26 20 13 13 13
130 51 45 39 33 29 26 20 13 13 13
129 51 45 39 32 28 26 19 13 13 13
128 50 44 38 32 28 26 19 13 13 13
127 50 44 38 32 28 25 19 13 13 13
126 50 44 38 32 28 25 19 13 13 13
125 49 44 38 32 28 25 19 13 13 13
124 49 43 37 31 27 25 19 12 12 12
123 48 43 37 31 27 25 18 12 12 12
122 48 43 37 31 27 24 18 12 12 12
121 47 42 37 31 27 24 18 12 12 12
120 47 42 37 31 26 24 18 12 12 12
119 47 42 36 30 26 24 18 12 12 12
118 46 41 36 30 26 24 18 12 12 12
117 46 41 36 30 26 23 18 12 12 12
116 46 41 36 30 26 23 17 12 12 12
115 45 40 35 29 25 23 17 12 12 12
114 45 40 35 29 25 23 17 11 11 11
113 44 39 34 29 25 23 17 11 11 11
112 44 39 34 29 25 22 17 11 11 11
111 44 39 33 28 24 22 17 11 11 11
110 43 38 33 28 24 22 17 11 11 11
109 43 38 33 28 24 22 16 11 11 11
108 43 38 33 28 24 22 16 11 11 11
107 43 38 33 28 24 21 16 11 11 11
106 42 37 32 27 23 21 16 11 11 11
105 42 37 32 27 23 21 16 11 11 11
104 41 36 31 26 23 21 16 10 10 10
103 41 36 31 26 23 21 15 10 10 10
102 40 35 30 25 22 20 15 10 10 10
101 40 35 30 25 22 20 15 10 10 10
7
1995 SENIOR EXECUTIVE TARGET BONUS MATRIX
-----------------------------------------
ANNUAL MANAGEMENT PLAN
----------------------
1995 Salary Grade
Bonus ----------------------------------------
Points 36 35 34 33 32 31 30
------ ---- ---- ---- ---- ---- ---- ----
100 60% 60% 55% 50% 50% 50% 45%
99 56 56 52 47 47 46 43
98 52 52 49 44 44 43 41
97 48 48 46 42 42 40 39
96 46 46 44 40 38 37 36
95 44 44 42 38 36 34 33
94 43 43 41 38 36 34 32
93 43 43 41 37 35 33 32
92 42 42 40 37 35 33 31
91 42 42 40 36 35 33 31
90 41 41 40 36 34 32 31
89 41 41 39 36 34 32 30
88 40 40 39 35 33 32 30
87 40 40 38 35 33 31 30
86 40 40 38 34 33 31 29
85 39 39 37 34 32 31 29
84 39 39 37 34 32 30 29
83 38 38 37 33 32 30 28
82 38 38 36 33 31 30 28
81 37 37 36 32 31 29 28
80 37 37 35 32 30 29 27
79 36 36 35 32 30 28 27
78 36 36 34 31 30 28 27
77 35 35 34 31 29 28 26
76 35 35 33 30 29 27 26
75 35 35 33 30 29 27 26
74 34 34 33 30 28 27 25
73 34 34 32 29 28 26 25
72 33 33 32 29 27 26 24
71 33 33 31 28 27 26 24
70 32 32 31 28 27 25 24
69 32 32 30 28 26 25 23
68 31 31 30 27 26 24 23
67 31 31 29 27 25 24 23
66 30 30 29 26 25 24 22
65 30 30 29 26 25 23 22
64 29 29 28 26 24 23 22
63 29 29 28 25 24 23 21
62 29 29 27 25 24 22 21
61 28 28 27 24 23 22 21
60 28 28 26 24 23 22 20
59 27 27 26 24 22 21 20
58 27 27 26 23 22 21 19
57 26 26 25 23 22 21 19
56 26 26 25 22 21 20 19
55 25 25 24 22 21 20 19
54 25 25 24 22 21 19 18
53 24 24 23 21 20 19 18
52 24 24 23 21 20 19 18
51 23 23 22 20 19 18 17
50 23 23 22 20 19 18 17
8
1995 SENIOR EXECUTIVE STRETCH BONUS MATRIX
------------------------------------------
ANNUAL MANAGEMENT PLAN
----------------------
1995 Salary Grade
Bonus ----------------------------------------
Points 36 35 34 33 32 31 30
------ ---- ---- ---- ---- ---- ---- ----
150 120% 120% 110% 100% 100% 100% 90%
149 119 119 109 99 99 99 89
148 118 118 108 98 98 98 88
147 117 117 107 97 97 97 87
146 116 116 106 96 96 96 86
145 114 114 104 95 95 95 85
144 113 113 103 94 94 94 84
143 112 112 102 93 93 93 83
142 111 111 101 92 92 92 82
141 110 110 100 91 91 91 81
140 108 108 99 90 90 90 81
139 107 107 97 89 89 89 80
138 106 106 96 88 88 88 79
137 105 105 95 87 87 87 78
136 104 104 94 86 86 86 77
135 102 102 93 85 85 85 76
134 101 101 92 84 84 84 75
133 100 100 91 83 83 83 74
132 99 99 90 82 82 82 73
131 98 98 89 81 81 81 72
130 96 96 88 80 80 80 72
129 95 95 86 79 79 79 71
128 94 94 85 78 78 78 70
127 93 93 84 77 77 77 69
126 92 92 83 76 76 76 68
125 90 90 82 75 75 75 67
124 89 89 81 74 74 74 66
123 88 88 80 73 73 73 65
122 87 87 79 72 72 72 64
121 86 86 78 71 71 71 63
120 84 84 77 70 70 70 63
119 83 83 75 69 69 69 62
118 82 82 74 68 68 68 61
117 81 81 73 67 67 67 60
116 80 80 72 66 66 66 59
115 78 78 71 65 65 65 58
114 77 77 70 64 64 64 57
113 76 76 69 63 63 63 56
112 75 75 68 62 62 62 55
111 74 74 67 61 61 61 54
110 72 72 66 60 60 60 54
109 71 71 64 59 59 59 53
108 70 70 63 58 58 58 52
107 69 69 62 57 57 57 51
106 68 68 61 56 56 56 50
105 66 66 60 55 55 55 49
104 65 65 59 54 54 54 48
103 64 64 58 53 53 53 47
102 63 63 57 52 52 52 46
101 62 62 56 51 51 51 46
9
EXHIBIT 10(33)
Amendment dated as of December 19, 1995
("this Amendment") to
Amended and Restated Employment Agreement
dated June 30, 1995 (the "Employment Agreement")
Introduction
- ------------
On December 19, 1995, the Human Resources Committee (the
"Committee") of the Board of Directors of Harrah's Entertainment, Inc. (the
"Company") approved an amendment to the Employment Agreement with Michael
D. Rose ("Executive") due to increased demands on his time.
Pursuant to that approval and in consideration of the mutual
covenants herein, the Company and Executive hereby agree as follows:
1. Adjustment in Salary/Services. Commencing January 1,
-----------------------------
1996, for the term of this Amendment, Executive's salary rate will increase
from $350,000 per year to $450,000 per year in return for a significant
increase in Executive's contemplated time commitment on behalf of the
Company during the term of this Amendment.
2. Term of this Amendment. The term of this Amendment
----------------------
will commence January 1, 1996 and will terminate December 31, 1996 or will
terminate at an earlier date if the Committee and Executive determine that
the demands on Executive's time can be reduced to levels originally
anticipated for the relevant period under the Employment Agreement.
Upon termination of this Amendment, the salary and service
provisions of the Employment Agreement as would then otherwise be in force
will be reinstated.
3. Modification of Duties. In addition to serving as
----------------------
Board Chairman, for the term of this Amendment Executive will serve as the
Company's senior executive responsible for the resolution, including any
restructuring/reorganization, of the New Orleans project.
4. Full-Time Benefits. Executive will be entitled to the
------------------
benefits of a full-time executive during the term of this Amendment
including, without limitation, incentive compensation (i.e., the benefits
provided during the "First Period" of his employment as set forth in the
Employment Agreement).
5. Stock Option Grant. Executive will receive a stock
------------------
option grant on December 19, 1995 as may be approved by the Committee.
6. Existing Rights. The existing rights in the Employment
---------------
Agreement concerning retirement, termination and vesting provisions will
continue in force during this Amendment.
Except as amended herein, the Employment Agreement continues
in full force and effect.
IN WITNESS WHEREOF, the Company and Executive have executed
this Amendment as of the date and year written above.
Executive: Harrah's Entertainment, Inc.
/s/ Michael D. Rose By: /s/ E. O. Robinson, Jr.
- ------------------------- --------------------------
Michael D. Rose Title: SVP
EXHIBIT 10(42)
================================================================================
HARRAH'S ENTERTAINMENT, INC.
Stock Option Award
THIS CERTIFIES THAT the Human Resources Committee of the Board of
Directors of Harrah's Entertainment, Inc. has awarded
__________________________________ a Nonqualified Stock Option to
purchase ___________________ shares of the Company's Common Stock at a
price of ____________ per share.
Original Grant Date: ___________________
This option is exercisable as follows:
This award is subject to the terms and conditions on the reverse side of
this award and to the terms and conditions of the Company's 1990 Stock
Option Plan, as it may be amended from time to time. A summary of
certain of the Plan's terms and conditions is included on the reverse
side of this award. This document constitutes part of a prospectus
concerning securities that have been registered under the Securities Act
of 1933.
DATED as of this ______________ day of _____________________, 19_______.
HARRAH'S ENTERTAINMENT, INC.
/s/ Rebecca W. Ballou /s/ Michael D. Rose
------------------------------- ------------------------------------
Secretary Chairman of the Board
================================================================================
SUMMARY OF CERTAIN CONDITIONS
Shares of Harrah's Entertainment, Inc. ("Harrah's Entertainment" or
"Company") common stock may be purchased under this stock option. Subject
to the terms and conditions of the Plan, the term of this option is 10
years and one day from the original grant date shown on the front side of
this certificate. The option is exercisable in accordance with the stated
schedule indicated on the front side of this certificate by giving written
notice addressed to the Corporate Compensation Department, Harrrah's
Entertainment, Inc. 1023 Cherry Road, Memphis, TN 38117 (or such other
address designated by the Company), specifying the number of shares to be
purchased and by payment of the option price according to the rules of the
Plan.
Subject to the Plan and the Administrative Regulations thereunder and
contractual provisions, this stock option, to the extent not exercised,
shall terminate and be forfeited on the expiration of 10 years and one day
from the original grant date shown on the front side of this certificate,
upon breach by the optionee of any provision of this option, or upon
optionee's ceasing to be an active employee of Harrah's Entertainment (or
its legal successor) or its subsidiaries for any reason including, but not
limited to, retirement and voluntary or involuntary termination including
termination due to sale or closure of a business unit or sale of a
subsidiary, provided however:
- - If active employment ceases during the term of this stock option
because of death or disability, then the unexercised portion of the
options that were already vested (i.e., exercisable) at that time plus
50 percent of any future unvested installments shall be exercisable in
full on the date of death or on the date of the determination of
disability, as the case may be. All remaining unvested options will
be forfeited.
- - The time period to exercise vested options, following retirement for
age, death or determination of disability during the term of this
option while in the employ of the Company (or its legal successor) or
its subsidiaries, is as follows:
================================================================================
Years of Service Period to Exercise
---------------- Vested Options
after Death, Disability or
--------------------------
Retirement
----------
- --------------------------------------------------------------------------------
under 10 years (for death one year
or disability)
- --------------------------------------------------------------------------------
10 to 20 years (for death, two years
disability or retirement)
- --------------------------------------------------------------------------------
20 or more years (for death three years
disability or retirement
================================================================================
- - Retirement means termination during the term of this option at or
after age 55 and having 10 or more years of service with the Company
(or its legal successor) or its subsidiaries. Disability means a
determination (while you are an employee or on authorized leave) that
you qualify for long-term disability insurance under the Company's LTD
policy. Upon death, vested options may be exercised by your proper
legal representative (executor or administrator) or your legal
beneficiary subject to the Company being properly assured and legally
advised of the rights of such persons.
- - Reference is made to the vesting acceleration provisions in the Plan's
Administrative Regulations which provisions are applicable upon a
"Change in Control" (as defined in, and subject to, such Regulations).
This stock option shall be non-transferable by the optionee other than by
will or the laws of descent and distribution and shall be exercisable
during optionee's lifetime only by optionee.
This stock option may not be exercised at a time when the exercise thereof
or the issuance of shares thereunder would constitute a violation of any
federal or state laws or rules of any stock exchange where the common stock
of Harrah's Entertainment, Inc., (or its legal successor) is listed.
ALL THE TERMS AND CONDITIONS OF THE HARRAH'S ENTERTAINMENT, INC., 1990
STOCK OPTION PLAN AND ADMINISTRATIVE REGULATIONS THEREUNDER, AS AMENDED
FROM TIME TO TIME, ARE INCORPORATED HEREIN BY REFERENCE. ANY CONFLICT OR
QUESTIONS OF INTERPRETATION SHALL BE GOVERNED BY THE PROVISIONS OF THE
PLAN, THE PLAN'S ADMINISTRATIVE REGULATIONS AND THE DECISIONS OF THE HUMAN
RESOURCES COMMITTEE.
This stock option is subject to the special clause regarding non-
competition as approved by the Human Resources Committee on December 15,
1995 and made a part of this award.
Special Clause
Harrah's Entertainment, Inc. (the "Company")
On December 15, 1995 the Human Resources Committee of the Company's Board
of Directors approved the following clause that applies to all stock
options granted on or after December 15, 1995, under the Company's 1990
Stock Option Plan:
(1) If the employee (a) terminates his or her employment voluntarily and
within one year thereafter, directly or indirectly, without the prior
written consent of the Company, goes to work for or provides services
or assistance (as an employee, partner, investor, consultant or in any
other capacity) to a competing business in the United States; or (b)
directly or indirectly solicits or recruits to a competing business
any employee (salary grade 20 and higher) of the Company or of its
direct or indirect subsidiaries during the one year after voluntary
employment termination, then the former employee will be obligated to
repay to the Company in cash any aggregate spread (less taxes paid by
the employee thereon) realized upon any exercise of the stock option
that occurred during the last three months of employment or
thereafter.
(2) A competing business is defined as any business that competes with any
business operated or managed by the Company or its direct or indirect
subsidiaries in the United States at the time of the employee's
termination of employment.
(3) Competition does not include an investment of 1% or less in the public
stock or public debt of a competing company.
(4) The chief executive officer will have authority on behalf of the
Company to determine whether the clause has been violated. The Human
Resources Committee will make this determination in regard to the
chief executive officer.
(5) The Company will have a right of set-off to collect the spread from
any amounts owed to the employee including deferred compensation.
EXHIBIT 10(47)
================================================================================
HARRAH'S ENTERTAINMENT, INC
1990 Restricted Stock Plan
PARTICIPATION AWARD
THIS CERTIFIES THAT the Human Resources Committee of the Board of Directors
of Harrah's Entertainment, Inc. has awarded _______________________ shares
of restricted stock to ________________________________________ in
accordance with the Company's 1990 Restricted Stock Plan, as amended.
Original Grant Date: ___________________
Vesting Schedule
The restrictions on these shares will lapse
in the annual installments as shown at
right if the participant is actively employed
with the Company on the vesting date.
This award is subject to the terms and conditions of the Company's 1990
Restricted Stock Plan, as it may be amended from time to time. A brief
summary of certain of the terms and conditions that apply to this award is
on the reverse side of this award. This document constitutes part of a
prospectus covering securities that have been registered under the
Securities Act of 1933.
DATED as of this _______ day of___________________, 19_______.
HARRAH'S ENTERTAINMENT, INC.
/s/ Rebecca W. Ballou /s/ Michael D. Rose
- ---------------------------------- ----------------------------------
Secretary Chairman of the Board
SUMMARY OF CERTAIN CONDITIONS
1. The stock certificates representing this award will be held by the
Company until the restrictions are lifted.
2. During the restricted period, the shares may not be sold, assigned,
pledged, encumbered or used as collateral for a loan. After the
shares vest, the stock certificates representing such shares may
contain a restrictive legend as required by law.
3. If the participant voluntarily or involuntarily terminates active
employment with the Company or its subsidiaries for any reason before
the restrictions have been removed (except for death or disability as
provided in Paragraph 4 below), then, subject to any contractual
provisions, the terms of the Plan or the Administrative Regulations
thereunder, all shares covered by the restrictions at that time will
be automatically forfeited to the Company.
Reference is made to the vesting acceleration provisions in the Plan's
Administrative Regulations, which provisions are applicable upon a
"Change in Control" (as defined in, and subject to, such Regulations).
4. If employment ceases because of death or disability (as disability is
defined in the Plan's Administrative Regulations), then, subject to
any contractual provisions, the terms of the Plan or the
Administrative Regulations thereunder, the restrictions on 50% of the
shares remaining under restriction at that time will be removed.
5. The rights of the participant are not transferable other than by will
or the laws of descent and distribution in accordance with the Plan's
provisions.
6. The participant will be entitled to vote and receive dividends on the
restricted shares.
7. ALL TERMS AND CONDITIONS OF THE HARRAH'S ENTERTAINMENT, INC. 1990
RESTRICTED STOCK PLAN AND THE ADMINISTRATIVE REGULATIONS THEREUNDER,
AS AMENDED FROM TIME TO TIME, ARE INCORPORATED HEREIN BY REFERENCE.
ANY CONFLICT OR QUESTION OF INTERPRETATION SHALL BE GOVERNED BY THE
PROVISIONS OF THE PLAN, THE PLAN'S ADMINISTRATIVE REGULATIONS AND THE
DECISIONS OF THE HUMAN RESOURCES COMMITTEE.
================================================================================
HARRAH'S ENTERTAINMENT, INC.
1990 Restricted Stock Plan
PARTICIPATION AWARD
THIS CERTIFIES THAT _________________________________________ has been
awarded __________________ shares of restricted stock in accordance with
the Company's 1990 Restricted Stock Plan, as amended.
Annual Vesting Schedule
The restrictions on these shares will lapse
in the annual installments as shown at the
right if the participant is a member of the
Board of Directors of the Company on the
applicable April 1 vesting date.
This award is subject to the terms and conditions of the Company's 1990
Restricted Stock Plan, as amended. A brief summary of certain of the terms
and conditions that apply to this award is on the reverse side of this
award. This document constitutes part of a prospectus covering securities
that have been registered under the Securities Act of 1933.
DATED as of this ___________ day of _____________________, 19_______.
HARRAH'S ENTERTAINMENT, INC.
/s/ Rebecca W. Ballou /s/ Michael D. Rose
- ---------------------------------- -------------------------------
Secretary Chairman of the Board
================================================================================
SUMMARY OF CERTAIN CONDITIONS
1. The stock certificates representing this award will be held by the
Company until the restrictions are lifted.
2. During the restricted period, the shares may not be sold, assigned,
pledged, encumbered or used as collateral for a loan. After the
shares vest, the stock certificates representing such shares may
contain a restrictive legend as required by law.
3. Unvested restricted shares granted to non-employee directors shall be
forfeited when the director's Board service terminates except all
restricted shares shall vest upon: (a) a Change in Control of the
Company (as defined in the Plan's Administrative Regulations); or (b)
upon such person's death, or permanent and total disability as
determined by a licensed physician.
4. The rights of the participant are not transferable other than by will
or the laws of descent and distribution in accordance with the Plan's
provisions.
5. The participant will be entitled to vote and receive dividends on the
restricted shares represented by this award.
6. ALL TERMS AND CONDITIONS OF THE HARRAH'S ENTERTAINMENT, INC. 1990
RESTRICTED STOCK PLAN AND THE PLAN'S ADMINISTRATIVE REGULATIONS, AS
AMENDED, ARE INCORPORATED HEREIN BY REFERENCE. ANY CONFLICT OR
QUESTION OF INTERPRETATION SHALL BE RESOLVED BY THE PROVISIONS OF THE
PLAN OR ITS ADMINISTRATIVE REGULATIONS.
EXHIBIT 10(48)
As Amended 10/27/95
ADMINISTRATIVE REGULATIONS
--------------------------
THE PROMUS COMPANIES INCORPORATED
(the "Company")
LONG TERM COMPENSATION PLAN
1. Application. These administrative regulations apply to all grants of
-----------
restricted stock and stock options under the Company's 1990 Restricted
Stock Plan and 1990 Stock Option Plan (the "Plans").
2. Procedure for Awards
--------------------
2.1 Eligibility. The Company will follow the eligibility
-----------
requirements for participants as set forth in the Plans. In general,
employees in grades 23-36 and general managers and specifically identified
key employees in grades 19-22 are eligible to be considered for awards
under the Plans.
2.2 Recommendation Method. The Corporate Compensation Department
---------------------
will provide each Division President, the President of the Company, and
Corporate Department head with a list of employees eligible for awards.
Each Division President, the President of the Company, and
each Corporate Department head will then be requested to recommend the
award(s) for the employee(s) within their respective areas of
responsibility. The recommendations will then be submitted for appropriate
corporate executive review and approval, and then to the Human Resources
Committee for final approval.
2.3 Vesting Schedules. The term "vesting" refers to the lifting of
-----------------
restrictions on restricted stock and to exercise rights regarding stock
options. Vesting schedules will be approved by the Human Resources
Committee.
2.4 Stock Price. If an award will be based on a dollar value instead
-----------
of number of shares, then the price of the Company's common stock for the
purpose of determining the grant will normally be the average of the high
and low prices of the stock on the New York Stock Exchange on the date that
the Human Resources Committee meets and approves the award or if that is
not a business day, the preceding business day. The Human Resources
Committee may use any other method it deems appropriate to determine stock
price and award values.
2.5 Special Awards. The Chief Executive Officer of the Company may
--------------
recommend a special award to any employee at any time in recognition of
outstanding performance or for purposes of encouraging such performance.
Special awards will be presented to the Human Resources Committee for
approval or shall otherwise be authorized by the Human Resources Committee.
2
3. Frequency of Awards
-------------------
3.1 Regular Awards. Regular awards will be made annually. Awards
--------------
and their vesting schedule will be submitted to the Human Resources
Committee for approval or shall otherwise be authorized by the Human
Resources Committee.
3.2 Interim Grants for Promotions and New Employees. The Committee
-----------------------------------------------
reserves discretion to make awards to any one or more employees between
annual grants.
4. Guidelines For Award Amounts.
----------------------------
4.1 Award amounts will follow Guidelines to be established by the
Committee from time to time. These Guidelines will remain effective until
changed by the Human Resources Committee. To promote equitable operation
of the Plans, it is contemplated that the Guidelines will be modified
periodically to reflect the current factors/assumptions that form the basis
for the Guidelines.
4.2 (a) The Guidelines will be used to calculate Target Awards.
Maximum and minimum share amounts may be set on each side of the Target
Award. The value of the Target Award will be calculated using a percentage
of salary. This percentage will vary for each grade level based on
competitive factors.
(b) The Guidelines will consider the following factors and
assumptions:
3
(i) Current value of the Company's stock.
(ii) Compounded growth rate assumption for the stock's value.
(iii) Compounded growth rate assumption for salaries.
(iv) Competitive environment.
(c) The amount of shares in a stock option award will be a
multiple of the restricted stock award in order to achieve equivalent
target value at the end of the vesting period.
The Guidelines are intended to assist in the calculation of grants.
However, since the circumstances of each individual may be different and
may require special consideration, the Guidelines are not mandatory in all
cases.
5. Award Certificates. Participation letters or award certificates will
------------------
be issued in respect of shares awarded to a participant and shall be
deposited with the Company along with an executed stock power. The stock
power will be used to re-transfer forfeited or cancelled stock back to the
Company.
6. Restrictions Upon Transfer of Restricted Stock.
-----------------------------------------------
6.1 Restriction Period. Restrictions will be determined for each
------------------
restricted stock award at the time the grant is made. During the
restriction period, shares may not be sold, assigned, pledged, encumbered
or used as collateral for a loan. All other rights as a stockholder shall
apply to restricted stock as would apply to issued stock (i.e., dividends,
voting, etc.).
4
6.2 Lapse of Restrictions. When the restrictions on shares are
---------------------
lifted, the stock certificate will be released to the participant, or to
his beneficiary or estate, subject to any restrictive legend as may be
required by law.
6.3 Types of Vesting -- Performance and Longevity. Grants of
---------------------------------------------
restricted stock and stock options will normally vest based upon continued
active service (longevity). However, the Human Resources Committee may
grant awards of restricted stock or stock options that have either
performance vesting, longevity vesting, or both. If performance restricted
shares or performance stock options are granted, the vesting of such shares
generally will occur only if the Company has met certain performance
criteria established by the Board of Directors for the fiscal year that is
substantially completed prior to such vesting date.
In the event that performance criteria for a particular fiscal year
are not met, any performance restricted shares or performance stock options
scheduled to vest with respect to that year will be forfeited back into the
plan; provided, however, that the Board of Directors, upon recommendation
-------- -------
of the Human Resources Committee, shall have discretion to make exceptions
to the provisions concerning forfeiture of performance restricted shares
and performance stock options. The Board of Directors has broad discretion
to set and modify such performance criteria and, in its sole and absolute
discretion, may vary the performance standards among holders of
performance restricted shares and/or performance stock options and may
waive any performance standards set. When adjusting or waiving performance
standards, the Board of Directors, upon recommendation of the
5
Human Resources Committee, shall also have discretion to provide for
vesting or partial vesting of performance restricted shares or performance
stock options for participants who are not employed for a full performance
period.
7. Vesting on Change in Control of the Company.
-------------------------------------------
7.1 In the event of a Change in Control of the Company, as
hereinafter defined, all outstanding restricted shares and all unvested
options granted whether such shares or options were granted before or after
the approval dates of these regulations shall vest.
7.2 Subject to Section 7.3 below, a "Change in Control" of the
Company shall be deemed to have occurred if:
(a) any "person" (as such term is used in Section 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange act),
directly or indirectly, of 25% or more of the Company's then
outstanding voting securities carrying the
right to vote in elections of persons to the Board, regardless of
comparative voting power of such voting securities, and regardless of
whether or not the Board shall have approved such Change in Control;
or
6
(b) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board and any new
director (other than a director designated by a person who shall have
entered into an agreement with the Company to effect a transaction
described in clauses (a) or (c) of this Subsection) whose election by
the Board or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then still
in office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; or
(c) the holders of securities of the Company entitled to vote
thereon approve (i) a merger or consolidation regardless of which
entity is the surviving company, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation, or (ii) a plan of complete liquidation of the Company
or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets. The disposition of assets
for purposes of repayment of debt shall not be deemed the sale of all
or substantially all of the Company's assets.
7
7.3 Notwithstanding the definition of a "Change in Control" of the
Company as set forth in Section 7.2 hereof, the Human Resources Committee
shall have full and final authority, which shall be exercised in its
discretion, to determine conclusively whether a Change in Control of the
Company has occurred, and the date of the occurrence of such Change in
Control and any incidental matters relating thereto, with respect to a
transaction or series of transactions which have resulted or will result in
a substantial portion of the assets or business of the Company (as
determined immediately prior to the transaction or series of transactions
by the Human Resources Committee in its sole discretion, which
determination shall be final and conclusive) being held by a corporation at
least 80% of whose voting securities are held, immediately following such
transaction or series of transactions, by holders of the voting securities
of the Company (determined immediately prior to such transaction
or series of transactions). The Human Resources Committee may
exercise such discretionary authority without regard to whether one
or more of the transactions in such series of transactions would otherwise
constitute a Change in Control of the Company under the definition set
forth in Section 7.2 hereof. If the Human Resources Committee determines
that a Change in Control of the Company has not occurred, then Section 9 of
the Restricted Stock Plan and Section N of the Stock Option Plan, which
provide for adjustments in restricted shares and stock options on the terms
set forth therein, shall be applicable to such
8
transaction or series of transactions. The provisions of this Section 7.3 as to
the discretionary authority of the Human Resources Committee to determine
whether a Change in Control has occurred shall not apply to the application
of the Change in Control provisions herein to the vesting of the restricted
stock of nonmanagement members of the Board of Directors.
8. Forfeiture of Restricted Shares and Stock Options.
--------------------------------------------------
8.1 In the event that a participant terminates active employment with
the Company or any affiliate of the Company voluntarily or involuntarily
including by reason of retirement (except in the event of death or
disability as provided herein), then (subject to any agreement with the
participant) all restricted shares and all stock options which shares or
options at that time have not yet vested shall be forfeited by the
participant to the Company without payment of any consideration by the
Company. Neither the participant, nor any successor, heir, assign or
personal representative of the participant, shall have any further right to
or interest in such restricted shares or stock options or the certificate
or certificates evidencing them. Such forfeited shares or options shall be
available for reissuance under the Plans.
8.2 In the event any employee holding stock options retires (leaves
employment at age 55 or older with ten or more years of service), then such
person shall have a period of two years in the event of ten or more years
of service, or three years in the event of 20 or more years of service,
after the
9
retirement date to exercise any outstanding stock options which are vested
(exercisable) or become vested (exercisable) as of the retirement date,
provided that (1) for incentive stock options, this two or three year
period will not extend beyond the normal term of the option and (2) for
non-incentive options, the term of the option will be extended up to a
maximum term of thirteen years and one day to accommodate the two or three
year extension in cases where retirement, death or determination of
disability occurs within the three year period prior to the end of the
normal term of the option. This provision shall apply to all options
whether granted before or after the approval dates of these resolutions.
8.3 In the event of the participant's death or disability, then
(subject to any agreement with the participant) one half of all unvested
restricted shares and one half of all unvested stock options shall vest as
of the date of death or determination of disability and the remaining
shares shall be forfeited. With respect to vested options upon a
participant's death or disability, the participant or his legal
representative shall have the right to exercise such options for a period
of two years in the event of ten or more years of service, or three years
in the event of 20 or more years of service, after such death or
determination of disability, provided that (1) for incentive stock options,
this two or three year period will not extend beyond the normal term of the
option and (2) for non-incentive options, the term of the option will be
extended up to a maximum term of thirteen years and one day to accommodate
the two or three year extension in cases where retirement,
10
death or determination of disability occurs within the three year period
prior to the end of the normal term of the option. This provision shall
apply to all options whether granted before or after the approval dates of
these resolutions.
8.4 For purposes of administration, a participant shall be deemed
disabled when a determination is made (while the participant is an employee
or is on authorized sick leave) that the participant qualifies for
long-term disability insurance under the LTD policy of the Company's
affiliate who is the participant's employer.
8.5 The Human Resources Committee shall have sole discretion to make
exceptions to the provisions in this section 8 regarding the forfeiture of
restricted shares and stock options for persons who are subject to Section
16 of the Securities Exchange Act. The Chief Executive Officer is hereby
granted authority to make exceptions regarding such forfeitures for all
other employees without the necessity for Committee approval. The
provisions of this Section 8.5 shall apply to all awards of stock options
and restricted stock whether granted before or after the date of these
regulations.
9. Rights to Terminate Employment. No award shall confer upon a
------------------------------
participant the right to continue in the employment of the Company or its
affiliates or affect any right which the Company or its affiliates may have
to terminate the employment of a participant with or without cause.
11
10. Withholding. Whenever the Company proposes or is required to issue,
-----------
transfer, or release shares of Common Stock under the Plans or to make any
payments to a participant, the Company or its affiliates shall have the
right to withhold from any sums due to the recipient, or to require the
recipient to remit to the Company or its affiliates, any amount sufficient
to satisfy any federal, state and/or local withholding tax requirements
prior to the delivery of any stock certificates or any payments to the
participant. Whenever payments are to be made in cash, such payments shall
be net of an amount sufficient to satisfy any federal, state and/or local
withholding tax requirements imposed with respect to such payments. The
Company shall have flexibility to use any reasonable methods or procedures
to satisfy withholding tax requirements including but not limited to the
right to charge reasonable interest on amounts due, to withhold amounts
from any other sums due a participant, and/or to sell a portion of vested
shares in order to satisfy withholding taxes.
11. Discretion of Human Resources Committee and Chief Executive Officer.
-------------------------------------------------------------------
These regulations may be amended by the Human Resources Committee at any
time and are not intended to limit the discretion or rights of the Chief
Executive Officer, the Human Resources Committee, or the Board of Directors
as provided under the Plans.
12
EXHIBIT 10(51)
DEFERRED COMPENSATION PLAN (DCP)
EMPLOYEE PARTICIPATION AGREEMENT
Agreement made this day of ,
-------------------------- -------------------------
19 , between (Participant) and the
---- -------------------------------
Participant's Employer identified on the signature line (the Company) relating
to deferrals under the Harrah's Entertainment, Inc. Deferred Compensation Plan
as it may be amended from time to time (the Plan). The deferrals elected under
this Agreement pertain to the plan year beginning January 1 and ending
December 31 following the date of this Agreement (the Year of Deferral).
1. Deferral Election for Year of Deferral
A. Salary Deferral (up to maximum of 12%)
I hereby elect to defer % of my base salary payable to me
-------
during the Year of Deferral.
B. Bonus Deferral (up to 100%)
I hereby elect to defer % of my annual bonus payable to me in
------
the Year of Deferral.
2. Method of Benefit Payment
I hereby elect to receive my account balance related to the Year of
Deferral, as follows (check only one choice):
A. lump sum within 30 days after leaving employment.
-----
B. lump sum within 30 days after the earlier of:
-----
(a) leaving employment, or
(b) (insert date of future payment).
----------
C. in annual installments over years (insert 2 to 10 years)
----- ---
beginning not later than 30 days after leaving employment.
I understand that leaving employment means discontinuance or removal from the
employee payroll of the Company or its affiliates unless otherwise agreed by
Harrah's Entertainment, Inc. Upon my death, my account will be payable to my
Beneficiary pursuant to the procedures set forth in the Plan.
This Agreement must be signed and received by the Company on or before December
31 of the year prior to the deferrals or prior to such other date as may be
designated by the Company.
Subject to the provisions of the Plan, my elections under this Agreement are
irrevocable. For this election and all previous deferrals under the DCP, I agree
to be bound by the terms of the Plan, as it may be amended from time to time,
which is incorporated herein by reference. This Agreement and all previous DCP
election agreements shall be governed by Tennessee law and by federal law as
applicable.
Employee
Your Signature
------------------------------
Printed Name
--------------------------------
Address
-------------------------------------
- ---------------------------------------------
- ---------------------------------------------
Social Security Number
----------------------
Company
By
------------------------------------------
Title
---------------------------------------
DEFERRED COMPENSATION PLAN (DCP)
DIRECTOR PARTICIPATION AGREEMENT
Agreement made this day of ,
-------------------------- -------------------------
19 , between (Participant) and the Harrah's
---- -------------------------------
Entertainment, Inc. (the Company) relating to deferrals under the Company's
Deferred Compensation Plan as it may be amended from time to time (the Plan).
The deferrals elected under this Agreement pertain to the plan year beginning
January 1 and ending December 31 following the date of this Agreement (the Year
of Deferral).
1. Deferral Elections for Year of Deferral--Cash Fees
Deferral of Director's Fees payable in cash (up to 100%):
I hereby elect to defer % of my Director's Fees payable to me in cash
----
during the Year of Deferral.
2. Method of Benefit Payment
I hereby elect to receive my account balance related to the Year of
Deferral, as follows (check only one choice):
A. lump sum within 30 days after leaving service.
-----
B. lump sum within 30 days after the earlier of:
-----
(a) leaving service, or
(b) (insert date of future payment).
----------
C. in annual installments over years (insert 2 to 10 years)
----- ----
beginning not later than 30 days after leaving service.
I understand that leaving service means resignation from the Company's Board of
Directors or discontinuance of active service on such Board unless otherwise
agreed by Harrah's Entertainment, Inc. Upon my death, my account will be payable
to my Beneficiary pursuant to the procedures set forth in the Plan.
This Agreement must be signed and received by the Company on or before
December 31 of the year prior to the deferrals or prior to such other date as
may be designated by the Company.
Subject to the provisions of the Plan, my elections under this Agreement are
irrevocable. For this election and all previous deferrals under the DCP, I agree
to be bound by the terms of the Plan, as it may be amended from time to time,
which is incorporated herein by reference. This Agreement and all previous DCP
election agreements shall be governed by Tennessee law and by federal law as
applicable.
Director
Your Signature
------------------------------
Printed Name
--------------------------------
Address
-------------------------------------
- ---------------------------------------------
- ---------------------------------------------
Social Security Number
----------------------
Harrah's Entertainment, Inc.
By
------------------------------------------
Title
---------------------------------------
EXHIBIT 10(52)
HARRAH'S ENTERTAINMENT, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
Amended and Restated
October 27, 1995
TABLE OF CONTENTS
PAGE
-----
ARTICLE I PURPOSE 1
ARTICLE II DEFINITIONS 1
2.1(a) Account 1
2.1(b) Pre-1996 Retirement Account 2
2.1(c) Post-1995 Retirement Account 2
2.1(d) Pre-1996 Termination Account 2
2.1(e) Post-1995 Termination Account 2
2.2 Beneficiary 2
2.3 Board 2
2.4 Change of Control 3
2.5 EDCP Committee 5
2.6 Compensation 6
2.7 Deferral Commitment 6
2.8 Deferral Period 6
2.9 Determination Date 6
2.10 Employer 7
2.11 Employment 7
2.12 Hardship 7
2.13 Interest 8
2.13(a) Termination Account Interest 8
2.13(b) Retirement Account Interest 8
2.14 Participant 10
2.15 Participation Agreement 10
2.16 Plan Benefit 10
2.17 Retirement 10
2.18 Total and Permanent Disability 10
ARTICLE III PARTICIPATION AND DEFERRAL COMMITMENTS 11
3.1 Eligibility and Participation 11
3.1(a) Eligibility 11
3.1(b) Participation 11
3.1(c) Salary Continuation 12
3.2 Form of Deferral; Maximum and Minimum
Deferral 12
3.2(a) Salary and Bonus Commitment 12
(i)
PAGE
----
3.2(b) Savings and Retirement Plan Exception 13
3.2(c) Fee Deferral Commitment 13
3.2(d) Other Deferral Provisions 14
3.3 Modification of Deferral Commitment 14
ARTICLE IV DEFERRED COMPENSATION ACCOUNTS 15
4.1 Elective Deferred Compensation 15
4.2 Types of Account 15
4.3 Matching Contributions 15
4.3(a) Eligibility 15
4.3(b) Amount 16
4.3(c) Time of Credit 16
4.4 Vesting of Accounts 16
4.4(a) Amounts Deferred 16
4.4(b) Employer Matching Contributions 17
4.4(c) Retirement, Disability or Death 17
4.5 Determination of Accounts 17
4.6 Statement of Accounts 18
ARTICLE V PLAN BENEFITS 18
5.1 Pre-Termination Withdrawals 18
5.1(a) Amount 18
5.1(b) Remaining Account Balance 18
5.2 Retirement Benefit 19
5.3 Termination Benefit 20
5.4 Death Benefit 20
5.5 Disability Benefits 22
5.6 Hardship Distributions 22
5.7 Form of Benefit Payment 22
5.8 Withholding; Payroll Taxes 23
5.9 Commencement of Payments 24
5.10 Full Payment of Benefits 24
5.11 Payment of Guardian 24
5.12 Spin-Off Transactions 24
ARTICLE VI BENEFICIARY DESIGNATION 26
6.1 Beneficiary Designation 26
6.2 Amendments 27
6.3 No Beneficiary Designation 27
6.4 Effect of Payment 27
(ii)
PAGE
----
ARTICLE VII ADMINISTRATION 28
7.1 Committee; Duties 28
7.2 Agents 28
7.3 Binding Effect of Decisions 28
7.4 Indemnity of EDCP Committee 28
ARTICLE VIII CLAIMS PROCEDURE 29
8.1 Claim 29
8.2 Denial of Claim 29
ARTICLE IX AMENDMENT AND TERMINATION OF PLAN 30
9.1 Amendment 30
9.2 Employer's Right to Terminate Future
Deferrals 31
ARTICLE X MISCELLANEOUS 31
10.1 Unfunded Plan 31
10.2 Unsecured General Creditor 32
10.3 Nonassignability 32
10.4 Not a Contract of Employment 33
10.5 Protective Provisions 33
10.6 Terms 33
10.7 Captions 34
10.8 Governing Law 34
10.9 Validity 34
10.10 Notice 34
10.11 Successors 34
(iii)
HARRAH'S ENTERTAINMENT, INC.
AMENDED AND RESTATED
EXECUTIVE DEFERRED COMPENSATION PLAN
ARTICLE I
PURPOSE
The purpose of this Executive Deferred Compensation Plan (hereinafter
referred to as the "Plan") is to provide supplemental funds for retirement
or death for nonmanagement directors ("director Participants") and key
management employees (and their beneficiaries) of Harrah's Entertainment,
Inc., (formerly named The Promus Companies Incorporated) (hereinafter
referred to as the "Company") and certain of its subsidiaries which elect
to participate in the Plan ("employee Participants"). It is intended that
the Plan will aid in retaining and attracting directors and employees of
exceptional ability by providing such individuals with these benefits.
This plan shall be effective as of November 5, 1989.
ARTICLE II
DEFINITIONS
For the purposes of this Plan, the following words and phrases shall
have the meanings indicated, unless the context clearly indicates
otherwise:
2.1 (a) Account. "Account" means the Retirement Account and the
-------
Termination Account maintained by the Employer with respect to
each Participant's deferred compensation pursuant to Article IV,
including
accounts transferred from the Holiday Corporation Executive
Deferred Compensation Plan. The existence of these accounts
shall not require any segregation of assets.
(b) Pre-1996 Retirement Account. "Pre-1996 Retirement Account"
---------------------------
means the Retirement Account for deferrals of Compensation during
Plan years through 1995.
(c) Post-1995 Retirement Account. "Post-1995 Retirement
----------------------------
Account" means the Retirement Account for deferrals of
Compensation for Plan years after 1995.
(d) Pre-1996 Termination Account. "Pre-1996 Termination
----------------------------
Account" means the Termination Account for deferrals of
Compensation during Plan years through 1995.
(e) Post-1995 Termination Account. "Post-1995 Termination
-----------------------------
Account" means the Termination Account for deferrals of
Compensation during the Plan years after 1995.
2.2 Beneficiary. "Beneficiary" means the person, persons or entity
-----------
designated by the Participant, or as provided in Article VI, to receive any
Plan benefits payable after the Participant's death.
2.3 Board. "Board" means the Board of Directors of the Company or
-----
the Human Resources Committee (or its successor committee) of such Board of
Directors, or any other Committee designated by the Board of Directors of
the Company.
2
2.4 Change of Control. A "Change of Control" shall be deemed to have
-----------------
occurred, subject to subparagraph (iv) hereof, if any of the events in
subparagraphs (i), (ii) or (iii) occur:
(i) Any "person" (as such term is used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), other than an employee
benefit plan of the Company, or a trustee or other fiduciary
holding securities under an employee benefit plan of the
Company, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly,
of 25% or more of the Company's then outstanding voting
securities carrying the right to vote in elections of
persons to the Board of Directors, regardless of comparative
voting power of such voting securities, and regardless of
whether or not the Board of Directors shall have approved
such Change in Control; or
(ii) During any period of two consecutive years,
individuals who at the beginning of such period constitute
the Board of Directors and any new director (other than a
director designated by a person who shall have entered into
an agreement with the Company to effect a transaction
described in subparagraphs (i) or (iii) of this paragraph)
whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a
vote of at least two-thirds of
3
the directors then still in office who either were directors
at the beginning of the period or whose election or
nomination for election was previously so approved, cease
for any reason to constitute a majority thereof; or
(iii) The holders of securities of the Company entitled
to vote thereon approve the following:
(A) A merger or consolidation of the Company with
any other corporation regardless of which entity
is the surviving company, other than a merger or
consolidation which would result in the voting
securities of the Company carrying the right to
vote in elections of persons to the Board of
Directors outstanding immediately prior thereto
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity) at least 80%
of the Company's then outstanding voting
securities carrying the right to vote in elections
of persons to the Board of Directors, or such
securities of such surviving entity outstanding
immediately after such merger or consolidation, or
(B) A plan of complete liquidation of the Company
or an agreement for the sale or disposition by the
Company of all or substantially all of the
Company's assets.
4
(iv) Notwithstanding the definition of a "Change in
Control" of the Company as set forth in this paragraph 2.4,
the Human Resources Committee of the Board of Directors (the
"Committee") shall have full and final authority, which
shall be exercised in its discretion, to determine
conclusively whether a Change in Control of the Company has
occurred, and the date of the occurrence of such Change in
Control and any incidental matters relating thereto, with
respect to a transaction or series of transactions which have
resulted or will result in a substantial portion of the assets
or business of the Company (as determined immediately prior to
the transaction or series of transactions by the Committee in
its sole discretion which determination shall be final and
conclusive) being held by a corporation at least 80% of
whose voting securities are held, immediately following such
transaction or series of transactions, by holders of the
voting securities of the Company (determined immediately
prior to such transaction or series of transactions). The
Committee may exercise such discretionary authority without
regard to whether one or more of the transactions in such
series of transactions would otherwise constitute a Change
in Control of the Company under the definition set forth in
this paragraph 2.4.
2.5 EDCP Committee. "EDCP Committee" means the Executive Deferred
--------------
Compensation Committee appointed to administer the Plan pursuant to Article
VII.
5
2.6 Compensation. "Compensation" means the base salary and annual
------------
bonus or director's fees paid to the Participant by the Employer during the
calendar year, before reduction for amounts deferred pursuant to this Plan
or any other Plan. Compensation does not include expense reimbursements,
or any form of non-cash compensation and benefits. For directors,
Compensation does not include fees payable for Board service after April
30, 1996.
2.7 Deferral Commitment.
-------------------
(a) "Deferral Commitment" means a Salary Deferral Commitment, a
Bonus Deferral Commitment, or a Fee Deferral Commitment made by
the Participant pursuant to Article III and for which a
Participation Agreement has been filed. A Deferral Commitment
shall include any deferral commitment made by a Participant for
1990 and years prior thereto under the predecessor Holiday
Corporation plan.
(b) Pre-1996 Deferrals means the deferral of Compensation during
Plan years through 1995.
(c) Post-1995 Deferrals means the deferral of Compensation
during Plan years after 1995.
2.8 Deferral Period. "Deferral Period" means the single calendar
---------------
year for which the Participant has made a Deferral Commitment. The initial
Deferral Period shall commence as soon as administratively feasible after
the effective date of this Plan.
2.9 Determination Date. "Determination Date" means the last day of
------------------
each calendar month.
6
2.10 Employer. "Employer" means the Company, and directly or
--------
indirectly affiliated or subsidiary corporations, any other affiliate
designated by the Board, or any successors to the businesses thereof.
2.11 Employment. "Employment," in the case of an employee, means the
----------
period of time that a Participant is on the Employer's payroll. A leave of
absence approved by the Committee shall not be deemed a termination of
Employment. A Participant who enters salary continuation status shall not
be deemed to have terminated Employment. In the case of a director,
Employment means the active service on the Board by the Participant.
2.12 Hardship. "Hardship" means the immediate and heavy financial
--------
need of the Participant as determined by the EDCP Committee. Financial
needs shall be limited to the following situations:
(a) Financial obligations incurred by the Participant because of
sickness, accident, death, disability, or other medial need in
the Participant's immediate family which the Participant is not
able to pay out of liquid assets or current cash flow.
(b) Financial requirements to purchase necessary shelter and
related necessities for the Participant and the Participant's
immediate family which the Participant is unable to purchase out
of liquid assets or current cash flow or otherwise reasonably
finance.
(c) Financial requirements for education for the Participant or
a member of the Participant's immediate family which the
Participant is unable to pay out of liquid assets or current cash
flow.
7
For purposes of this definition, the term "immediate family" means
wife, husband, child, father, mother, or a related dependent residing with
the Participant.
2.13 Interest.
--------
(a) Termination Account Interest. (1) The interest rate applied
----------------------------
to a Pre-1996 Termination Account on each monthly Determination
Date shall be the greater of one twelth (1/12) of 8.5% or one-
twelfth (1/12) of the rate announced by Citibank, N.A. as its
prime rate ("Citibank Prime Rate") at the beginning of each
calendar quarter during the Plan year. (2) The interest rate
applicable to a Post-1995 Termination Account on each monthly
Determination Date shall be the greater of one-twelfth (1/12) of
the rate approved by the Board prior to January 1 of each Plan
year or one-twelfth (1/12) of the Citibank Prime Rate at the
beginning of each calendar quarter during the Plan year. The
rate to be approved by the Board shall be submitted by Company
management to the Board for review and approval prior to January
1 of each Plan year.
If the Citibank Prime rate is no longer available, the
Committee shall select a substantially similar index.
(b) Retirement Account Interest. (1) For Plan years through
---------------------------
1995, the effective annual yield applicable to a Pre-1996
Retirement Account shall be determined prior to January 1 of each
year and be effective for the calendar year following the date it
is determined; such rate
8
shall be submitted by Company management for review and approval
by the Board prior to January 1 each year. For all calendar
years after 1995, such rate shall be and is hereby fixed at 15.5%
for all Pre-1996 Retirement Accounts, provided that the annual
yield under this paragraph 2.13(b)(1) for each calendar year for
a Pre-1996 Retirement Account shall not be less than one hundred
fifty percent (150%) of the annual average of Moody's for such
year. If a Participant or Beneficiary receives payment in full
prior to a calendar year end, the foregoing minimum annual yield
for such year will be the Moody's average for the full months the
funds were held by the Plan during the calendar year (or during
the prior year if the payment occurs before one full month has
been calculated in a calendar year). The term "Moody's" refers
to Moody's Average Corporate Bond Yield as published by Moody's
Investors Service, Inc. (or any successor thereto) or, if such
index is no longer published, a substantially similar index
selected by the EDCP Committee.
(2) The effective annual yield applicable to a Post-
1995 Retirement Account shall be determined prior to January 1 of
each year and be effective for the calendar year following the
date it is determined; such rate shall be submitted by Company
management for review and approval by the Board prior to January
1 each year, provided that the annual yield under this paragraph
--------
2.13(b)(2) for each calendar year for a Post-1995 Retirement
Account shall not in any event be less than 150% of the annual
average of Moody's for such
9
year. If a Participant or Beneficiary receives payment in full
prior to a calendar year end, the foregoing minimum annual yield
for such year will be the Moody's average for the full months the
funds were held by the Plan during the calendar year (or during
the prior year if the payment occurs before one full month has
been calculated in a calendar year).
2.14 Participant. "Participant" means any individual who is
-----------
participating or has participated in this Plan as provided in Article III
including a director Participant and employee Participant.
2.15 Participation Agreement. "Participation Agreement" means the
-----------------------
agreement filed by the Participant prior to the beginning of the Deferral
Period. A new Participation Agreement shall be filed by the Participant
for each Deferral Period.
2.16 Plan Benefit. "Plan Benefit" means the benefit payable to the
------------
Participant as calculated in Article V.
2.17 Retirement. "Retirement" for an employee Participant means
----------
termination of Employment with the Employer on or after the earlier of the
date the Participant attains age fifty five (55) with ten (10) years of
credited service or on or after the date the Participant attains age sixty
(60). For purposes of this definition, years of credited service will be
credited in accordance with the provisions of the Company's Savings and
Retirement Plan. The Board reserves the right to provide different
retirement requirements for different Participants.
2.18 Total and Permanent Disability. "Total and Permanent Disability"
------------------------------
means that due to sickness or accidental bodily injury the Participant is
completely
10
unable to perform any and every duty pertaining to his occupation with the
Employer, and such disability is expected to last at least 24 months.
For purposes of this Plan, the EDCP Committee shall determine whether
or not a condition renders the Participant to be Totally and Permanently
Disabled based on evidence satisfactory to the EDCP Committee. Such
determination by the EDCP Committee shall be final and binding.
ARTICLE III
PARTICIPATION AND DEFERRAL COMMITMENTS
3.1 Eligibility and Participation.
-----------------------------
(a) Eligibility. Eligibility to participate in the Plan is
-----------
limited to directors of the Board for their fees payable through
April 30, 1996 and those employees of the Employer who are:
(i) in Job Grades 26 and above (or equivalent grades)
or in other Job Grades which may be declared eligible by the
Board's Human Resources Committee, and
(ii) designated as a Participant by the Chief Executive
Officer of the Company.
(b) Participation. An eligible employee or director may elect
-------------
to participate in the Plan with respect to any Deferral Period by
filing a Participation Agreement with the Company by a date set
by the Company but not later than December 31 of the calendar
year immediately preceding the Deferral Period. In the event
that an
11
individual first becomes eligible to Participate during a
calendar year, a Participation Agreement must be filed no later
than thirty (30) days following notification of the individual by
the EDCP Committee or the Company of his eligibility to
Participate, and such Participation Agreement shall be effective
only with regard to Compensation earned and payable following the
filing of the Participation Agreement with the Company.
(c) Salary Continuation. Unless an exception is specifically
-------------------
made by the Committee, in its sole discretion, and except for the
purpose described in paragraph 5.4(b) below, a Participant shall
not be permitted to defer under this Plan amounts payable to the
Participant after (i) the Participant's death; or (ii) if a
Participant is placed on salary continuation during a Deferral
Period, the earlier of the date the Participant ceases to receive
a continuation of salary or the commencement of a new Deferral
Period; or (iii) the Employer has terminated future deferrals
pursuant to paragraph 9.2 of this Plan.
3.2 Form of Deferral; Maximum and Minimum Deferral. The Participant
----------------------------------------------
may elect in the Participation Agreement any of the following Deferral
Commitments:
(a) Salary and Bonus Commitment. For the Deferral Period
---------------------------
following the calendar year in which the Participation Agreement
is filed, the Participant may elect to defer, except as provided
in (b) below, (1) up to twenty-five percent (25%) of base salary
payable
12
during the Deferral Period, and (2) for Plan years through 1990,
up to one hundred per cent (100%) of bonus (fifty percent (50%)
of bonus for Job Grades 26-29 or equivalent grades) payable
during the Deferral Period. Commencing with the 1991 Deferral
Period with respect to bonus deferrals, all Participants will be
limited to deferring a maximum of 50% of bonus.
(b) Savings and Retirement Plan Exception. In addition to the
-------------------------------------
deferral permitted under (a) above, any Participant that
participates at the maximum before-tax percentage allowed by the
Employer's Savings and Retirement Plan maintained by the Employer
shall be deemed to have elected to defer under this Plan that
portion of eligible Savings and Retirement Plan earnings which
the Participant elected to defer under the Savings and Retirement
Plan, up to six percent (6%) (or such other maximum before-tax
percentage allowed by the Savings and Retirement Plan), which
could not be deferred on a before-tax basis under the Savings and
Retirement Plan due to any law or regulation as determined by the
EDCP Committee, but excluding any amount which was actually
deferred into the Savings and Retirement Plan but distributed
back to the employee in a following Plan year.
(c) Fee Deferral Commitment. A director Participant may elect
-----------------------
to defer a minimum of fifteen percent (15%) and up to a maximum
of one hundred percent (100%) of fees payable in the calendar
year following the calendar year in which the Participation
Agreement is
13
filed. For calendar year 1985, the maximum a director
Participant may elect to defer shall be one hundred percent
(100%) of remaining fees. For Plan years after 1995, a director
Participant may defer fees for services through April 30, 1996.
Fees payable to a director after April 30, 1996, will not be
deferrable under this Plan.
(d) Other Deferral Provisions. Notwithstanding anything herein,
-------------------------
for Plan years through 1995: (i) an employee who has five (5)
years of active deferrals of salary and/or bonus into this Plan
including deferrals under the predecessor Holiday Corporation
plan shall not be permitted to defer any further bonus into this
Plan payable in Plan years through 1995, and (ii) a director on
the Board of Directors of the Company who has ten (10) full years
of active deferrals of director's fees into this Plan including
deferrals under the predecessor Holiday Corporation plan shall
not be permitted to defer any further director's fees into this
Plan payable in Plan years through 1995. For Plan years after
1995, an employee Participant may defer up to 25% of base salary
and 50% of bonus payable during a Deferral Period, provided the
Board reserves the right to modify or terminate further deferrals
into the Plan for any Plan year.
3.3 Modification of Deferral Commitment. A Deferral Commitment shall
-----------------------------------
be irrevocable except that the EDCP Committee may reduce the amount to be
deferred or waive the remainder of the Deferral Commitment upon a finding,
based
14
upon the uniform standards established by the EDCP Committee, that the
Participant has suffered a Hardship or that a bona fide mistake occurred in
filling out a form or responding to instructions.
ARTICLE IV
DEFERRED COMPENSATION ACCOUNTS
4.1 Elective Deferred Compensation. The amount of Compensation that
------------------------------
the Participant elects to defer shall be withheld and credited to the
Participant's Account as the Compensation becomes payable. Any withholding
of taxes or other amounts with respect to deferred Compensation which is
required by state, federal or local law may be withheld from the
Participant's non-deferred Compensation.
4.2 Types of Account. For record-keeping purposes only, the
----------------
following accounts shall be maintained for each Participant:
Pre-1996 Retirement Account
Pre-1996 Termination Account
Post-1995 Retirement Account
Post-1995 Termination Account
The amount of Compensation elected to be deferred shall be credited to both
the Retirement Accounts and the Termination Accounts subject to the
provisions of this Plan.
4.3 Matching Contributions.
----------------------
(a) Eligibility. Matching contributions shall be credited to
-----------
Participants in this Plan who are eligible to participate in the
Employer's Savings and Retirement Plan and elect to make a Basic
15
Contribution equal to the maximum rate at which a Participant may
elect before-tax contributions under the Employer's Savings and
Retirement Plan and such before-tax contribution is limited due
to any law or regulation.
(b) Amount. The Employer shall credit to each employee
------
Participant's Account a matching contribution for each calendar
year equal to one hundred percent (100%) of the Participant's
Compensation elected to be deferred under this Plan for the year,
such Compensation being limited for purposes of this calculation
to a maximum of six percent (6%) of the Participant's eligible
Savings and Retirement Plan earnings (which shall for this
purpose include the Participant's salary deferrals but shall not
include bonus amounts or board fees). The matching contribution
amount shall be offset by the actual matching contribution
allocated to the Participant for the year under the Employer's
Savings and Retirement Plan.
(c) Time of Credit. The Employer matching contribution shall be
--------------
credited to a Participant's Account as of the last day of the
calendar year or the date the Participant's employment ends, if
earlier.
4.4 Vesting of Accounts. Each Participant shall be vested in the
-------------------
amounts credited to such Participant's Account and earnings thereon as
follows:
(a) Amounts Deferred. A Participant shall be one hundred
----------------
percent (100%) vested at all times in the amount of Compensation
elected to be deferred under this Plan and the earnings thereon
(either at the Termination Rate or Retirement Rate).
16
(b) Employer Matching Contributions. A Participant who
-------------------------------
terminates Employment for reasons other than Retirement, Total
and Permanent Disability or Death shall be vested in the Employer
matching contributions (and earnings thereon) made for any
particular year in accordance with the vesting provisions in the
Employer's Savings and Retirement Plan and as it may be amended
from time to time.
(c) Retirement, Disability or Death. A Participant shall be one
-------------------------------
hundred percent (100%) vested in all amounts at Retirement or
upon Total and Permanent Disability or Death during employment
with the Company or its direct or indirect majority owned
subsidiaries. For this purpose, "during employment" includes
death or disability occurring after such employment termination
if the death or disability is primarily caused (as determined by
the EDCP Committee) by the sickness or injury that resulted in
the termination of employment.
4.5 Determination of Accounts. Each Participant's Retirement Account
-------------------------
(Pre-1996 and Post-1995) and Termination Account (Pre-1996 and Post-1995)
as of each Determination Date shall consist of the balance of the
Participant's Account as of the immediately preceding Determination Date,
plus the Participant's elective deferred Compensation credited, matching
contributions and Interest earned, minus the amount of any distributions
made since the immediately preceding Determination Date. Interest earned
shall be calculated as of each Determination Date based upon the average
daily balance of the account since the preceding Determination Date.
Interest earned on each of the Retirement Accounts shall be calculated so
as to achieve the annual yield provided by paragraph 2.13(b).
17
4.6 Statement of Accounts. The Company shall submit to each
---------------------
Participant, within one hundred twenty (120) days after the close of each
calendar year and at such other times as determined by the Company, a
statement setting forth the balance to the credit of each Account
maintained for the Participant.
ARTICLE V
PLAN BENEFITS
5.1 Pre-Termination Withdrawals.
---------------------------
(a) Amount. At the time the Participation Agreement is filed,
------
the Participant may elect to receive fifty percent (50%) of the
Deferral Commitment during each of the 8th, 9th, 10th and 11th
years prior to termination after the year during which the
Participation Agreement is filed. The total Pre-Termination
Withdrawal shall be limited to the Termination Account balance at
the time of the withdrawal.
(b) Remaining Account Balance. The amount of the withdrawal
-------------------------
shall reduce the respective Pre-1996 or Post-1995 Retirement
Account and respective Pre-1996 or Post-1995 Termination Account
balances. Any remaining account balances shall continue to be
credited with Interest in accordance with paragraph 4.5. Any
amounts remaining in the respective Pre-1996 or Post-1995 Retirement
Account or Termination Account after all Pre-Termination Withdrawals
shall be paid in accordance with this Article V.
18
5.2 Retirement Benefit. The Employer shall pay a Plan Benefit equal
------------------
to the amount of the Participant's respective Pre-1996 and/or Post-1995
Retirement Account to each Participant who terminates Employment:
(a) by reason of Retirement,
(b) by reason of Total and Permanent Disability,
(c) within a twenty-four (24) month period after a Change in
Control,
(d) while participating as a director Participant and terminates
from Employment on the Employer's Board due to:
(i) not being re-elected as a director,
(ii) Total and Permanent Disability, or
(iii) termination within a twenty-four (24) month period
after a Change in Control.
(e) for Participants who are entitled to the Retirement Account
rate and who retired or terminated active service after October
29, 1992 and on or before December 31, 1992, such rate will be
locked-in at 16.5% until such Participant's account is fully
distributed.
(f) for Participants who are entitled to the Retirement Account
rate who retired or terminated active service during 1993, such
rate will be locked-in at 16% until such Participant's account is
fully distributed.
(g) for Participant's who are entitled to the Retirement Account
rate and who retired or terminated active service during 1994 or
1995, such rate will be locked-in at the retirement rate approved
for that year (15.5%) until such Participant's account is fully
distributed.
19
(h) for Participants whose active service ceased before October
29, 1992, and at that time were already receiving the Retirement
Account rate, the rate each such Participant will receive in
1993, 1994 and 1995 will be the approved retirement rate for each
such year, provided that for years after 1995 the retirement rate
will be locked-in at the rate approved for 1995 (15.5%) until
such Participant's account is fully distributed.
5.3 Termination Benefit. The Employer shall pay a Plan Benefit equal
-------------------
to the amount of the Participant's Termination Account to each Participant
who terminates Employment for all reasons other than those for which a
Retirement Benefit or Death Benefit shall be paid.
A Participant or Beneficiary shall receive either the Termination
Account or Retirement Account as provided in this Plan but not both.
5.4 Death Benefit. Upon the death of the Participant, the Employer
-------------
shall pay to the Participant's Beneficiary an amount determined as follows:
(a) If the Participant dies prior to termination of Employment
with the Employer, the amount payable under this paragraph shall
be in lieu of any other benefit payment under this Plan and shall
equal:
(i) the Participant's Retirement Account Balance, plus;
(ii) three (3) times the sum of all amounts deferred by
the Participant under this Plan (not including interest or
earnings thereon) until the date of death.
(b) For purposes of calculating the Death Benefit under
paragraph 5.4(a):
20
(i) "amounts deferred" shall include salary, bonus,
and any other Compensation that the Participant may be
permitted to defer hereunder which the Participant shall
have elected in writing to defer under this Plan from
inception of the Plan (including the predecessor Holiday
Corporation plan) to the date of death including any
deferred bonus or other deferred Compensation hereunder
which would be payable to the Participant or to the
Participant's estate or beneficiary after the Participant's
death, except that "amounts deferred" shall not include any
salary elected to be deferred under this Plan but not yet
payable at the time of the Participant's death.
(ii) the Participant's Retirement Account Balance shall
not include any Compensation which is not payable on the day
before the Participant's death even if such amounts become
payable on or after the Participant's death and even if the
Participant had elected in writing to defer such amounts
under this Plan.
(iii) the Plan's pre-termination death benefit of 3 x
deferrals under paragraph 5.4(a)(ii) will only be payable to
Participants whose death occurs during active employment (or
if such Participant's death occurs after active employment
has ceased by reason of a sickness or injury which
thereafter results in the Participant's death). The 3 x
deferrals Death Benefit under
21
paragraph 5.4(a)(ii) will not be payable to Participants who
commence salary continuation after October 29, 1992 (unless
such Participant's salary continuation commences in
connection with a sickness or injury which thereafter
results in the Participant's death).
(c) If the Participant dies after termination of Employment with
the Employer, the amount payable shall be equal to the remaining
unpaid balance of the Participant's appropriate Account.
5.5 Disability Benefits. If the Participant terminates Employment by
-------------------
reason of Total and Permanent Disability, the amount payable shall equal
the Retirement Account balance.
5.6 Hardship Distributions. Upon a finding that the Participant has
----------------------
suffered a Hardship, the EDCP Committee may, in its sole discretion, allow
distributions from the Participant's Account prior to the time otherwise
specified for payment of benefits under the Plan. The amount of such
distribution shall be limited to the amount reasonably necessary to meet
the Participant's requirements during the Hardship. The amount of such
distribution shall reduce the Termination Account balance and Retirement
Account balance.
5.7 Form of Benefit Payment. The Plan Death Benefit payable under
-----------------------
paragraph 5.4(a)(ii) of this Plan shall be paid within 90 days of death in
a lump sum with no interest accruing from the date of death until the date
of payment. The Plan Retirement Benefit, Death Benefit payable under
paragraph 5.4(a)(i) or 5.4(c), Disability Benefits, and Termination Benefit
shall be paid in one of the following forms as elected by the Participant
in the Participation Agreement:
22
(a) Installments. Equal monthly installments of the Account and
------------
Interest amortized over a period of time elected by the
Participant and approved by the Company. Interest shall be
credited to the remaining portion of the Account Balance in
accordance with paragraph 4.5. If the Participant is receiving a
Retirement Account, Interest shall be equal to an amount in
accordance with paragraph 2.13(b). If the Participant is
receiving the Termination Account, Interest shall be equal to an
amount in accordance with paragraph 2.13(a); and/or
(b) A lump sum payment.
(c) Any other form selected by the Participant, which has
written approval of the EDCP Committee.
(d) If the Participant fails to elect the form of benefit
payment, the benefits shall be paid in accordance with 5.7(a)
over a period of fifteen (15) years. However the EDCP Committee
may, in its sole discretion, provide for an alternate form of
benefit payment to the Participant, if payment is made pursuant
to paragraph 5.2(c) or 5.2(d)(iii).
(e) If a Plan Death Benefit is payable in installments under
paragraph 5.4(a)(i), the EDCP Committee may, in its sole
discretion, determine that payment of the Death Benefit shall be
accelerated and paid in a lump sum to the Beneficiary.
5.8 Withholding; Payroll Taxes. The Employer shall withhold from
--------------------------
payments made hereunder any taxes required to be withheld from the
Participant's wages for the federal or any state or local government.
23
5.9 Commencement of Payments. Payment shall commence at the
------------------------
discretion of the Company, but not later than sixty (60) days after the end
of the month in which the Participant Retires, dies, becomes Totally and
Permanently Disabled or otherwise terminates Employment with the Employer
and is entitled to payment pursuant to his or her Participation Agreement.
For purposes of this paragraph 5.9, termination of Employment shall include
when a Participant is no longer entitled to any payments of salary or
salary continuation.
5.10 Full Payment of Benefits. Notwithstanding any other provision of
------------------------
this Plan, all benefits shall be paid no later than the date the
Participant attains age eight five (85).
5.11 Payment to Guardian. If a Plan benefit is payable to minor or a
-------------------
person declared incompetent or to a person incapable of handling the
disposition of property, the Company may direct payment of such Plan
benefit to the guardian, legal representative or person having the care and
custody of such minor or incompetent person. The Company may require proof
of incompetency, minority, incapacity or guardianship as it may deem
appropriate prior to distribution of the Plan benefit. Such distribution
shall completely discharge the EDCP Committee and the Employer from all
liability with respect to such benefit.
5.12 Spin-Off Transactions. Notwithstanding anything in the Plan to
---------------------
the contrary, in the event any business of the Company or its subsidiaries
is spun-off and a Participant becomes an employee or director of the
company owning the spun-off business (the "Spin-Off Company") which adopts
a deferred compensation
24
plan that is substantially the same as the Plan, then the Human Resources
Committee of the Board of Directors of the Company in its discretion may
determine as follows prior to the spin-off:
(a) any director Participant who resigns as a director of the
Company and who, within 90 days, commences service as a director
of the Spin-Off Company will not be treated as having terminated
service or employment as a director for purposes of paying Plan
benefits, and his or her entire Account balance and all
obligations associated therewith will be transferred to the
corresponding Plan of the Spin-Off Company;
(b) a transfer of employment of a Participant to the Spin-Off
Company in connection with the spin-off will not be considered a
termination of employment for purposes of paying Plan benefits or
of forfeiting matching contributions and interest thereon;
(c) a transferred Participant's Account balance as of the
effective date of the spin-off and all obligations related
thereto will be transferred to the corresponding plan of the
Spin-Off Company;
(d) any Participant who will immediately after the effective
date of the spin-off continue to be employed by the Company (or a
subsidiary thereof) and will also be employed by the Spin-Off
Company (or a subsidiary thereof) will have the right to
designate in writing (to be signed prior to the effective date of
the spin-off) a percentage (from zero to 100%) of his or her
Account Balance as of such effective date
25
that will be transferred to the Spin-Off Company (such percentage
being applied to the balances attributable to each year of
deferral) which transfer will include the transfer of all
obligations associated therewith. (To the extent such
designation is not made, the Participant's Account will remain in
the Plan pursuant to its terms.);
(e) Any employee or director transferring to the Spin-Off
Company will receive credit for and will be vested in the
Retirement Account Interest Rate under the Plan and under the
Spin-Off Company's corresponding plan if such Rate is earned or
otherwise vested or credited under the Plan on or prior to the
effective date of the spin-off; and
(f) Except to the extent related to that portion of a
Participant's Account balance that is retained in the Plan
pursuant to the above Section 5.12(d), no benefits will be
payable under the Plan to a Participant whose Account balance (or
portion thereof) is transferred to the Spin-Off Company.
ARTICLE VI
BENEFICIARY DESIGNATION
6.1 Beneficiary Designation. Each Participant shall have the right,
-----------------------
at any time, to designate any person or persons as his Beneficiary or
Beneficiaries (both principal or contingent) to whom payment under this
Plan shall be paid in the event of his death prior to complete distribution
to the Participant of the benefits due him
26
under the Plan. Each beneficiary designation shall be in a written form
prescribed by the Company and will be effective only when filed with the
Company during the Participant's lifetime. If the Participant's
Compensation is community property, any Beneficiary Designation shall be
valid or effective only as permitted under applicable law.
6.2 Amendments. Any Beneficiary designation may be changed by the
----------
Participant without the consent of any designated Beneficiary by the filing
of a new Beneficiary Designation with the Company. The filing of a new
Beneficiary Designation form will cancel all Beneficiary Designations
previously filed.
6.3 No Beneficiary Designation. If any Participant fails to
--------------------------
designate a Beneficiary in the manner provided above, or if the Beneficiary
designated by a deceased Participant dies before the Participant or before
complete distribution of the Participant's benefits, the Company, in its
discretion, may direct the Employer to distribute such Participant's
benefits (or the balance thereof) to either:
(a) The surviving spouse;
(b) The Participant's children, except that if any of the
children predecease the Participant but leave issue surviving,
then such issue shall take by right of representation the share
the parent would have taken if living;
(c) The Participant's estate.
6.4 Effect of Payment. The payment to the Beneficiary shall
-----------------
completely discharge the Employer's obligations under this Plan.
27
ARTICLE VII
ADMINISTRATION
7.1 Committee; Duties. This Plan shall be administered by the
-----------------
Employer's Executive Deferred Compensation Committee (EDCP Committee),
which shall consist of not less than three (3) individuals selected by the
Chief Executive Officer of the Company. Members of the EDCP Committee may
be Participants under this Plan.
7.2 Agents. The EDCP Committee shall appoint an individual to be the
------
Committee's agent with respect to the day-to-day administration of the
Plan. In addition, the EDCP Committee may, from time to time, employ other
agents and delegate to them such administrative duties as it sees fit, and
may from time to time consult with counsel who may be counsel to the
Employer.
7.3 Binding Effect of Decisions. The decision or action of the EDCP
---------------------------
Committee in respect of any question arising out of or in connection with
the administration, interpretation and application of the Plan and the
rules and regulations promulgated hereunder shall be final and conclusive
and binding upon all persons having any interest in the Plan.
7.4 Indemnity of EDCP Committee. The Employer shall indemnify and
---------------------------
hold harmless the members of the EDCP Committee or any agents or employees
of the Employer against any and all claims, loss, damage, expense, or
liability arising from any action or failure to act with respect to this
Plan, except in the case of willful misconduct by the EDCP Committee, EDCP
Committee member, or such agent or employee of the Employer.
28
ARTICLE VIII
CLAIMS PROCEDURE
8.1 Claim. Any Participant, former Participant, Beneficiary, or
-----
legal representative thereof, may file a claim for benefits under the Plan
by submitting to the EDCP Committee a written statement describing the
nature of the claim and requesting a determination of its validity under
the terms of the Plan. The EDCP Committee shall issue a ruling and written
notice with respect to the claim within 30 days after such claim is
received. If the claim is wholly or partially denied, written notice shall
be furnished to the claimant, which notice shall set forth in a manner
calculated to be understood by the claimant;
(a) the specific reason or reasons for denial;
(b) specific reference to pertinent Plan provisions on which the
denial is based;
(c) a description of any additional materials or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary; and
(d) an explanation of the claims review procedures.
8.2 Denial of Claim. Any Participant, former Participant, or
---------------
Beneficiary (or their authorized representatives) whose claim for benefits
has been denied, may appeal such denial by resubmitting to the EDCP
Committee a written statement requesting a further review of the decision
within sixty (60) days of the date the claimant receives notice of such
denial. The statement shall set forth the reasons supporting the claim,
the reasons such claim should not have been denied, and any
29
other issues or comments which the claimant deems appropriate with respect
to the claim. The EDCP Committee shall, if requested, make copies of the
Plan documents available for examination by the claimant. The EDCP
Committee shall issue a ruling and written notice within sixty (60) days
after the date the claim is resubmitted. Such written notice shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant, with specific references to the pertinent Plan
provisions on which the decision is based. The EDCP Committee's decision
of the appeal may be reviewed by the Board, which shall have the right to
overrule the EDCP Committee.
ARTICLE IX
AMENDMENT AND TERMINATION OF PLAN
9.1 Amendment.
---------
(a) The Board may at any time amend the Plan in whole or in
part, and may impose different requirements for different
Participants, provided, however, that (i) no amendment shall be
effective to decrease or restrict the amount accrued to that date
on any Account maintained pursuant to any existing Deferral
Commitment under the Plan; and (ii) on amounts that have been
deferred up to the date of amendment, no amendment shall be
effective to reduce the minimum interest credited or to be
credited to Termination Accounts until their payment date or
reduce the minimum interest credited or to be credited to
Retirement Accounts until their payment date as provided in
paragraph 2.13, without the consent of all Participants (or a
30
Beneficiary in case a Participant is then deceased ) who may be
affected by such change; and (iii) no amendment shall be
effective to alter the form of payment as elected by a
Participant in any Participation Agreement.
(b) The EDCP Committee may make administrative amendments to the
Plan including but not limited to amendments to clarify the Plan
language and to simplify and implement various administrative
procedures, including matters relating to the calculation of
death benefits and payments to Beneficiaries, which the EDCP
Committee determines are consistent with the purpose and intent
of the Plan.
9.2 Employer's Right to Terminate Future Deferrals. The Board may at
----------------------------------------------
any time terminate further deferrals into the Plan by any person and may
reject additional Participants in the Plan, if, in its sole judgment, such
termination would be in the best interest of the Employer. Benefits from
deferrals up to the point of termination of further deferrals shall be paid
in the form elected by the Participant in his or her Participation
Agreement and otherwise in accordance with this Plan, including crediting
of interest, until all payments are complete.
ARTICLE X
MISCELLANEOUS
10.1 Unfunded Plan. This Plan is an unfunded plan maintained
-------------
primarily to provide Deferred Compensation benefits for a select group of
management employees or highly compensated employees. This Plan is not
intended to create
31
an investment contract, but to provide tax planning opportunities and
retirement benefits to eligible individuals who have elected to participate
in the Plan. Eligible individuals are select members of management who, by
virtue of their position with the Employer, are uniquely informed as to the
Employer's operations and have the ability to materially affect the
Employer's profitability and operations.
10.2 Unsecured General Creditor. The Participants and their
--------------------------
Beneficiaries, heirs, successors, and assigns shall have no legal or
equitable rights, interest, or claims in any property or assets of the
Employer, nor shall they be Beneficiaries of, or have any rights, claims,
or interests in any life insurance policies, annuity contracts or the
proceeds therefrom owned or which may be acquired by the Employer
("Policies"). Such Policies or other assets of the Employer shall not be
held as collateral security for the fulfilling of the obligations of the
Employer under this Plan. The Policies shall be the general, unpledged,
unrestricted assets of the Employer, and the Employer may transfer, assign,
sell, or use such policies without restriction. The Employer's obligation
under the Plan shall be merely that of an unfunded and unsecured promise of
the Employer to pay money in the future. No Employer shall have any
obligation under this Plan with respect to individuals other than that of
the Employer's employees or directors or Beneficiaries thereof.
10.3 Nonassignability. Neither the Participant nor any other person
----------------
shall have any right to commute, sell, assign, transfer, pledge,
anticipate, mortgage, or otherwise encumber, transfer, hypothecate, or
convey in advance of actual receipt the amounts, if any, payable hereunder,
or any part thereof, which are, and all rights to which are, expressly
declared to be unassignable and non-transferable. No part of the amounts
payable shall, prior to actual payment, be subject to seizure
32
or sequestration for the payment of any debts, judgments, alimony, or
separate maintenance owed by the Participant or any other person, nor be
transferable by operation of law in the event of the Participant's or any
other person's bankruptcy or insolvency.
10.4 Not a Contract of Employment. The terms and conditions of this
----------------------------
Plan shall not be deemed to constitute a contract of employment between the
Employer and the Participant, and the Participant (or his Beneficiary)
shall have no rights against the Employer except as may otherwise be
specifically provided herein. Moreover, nothing in this Plan shall be
deemed to give the Participant the right to be retained in the service of
the Employer or to interfere with the right of the Employer to discipline
or discharge the Participant at any time.
10.5 Protective Provisions. The Participant will cooperate with the
---------------------
Employer by furnishing any and all information requested by the Employer,
in order to facilitate the payment of benefits hereunder, and by taking
such physical examinations as the Employer may deem necessary and taking
such other action as may be requested by the Employer. Notwithstanding the
other provisions of this Plan, no death benefits in excess of the
Retirement Account balance shall be paid if during the first two (2) years
of participation death occurs as a result of suicide. The EDCP Committee
shall have sole discretion to determine whether death occurs as a result of
suicide.
10.6 Terms. Whenever any words are used herein in the masculine, they
-----
shall be construed as through they were used in the feminine in all cases
where they would so apply; and wherever any words are used herein in the
singular or in
33
the plural, they shall be construed as through they were used in the plural
or the singular, as the case may be, in all cases where they would so
apply.
10.7 Captions. The captions of the articles, sections, and paragraphs
--------
of this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
10.8 Governing Law. The provisions of this Plan shall be construed
-------------
and interpreted according to the laws of the State of Tennessee.
10.9 Validity. In case any provision of this Plan shall be held
--------
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts hereof, but this Plan shall be construed and
enforced as if such illegal and invalid provision had never been inserted
herein.
10.10 Notice. Any notice or filing required or permitted to be given
------
to the EDCP Committee or the Company under the Plan shall be sufficient if
in writing and hand delivered, or sent by registered or certified mail, to
any member of the EDCP Committee, the Chief Executive Officer of the
Employer, or the Employer's Statutory Agent. Such notice shall be deemed
given as of the date of delivery or, if delivery is made by mail, as of the
date shown on the postmark on the receipt for registration or
certification.
10.11 Successors. The provisions of this Plan shall bind and inure to
----------
the benefit of the Employer and its successors and assigns. The term
successors as used herein shall include any corporate or other business
entity which shall, whether by merger, consolidation, purchase or otherwise
acquire all or substantially all of the business and assets of the
Employer, and successors of any such corporation or other business entity.
34
IN WITNESS WHEREOF, and pursuant to resolution of the Board, this
instrument has been executed by its duly authorized officers.
HARRAH'S ENTERTAINMENT, INC.
By: ________________________________
Neil F. Barnhart
Vice President
________________________________
Title
Attest: ________________________________
_______________________________
Title
35
EXHIBIT 10(53)
EXECUTIVE DEFERRED COMPENSATION PLAN (EDCP)
EXECUTIVE PARTICIPATION AGREEMENT
Agreement made this day of ,
-------------------------- -------------------------
19 , between (Participant) and Harrah's
---- -------------------------------
Entertainment, Inc. (the Company) relating to the Company's Executive Deferred
Compensation Plan (the Plan), as it may be amended from time to time, for the
plan year beginning on January 1 and ending December 31 following the date
designated above (the Year of Deferral). This agreement relates to deferral of
compensation payable by the Company or its direct or indirect subsidiaries for
the Year of Deferral.
1. Deferral Elections
A. Salary Deferral (maximum 25%; minimum 4%)
I hereby elect to defer % of my base salary payable to me
------
commencing January 1 of the Year of Deferral and ending December 31
of the Year of Deferral.
B. Annual Bonus Deferral (maximum 50% of bonus)
I hereby elect to defer % of my annual bonus payable to me in
-------
the Year of Deferral.
2. Method of Deferral for Salary
(Deferrals for bonus will be withheld directly from the bonus cash
payment.)
I hereby elect to make my salary deferral for the coming Year of Deferral
as follows (select one):
A. Entire salary deferral for the year will come out of salary
------
pro-rata during the Year of Deferral.
B. Entire salary deferral for the year will come out as 100% of
------
first available pay during the Year of Deferral and then from any
annual bonus payable in that same year if necessary and available. If
a salary increase occurs during the Year of Deferral, the indicated
deferral percentage will also be deducted pro-rata during the balance
of the year from the salary increase.
C. Entire salary deferral for the year will come out of annual
------
bonus payable in the Year of Deferral, if available, and if my
available bonus is insufficient to cover the deferral, the balance
will come pro-rata out of paychecks received after the bonus payment
date during that same year.
3. Method of Benefit Payment
I hereby elect to receive benefits from this election in the following form
(select A or B):
A. I elect to receive benefits at the time I leave employment with
-----
the Company or its subsidiaries. The benefits should be paid in the
following form (must total 100%):
% Indicate percent of account balance desired in lump sum
------
(payable within 60 days after termination).
% Indicate percent of account balance to be paid in monthly
------
payments over years (maximum 15 years).
-----
B. I elect to receive 50% of the deferral amount during each of the
-----
8th, 9th, 10th, and 11th years following the year of this election. I
realize that if I terminate prior to or during the 8th through 11th
years, my entire account balance will be paid to me according to the
method chosen below for payment of the balance of my account when I
leave employment. The balance of any benefit to be payable in the
following form when I leave employment (must total 100%):
% Indicate percent of account balance desired in lump sum
------
(payable within 60 days after termination).
% Indicate percent of account balance to be paid in monthly
------
payments over years (maximum 15 years).
-------
I understand that leaving employment means discontinuation or removal from the
employee payroll of the Company or its subsidiaries unless otherwise agreed by
the Company.
Upon death, my beneficiary will receive payment according to plan rules.
Deferrals as elected may not be permitted if this signed agreement is not
received by the Company on or before December 31 of the year prior to the Year
of Deferral or such other date as may be designated by the Company.
I understand that, subject to the provisions of the Plan, my elections under
this agreement are irrevocable by me. For this election and all previous
elections and subject to any agreements applicable to me, I agree to be bound by
the terms of the Plan, as they may be amended from time to time, which are
incorporated herein by reference. This agreement and all previous EDCP election
agreements shall be governed by Tennessee law and by federal law as applicable.
Employee
Your Signature
------------------------------
Printed Name
--------------------------------
Address
-------------------------------------
- ---------------------------------------------
- ---------------------------------------------
Social Security Number
----------------------
Harrah's Entertainment, Inc.
By
------------------------------------------
Title
---------------------------------------
Election Not To Participate
I do not wish to defer any base salary payable to me with respect to
the Year of Deferral.
Date
----------------------------------------
Employee's Signature
------------------------
EXECUTIVE DEFERRED COMPENSATION PLAN (EDCP)
DIRECTOR PARTICIPATION AGREEMENT
FOR JANUARY 1 - APRIL 30, 1996
Agreement made this day of ,
-------------------------- -------------------------
19 , between (Participant) and Harrah's
---- -------------------------------
Entertainment, Inc. (the Company) relating to the Company's Executive Deferred
Compensation Plan (the Plan), as it may be amended from time to time for part of
the plan year of 1996 (the Year of Deferral) beginning on January 1 and ending
April 30 following the date of this agreement.
1. Deferral Election
Fee Deferral (maximum 100%; minimum 15%)
I hereby elect to defer % of any fees paid to me for my Board
-------
service commencing January 1 of the Year of Deferral and ending April 30 of
the Year of Deferral.
2. Form of Benefit Payment
I hereby elect to receive benefits from this election in the following form
(select A or B):
A. I elect to receive benefits at the time I leave my directorship
-----
with the Company. The benefits should be paid in the following form:
Lump sum (payable within 60 days after directorship
-----
termination).
Equal monthly payments over years (maximum 15 years).
----- ----
B. I elect to receive 50% of the deferral amount during the 8th,
-----
9th, 10th, and 11th years following the year of this election. If I
terminate as a director prior to or during the 8th through 11th years,
my entire account will be paid out according to the method chosen
below for payment of the balance of my account when I leave my
directorship. The balance of any benefit to be payable in the
following form when I leave my directorship:
Lump sum (payable within 60 days after directorship
-----
termination).
Equal monthly payments over years (maximum 15 years).
----- ----
Deferrals as elected may not be permitted if this signed agreement is not
received by the Company prior to the commencement of the Year of Deferral or on
or before a designated date prior to the Year of Deferral.
I understand that, subject to the provisions of the Plan, my elections under
this agreement are irrevocable by me. For this election and all previous
elections, I agree to be bound by the terms of the Plan, as amended from time to
time, which are incorporated herein by reference. This agreement and all
previous EDCP election agreements shall be governed by Tennessee law and by
federal law as applicable.
Director
Your Signature
------------------------------
Printed Name
--------------------------------
Address
-------------------------------------
- ---------------------------------------------
- ---------------------------------------------
Social Security Number
----------------------
Harrah's Entertainment, Inc.
By
------------------------------------------
Title
---------------------------------------
I do not wish to defer fees payable with respect to 1996.
Date
----------------------------------------
Participant's Signature
---------------------
EXHIBIT 11
HARRAH'S ENTERTAINMENT, INC.
COMPUTATIONS OF PER SHARE EARNINGS
EXHIBIT 12
HARRAH'S ENTERTAINMENT, INC.
COMPUTATIONS OF RATIOS
(IN THOUSANDS EXCEPT RATIO AMOUNTS)
EXHIBIT 13
EXHIBIT 21
February 27, 1996
HARRAH'S ENTERTAINMENT, INC.
SUBSIDIARIES
Jurisdiction Percentage Date of
of of Incorpo-
Name Incorporation Ownership ration
- ---- ------------- --------- ------
Aster Insurance Ltd. Bermuda 100% 02/06/90
Harrah's Operating Company, Inc. Delaware 100% 08/08/83
ESI-Air, Inc. Tennessee 100% 03/11/63
Harrah South Shore Corporation California 100% 10/02/59
Harrah's - Holiday Inns of
New Jersey, Inc. New Jersey 100% 09/19/79
Harrah's Alabama Corporation Nevada 100% 09/09/93
Harrah's Alberta Investment
Corporation Alberta 100% 04/05/95
Harrah's Arizona Corporation Nevada 100% 01/26/93
Harrah's Atlantic City, Inc. New Jersey 100% 02/13/79
Harrah's California Corporation Nevada 100% 02/02/94
Harrah's California SSR
Corporation Nevada 100% 10/12/94
Harrah's Colorado Investment
Corporation Nevada 100% 06/23/93
Harrah's Colorado Management
Company Nevada 100% 06/23/93
Harrah's Colorado Standby
Corporation Nevada 100% 11/10/93
Harrah's Connecticut
Corporation Nevada 100% 01/25/94
Harrah's Huntington
Corporation W. Virginia 100% 03/03/95
Harrah's Illinois Corporation Nevada 100% 12/18/91
Harrah's Indiana Investment
Corporation Nevada 100% 09/09/93
Harrah's Indiana Management
Corporation Nevada 100% 09/09/93
Harrah's Interactive
Entertainment Company Nevada 100% 09/21/94
Harrah's Interactive
Investment Company Nevada 100% 09/21/94
Harrah's Kansas Casino
Corporation Nevada 100% 11/12/93
Harrah's Kenner Corporation Louisiana 100% 01/27/93
Harrah's Las Vegas, Inc. Nevada 100% 03/21/68
Harrah's Laughlin, Inc. Nevada 100% 07/10/87
Harrah's Management Company Nevada 100% 04/07/83
Harrah's Maryland Heights
Corporation Nevada 100% 07/30/93
Harrah's Maryland Heights LLC* Delaware 99% 10/16/95
Harrah's Maryland Heights
Operating Company Nevada 100% 6/20/95
Harrah's Mexico Holding
Company Nevada 100% 4/11/95
Harrah's de Mexico, S.A.
de C.V.** Mexico 50%
Harrah's Michigan Corporation Nevada 100% 06/15/93
Harrah's Minnesota Corporation Nevada 100% 10/20/92
Harrah's NC Casino Company,
LLC*** North Carolina 99% 04/21/95
Harrah's New Jersey, Inc. New Jersey 100% 09/13/78
Harrah's New Orleans Investment
Company Nevada 100% 05/21/93
Harrah's Jazz Finance
Corp.**** Delaware 47.07% 12/17/93
Harrah's New Orleans
Management Company Nevada 100% 05/21/93
Harrah's New Zealand, Inc. Nevada 100% 02/28/92
Harrah's North Carolina Casino
Corporation North Carolina 100% 12/22/94
Harrah's-North Kansas City
Corporation Nevada 100% 02/23/93
Harrah's Ohio Corporation Nevada 100% 11/02/94
Harrah's Ohio Management
Company Nevada 100% 11/02/94
Harrah's Ontario, Inc. Canada 100% 06/23/93
Harrah's Pennsylvania
Development Co. Nevada 100% 05/18/94
Harrah's Pittsburgh
Investment Company Nevada 100% 05/26/94
Harrah's Pittsburgh
Management Company Nevada 100% 06/08/94
Harrah's Pty. Limited Australia 100% 04/21/75
Harrah's Reno Holding
Company, Inc. Nevada 100% 02/23/88
Harrah's Riverboat Leasing
Company Nevada 100% 06/20/95
Harrah's Shreveport Investment
Company, Inc. Nevada 100% 04/23/92
Harrah's Shreveport Management Nevada 100% 04/23/92
Company, Inc.
Harrah's Skagit Valley Agency
Corporation Nevada 100% 11/08/95
Harrah's Southeast Washington
Casino Corporation Nevada 100% 11/21/95
Harrah's Southwest Michigan
Casino Corporation Nevada 100% 04/06/95
Harrah's Tunica Corporation Nevada 100% 08/10/92
Harrah's Vicksburg Corporation Nevada 100% 07/13/92
Harrah's Virginia Corporation Nevada 100% 12/01/94
Harrah's Washington
Corporation Nevada 100% 02/03/94
Harrah's West Virginia
Corporation W. Virginia 100% 03/03/95
Harrah's Wheeling Corporation Nevada 100% 04/29/94
Sodak Gaming, Inc. South Dakota 14.1%
The Restaurant Company***** Delaware 32.5% 10/31/85
(fka Tennessee Restaurant Company)
* 99% Harrah's Operating Company, Inc., 1% Harrah Maryland Heights
Operating Company
** 50% Harrah's Operating Company, Inc., 50% Harrah's Mexico Holding
Company
*** 99% Harrah's Operating Company, Inc., 1% Harrah's Management
Company
**** 47.07% Harrah's New Orleans Investment Company
***** Owns 50% of Perkins Restaurants, Inc.