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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM TO .
Commission File No. 1-10410
THE PROMUS COMPANIES INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware I.R.S. No. 62-1411755
(State of Incorporation) (I.R.S. Employer
Identification No.)
1023 Cherry Road
Memphis, Tennessee 38117
(Address of principal executive offices)
(901) 762-8600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- -------
At March 31, 1994, there were outstanding 102,346,082 shares
of the Company's Common Stock.
Page 1 of 101
Exhibit Index Page 29
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
----------------------------
The accompanying unaudited consolidated condensed financial
statements of The Promus Companies Incorporated (Promus or the
Company), a Delaware corporation, have been prepared in
accordance with the instructions to Form 10-Q, and therefore do
not include all information and notes necessary for complete
financial statements in conformity with generally accepted
accounting principles. The results for the periods indicated are
unaudited, but reflect all adjustments (consisting only of normal
recurring adjustments) which management considers necessary for a
fair presentation of operating results. Results of operations
for interim periods are not necessarily indicative of a full year
of operations. These consolidated condensed financial statements
should be read in conjunction with the consolidated financial
statements and notes thereto included in Promus' 1993 Annual
Report to Stockholders.
-2-
THE PROMUS COMPANIES INCORPORATED
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
March 31, Dec. 31,
(In thousands, except share amounts) 1994 1993
ASSETS
Current assets
Cash and cash equivalents $ 54,960 $ 61,962
Receivables, including notes receivable of
$4,206 and $2,197, less allowance for
doubtful accounts of $10,964 and $10,864 44,600 47,448
Deferred income taxes 23,011 21,024
Supplies 12,519 12,996
Prepayments and other 21,623 20,128
---------- ----------
Total current assets 156,713 163,558
---------- ----------
Land, buildings, riverboats and equipment 1,866,994 1,824,433
Less: accumulated depreciation (504,624) (486,231)
---------- ----------
1,362,370 1,338,202
Investments in and advances to
nonconsolidated affiliates 77,361 70,050
Deferred costs and other 230,843 221,308
---------- ----------
$1,827,287 $1,793,118
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 48,518 $ 60,530
Construction payables 8,235 26,345
Accrued expenses 165,907 162,969
Current portion of long-term debt 2,153 2,160
---------- ----------
Total current liabilities 224,813 252,004
Long-term debt 853,894 839,804
Deferred credits and other 93,800 86,829
Deferred income taxes 63,943 63,460
---------- ----------
1,236,450 1,242,097
---------- ----------
Minority interest 23,012 14,984
---------- ----------
Commitments and contingencies (Notes 5 and 6)
Stockholders' equity
Common stock, $0.10 par value,
authorized - 360,000,000 shares,
outstanding - 102,346,082 and 102,258,442
shares (net of 8,942 and 25,251 shares
held in treasury) 10,235 10,226
Capital surplus 348,982 344,197
Retained earnings 214,575 187,203
Deferred compensation related to
restricted stock (5,967) (5,589)
---------- ----------
567,825 536,037
---------- ----------
$1,827,287 $1,793,118
========== ==========
See accompanying Notes to Consolidated Condensed Financial Statements.
-3-
THE PROMUS COMPANIES INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
First Quarter Ended
(In thousands, March 31, March 31,
except per share amounts) 1994 1993
Revenues
Casino $243,010 $166,180
Rooms 51,110 57,172
Food and beverage 38,406 33,196
Franchise and management fees 15,820 12,920
Other 26,439 21,427
Less: casino promotional allowances (28,998) (21,688)
-------- --------
Total revenues 345,787 269,207
-------- --------
Operating expenses
Departmental direct costs
Casino 112,634 82,637
Rooms 21,792 25,047
Food and beverage 20,185 16,939
Depreciation of buildings, riverboats
and equipment 21,392 18,208
Other 84,373 71,254
-------- --------
Total operating expenses 260,376 214,085
-------- --------
85,411 55,122
Property transactions (198) (265)
-------- --------
Operating income 85,213 54,857
Corporate expense (5,538) (6,709)
Interest expense, net of interest
capitalized (25,737) (27,945)
Interest and other income 431 356
-------- --------
Income before income taxes and
minority interest 54,369 20,559
Provision for income taxes (22,427) (8,594)
Minority interest (4,570) -
-------- --------
Income before extraordinary item 27,372 11,965
Extraordinary loss on extinguishment
of debt, net of tax benefit of $679 - (1,009)
-------- --------
Net income $ 27,372 $ 10,956
======== ========
Earnings per share before extraordinary
item $ 0.27 $ 0.12
Extraordinary item, net - (0.01)
-------- --------
Earnings per share $ 0.27 $ 0.11
======== ========
Average common shares outstanding 102,907 102,059
======== ========
See accompanying Notes to Consolidated Condensed Financial Statements.
-4-
THE PROMUS COMPANIES INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
First Quarter Ended
March 31, March 31,
(In thousands) 1994 1993
Cash flows from operating activities
Net income $ 27,372 $ 10,956
Adjustments to reconcile net income
to cash flows from operating activities
Extraordinary item, before income taxes - 1,688
Depreciation and amortization 27,182 23,282
Other noncash items 717 5,344
Minority interest share of net income 4,570 -
Net losses of and distributions from
nonconsolidated affiliates 4,373 732
Net losses from property transactions 163 120
Net change in long-term accounts 285 (1,261)
Net change in working capital accounts 569 2,249
Tax indemnification payments to Bass (4,282) (157)
-------- ---------
Cash flows provided by operating
activities 60,949 42,953
-------- ---------
Cash flows from investing activities
Land, buildings, riverboats and equipment
additions (45,644) (30,852)
Decrease in construction payables (18,110) -
Investments in and advances (to) from
nonconsolidated affiliates (12,652) 46
Other (3,222) (4,898)
-------- ---------
Cash flows used in investing activities (79,628) (35,704)
-------- ---------
Cash flows from financing activities
Net borrowings under Revolving Credit
Facility 15,000 -
Proceeds from issuance of senior subordinated
notes, net of issue costs of $4,000 - 196,000
Debt retirements (989) (204,261)
Minority interest (distributions) contributions (2,334) 2,001
-------- ---------
Cash flows provided by (used in)
financing activities 11,677 (6,260)
-------- ---------
Net change in cash and cash equivalents (7,002) 989
Cash and cash equivalents, beginning
of period 61,962 43,756
-------- ---------
Cash and cash equivalents, end of period $ 54,960 $ 44,745
======== =========
See accompanying Notes to Consolidated Condensed Financial Statements.
-5-
THE PROMUS COMPANIES INCORPORATED
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1994
(UNAUDITED)
Note 1 - Basis of Presentation
------------------------------
Promus is a hospitality company with two primary business
segments: casino entertainment and hotels. Promus owns and
operates casino entertainment hotels and riverboats under the
brand name Harrah's. Harrah's casino hotels are in all five
major Nevada and New Jersey gaming markets: Reno, Lake Tahoe, Las
Vegas and Laughlin, Nevada; and Atlantic City, New Jersey.
Harrah's riverboat casinos are in Joliet, Illinois; Shreveport,
Louisiana; and Tunica and Vicksburg, Mississippi. Harrah's also
has an ownership interest in and manages two limited stakes
casinos in Black Hawk and Central City, Colorado. The hotel
segment is composed of three hotel brands targeted to specific
market segments: Embassy Suites, Hampton Inn and Homewood Suites.
The consolidated condensed financial statements include all
the accounts of Promus and its subsidiaries after elimination of
all significant intercompany accounts and transactions.
Investments in 50% or less owned companies and joint ventures
over which Promus has the ability to exercise significant
influence are accounted for using the equity method. Promus
reflects its share of income before interest expense of these
nonconsolidated affiliates in revenues and operating income.
Promus' proportionate share of the interest expense of such
nonconsolidated affiliates is included in interest expense. (See
Note 7.)
Certain amounts for the prior year first quarter have been
reclassified to conform with the presentation for first quarter
1994.
Note 2 - Long-Term Debt
-----------------------
Interest Rate Agreements
------------------------
Promus has entered into interest rate swap agreements, as
summarized in the following table:
Effective Next Semi-
Swap Rate at Annual Rate
Rate March 31, Adjustment Swap Agreement
Associated Debt (LIBOR+) 1994 Date Expiration Date
--------------- ------- --------- ----------- ---------------
10 7/8% Notes
$200 million 4.731% 8.143% April 15 October 15, 1997
8 1/4% Notes
$50 million 3.42% 6.929% May 15 May 15, 1998
$50 million 3.22% 6.688% July 15 July 15, 1998
In accordance with the terms of the interest rate swap
agreements, the effective interest rate on the 10 7/8% Notes was
adjusted on April 15, 1994, to 9.159%. This rate will remain in
effect until October 15, 1994.
-6-
THE PROMUS COMPANIES INCORPORATED
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1994
(UNAUDITED)
Note 2 - Long-Term Debt (Continued)
----------------------------------
Promus maintains interest rate protection, in the form of a
rate collar transaction entered into in June 1990, on $140
million of its variable rate bank debt. The interest rate
protection expires in 1995 and currently holds Promus' interest
rate in a range between 9.3% and 12.5%.
Note 3 - Stockholders' Equity
-----------------------------
On April 29, 1994, Promus' stockholders approved an amendment
to the Certificate of Incorporation which increased the number of
authorized common shares from 120 million to 360 million and
reduced the par value per common share from $1.50 to $0.10. As a
result of the change in par value, approximately $143.3 million
and $143.2 million has been transferred as of March 31, 1994, and
December 31, 1993, respectively, from common stock to capital
surplus on the consolidated condensed balance sheets.
In addition to its common stock, Promus has the following
classes of stock authorized but unissued:
Preferred stock, $100 par value, 150,000 shares authorized
Special stock, 5,000,000 shares authorized -
Series B, $1.125 par value
-7-
THE PROMUS COMPANIES INCORPORATED
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1994
(UNAUDITED)
Note 4 - Supplemental Disclosure of Cash Paid for Interest and
--------------------------------------------------------------
Taxes
-----
The following table reconciles Promus' interest expense, net
of interest capitalized, per the consolidated condensed
statements of income, to cash paid for interest:
First Quarter Ended
March 31, March 31,
(In thousands) 1994 1993
Interest expense, net of interest capitalized $25,737 $27,945
Adjustments to reconcile to cash paid for
interest
Promus' share of interest expense of
nonconsolidated affiliates (2,945) (3,190)
Net change in accruals (3,965) (2,864)
Amortization of deferred finance charges (814) (1,293)
Net amortization of discounts and premiums (54) (546)
------- -------
Cash paid for interest, net of amount
capitalized $17,959 $20,052
======= =======
Cash payments for income taxes, net of refunds $ 4,454 $(2,129)
======= =======
Note 5 - Commitments and Contingent Liabilities
-----------------------------------------------
Contractual Commitments
-----------------------
Promus is pursuing many casino development opportunities
that may require, individually and in the aggregate, significant
commitments of capital, up-front payments to third parties,
guarantees by Promus of third party debt and development
completion guarantees. As of March 31, 1994, Promus has
guaranteed third party loans of $65 million, which are secured by
certain assets, and has contractual agreements to construct
riverboat casino facilities of $44 million, excluding amounts
previously recorded.
Promus manages certain hotels for others under agreements
which provide for payments/loans to the hotel owners if
stipulated levels of financial performance are not maintained.
In addition, Promus is liable under certain lease agreements
where it has assigned the direct obligation to third party
interests. Promus believes the likelihood is remote that
material payments will be required under these agreements.
Promus' estimated maximum exposure under such agreements is
currently less than $41 million over the next 30 years.
-8-
THE PROMUS COMPANIES INCORPORATED
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1994
(UNAUDITED)
Note 5 - Commitments and Contingent Liabilities (Continued)
----------------------------------------------------------
Guarantee of Insurance Contract
-------------------------------
Promus' defined contribution savings plan includes a $12.9
million guaranteed investment contract with an insurance company.
Promus has agreed to provide non-interest-bearing loans to the
plan to fund, on an interim basis, withdrawals from this contract
by retired or terminated employees. Promus' maximum exposure on
this guarantee as of March 31, 1994, is approximately $7.8
million.
Self-Insurance
--------------
Promus is self-insured for various levels of general
liability, workers' compensation and employee medical coverage.
Insurance claims and reserves includes the accrual of estimated
settlements for known and anticipated claims.
Severance Agreements
--------------------
Promus has severance agreements with twelve of its senior
executives which provide for payments to the executives in the
event of their termination after a change in control, as defined,
of Promus. These agreements provide, among other things, for a
compensation payment equal to 2.99 times the average annual
compensation paid to the executive for the five preceding
calendar years, as well as for accelerated payment or accelerated
vesting of any compensation or awards payable to the executive
under any of Promus' incentive plans. The estimated amount,
computed as of March 31, 1994, that would have been payable under
the agreements to these executives based on earnings and stock
options aggregated approximately $38 million.
Tax Sharing Agreement
---------------------
In connection with the February 7, 1990 spin-off (the Spin-
off) of the stock of Promus to stockholders of Holiday
Corporation (Holiday), Promus is liable, with certain exceptions,
for taxes of Holiday and its subsidiaries for all pre-Spin-off
tax periods. Bass PLC (Bass) is obligated under the terms of the
Tax Sharing Agreements to pay Promus the amount of any tax
benefits realized from pre-Spin-off tax periods of Holiday and
its subsidiaries. Negotiations with the IRS to resolve disputed
issues for the 1985 and 1986 tax years were concluded and
settlement reached during fourth quarter 1993. Final payment of
the federal income taxes and related interest due under the
settlement was made during second quarter 1994. The IRS has
completed its examination of Holiday's federal income tax returns
for 1987 through the Spin-off date and has issued its proposed
adjustments to those returns. Federal income taxes and related
interest assessed on agreed issues were paid during first quarter
1994. A protest of all unagreed issues for the 1987 through
Spin-off periods was filed with the IRS during the third quarter
of 1993 and negotiations to resolve disputed issues are currently
expected to begin during the second half of 1994. Final
resolution of the disputed issues is not expected to have a
materially adverse effect on Promus' consolidated financial
position or its results of operations.
-9-
THE PROMUS COMPANIES INCORPORATED
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1994
(UNAUDITED)
Note 6 - Litigation
-------------------
In February 1992, Bass and certain affiliates filed suit
against Promus generally alleging breaches of representations and
warranties under the Merger Agreement with respect to the 1990
Spin-off of Promus and acquisition of the Holiday Inn hotel
business by Bass, violation of federal securities laws due to
such alleged breaches, and breaches of the Tax Sharing Agreement
between Bass and Promus entered into at the closing of the Merger
Agreement. The complaint seeks an unspecified amount of damages,
unspecified punitive or exemplary damages, and declaratory
relief. Promus believes that it has complied with all applicable
laws and agreements with Bass in connection with the Merger and
is defending its position vigorously. Promus has filed (a) an
answer denying, and asserting affirmative defenses to, the
substantive allegations of the complaint and (b) counterclaims
alleging that Bass has breached the Tax Sharing Agreement, the
Merger Agreement and agreements ancillary to the Merger
Agreement. The counterclaims request unspecified compensatory
damages, injunctive and declaratory relief and Promus' costs,
including reasonable attorneys fees and expenses. Discovery has
begun, but no trial date has been set.
In addition to the matter described above, Promus is also
involved in various inquiries, administrative proceedings and
litigation relating to contracts, sales of property and other
matters arising in the normal course of business. While any
proceeding or litigation has an element of uncertainty,
management believes that the final outcome of these matters will
not have a materially adverse effect upon Promus' consolidated
financial position or its results of operations.
-10-
THE PROMUS COMPANIES INCORPORATED
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1994
(UNAUDITED)
Note 7 - Nonconsolidated Affiliates
-----------------------------------
Combined summarized income statements of nonconsolidated
affiliates which Promus accounted for on the equity basis for the
first quarter ended March 31, 1994 were as follows:
First Quarter Ended
March 31, March 31,
(In thousands) 1994 1993
Revenues $217,880 $206,591
======== ========
Operating income $ (6,666) $ 5,986
======== ========
Net income (loss) $(20,420) $(11,592)
======== ========
Promus' share of nonconsolidated affiliates' combined net
operating results are reflected in the accompanying consolidated
condensed statements of income as follows:
First Quarter Ended
March 31, March 31,
(In thousands) 1994 1993
Pre-interest operating income (included in
Revenues-other) $ 660 $ 3,402
======== ========
Interest expense (included in Interest
expense) $ (2,945) $ (3,190)
======== ========
March 31, Dec. 31,
(In thousands) 1994 1993
Promus' investments in and advances to
nonconsolidated affiliates
At equity $42,562 $35,893
At cost 34,799 34,157
------- -------
$77,361 $70,050
======= =======
The values of certain of Promus' joint venture investments
have been reduced below zero due to Promus' intention to fund its
share of operating losses in the future, if needed. The total
amount of these negative investments included in deferred credits
and other liabilities on the consolidated condensed balance
sheets was $4.7 million and $5.1 million at March 31, 1994, and
December 31, 1993, respectively.
-11-
THE PROMUS COMPANIES INCORPORATED
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1994
(UNAUDITED)
Note 8 - Summarized Financial Information
-----------------------------------------
Embassy is a wholly-owned subsidiary and the principal asset
of Promus. Summarized financial information of Embassy as of
March 31, 1994 and December 31, 1993, and for the first quarter
ended March 31, 1994 and 1993, prepared on the same basis as
Promus, was as follows:
March 31, Dec. 31,
(In thousands) 1994 1993
Current assets $ 157,673 $ 165,753
Land, buildings, riverboats and
equipment, net 1,362,370 1,338,202
Other assets 307,568 290,454
---------- ----------
1,827,611 1,794,409
---------- ----------
Current liabilities 212,458 240,438
Long-term debt 853,894 839,804
Other liabilities 158,100 150,646
Minority interest 23,012 14,984
---------- ----------
1,247,464 1,245,872
---------- ----------
Net assets $ 580,147 $ 548,537
========== ==========
First Quarter Ended
March 31, March 31,
(In thousands) 1994 1993
Revenues $345,185 $268,767
======== ========
Operating income $ 83,506 $ 54,809
======== ========
Income before income taxes and
minority interest $ 52,662 $ 20,614
======== ========
Income before extraordinary items $ 26,262 $ 12,001
======== ========
Net income $ 26,262 $ 10,992
======== ========
The agreements governing the terms of Promus' debt contain
certain covenants which, among other things, place limitations on
Embassy's ability to pay dividends and make other restricted
payments, as defined, to Promus. Pursuant to the terms of the
most restrictive covenant regarding restricted payments,
approximately $571.0 million of Embassy's net assets were not
available for payment of dividends to Promus as of March 31,
1994.
-12-
THE PROMUS COMPANIES INCORPORATED
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1994
(UNAUDITED)
Note 9 - Operating Segment Information
---------------------------------------
Operating results for Promus' operating segments for the
first quarter ended March 31, 1994 and 1993, were as follows:
First Quarter Ended
March 31, March 31,
(In thousands) 1994 1993
Casino Entertainment Segment Operating Data
Revenues
Casino $243,010 $166,180
Food and beverage 36,415 31,090
Rooms 23,779 22,677
Management fees 258 -
Other 14,250 10,509
Less: casino promotional allowances (28,998) (21,688)
-------- --------
Total revenues 288,714 208,768
-------- --------
Operating expenses
Departmental direct costs
Casino 112,634 82,637
Food and beverage 18,324 14,800
Rooms 8,063 7,099
Other 84,589 66,351
-------- --------
Total operating expenses 223,610 170,887
-------- --------
Operating income $ 65,104 $ 37,881
======== ========
Hotel Segment Operating Data
Revenues
Rooms $ 27,331 $ 34,495
Franchise and management fees 15,562 12,920
Food and beverage 1,991 2,106
Other 10,446 9,421
-------- --------
Total revenues 55,330 58,942
-------- --------
Operating expenses
Departmental direct costs
Rooms 13,729 17,948
Food and beverage 1,861 2,139
Other 20,154 21,843
-------- --------
Total operating expenses 35,744 41,930
-------- --------
19,586 17,012
Property transactions (198) (265)
-------- --------
Operating income $ 19,388 $ 16,747
======== ========
Other Operations Segment Operating Data
Revenues $ 1,743 $ 1,497
Operating expenses 1,022 1,268
-------- --------
Operating income $ 721 $ 229
======== ========
-13-
Item 2. Management's Discussion and Analysis
---------------------------------------------
of Financial Condition and Results of Operations
------------------------------------------------
The following discussion and analysis of The Promus Companies
Incorporated's (Promus) financial position and operating results
for first quarter 1994 and 1993 complements and updates the
Management's Discussion and Analysis of Financial Position and
Results of Operations (MD&A) presented in Promus' 1993 Annual
Report. The following information should be read in conjunction
with the 1993 Annual Report MD&A disclosure. References to
Promus include its consolidated subsidiaries where the context
requires.
Promus operates four leading hospitality brands comprising
two business segments: a casino entertainment segment consisting
of Harrah's, one of the world's premier names in the casino
entertainment industry, and a hotel segment composed of three
established brands, Embassy Suites, Hampton Inn and Homewood
Suites (collectively Promus Hotels), targeted at specific market
segments. A fourth hotel brand, Hampton Inn & Suites, was
introduced in late 1993 and is designed to target a new
development segment not addressed by the existing brands.
Unit growth in both business segments, particularly the
addition of four riverboat casinos, and reduced interest expense
contributed to a 41.9% increase in cash flow from operations for
first quarter 1994 over the comparable prior year period. The
extension of debt maturities to 1998 and beyond achieved by a
debt refinancing strategy completed in 1993 allows Promus to
invest its increasing cash flows from operations in opportunities
to further grow its businesses, either through development of new
projects or expansion of existing facilities.
CAPITAL SPENDING AND DEVELOPMENT
--------------------------------
From six land-based casinos in operation in the traditional
markets of Nevada and New Jersey at the end of first quarter
1993, Promus' casino entertainment segment has grown to include
thirteen properties located in six states, including the latest
riverboat casino addition, Harrah's Shreveport. In recognition
of the additional opportunities presented by the proliferation of
casino gaming, Promus continues to focus the majority of its
capital spending on casino development opportunities.
Casino Entertainment
--------------------
To maintain its leading position in the casino entertainment
industry and to further build the value of Harrah's as a national
casino brand, Promus is continuing its development of previously
announced projects and its investigation and pursuit of
additional development opportunities in emerging markets
throughout the U.S. and, to a lesser extent, abroad.
-14-
Harrah's New Orleans
--------------------
On July 21, 1993, the Louisiana Economic Development and
Gaming Corporation (LEDGC) issued its second Request for
Qualifications and Proposals (1993 RFP) to own and operate the
sole land-based casino permitted by law to operate in Orleans
Parish (permanent casino). On August 11, 1993, LEDGC selected a
partnership comprised of a Promus subsidiary and a corporation
owned by Louisiana investors (First Partnership) as the winning
proposer, under the 1993 RFP, to own and operate the permanent
casino. After this selection, it was necessary that the First
Partnership secure control of the site of the Rivergate
Convention Center (Rivergate), the legally mandated site of the
permanent casino. To obtain this control, a new partnership
(Second Partnership) was formed among the partners of the First
Partnership and the holder of the sublease of the Rivergate,
design changes to the proposed permanent casino were made in
order to obtain zoning approval and governmental approvals to the
assignment of the Rivergate sublease, and the sublease for the
Rivergate was assigned to Second Partnership. Additional
properties were acquired by the Second Partnership and a sublease
was entered into with the City of New Orleans' Rivergate
Development Corporation to enable the Second Partnership to
provide a temporary casino at the City of New Orleans' Municipal
Auditorium. Documentation was delivered to LEDGC by the First
Partnership describing and requesting approval of the design,
cost, financing and ownership modifications incidental to
obtaining control of the Rivergate. On April 22, 1994, the
Louisiana Attorney General issued an opinion that LEDGC could not accept
these modifications under the Louisiana Economic Development and
Gaming Corporation Law. On April 27, 1994, LEDGC cancelled the
1993 RFP. On April 29, 1994, LEDGC issued a new Request for
Qualifications and Proposals (Applications) (the 1994 RFP).
First Partnership has appealed to state courts for judicial
review of the action of LEDGC and also has requested a rehearing
by LEDGC. Second Partnership intends to submit an application in
response to the 1994 RFP. The 1994 RFP requires a phased
response, the first phase response due May 13, 1994, and the
second and final phase due May 20, 1994. LEDGC will review
applications, hold public hearings, and select an applicant based
upon LEDGC's evaluation of its proposal with respect to stated
evaluation factors. The Company believes that this process will
be completed by the end of second quarter 1994 absent changes
occasioned by rehearing or judicial intervention. Because of the
1994 RFP, negotiations toward a casino operating contract between
First Partnership and LEDGC have been suspended. As a result of
these unanticipated delays and assuming that the 1994 RFP
proceeds without interruption, the application of the Second
Partnership is selected by LEDGC and the satisfaction of other
contingencies discussed below, the projected opening dates for
the temporary casino and permanent casino will be delayed until
fourth quarter 1994 and fourth quarter 1995, respectively.
Opening of the casino facilities by the Second Partnership may be
precluded if its application is not selected by LEDGC.
The estimated cost of the project is $730 million, which is
expected to be financed through a combination of partner capital
contributions, public debt securities, bank debt and operating
cash flow from the temporary casino. The Second Partnership is
currently in process of registering a public offering of
$425 million of debt and arranging $200 million of bank debt.
The total
-15-
capital contribution of Promus' subsidiary is expected to be
$23.3 million. Promus has agreed to provide completion
guarantees for the project, subject to certain conditions and
exceptions, in exchange for a fee to be paid by the Second
Partnership. Before the Second Partnership can begin
construction of either the planned 76,000 square foot temporary
casino or the proposed 400,000 square foot permanent casino
(200,000 square feet of casino space), other conditions and legal
issues pertinent to the transaction must be satisfied, including
obtaining the casino operating contract from LEDGC, obtaining
financing, and satisfying other governmental requirements.
Litigation concerning title to a portion of the land underlying
the permanent casino site was decided favorably at the trial court
level. An appeal of the trial court decision was filed on May 2, 1994.
If this appeal is decided unfavorably, it may delay or prevent opening
of the casino facilities or otherwise adversely affect their operations.
Riverboat Casino Development
----------------------------
During January 1994, Promus launched its second Joliet,
Illinois-based riverboat casino, the Harrah's Southern Star,
which shares shoreside facilities with its sister ship, the
Northern Star. On April 18, 1994, Promus christened the
Shreveport Rose, a dockside riverboat casino located in downtown
Shreveport, Louisiana, and the fifth floating casino to join
Promus' growing fleet. In addition to the five riverboat casinos
now operating, Promus has previously announced two riverboat
casino projects to be developed in the state of Missouri.
Following the failure of a statewide referendum that would have
approved games of chance for proposed casino developments in
Missouri and would have resolved the uncertainty which resulted
earlier this year when a state court ruling cast doubt on the
permissibility of offering certain types of games in casinos,
Promus is reevaluating its development plans and opportunities in
this state, as discussed in the following paragraphs.
In North Kansas City, Promus is developing a classic
sternwheeler-designed riverboat casino featuring approximately
33,000 square feet of casino space. Approximately $27.4 million
of the total estimated project cost of $82.6 million had been
spent as of the end of first quarter 1994. Development of the
North Kansas City project is proceeding and the project is
expected to open on schedule during third quarter 1994 featuring
certain types of games determined to have an element of skill
under the court ruling. Various factors may affect this
determination including legislative initiatives, regulatory
interpretation and, ultimately, judicial action.
Promus' second Missouri riverboat casino is to be located in
Maryland Heights, a suburb of St. Louis. $14.3 million of the
total announced project cost of $82.0 million had been spent as
of the end of first quarter 1994, primarily related to
construction of the riverboat casino, which will feature 27,500
square feet of casino space. Although construction of the
riverboat is continuing, construction of the related shoreside
facilities has not yet commenced and a decision concerning the
fourth quarter 1994 scheduled opening of this property has not
been made.
The opening of both Missouri projects is subject to the
approval of various regulatory bodies.
Subsequent to the end of the first quarter, Promus executed
its option to acquire an additional interest in the joint venture
which owns and operates the riverboat casino in Shreveport,
Louisiana. As a result of this transaction, Promus' ownership
interest in the joint venture will increase from approximately
86% to 96%, subject to the approval of state regulators.
-16-
Indian Lands
------------
Promus has entered into management and development agreements
for a planned $24.7 million casino entertainment facility near
Phoenix, Arizona, to be owned by the Ak-Chin Indian Community of
the Maricopa Indian Reservation. Promus does not expect to fund
this development, although it has agreed to guarantee the related
bank financing. Commencement of construction, expected to begin
during second quarter 1994, and the opening of the facility are
subject to the receipt of approvals from various regulatory
agencies, including the National Indian Gaming Commission.
Promus will manage the facility for a fee. The Tribal/State
Compact between the Ak-Chin Community and the State of Arizona
has received approval from the U.S. Department of the Interior.
Promus is in various stages of negotiations with a number of
other Indian communities to develop and/or manage facilities on
Indian lands.
International
-------------
Promus and its local partner are constructing a casino in
Auckland, New Zealand. Promus will contribute $15 million in
exchange for a 20% interest in the partnership and will manage
the facility for a fee. Construction of the $150 million
project, to be financed through a combination of partner
contributions and non-recourse debt, is expected to be completed
and the facility to be in operation in first quarter 1996.
Existing Land-Based Facilities
------------------------------
On-going refurbishment and maintenance of Promus' existing
casino entertainment facilities in Nevada and New Jersey
continues to maintain the quality standards set for these
properties. No major additions of casino square footage or hotel
rooms are currently under way at these properties.
Overall
-------
In addition to the projects discussed above, Promus is also
aggressively pursuing additional casino entertainment development
opportunities in various new jurisdictions across the United
States and abroad, although no definitive development agreements
have been signed and no material capital commitments to construct
additional facilities have been made to third parties at this
time. Until all necessary approvals to proceed with development
of a project are obtained from the relevant regulatory bodies,
the costs of pursuing casino entertainment projects are expensed
as incurred. Construction-related costs incurred after the
receipt of necessary approvals are capitalized and depreciated
over the estimated useful life of the resulting asset.
A number of these casino entertainment development projects,
if they go forward, may require, individually and in the
aggregate, a significant capital commitment and, if completed,
may result in significant additional revenues. The commitment of
capital, the timing of completion and the commencement of
operations of casino entertainment development projects are
contingent upon, among other things, negotiation of final
agreements and receipt of approvals from the appropriate
political and regulatory bodies.
-17-
Hotel
-----
Promus' three established hotel brands continued their steady
growth during first quarter 1994 with the opening of ten
additional franchised properties. An additional 55 franchised
properties, comprised of 49 Hampton Inns, four Embassy Suites and
two Homewood Suites, were under construction or conversion to
Promus brands at March 31, 1994.
Construction of a company-owned prototype of a downsized
Homewood Suites property suitable for smaller markets will begin
during second quarter 1994. The prototype is expected to be
completed by the end of 1994 at a cost of less than $6 million.
Three Hampton Inn & Suites hotels, a new concept combining rooms
and suites in a single property introduced by Promus hotels in
late 1993, were approved for development during first quarter
1994. The first Hampton Inn & Suites property is expected to
open in first quarter 1995.
To increase distribution and awareness of its Homewood Suites
brand, subsequent to the end of the first quarter 1994 Promus
announced plans to expand the brand by developing 20 to 25
additional properties over the next three years. A total of up
to $150 million is expected to be required over the three year
period to fund this development.
Summary
-------
Cash needed to finance projects currently under development
as well as additional projects being pursued by Promus will be
made available from operating cash flows, the Bank Facility (see
DEBT REFINANCING ACTIVITIES section), joint venture partners,
specific project financing, guarantees by Promus of third party
debt, sales of existing hotel assets and, if necessary, Promus
debt and/or equity offerings. Including $58.3 million spent
during first quarter 1994, Promus currently estimates
$325 million to $375 million of cash from all sources will be
required during 1994 to fund project development, including the
projects discussed in this CAPITAL SPENDING AND DEVELOPMENT
section, refurbishment of existing facilities and other projects.
DEBT AND LIQUIDITY
------------------
Bank Facility
-------------
At March 31, 1994, $185.0 million in borrowings were
outstanding under Promus' reducing revolving and letter of credit
facility (the Bank Facility). An additional $220.5 million of
the Bank Facility was committed to back certain letters of
credit, including a $204.7 million letter of credit supporting
the existing 9% Notes. After consideration of these borrowings,
$244.5 million was available to Promus under the Bank Facility as
of March 31, 1994. Subsequent to the end of the first quarter,
Promus funded the scheduled retirement of $39.1 million of
10 1/2% notes using borrowings under the Bank Facility.
Debt Rating Upgrade
-------------------
A primary financial objective was fulfilled subsequent to the
end of the quarter with the announcement by Standard and Poor's
that it had upgraded Promus' implied senior debt rating to
investment grade status. As a result of achieving investment
grade status, the interest rate on Promus' Bank Facility will be
reduced by 1/4 of 1% during third quarter 1994. This reduction in the
interest rate will remain in force so long as the investment
grade status is maintained.
-18-
Interest Rate Agreements
------------------------
In prior years, Promus entered into various interest rate
swap agreements as summarized in the following table:
Next Semi-
Swap Rate at Annual Rate
Associated Rate Mar. 31, Adjustment Swap Agreement
Debt (LIBOR+) 1994 Date Expiration Date
-------------- -------- -------- ----------- ----------------
10 7/8% Notes
$200 million 4.731% 8.143% April 15 October 15, 1997
8 3/4% Notes
$50 million 3.42% 6.929% May 15 May 15, 1998
$50 million 3.22% 6.688% July 15 July 15, 1998
In accordance with the terms of the interest rate swap
agreements, the effective interest rate on the 10 7/8% Notes was
adjusted on April 15, 1994, to 9.159%. This rate will remain in
effect until October 15, 1994.
Promus maintains interest rate protection, in the form of a
rate collar transaction entered into in June 1990, on
$140 million on its variable rate bank debt. The interest rate
protection expires in 1995 and currently holds Promus' interest
rate in a range between 9.3% and 12.5%.
Shelf Registration
------------------
Promus, through its wholly-owned subsidiary Embassy Suites,
Inc. (Embassy), has registered up to $200 million of new debt
securities pursuant to a shelf registration declared effective by
the Securities and Exchange Commission. The terms and conditions
of these debt securities, which will be unconditionally
guaranteed by Promus, will be determined by market conditions at
the time of issuance.
EQUITY TRANSACTIONS
-------------------
On April 29, 1994, Promus' stockholders approved an amendment
to the Certificate of Incorporation which increased the number of
authorized common shares from 120 million to 360 million and
reduced the par value per common share from $1.50 to $0.10. As a
result of the change in the par value, approximately $143 million
has been transferred from common stock to capital surplus on the
balance sheet.
-19-
RESULTS OF OPERATIONS
---------------------
Overall
-------
First Quarter Percent
(in millions, except -------------- Increase/
earnings per share) 1994 1993 (Decrease)
------ ------ ----------
Revenues $345.8 $269.2 28.5 %
Operating income 85.2 54.9 55.2 %
Net income 27.4 11.0 149.1 %
Earnings per share 0.27 0.11 145.5 %
Operating margin 24.6% 20.4% 4.2 pts
First quarter 1994's record revenues, operating income and
earnings per share are due primarily to unit growth attained in
both segments, especially the addition of the riverboat casino
properties, and lower overall cost of debt, which continues
favorable operating trends noted during 1993. A summary of
Promus' operating segments performance for the first quarter
ended March 31, 1994 and 1993 is presented in Note 7 to the
consolidated condensed financial statements.
The mix of Promus' operating income among the casino
entertainment divisions, including the contribution now made by
the Riverboat Casino Entertainment Division, and the growth
experienced by the hotel segment reflect the increasing
diversification of Promus' operations. The following table
summarizes operating income before property transactions for the
twelve month periods ended March 31, 1994, 1993 and 1992 in
million of dollars and as a percent of the total for each of
Promus' casino entertainment divisions and primary business
segments:
-20-
Operating Income Contributions for the
Twelve Months Ended March 31,
-------------------------------------------
In Millions of Dollars Percent of Total
---------------------- --------------------
1994 1993 1992 1994 1993 1992
------ ------ ------ ------ ------ ------
Casino Entertainment
Southern Nevada $ 79 $ 69 $ 59 24 % 28 % 28 %
Northern Nevada 79 69 61 24 % 28 % 27 %
Atlantic City 68 63 68 20 % 25 % 31 %
Riverboat 58 - - 17 % - -
New Orleans (3) - - (1)% - -
Other (19) (13) (7) (5)% (5)% (3)%
---- ---- ---- --- --- ---
Total 262 188 181 79 % 76 % 83 %
Hotel 68 57 37 20 % 23 % 17 %
Other 3 1 (1) 1 % 1 % -
---- ---- ---- --- --- ---
Total Promus $333 $246 $217 100 % 100 % 100 %
==== ==== ==== === === ===
Casino Entertainment
--------------------
Promus' casino entertainment segment includes the combined
results of Promus' casino entertainment properties located in
Colorado, Illinois, Mississippi, Nevada and New Jersey. Overall
revenues and operating income for the segment increased 38.3% and
71.9%, respectively, for first quarter 1994 over the comparable
prior year period. This growth is primarily a result of the
first quarter 1994 operating contributions made by the Riverboat
Casino Entertainment Division, partially offset by the
recognition of Promus' pro-rata share of Harrah's New Orleans
preopening-related costs. Included in both periods are
development costs related to Promus' pursuit of additional casino
entertainment projects. The amounts of these development costs
charged to casino entertainment segment other operating expense
for first quarter 1994 and 1993 were $3.6 million and $1.4
million, respectively.
-21-
Riverboat Division
------------------
First
Quarter
(in millions) 1994
-------
Revenues $ 83.1
Operating income 30.2
Operating margin 36.4%
Gaming volume $790.5
The Riverboat Division includes the operations of four
riverboats, all of which opened subsequent to the end of first
quarter 1993, as well as the results of the Division's group
staff function. The higher operating margin achieved by this
Division reflects operational differences between a riverboat
facility and a conventional land-based property and limited
competition currently faced by facilities opening in new,
emerging markets.
Southern Nevada
---------------
First Quarter Percent
-------------- Increase/
(in millions) 1994 1993 (Decrease)
------ ------ ----------
Revenues $ 71.4 $ 69.7 2.4 %
Operating income 18.2 18.8 (3.2)%
Operating margin 25.5% 26.9% (1.4)pts
Gaming volume $754.9 $742.3 1.7 %
The increase in first quarter revenues for the Southern
Nevada region is due to record revenue at Harrah's Las Vegas,
which benefited from the increased visitation to the market
prompted by the late-1993 openings of three "mega" properties.
However, total operating income and operating margin for the
region declined due to lower results posted by Harrah's Laughlin
as the Laughlin market continues to absorb new capacity and as
its traditional customers tried some of the new Las Vegas
properties.
Northern Nevada
---------------
First Quarter Percent
-------------- Increase/
(in millions) 1994 1993 (Decrease)
------ ------ ----------
Revenues $ 70.3 $ 67.6 4.0 %
Operating income 13.1 10.9 20.2 %
Operating margin 18.6% 16.1% 2.5 pts
Gaming volume $808.6 $775.5 4.3 %
All three Northern Nevada properties reported first quarter
operating income records. The region's continuing emphasis on
costs savings and operating efficiencies enabled it to again
achieve disproportionate growth in operating income and margins
versus revenue growth. The revenue and gaming volume growth
achieved by the region can be partially attributed to better
weather compared to last year.
-22-
Atlantic City
-------------
First Quarter Percent
-------------- Increase/
(in millions) 1994 1993 (Decrease)
------ ------ ----------
Revenues $ 65.8 $ 70.4 (6.5)%
Operating income 10.4 10.4 -
Operating margin 15.7% 14.7% 1.0 pts
Gaming volume $684.6 $650.1 5.3 %
The decline in revenues for Atlantic City reflects the impact
of inclement weather, construction on the casino floor, a decline
in table game volume and a lower table hold percentage. The
increase in total gaming volume reflects an increase in slot
volume, which more than offset the decline in table play. An
emphasis on managing expenses and targeting marketing dollars
towards more profitable customer segments enabled the property to
achieve a 1.0 percentage point increase in operating margin and
match its prior year operating income, despite the decrease in
revenues.
Harrah's New Orleans
--------------------
Revenues and operating income for the casino entertainment
segment include a loss of $3.2 million representing the equity
pick-up of Promus' pro-rata share of preopening-related costs
incurred by the joint venture developing Harrah's New Orleans.
(See CAPITAL SPENDING AND DEVELOPMENT section.)
Hotel
-----
First Quarter Percent
(in millions, except ---------------- Increase/
rooms/hotels data) 1994 1993 (Decrease)
------- ------- ----------
Revenues $55.3 $58.9 (6.1)%
Operating income
before property
transactions 19.6 17.0 15.3 %
Operating margin 35.4% 28.9% 6.5 pts
Number of rooms 73,433 68,881 6.6 %
Number of hotels 511 462 10.6 %
Hotel segment revenues for first quarter 1994 declined from
the comparable prior year period due to a decrease in the number
of company-owned Embassy Suites properties. Despite the decline
in revenues, the segment reported increased operating income for
first quarter 1994 due to increases in franchise and management
fees reflecting growth in the combined hotel systems and
increased revenue per available room (suite) (RevPAR/S).
Compared to the prior year period, total system RevPAR/S for the
first quarter increased 6.2% at Hampton Inn, 5.4% at Embassy
Suites and 5.4% at Homewood Suites. The number of room/suites at
franchised properties and RevPAR/S significantly affects hotel
segment results since franchise royalty fees are based upon
rooms/suites revenues at franchised hotels. Also contributing to
the operating income and margin improvements for the hotel
segment are overhead cost savings being achieved as a result of
consolidation of hotel brand management into a single
organization structure announced in third quarter 1993.
-23-
Other Factors Affecting Income Per Share
----------------------------------------
First Quarter Percent
(in millions) -------------- Increase/
1994 1993 (Decrease)
------ ------ ----------
Property transaction
(gains) losses, net $ 0.2 $ 0.3 NM
Corporate expense 5.5 6.7 (17.9)%
Interest expense 25.7 27.9 (7.9)%
Interest and other
income (0.4) (0.4) -
Effective tax rate 41.2% 41.8% (0.6)pts
Minority interest $ 4.6 $ - -
Extraordinary loss,
net - 1.1 NM
Corporate expense decreased primarily due to timing and
reimbursement of certain expenses. The decrease in interest
expense is due to the impact of lower interest rates on Promus'
variable rate debt and lower overall levels of debt. Minority
interest reflects joint venture partners' shares of income at
joint venture riverboat casinos. The extraordinary loss recorded
in the prior year related to the write-off of unamortized
deferred finance charges due to the early retirement of the
related debt.
Tax Matters
-----------
The effective tax rate for both periods is higher than the
federal statutory rate due primarily to state income taxes.
In connection with the spin-off of Promus' stock (the Spin-
off) to Holiday Corporation (Holiday) stockholders on February 7,
1990, Promus is liable, with certain exceptions, for the taxes of
Holiday and subsidiaries for all pre-Spin-off tax periods.
Negotiations with the Internal Revenue Service (IRS) to resolve
disputed issues for the 1985 and 1986 tax years were concluded
and a settlement reached during fourth quarter 1993. Final
payment of the federal income taxes and related interest due
under the settlement was made during second quarter 1994. The
IRS has completed its examination of Holiday's federal income tax
returns for 1987 through the Spin-off date and has issued its
proposed adjustments to those returns. Federal income taxes and
related interest assessed on agreed issues were paid during first
quarter 1994. A protest defending the taxpayer's position on all
unagreed issues for the 1987 through Spin-off periods was filed
with the IRS during third quarter 1993 and negotiations to
resolve disputed issues are currently expected to begin during
the second half of 1994. Final resolution of the disputed issues
is not expected to have a materially adverse effect on Promus'
consolidated financial position or its results of operations.
EFFECTS OF CURRENT ECONOMIC AND POLITICAL CONDITIONS
----------------------------------------------------
The casino entertainment industry is experiencing expansion
in both existing markets and new jurisdictions. In the Las Vegas
market, three competitors opened new casino "mega" facilities
during fourth quarter 1993
-24-
adding more than 350,000 square feet of casino space and 10,000
rooms to the market. In Laughlin, expansions by competitors
completed in 1993 increased the number of rooms available in that
market by 12%. In Reno, competitors have announced new projects
which, if constructed, will add significant additional casino
space and hotel rooms to that market. In addition, the
proliferation of casino gaming activity in many new jurisdictions
continues due to the widespread growing acceptance of casino
gaming as a form of entertainment and as an alternative tax
revenue source for municipalities and states. Also furthering
the proliferation of casino gaming has been the Indian Gaming
Regulatory Act of 1988 which, as of May 10, 1994, had resulted in
the approval of 107 compacts for the development of casinos on
Native American lands in 19 states. Promus is not able to
determine the impact, whether favorable or unfavorable, that
these developments will have on the markets in which it currently
operates. However, management believes that the current balance
of its operations among the existing casino entertainment
divisions and the hotel segment as discussed above, combined with
the further geographic diversification and the continuing pursuit
of the Harrah's national brand strategy presently underway in its
casino entertainment segment, have well-positioned Promus to face
the challenges presented by these developments and will reduce
the potentially negative impact these new developments may have
on Promus' overall operations.
INTERCOMPANY DIVIDEND RESTRICTION
---------------------------------
Agreements governing the terms of its debt require Promus to
abide by covenants which, among other things, limit Embassy's
ability to pay dividends and make other restricted payments, as
defined, to Promus. The amount of Embassy's restricted net
assets, as defined, computed in accordance with the most
restrictive of these covenants regarding restricted payments, was
approximately $571.0 million at March 31, 1994. Promus'
principal asset is the stock of Embassy, a wholly-owned
subsidiary. Embassy holds, directly and through subsidiaries,
the principal assets of Promus' businesses. Given this ownership
structure, these restrictions should not impair Promus' ability
to conduct its business through its subsidiaries or to pursue its
development plans.
-25-
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
--------------------------
Bass Public Limited Company, Bass International
Holdings N.V., Bass (U.S.A.) Incorporated, Holiday
Corporation and Holiday Inns, Inc. (collectively "Bass") v.
The Promus Companies Incorporated ("Promus"). A complaint
was filed in the United States District Court for the
Southern District of New York against Promus on February 6,
1992, under Civil Action No. 92 Civ. 0969(SWK). The
complaint alleges violation of Rule 10b-5 of the federal
securities laws, intentional and negligent
misrepresentation, breach of express warranties, breach of
contract, and express and equitable indemnification. The
complaint generally alleges breaches of representations and
warranties under the Merger Agreement with respect to the
1990 spin-off of Promus and acquisition of the Holiday Inn
hotel business by Bass, violation of the federal securities
laws due to such alleged breaches, and breaches of the Tax
Sharing Agreement between Bass and Promus entered into at
the closing of the Merger Agreement. The complaint seeks an
unspecified amount of damages, unspecified punitive or
exemplary damages, and declaratory relief. The Company
believes that it has complied with all applicable laws and
agreements with Bass in connection with the Merger and is
defending its position vigorously. Promus has filed (a) an
answer denying, and asserting affirmative defenses to, the
substantive allegations of the complaint and (b)
counterclaims alleging that Bass has breached the Tax
Sharing Agreement and agreements ancillary to the Merger
Agreement. The counterclaims request unspecified
compensatory damages, injunctive and declaratory relief and
Promus' costs, including reasonable attorneys fees and
expenses. On April 17, 1992, Bass filed a motion seeking to
disqualify the Company's outside counsel in the litigation,
Latham & Watkins, on various grounds. That motion was
denied by the trial court on January 7, 1994. Discovery has
begun, but no trial date has been set.
Certain tax matters. In connection with the Spin-off,
Promus is liable, with certain exceptions, for taxes of
Holiday and its subsidiaries for all pre-merger tax periods.
Bass is obligated under the terms of the Tax Sharing
Agreement to pay Promus the amount of any tax benefits
realized from pre-merger tax periods of Holiday and its
subsidiaries. The disputed issues from the Internal Revenue
Service audit of the 1985 and 1986 tax years have been
settled and the payment of taxes and interest with respect
thereto was made during second quarter 1994. The IRS has
completed its examination of Holiday's federal income tax
returns for 1987 through the Spin-off date and has issued its
proposed adjustments to those returns. Federal income taxes
and related interest assessed on agreed issues were paid in
first quarter 1994. A protest of all unagreed issues for the
1987 through Spin-off periods was filed with the IRS during
the third quarter of 1993 and negotiations to resolve disputed
issues are currently expected to begin during the second half
of 1994. Final resolution of the disputed issues is not expected
to have a materially adverse effect on Promus' consolidated
financial position or its results of operations.
-26-
Item 6. Exhibits and Reports on Form 8-K
----------------------------------------------------------
(a) Exhibits
EX-3.1 Certificate of Incorporation of The Promus
Companies Incorporated.
EX-3.2 Certificate of Amendment of Certificate of
Incorporation of The Promus Companies
Incorporated dated April 29, 1994.
EX-3.3 Bylaws of The Promus Companies Incorporated,
as amended April 29, 1994.
EX-10.1 The Promus Companies Incorporated 1990 Stock
Option Plan, as amended April 29, 1994.
EX-10.2 Second Amendment dated March 31, 1994 to the
Amended and Restated Partnership Agreement of
Harrah's Jazz Company.
EX-11 Computation of per share earnings.
(b) No reports on Form 8-K were filed during the quarter
ended March 31, 1994.
-27-
Signature
---------
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
THE PROMUS COMPANIES
INCORPORATED
May 12, 1994 BY: MICHAEL N. REGAN
------------------------------
Michael N. Regan
Vice President and Controller
(Chief Accounting Officer)
-28-
Exhibit Index
-------------
Exhibit No. Description Sequential Page No.
----------- ------------ ------------------
EX-3.1 Certificate of Incorporation 30
of The Promus Companies
Incorporated.
EX-3.2 Certificate of Amendment of 56
Certificate of Incorporation of The
Promus Companies Incorporated dated
April 29, 1994.
EX-3.3 Bylaws of The Promus Companies 58
Incorporated, as amended April
29, 1994.
EX-10.1 The Promus Companies 69
Incorporated 1990 Stock Option
Plan, as amended April 29, 1994.
EX-10.2 Second Amendment dated March 31, 82
1994 to the Amended and
Restated Partnership Agreement
of Harrah's Jazz Company.
EX-11 Computation of per share 101
earnings.
-29-
EX-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:
30
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 Stock and to
determine and fix the distinguishing characteristics and rights,
privileges and immunities thereof.
31
SUBPART I. The Special Stock as a Class
----------------------------
1. General. Shares of Special Stock may be issued from
-------
time to time 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 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
-----------------------
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
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;
32
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 Section D of Article FOURTH:
"Affiliate" and "Associate" shall have the meanings
given to such terms in Article NINTH.
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 not be deemed the "Beneficial
--------
Owner" of, or to "Beneficially Own," any security under this
subparagraph (i) as a result of an agreement,
33
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 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
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.
34
"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 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.
---------------------------
(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
35
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 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.
----------------------
(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.
36
(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 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 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 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 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 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
37
(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 (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 (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 provi-
sional). 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
38
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 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:
39
(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 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
-------- -------
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 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
40
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 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
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
41
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;
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,
42
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
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.
43
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 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
44
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 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
45
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 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,
--------
46
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
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
47
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 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).
48
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 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
49
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.
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 responsi-
bility 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
50
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
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
51
person is fairly and 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 of
competent jurisdiction in the State of Delaware for
indemnification to the extent otherwise permissible under
Sections A and B of this Article TENTH.
52
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 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
53
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.
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.
54
FOURTEENTH: The name and mailing address of the
incorporator is:
E. O. Robinson, Jr.
The Promus Companies Incorporated
1023 Cherry Road
Memphis, Tennessee 38117
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.
55
EX-3.2
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."
56
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: E. O. ROBINSON, JR.
---------------------------
E. O. Robinson, Jr.
Senior Vice President
ATTEST:
VINCENT G. DE YOUNG
---------------------
Vincent G. De Young
Assistant Secretary
57
EX-3.3
BYLAWS
OF
THE PROMUS COMPANIES INCORPORATED
(Amended April 29, 1994)
ARTICLE I
OFFICES
SECTION 1. Registered Office. The registered office of The
Promus Companies Incorporated (the "Corporation") shall be at The
Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, State of Delaware.
SECTION 2. Other Offices. The Corporation may also have
offices at such other places both within and without the State of
Delaware as the Board of Directors of the Corporation (the "Board of
Directors") may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meetings. Meetings of the stockholders
for the election of directors or for any other purpose shall be held
at such time and place, either within or without the State of
Delaware as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
SECTION 2. Annual Meetings. The annual meeting of
stockholders shall be held on the first Friday in May in each year
or on such other date and at such time as may be fixed by the Board
of Directors and stated in the notice of the meeting, for the
purpose of electing directors and for the transaction of only such
other business as is properly brought before the meeting in
accordance with these Bylaws.
Written notice of an annual meeting stating the place, date
and hour of the meeting, shall be given to each stockholder entitled
to vote at such meeting not less than ten nor more than sixty days
before the date of the meeting.
58
SECTION 3. Special Meetings. Unless otherwise prescribed by
law or by the Certificate of Incorporation, special meetings of
stockholders, for any purpose or purposes, may only be called by a
majority of the entire Board of Directors or by the Chairman or the
President.
Written notice of a special meeting stating the place, date
and hour of the meeting, shall be given to each stockholder entitled
to vote at such meeting not less than ten nor more than sixty days
before the date of the meeting.
SECTION 4. Quorum. Except as otherwise provided by law or
by the Certificate of Incorporation, the holders of a majority of
the capital stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall constitute
a quorum at all meetings of the stockholders for the transaction of
business. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the holders of a
majority of the votes entitled to be cast by the stockholders
entitled to vote thereat, present in person or represented by proxy
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or
represented by proxy. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally
noticed. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each
stockholder entitled to vote at the meeting.
SECTION 5. Voting. Unless otherwise required by law, the
Certificate of Incorporation or these Bylaws, any question brought
before any meeting of stockholders shall be decided by the vote of
the holders of a majority of the stock represented and entitled to
vote thereat. Each stockholder represented at a meeting of
stockholders shall be entitled to cast one vote for each share of
the capital stock entitled to vote thereat held by such stockholder,
unless otherwise provided by the Certificate of Incorporation. Such
votes may be cast in person or by proxy but no proxy shall be voted
after three years from its date, unless such proxy provides for a
longer period. The Board of Directors, in its discretion, or the
officer of the Corporation presiding at a meeting of stockholders,
in his discretion, may require that any votes cast at such meeting
shall be cast by written ballot.
SECTION 6. List of Stockholders Entitled to Vote. The
officer of the Corporation who has charge of the stock ledger of the
Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and
showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at
59
least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation
who is present.
SECTION 7. Stock Ledger. The stock ledger of the
Corporation shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required
by Section 6 of this Article II or the books of the Corporation, or
to vote in person or by proxy at any meeting of stockholders.
ARTICLE III
DIRECTORS
SECTION 1. Meetings. The Board of Directors of the
Corporation may hold meetings, both regular and special, either
within or without the State of Delaware. Regular meetings of the
Board of Directors may be held without notice at such time and at
such place as may from time to time be determined by the Board of
Directors. Special meetings of the Board of Directors may be called
by the Chairman of the Board or the President or a majority of the
entire Board of Directors. Notice thereof stating the place, date
and hour of the meeting shall be given to each director either by
mail not less than forty-eight (48) hours before the date of the
meeting, by telephone or telegram on twenty-four (24) hours' notice,
or on such shorter notice as the person or persons calling such
meeting may deem necessary or appropriate in the circumstances.
SECTION 2. Quorum. Except as may be otherwise specifically
provided by law, the Certificate of Incorporation or these Bylaws,
at all meetings of the Board of Directors, a majority of the entire
Board of Directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any
meeting at which there is a quorum shall be the act of the Board of
Directors. If a quorum shall not be present at any meeting of the
Board of Directors, a majority of the directors present thereat may
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 3. Actions of Board of Directors. Unless otherwise
provided by the Certificate of Incorporation or these Bylaws, any
action required or permitted to be taken at any meeting of the Board
of Directors or of any committee thereof may be taken without a
meeting, if all the members of the Board of Directors or committee,
as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of
Directors or committee.
60
SECTION 4. Meetings by Means of Conference Telephone.
Unless otherwise provided by the Certificate of Incorporation or
these Bylaws, members of the Board of Directors of the Corporation,
or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors or such committee
by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting
can hear each other, and participation in a meeting pursuant to this
Section 4 of Article III shall constitute presence in person at such
meeting.
SECTION 5. Committees. The Board of Directors may, by
resolution passed by a majority of the entire Board of Directors,
designate one or more committees, each committee to consist of one
or more of the directors of the Corporation. The Board of Directors
may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any
meeting of any such committee. In the absence or disqualification
of a member of a committee, and in the absence of a designation by
the Board of Directors of an alternate member to replace the absent
or disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any absent
or disqualified member. Any committee, to the extent allowed by law
and provided in the resolution establishing such committee, shall
have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the
Corporation. Each committee shall keep regular minutes and report
to the Board of Directors when required.
SECTION 6. Compensation. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director.
No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation
therefor.
Members of special or standing committees may be allowed like
compensation for attending committee meetings.
SECTION 7. Interested Directors. No contract or transaction
between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more
of its directors or officers are directors or officers, or have a
financial interest, shall be void or voidable solely for this
reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose if (i) the
material facts as to his or their relationship or interest and as to
the contract or transaction are disclosed or are known to the Board
of Directors or the committee, and the Board of Directors or
committee in good faith authorizes the contract or transaction by
the affirmative votes of a majority of the disinterested
61
directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or their relationship
or interest and as to the contract or transaction are disclosed or
are known to the shareholder entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by
vote of the shareholders; or (iii) the contract or transaction is
fair as to the Corporation as of the time it is authorized,
approved or ratified, by the Board of Directors, a committee
thereof or the shareholders. Common or interested directors may
be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the
contract or transaction.
ARTICLE IV
OFFICERS
SECTION 1. General. The officers of the Corporation shall
be chosen by the Board of Directors and shall be a President, a
Secretary and a Treasurer. The Board of Directors, in its
discretion, may also choose a Chairman of the Board of Directors
(who must be a director) and one or more Vice Presidents, Assistant
Secretaries, Assistant Treasurers and other officers. Any number of
offices may be held by the same person, unless otherwise prohibited
by law, the Certificate of Incorporation or these Bylaws. The
officers of the Corporation need not be stockholders of the
Corporation nor, except in the case of the Chairman of the Board of
Directors, need such officers be directors of the Corporation.
SECTION 2. Election. The Board of Directors at its first
meeting held after each annual meeting of stockholders shall elect
the officers of the Corporation who shall hold their offices for
such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors; and
all officers of the Corporation shall hold office until their
successors are chosen and qualified, or until their earlier
resignation or removal. Any officer elected by the Board of
Directors may be removed at any time by the affirmative vote of a
majority of the Board of Directors. Any vacancy occurring in any
office of the Corporation shall be filled by the Board of Directors.
The salaries of all officers who are directors of the Corporation
shall be fixed by the Board of Directors.
SECTION 3. Voting Securities Owned by the Corporation.
Powers of attorney, proxies, waivers of notice of meeting, consents
and other instruments relating to securities owned by the
Corporation may be executed in the name of and on behalf of the
Corporation by the President or any Vice President and any such
officer may, in the name and on behalf of the Corporation, take all
such action as any such officer may deem advisable to vote in person
or by proxy at any meeting of security holders of any corporation in
which the Corporation may own securities and at any such
62
meeting shall possess and may exercise any and all rights and power
incident to the ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to
time confer like powers upon any other person or persons.
SECTION 4. Chairman of the Board of Directors. The Chairman
of the Board of Directors, if there be one, shall preside at all
meetings of the stockholders and of the Board of Directors. Except
where by law the signature of the President is required, the
Chairman of the Board of Directors shall possess the same power as
the President to sign all contracts, certificates and other
instruments of the Corporation which may be authorized by the Board
of Directors. During the absence or disability of the President,
the Chairman of the Board of Directors shall exercise all the powers
and discharge all the duties of the President. The Chairman of the
Board of Directors shall also perform such other duties and may
exercise such other powers as from time to time may be assigned to
him by these Bylaws or by the Board of Directors.
SECTION 5. President. The President shall, subject to the
control of the Board of Directors and, if there be one, the Chairman
of the Board of Directors, have general supervision of the business
of the Corporation and shall see that all orders and resolutions of
the Board of Directors are carried into effect. He shall execute
all bonds, mortgages, contracts and other instruments of the
Corporation requiring a seal, under the seal of the Corporation,
except where required or permitted by law to be otherwise signed and
executed and except that the other officers of the Corporation may
sign and execute documents when so authorized by these Bylaws, the
Board of Directors or the President. In the absence or disability
of the Chairman of the Board of Directors, or if there be none, the
President shall preside at all meetings of the stockholders and the
Board of Directors. The President shall also perform such other
duties and may exercise such other powers as from time to time may
be assigned to him by these Bylaws or by the Board of Directors.
SECTION 6. Vice Presidents. At the request of the President
or in his absence or in the event of his inability or refusal to act
(and if there be no Chairman of the Board of Directors), the Vice
President or the Vice Presidents if there is more than one (in the
order designated by the Board of Directors) shall perform the duties
of the President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President. Each
Vice President shall perform such other duties and have such other
powers as the Board of Directors from time to time may prescribe.
If there be no Chairman of the Board of Directors and no Vice
President, the Board of Directors shall designate the officer of the
Corporation who, in the absence of the President or in the event of
the inability or refusal of the President to act, shall perform the
duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President.
63
SECTION 7. Secretary. The Secretary shall attend all
meetings of the Board of Directors and all meetings of stockholders
and record all the proceedings thereat in a book or books to be kept
for that purpose; the Secretary shall also perform like duties for
the standing committees when required. The Secretary shall give, or
cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, and shall perform such
other duties as may be prescribed by the Board of Directors or
President, under whose supervision he shall be. If the
Secretary shall be unable or shall refuse to cause to be given
notice of all meetings of the stockholders and special meetings of
the Board of Directors, and if there be no Assistant Secretary, then
either the Board of Directors or the President may choose another
officer to cause such notice to be given. The Secretary shall have
custody of the seal of the Corporation and the Secretary or any
Assistant Secretary, if there be one, shall have authority to affix
the same to any instrument requiring it and when so affixed, it may
be attested by the signature of the Secretary or by the signature of
any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the
Corporation and to attest the affixing by his signature. The
Secretary shall see that all books, reports, statements,
certificates and other documents and records required by law to be
kept or filed are properly kept or filed, as the case may be.
SECTION 8. Treasurer. The Treasurer shall have the custody
of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging
to the Corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors. The
Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of
Directors, at its regular meetings, or when the Board of Directors
so requires, an account of all his transactions as Treasurer and of
the financial condition of the Corporation. If required by the
Board of Directors, the Treasurer shall give the Corporation a bond
in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance
of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other
property of whatever kind in his possession or under his control
belonging to the Corporation.
SECTION 9. Assistant Secretaries. Except as may be
otherwise provided in these Bylaws, Assistant Secretaries, if there
be any, shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors, the
President, any Vice President, if there be one, or the Secretary,
and in the absence of the Secretary or in the event of his
disability or refusal to act, shall perform the duties of the
Secretary, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Secretary.
64
SECTION 10. Assistant Treasurers. Assistant Treasurers, if
there be any, shall perform such duties and have such powers as from
time to time may be assigned to them by the Board of Directors, the
President, any Vice President, if there be one, or the Treasurer,
and in the absence of the Treasurer or in the event of his
disability or refusal to act, shall perform the duties of the
Treasurer, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Treasurer. If required by
the Board of Directors, an Assistant Treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful
performance of the duties of his office and for the restoration to
the Corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other
property of whatever kind in his possession or under his control
belonging to the Corporation.
SECTION 11. Controller. The Controller shall establish and
maintain the accounting records of the Corporation in accordance
with generally accepted accounting principles applied on a
consistent basis, maintain proper internal control of the assets of
the Corporation and shall perform such other duties as the Board of
Directors, the President or any Vice President of the Corporation
may prescribe.
SECTION 12. Other Officers. Such other officers as the
Board of Directors may choose shall perform such duties and have
such powers as from time to time may be assigned to them by the
Board of Directors. The Board of Directors may delegate to any
other officer of the Corporation the power to choose such other
officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
SECTION 1. Form of Certificates. Every holder of stock in
the Corporation shall be entitled to have a certificate signed, in
the name of the Corporation (i) by the Chairman of the Board of
Directors, the President or a Vice President and (ii) by the
Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation, certifying the number of
shares owned by him in the Corporation.
SECTION 2. Signatures. Any or all of the signatures on the
certificate may be a facsimile, including, but not limited to,
signatures of officers of the Corporation and countersignatures of a
transfer agent or registrar. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
65
SECTION 3. Lost Certificates. The Board of Directors may
direct a new certificate to be issued in place of any certificate
theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate, or his legal representative, to
advertise the same in such manner as the Board of Directors shall
require and/or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
SECTION 4. Transfers. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these Bylaws.
Transfers of stock shall be made on the books of the Corporation
only by the person named in the certificate or by his attorney
lawfully constituted in writing and upon the surrender of the
certificate therefor, which shall be cancelled before a new
certificate shall be issued.
SECTION 5. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or entitled to
express consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty days
nor less than ten days before the date of such meeting, nor more
than sixty days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting
of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
SECTION 6. Beneficial Owners. The Corporation shall be
entitled to recognize the exclusive right of a person registered on
its books as the owner of shares to receive dividends, and to vote
as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of shares, and shall not be
bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise
provided by law.
66
ARTICLE VI
NOTICES
SECTION 1. Notices. Whenever written notice is required by
law, the Certificate of Incorporation or these Bylaws, to be given
to any director, member of a committee or stockholder, such notice
may be given by mail, addressed to such director, member of a
committee or stockholder, at his address as it appears on the
records of the Corporation, with postage thereon prepaid, and such
notice shall be deemed to be given at the time when the same shall
be deposited in the United States mail. Written notice may also be
given personally or by telegram, telex or cable.
SECTION 2. Waivers of Notice. Whenever any notice is
required by law, the Certificate of Incorporation or these Bylaws,
to be given to any director, member of a committee or stockholder, a
waiver thereof in writing, signed, by the person or persons entitled
to said notice, whether before or after the time stated therein,
shall be deemed equivalent thereto.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. Dividends. Dividends upon the capital stock of
the Corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors at
any regular or special meeting, and may be paid in cash, in
property, or in shares of the capital stock. Before payment of any
dividend, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in its absolute discretion, deems
proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property
of the Corporation, or for any proper purpose, and the Board of
Directors may modify or abolish any such reserve.
SECTION 2. Disbursements. All checks or demands for money
and notes of the Corporation shall be signed by such officer or
officers or such other person or persons as the Board of Directors
may from time to time designate.
SECTION 3. Fiscal Year. The fiscal year of the Corporation
shall end on the Friday nearest December 31 and the following fiscal
year shall commence on the Saturday following the aforesaid Friday,
unless the fiscal year is otherwise fixed by affirmative resolution
of the entire Board of Directors.+
67
SECTION 4. Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or
otherwise.
+ On October 25, 1991, the Board of Directors of the Company
adopted a resolution changing the Company's fiscal year end
to a calendar year commencing with the year 1992.
68
EX-10.1
THE PROMUS COMPANIES INCORPORATED
1990 STOCK OPTION PLAN
(as amended April 29, 1994)
A. Purpose
The purpose of The Promus Companies Incorporated 1990 Stock
Option Plan (the "Plan") is to attract and retain outstanding key
employees and to provide an incentive to, and encourage stock
ownership in The Promus Companies Incorporated, a Delaware
corporation (the "Company"), by those employees responsible for
the policies and operations of the Company or its Subsidiaries.
As used herein, "Subsidiary" means any domestic or foreign
corporation, at least 50% of the outstanding voting stock or
voting power of which is beneficially owned, directly or
indirectly, by the Company.
B. Administration
1. This Plan shall be administered by the Human Resources
Committee (the "Committee") of the Board of Directors (the
"Board") of the Company. The Committee shall consist of not less
than three members of the Board of Directors. No person shall be
appointed to the Committee (i) who is (or has been during the
one-year period prior to such appointment) eligible to receive an
award under the Plan or any other stock, stock option or stock
appreciation right plan of the Company, a Subsidiary or a Parent
Company other than a plan or provision of a plan specifically
developed for, or made available to, members of the Board who are
not employees and which otherwise complies with subsection
(b)(1)(iii) of Rule 16b-3 ("Rule 16b-3") under Section 16
("Section 16") of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or any successor provision; or (ii) who has
received options under the Plan if at the time of such
appointment, the options have not been exercised. As used
herein, "Parent Company" means any domestic or foreign
corporation that beneficially owns, directly or indirectly, at
least 50% of the outstanding voting stock or voting power of the
Company.
2. The Committee shall have full authority and discretion
to determine, consistent with the provisions of this Plan other
than with respect to Replacement Options (as defined below): (1)
the employees who should be granted options; (2) whether the
option or options shall be an incentive stock option or a non-
qualified stock option; (3) the times at which options shall be
granted; (4) subject to Section F, the option price of the shares
subject to each option; (5) the number of shares subject to each
option; (6) subject to Section I, the period during which each
option becomes exercisable; and (7) other terms and conditions of
each option.
69
3. The Committee shall further have discretion at any time
and from time to time to accelerate the date or dates when
outstanding options become exercisable and to decrease the option
price of outstanding options. The Committee may in its
discretion change any incentive stock option to a non-qualified
stock option without liability to any employee who has received
options under this Plan (an "Optionee"). The Committee shall
also have full authority and discretion to adopt such rules,
regulations and procedures as it shall deem necessary for the
administration of the Plan and to interpret, amend or revoke any
such rules, regulations or procedures.
4. The Committee may in its discretion provide in the terms
of any stock option (other than a Replacement Option) that the
number of Shares subject to such option will be decreased if the
participant's grade level is reduced by the Company, any
Subsidiary or any Parent Company, for performance, by reason of
change in job functions or responsibilities, or by reason of
transfer to a different position during the term of the option.
Options that become exercisable prior to the reduction in the
option award shall not be affected.
5. The Committee's interpretation and construction of any
provisions of this Plan or any option granted hereunder shall be
final, conclusive and binding upon all Optionees, the Company and
all other interested parties.
C. Eligibility
1. The Committee shall from time to time determine the key
management employees of the Company and any of its Subsidiaries
who shall be granted options (other than Replacement Options)
under the Plan. No incentive stock option shall be granted to
any director of the Company who is not an employee of the
Company, any of its Subsidiaries or any of its Parent Companies.
An employee who has been granted an option may be granted an
additional option or options under this Plan if the Committee
shall so determine. The granting of an option under this Plan
shall not affect any outstanding stock option previously granted
to an Optionee under this Plan or any other plan of the Company,
a Subsidiary or a Parent Company.
2. Each employee of the Company who prior to the merger
(the "Merger") of Bass (U.S.A.) Hotels, Incorporated, a Delaware
corporation ("Merger Sub"), with and into Holiday Corporation
("Holiday") pursuant to that certain Agreement and Plan of Merger
(the "Merger Agreement") among Holiday, Holiday Inns, Inc., the
Company, Bass plc, Merger Sub and Bass (U.S.A.) Hotels,
Incorporated, a Tennessee corporation, dated as of August 24,
1989, as amended, held options to purchase Holiday common stock
issued under Holiday's 1977 Incentive Stock Option Plan or 1989
Stock Option Plan (collectively, "Holiday Stock Options") and
which options were not exercised prior to the Merger shall, in
lieu and upon cancellation of such Holiday Stock
70
Options, be issued an option (a "Replacement Option") to purchase
shares of the $1.50 par value common stock ("Common Stock") of
the Company under the Plan subject to the following terms:
(1) Upon the consummation of the Merger each such
employee shall hereby be issued, without the requirement of
any additional act of the Committee, a Replacement Option to
purchase the number of shares of Common Stock (rounded
upward to the nearest full share) with a per share exercise
price, (rounded downward to the nearest cent) determined to
preserve each such Holiday Stock Option's value as of the
time of the Merger (such value being the product of (A) the
difference between (i) the sum of (x) the fair market value
of a share of Common Stock (as defined for purposes of this
paragraph only, below), (y) the fair market value of a share
of Bass plc stock (as defined for purposes of this paragraph
only, below) multiplied by the number of shares of Bass plc
stock to be issued for each outstanding share of Holiday
common stock in the Merger (assuming all Holiday Stock
Options have been exercised) and (z) the amount of the
special cash dividend to be paid with respect to each share
of Common Stock as contemplated in the Merger Agreement and
(ii) such Holiday Stock Option's exercise price per share,
and (B) the number of shares of Holiday common stock subject
to such Holiday Stock Options). For purposes of this
paragraph, the fair market value of a share of Common Stock
shall be deemed to be equal to the average of the closing
prices of a share during the ten trading days following the
effective time of the Merger as reported on the New York
Stock Exchange. If the special cash dividend has not been
paid on the date of the effective time of the Merger, the
above calculation will be adjusted to preserve the intended
reduction. For purposes of this paragraph only, the fair
market value of a share of Bass plc stock shall be deemed to
be equal to the "Market Value Per Bass Share," as defined in
the Merger Agreement.
(2) Replacement Options granted in exchange for vested
Holiday Stock Options shall be vested, and Replacement
Options granted in exchange for unvested Holiday Stock
Options shall be unvested and subject to the same vesting
schedules as the Holiday Stock Options surrendered in
exchange therefor.
(3) Replacement Options shall be subject to the same
terms as the Holiday Stock Options they replace, including
dates of expiration and the inclusion of stock appreciation
rights, if applicable, except that the Replacement Options
shall vest based on continued employment with the Company
and all references made to Holiday or any of its
subsidiaries shall be deemed references to the Company and
its subsidiaries. The Replacement Options shall comply in
all other respects with the Plan.
71
(4) The Replacement Options shall be evidenced by
option agreements or certificates.
D. Shares of Stock Subject to this Plan
1. The number of shares which may be issued pursuant to the
options granted by the Committee under this Plan shall not exceed
1,200,000 shares of Common Stock.* Such shares may be authorized
and issued shares or shares previously acquired or to be acquired
by the Company and held in treasury. Any shares subject to an
option which expires for any reason, is forfeited, or is
terminated unexercised as to such shares may again be subject to
an option under this Plan. To the extent that a stock
appreciation right shall have been exercised and paid in cash,
the number of shares subject to the related option, or portion
thereof, may again be subject to an option under this Plan.
____________
* The number of shares available for the issuance of options
immediately prior to the March 8, 1993 record date of the 2 for 1
stock split was multiplied by two pursuant to action taken by the
Committee on February 25, 1993. The number of shares available for
the issuance of options immediately prior to the November 8, 1993
record date of the 3 for 2 stock split was multiplied by 1.5 pursuant
to action taken by the Committee on October 29, 1993.
2. If the outstanding shares of Common Stock of the Company
are hereafter changed into or exchanged for a different number or
kind of shares or other securities of the Company, or of another
corporation, by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, stock
dividend, combination of shares or otherwise, appropriate
adjustments shall be made by the Committee in the number and kind
of shares for the purchase of which options may be granted,
including adjustments of the limitations in paragraph 1 on the
maximum number and kind of shares which may be issued on exercise
of options. Adjustments made by the Committee shall be final,
conclusive and binding upon all Optionees, the Company and all
other interested parties.
3. Effective April 30, 1993, the number of authorized
shares which may be issued pursuant to the options granted by the
Committee under the Plan is increased by an additional 1,500,000
shares.
Effective April 29, 1994, the maximum number of options that
can be granted in any one year period to one employee shall be
options for 250,000 shares, provided that this limit shall be
appropriately adjusted by the Committee in accordance with
Section D.2 hereof.
72
E. Issuance and Terms of Option Certificates
Each key management employee to whom an option is granted
under this Plan shall be entitled to receive an appropriate
certificate evidencing his option and referring to the terms and
conditions of this Plan.
F. Option Price
1. Each option shall state the number of shares to which it
pertains and shall state the option price. The option price for
Replacement Options shall be as set forth in Section C(2).
Subject to the foregoing, the option price of incentive stock
options shall not be less than 100% (110% in the case of an
option granted to an individual owning (within the meaning of
Section 425(d) of the Internal Revenue Code of 1986, as amended
(the "Code")) more than 10% of the total combined voting power of
all classes of stock of the Company, any Subsidiary or any Parent
Company) of the Fair Market Value of the Common Stock on the date
the option is granted. The option price of non-qualified stock
options shall not be less than $1.50 per share. Provided, that
non-qualified options shall not be issued under this Plan at less
than the average of the high and low prices of the Company's
Common Stock on the principal exchange or system where the Common
Stock is traded on the date that the option is granted or, if
such date is not a trading day, the preceding trading day. "Fair
Market Value" of a share of Common Stock as of a given date shall
be: (i) the closing price of a share of Common Stock on the
principal exchange on which shares of Common Stock are then
trading, if any, on the day previous to such date, or if shares
were not traded on the day previous to such dates, then on the
next preceding trading day during which a sale occurred; or (ii)
if such stock is not traded on an exchange but is quoted on
NASDAQ or a successor quotation system, (1) the last sales price
(if the stock is then listed as a National Market Issue under the
NASD National Market System) or (2) the mean between the closing
representative bid and asked prices (in all other cases) for the
stock on the day previous to such date as reported by NASDAQ or
such successor quotation system; or (iii) if such stock is not
publicly traded on an exchange and not quoted on NASDAQ or a
successor quotation system, the mean between the closing bid and
asked prices for the stock, on the day previous to such date, as
determined in good faith by the Committee; or (iv) if Common
Stock is not publicly traded, the fair market value established
by the Committee acting in good faith; provided that if there has
been no sale of Common Stock during the 30-day period prior to
the date of the calculation provided for in this sentence, then
such stock shall not be considered to be trading on an exchange
or quoted on the NASDAQ or successor quotation system.
73
2. The option price shall be payable in United States
dollars upon the exercise of the option and may be paid in cash,
by check, or in shares of Common Stock having a total Fair Market
Value on the date of exercise equal to the option price. The
Company may also permit the option price incurred by reason of
the exercise of an option to be satisfied by withholding shares
(that would otherwise be obtained upon such exercise) having a
Fair Market Value equal to the aggregate option price of the
exercised option. The Company may permit Optionees to use
cashless exercise methods that are permitted by law and in
connection therewith the Company may establish a cashless
exercise program including a program where the commissions on the
sale of stock subject to an exercised option are paid by the
Company.
3. The proceeds received by the Company from the sale of
Common Stock subject to option are to be added to the general
funds of the Company and used for its corporate purposes.
G. Treatment of Certain Options; Certain Limitations on Grant
1. Subject to the provisions of this Section G, the
Committee may grant under this Plan both incentive stock options
under Section 422A of the Code and non-qualified stock options
not subject to Section 422A of the Code.
2. To the extent that the aggregate Fair Market Value
(determined at the time the option is granted) of the stock with
respect to which incentive stock options (within the meaning of
Section 422A of the Code, but without regard to Section 422A(d)
of the Code) are exercisable for the first time by an Optionee
during any calendar year (under the Plan and all other incentive
stock option plans of the Company, any Subsidiary and any Parent
Company) shall exceed $100,000, such options shall be taxed as
non-qualified options. The rule set forth in the preceding
sentence shall be applied by taking options into account in the
order in which they are granted.
3. Incentive stock options granted hereunder shall at the
time of grant qualify as "incentive stock options" under Section
422A of the Code.
H. Stock Appreciation Rights
1. At the discretion of the Committee (other than with
respect to Replacement Options), any option granted under this
Plan may include a stock appreciation right. The Committee may
impose conditions upon the grant or exercise of the stock
appreciation right which conditions may include a condition that
the stock appreciation right may only be exercised in
74
accordance with rules and regulations adopted by the
Committee from time to time. Such rules and regulations may
govern the right to exercise the stock appreciation right granted
prior to the adoption or amendment of such rules and regulations
as well as stock appreciation rights granted thereafter. The
Committee may amend any outstanding option or options to grant stock
appreciation rights with respect to the shares covered by any such
option or options if the original option or options did not contain
such rights.
2. A "stock appreciation right" is the right of an
Optionee, without payment to the Company (except for applicable
withholding taxes), to receive the excess of the Fair Market
Value over the option price per share as provided in the related
underlying option. A stock appreciation right shall pertain to,
and be granted only in conjunction with, a related underlying
option granted under this Plan and shall be exercisable and
exercised only to the extent that the related option is
exercisable. The number of shares of Common Stock subject to the
stock appreciation right shall be all or part of the shares
subject to the related option, as determined by the Committee.
The stock appreciation right shall either become all or partially
non-exercisable and shall be all or partially forfeited if the
exercisable portion, or any part thereof, of the related option
is exercised and vice versa. A stock appreciation right may only
be exercised if the Fair Market Value per share of the Common
Stock on the exercise date exceeds the option price per share
under the related underlying option.
3. Subject to any restrictions or conditions imposed by the
Committee, a stock appreciation right may be exercised by the
Optionee as to a number of shares of the Common Stock under its
related option only upon the surrender of exercise rights with
respect to a like number of shares of the Common Stock available
to the exercisable portion of the related option. Upon the
exercise of a stock appreciation right and the surrender of the
exercisable portion of the related option, the Optionee shall be
awarded cash, shares of the Common Stock or a combination of
shares and cash at the discretion of the Committee. The award
shall have a total value equal to the product obtained by
multiplying (i) the excess of the Fair Market Value per share on
the date on which the stock appreciation right is exercised over
the option price per share by (ii) the number of shares subject
to the exercisable portion of the related option so surrendered.
4. The portion of the stock appreciation right which may be
awarded in cash shall be determined by the Committee from time to
time. The number of shares awardable to an Optionee with respect
to the non-cash portion of a stock appreciation right shall be
determined by dividing such non-cash portion by the Fair Market
Value per share on the exercisable date. No fractional shares
shall be issued.
75
I. Term and Exercise of Options and Stock Appreciation Rights
Each option and stock appreciation right granted under this
Plan shall be exercisable on the dates and for the number of
shares as shall be provided in the option certificate evidencing
the option granted by the Committee and the terms thereof. An
Optionee may exercise his option only by delivering to the
Company written notice of intent to exercise and by complying
with all terms of such option. No stock option shall be
exercisable after the expiration of ten years and one day (ten
years in the case of an incentive stock option) from the date of
grant of the option or, in the case of an incentive stock option
granted to an Optionee owning (within the meaning of Section
425(d) of the Code), at the time the option was granted, more
than 10% of the total combined voting power of all classes of
stock of the Company, any Subsidiary or any Parent Company, the
expiration of five years from the date of grant of the option.
Provided, however, that where death, retirement for age or
determination of disability occurs during the one year period
ending ten years and one day from the date of grant of the
option, no option that is not an incentive stock option shall be
exercisable after the expiration of eleven years and one day from
the date of grant of the option. With respect to persons subject
to the provisions of Section 16(b): (i) except in the case of
death or disability (within the meaning of Section 22(e)(3) of
the Code) of the Optionee, no stock appreciation right related to
any stock option shall be exercisable earlier than six months
from the date of grant of the stock appreciation right, (ii)
where an outstanding option is subsequently amended to include
the grant of a stock appreciation right, no such stock
appreciation right shall be exercisable earlier than six months
from the date of grant of such right and (iii) a stock
appreciation right may only be exercised during the period
beginning on the third business day following the date of the
Company's release of its quarterly or annual summary statements
of sales and earnings and ending on the twelfth business day
following such date.
J. Nontransferability
No option, stock appreciation right or interest or right
therein or part thereof shall be subject to liability for the
debts, contracts or engagements of the Optionee or his successors
in interest or shall be subject to liability for the debts,
contracts or engagements of the Optionee or his successors in
interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any
other means whether such disposition be voluntary or involuntary
or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including
bankruptcy), and any attempted disposition thereof shall be null
and void and of no effect; provided, however, that nothing in
this Section J shall prevent transfers by will or by the
applicable laws of descent and distribution.
76
K. Requirements of Law
The granting of options and the issuance of shares of Common
Stock upon the exercise of an option or of a stock appreciation
right or the awarding of cash upon the exercise of a stock
appreciation right shall be subject to all applicable laws, rules
and regulations and shares shall not be issued except upon
approval of proper government agencies or stock exchanges as may
be required.
L. Termination of Employment
If an Optionee shall cease to be employed by the Company or
its Subsidiaries as a result of retirement for age or disability,
he may (subject to Section I), but only within a period of ninety
days (one year in the case of options that are not incentive
stock options) beginning the day following the date of such
termination of employment (or the date of determination of
disability for options that are not incentive stock options),
exercise his option or his stock appreciation right, to the
extent that he was entitled to exercise it at the date of such
termination of employment (or the date of determination of
disability for options that are not incentive stock options).
Termination for any other reason (other than death) shall result
in cancellation of the option or stock appreciation right as of
the close of business on the date of such termination. For
purposes of this Plan, termination of employment means removal
from the Company's payroll unless otherwise agreed by the Company
and the Optionee.
M. Death of Optionee
In the event of the death of an Optionee while in the employ
of the Company, its Subsidiaries or its Parent Companies, the
option or stock appreciation right theretofore granted to him
shall be exercisable within a period of one year after the date
of death and then only if and to the extent that he was entitled
to exercise it at the date of his death including any option that
may have been accelerated by reason of his death. Such exercise
shall be made only by the executor or administrator of his estate
(upon presenting proper proof of appointment and authority to
act) or by the person or persons to whom his rights under the
option shall have passed by his will or by the applicable laws of
descent and distribution subject to the Company being properly
assured and legally advised of the rights of such beneficiaries.
Notwithstanding the provisions of Sections I, L and M herein
or any other provisions of the Plan, an Optionee with ten years
of service shall have a two year period, and an Optionee with
twenty years of service shall have a three year period, after
retirement for age, death or determination of disability to
exercise any option to the extent it was exercisable on the date
of such event, 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
77
non-incentive stock options, the normal 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 years prior to the end of the normal term of the option.
N. Adjustments
If the outstanding shares of the Common Stock subject to
options are changed into or exchanged for a different number or
kind of shares of the Company or other securities of the Company
or any other corporation by reason of merger, consolidation,
recapitalization, reclassification, stock split-up, stock
dividend, combination of shares or otherwise, the Committee may:
(1) in its absolute discretion and on such terms and
conditions as it deems appropriate, make an appropriate and
equitable adjustment in the number and kind of shares as to
which all outstanding options, or portions thereof then
unexercised, shall be exercisable; or
(2) in its absolute discretion and on such terms and
conditions as it deems appropriate, provide, coincident
with, or after the grant of any option, that such option
cannot be exercised after the merger or consolidation of the
Company with or into another corporation, the acquisition by
another corporation or person of all or substantially all of
the Company's assets or 80% or more of the Company's then
outstanding voting stock or the liquidation or dissolution
of the Company; and if the Committee so provides, it may, in
its absolute discretion and on such terms and conditions as
it deems appropriate, also provide, either by the terms of
such option or by a resolution adopted prior to the
occurrence of such merger, consolidation, acquisition,
recapitalization, reclassification, liquidation or
dissolution, that, for some period of time prior to such
event, such option shall be exercisable as to all or any
part of the shares subject thereto, notwithstanding anything
to the contrary in this Plan and/or in any installment
provisions of such option and that, upon the occurrence of
such event, any option that is not exercised shall terminate
and be of no further force and effect; or
(3) in its absolute discretion, provide that even if
the option shall remain exercisable after any such event,
from and after such event, any such option shall be
exercisable only for the kind and amount of securities
and/or other property, or the cash equivalent thereof,
receivable as a result of such event by the holder of the
number of shares of stock for which such option could have
been exercised immediately prior to such event;provided,
however, that if the Committee provides that any option
shall not be exercisable after such event, it shall provide
written notice to all holders of vested options of the
occurrence of such event not less than 10 days prior to the
occurrence of such event. Any adjustment or determination
made by the Committee pursuant to this Section N shall be
conclusive, final and binding upon all Optionees, the
Company and all other interested parties.
78
O. Claim to Stock Option, Ownership or Employment Rights
No employee or other person shall have any claim or right to
be granted options or stock appreciation rights under this Plan.
No Optionee, prior to issuance of the stock, shall be entitled to
voting rights, dividends or other rights of stockholders except
as otherwise provided in this Plan or except as may be approved
by the Committee subject to applicable law. Neither this Plan
nor any action taken hereunder shall be construed as giving any
employee any right to be retained in the employ of the Company, a
Subsidiary or a Parent Company, and any such employee may be
terminated at any time, with or without cause.
P. Unsecured Obligation
Optionees under this Plan shall not have any interest in any
fund or specific asset of the Company by reason of this Plan. No
trust shall be created in connection with this Plan or any award
thereunder, and there shall be no required funding of amounts
which may become payable to any Optionee.
Q. Tax Withholding
The Company, a Subsidiary or a Parent Company, as
appropriate, shall have the right to deduct or withhold from all
payments or distributions amounts sufficient to cover any
federal, state or local taxes required by law to be withheld or
paid with respect to such payments or distributions and, in the
case of stock appreciation rights for which the Optionee receives
Common Stock as payment, the participant or other person
receiving such Common Stock may be required to pay to the
Company, a Subsidiary or a Parent Company, as appropriate, the
amount of any such taxes which the Company, Subsidiary or Parent
Company is required to withhold with respect to such Common
Stock. In the event the cash portion of a stock appreciation
right is insufficient to cover the required withholding, the
Optionee may be required to pay to the Company the amount of such
taxes. In the case of non-qualified options, the Company may
require that required withholding taxes be paid to the Company at
the time the option is exercised. The Company may also permit
any withholding tax obligations incurred by reason of the
exercise of any stock option to be satisifed by withholding
shares (that would otherwise be obtained upon such exercise)
having a Fair Market Value equal to the aggregate amount of taxes
which are to be withheld. In the case of persons subject to
Section 16(b), such withholding shall be on terms consistent with
Rule 16b-3.
R. Expenses of Plan
The expenses of administering the Plan shall be borne by the
Company, its Subsidiaries and its Parent Companies.
79
S. Reliance on Reports
Each member of the Committee and each member of the Board
shall be fully justified in relying or acting in good faith upon
any report made by the independent public accountants of the
Company, its Subsidiaries and its Parent Companies and upon any
other information furnished in connection with the Plan by any
person or persons other than himself. In no event shall any
person who is or shall have been a member of the Committee or of
the Board be liable for any determination made or other action
taken or any omission to act in reliance upon any report or
information or for any action, including the furnishing of
information taken or failure to act, in good faith.
T. Indemnification
Each person who is or shall have been a member of the
Committee or of the Board or any other persons involved in the
administration of this Plan shall be indemnified and held
harmless by the Company against and from any loss, cost,
liability, or expense that may be imposed upon or reasonably
incurred by him in connection with or resulting from any claim,
action, suit or proceeding to which he may be a party or in which
he may be involved by reason of any such action taken or failure
to act under the Plan and against and from any and all amounts
paid by him in settlement thereof, with the Company's approval,
or paid by him in satisfaction of judgment in any such action,
suit or proceeding against him provided he shall give the Company
an opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own behalf.
The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such person may be
entitled under the Company's articles of incorporation or bylaws,
as a matter of law, or otherwise, or any power that the Company
may have to indemnify such person or hold him harmless.
U. Amendment and Termination
Unless this Plan shall theretofore have been terminated as
hereinafter provided, no options or stock appreciation rights may
be granted after the tenth anniversary of the adoption of the
Plan by the Board. The Committee may terminate, modify or amend
the Plan in such respect as it shall deem advisable, without
obtaining approval from the Company's stockholders except as such
approval may be required pursuant to Rule 16b-3 or the Code. No
termination, modification or amendment of the Plan may, without
the consent of an Optionee to whom an option shall theretofore
have been granted, adversely affect the rights of such Optionee
under such option.
V. Gender
Any masculine terminology used in this Plan shall also
include the feminine gender.
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W. Effective Date of the Plan
This Plan was approved by the Board and the stockholders of
the Company on November 5, 1989 and became effective January 1,
1990.
THE PROMUS COMPANIES INCORPORATED
By: NEIL F. BARNHART
---------------------------
Neil F. Barnhart
Vice President
81
EX-10.2
SECOND AMENDMENT TO THE AMENDED AND RESTATED
PARTNERSHIP AGREEMENT OF HARRAH'S JAZZ COMPANY
THIS SECOND AMENDMENT TO THE AMENDED AND RESTATED
PARTNERSHIP AGREEMENT OF HARRAH'S JAZZ COMPANY (the "Amendment")
is entered into this 31st day of March 1994, by and among
HARRAH'S NEW ORLEANS INVESTMENT COMPANY, a Nevada corporation
("Harrah's"), NEW ORLEANS/LOUISIANA DEVELOPMENT CORPORATION, a
Louisiana corporation ("NOLDC"), and GRAND PALAIS CASINO, INC., a
Delaware corporation ("Grand Palais").
RECITALS
A. Harrah's, NOLDC and Grand Palais are general partners
of Harrah's Jazz Company (the "Partnership"), a Louisiana general
partnership continued pursuant to that certain Amended and
Restated Partnership Agreement effective as of March 15, 1994, as
amended by that certain First Amendment to the Partnership
Agreement of even date therewith (the "Partnership Agreement").
B. Harrah's, NOLDC and Grand Palais desire to amend the
Partnership Agreement.
AGREEMENT
NOW THEREFORE, Harrah's NOLDC and Grand Palais hereby amend
the Partnership Agreement as follows:
1. The following is added as the last sentence of Section
3.01(a) hereof:
All payments owed to each Partner under Sections 3.01(c),
3.01(e) and 3.01(f) hereof shall be credited to each such
Partner's Capital Account.
2. Section 3.01(c) of the Partnership Agreement is deleted
in its entirety and is restated as follows:
(c) The Partners agree that they shall receive
reimbursements for all costs and expenses not reimbursed under
Section 3.01(f) hereof incurred by them in connection with
negotiating documents and performing acts necessary to form the
Partnership, negotiating this Agreement and any amendments
thereto, acquiring the Assembled Real Estate and November Real
Estate, entering into the Temporary Casino Lease and the
Rivergate Lease, obtaining the Permanent/Temporary Casino
Financing, or otherwise in connection with the Project, prior
to the closing of the Permanent/Temporary Casino Financing, not
to exceed Three Million Dollars ($3,000,000) to each Partner
as agreed upon by the Partnership from the proceeds of the
Permanent/Temporary Casino Financing, to the extent permitted by
the lenders thereof.
82
3. The first sentence of Section 3.01(e) of the
Partnership Agreement is deleted in its entirely and is restated
as follows:
All interest and property taxes paid, and insurance and
other carry costs paid or incurred by Grand Palais with
respect to the Assembled Real Estate and Louisiana Jazz
Company with respect to the November Real Estate,
during the period from October 1, 1993 through March
15, 1994, shall be reimbursed pari passu to Grand
Palais in respect of the Assembled Real Estate and
Louisiana Jazz Company in respect of the November Real
Estate, from the Proceeds of Major Capital Events
following payment of amounts payable under Section
3.01(f) hereof.
4. The first sentence of Section 3.01(f) of the
Partnership Agreement is deleted in its entirety and is restated
as follows:
The Partnership shall pay and each Partner shall
receive payment for certain costs set forth in Exhibit
A hereof.
5. The third sentence of Section 3.01(f) of the
Partnership Agreement is amended by deleting the word "soft" at
the beginning of line 5 on page 27.
6. The last sentence of Section 4.09(b) of the Partnership
Agreement is deleted in its entirety and restated as follows:
Such guaranteed payment shall be payable from first
available Proceeds of Major Capital Events and Cash
Flow, to the extent permitted by the lenders of the
Permanent/Temporary Casino Financing.
7. Exhibit B to the Partnership Agreement is deleted in
its entirety and the attachment to this Amendment is hereby added
as the restated Exhibit B to the Partnership Agreement.
8. Except as amended by this Amendment, the Partnership
Agreement shall be unchanged and shall remain in full force and
effect.
9. This Amendment may be executed in several counterparts,
all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all parties have not
signed the same counterpart.
83
THUS DONE AND PASSED in multiple originals in Orleans Parish
in the State of Louisiana, on the date first above written.
HARRAH'S NEW ORLEANS
INVESTMENT COMPANY, a Nevada
corporation
By /s/ Colin V. Reed
---------------------------------
Colin V. Reed
Senior Vice-President
NEW ORLEANS/LOUISIANA
DEVELOPMENT CORPORATION, a
Louisiana corporation
By /s/ Wendell H. Gauthier
---------------------------------
Wendell H. Gauthier
Chairman of the Board
GRAND PALAIS CASINO, INC., a
Delaware corporation
By /s/ Christopher B. Hemmeter
---------------------------------
Christopher B. Hemmeter
Chairman of the Board
84
ACKNOWLEDGEMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public duly qualified in
and for the Parish and State aforesaid, personally came and
appeared:
COLIN V. REED
who, after being duly sworn did declare to me that he is the
Senior Vice President of Harrah's New Orleans Investment Company
and that by and with the authority of the Board of the Board of
directors of Harrah's New Orleans Investment Company, he executed
the foregoing Second Amendment to the Amended and Restated
Partnership Agreement of Harrah's Jazz Company as the free and
voluntary act and deed of such corporation for the purposes
therein set forth.
IN WITNESS WHEREOF, we have hereby subscribed our names on
this 31st day of March 1994.
/s/ Colin V. Reed
-----------------------------------
COLIN V. REED
WITNESSES:
/s/ Lynn Johnston
-------------------
/s/ Wanda Rutland
------------------
/s/ Norma Egbert
------------------
Notary Public
My Commission Expires:
February 26, 1997
85
ACKNOWLEDGEMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public duly qualified in
and for the Parish and State aforesaid, personally came and
appeared:
WENDELL H. GAUTHIER
who, after being duly sworn did declare to me that he is the
Chairman of New Orleans/Louisiana Development Corporation and
that by and with the authority of the Board of Directors of New
Orleans Louisiana Development Corporation, he executed the
foregoing Second Amendment to the Amended and Restated
Partnership Agreement of Harrah's Jazz Company as the free and
voluntary act and deed of such corporation for the purposes
therein set forth.
IN WITNESS WHEREOF, we have hereby subscribed our names on
this 31st day of March 1994.
/s/ Wendell H. Gauthier
--------------------------------
WENDELL H. GAUTHIER
WITNESSES:
/s/ Kim St. Martin
--------------------
/s/ Phil King
----------------------
/s/ Deborah M. Sulzer
-----------------------
Notary Public
My Commission Expires: at my death
86
ACKNOWLEDGEMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public duly qualified in
and for the Parish and State aforesaid, personally came and
appeared:
CHRISTOPHER B. HEMMETER
who, after being duly sworn did declare to me that he is the
Chairman of Grand Palais Casino, Inc. and that by and with the
authority of the Board of Directors of Grand Palais Casino, Inc.,
he executed the foregoing Second Amendment to the Amended and
Restated Partnership Agreement of Harrah's Jazz Company as the
free and voluntary act and deed of such corporation for the
purposes therein set forth.
IN WITNESS WHEREOF, we have hereby subscribed our names on
this 31st day of March 1994.
/s/ Christopher B. Hemmeter
---------------------------------
CHRISTOPHER B. HEMMETER
WITNESSES:
/s/ Anthony Fadella
----------------------
/s/ Lou Fadella
------------------------
/s/ Steven H. Schultz
-----------------------
Notary Public
My Commission Expires: March 20, 1995
87
ATTACHMENT TO SECOND AMENDMENT OF THE AMENDED AND
RESTATED PARTNERSHIP AGREEMENT OF HARRAH'S JAZZ COMPANY
EXHIBIT "B"
REAL ESTATE AND EXISTING LIENS AND OBLIGATIONS
EXHIBIT B-1 - ASSEMBLED REAL ESTATE
I. LEGAL DESCRIPTION OF ASSEMBLED REAL ESTATE
The following real property constitutes the "Assembled Real
Estate":
PARCEL I
508-510 SOUTH PETERS STREET
A CERTAIN LOT OF GROUND, together with all the buildings and
improvements thereon, and all the rights, ways, privileges,
servitudes, appurtenances and advantages thereunto belonging or
in anywise appertaining, situated in the First District of New
Orleans, in SQUARE NO. 16, bounded by South Peters, Poydras,
Fulton and Lafayette Streets, designated by the LETTER "H" and
measuring 22 feet, 11 inches front on South Peters Street, about
the same width in the rear, by about 70 feet in depth. And which
said lot is designated as part of original Lot 4 on survey made
by Guy J. Seghers, Engineer and Surveyor, dated May 31, 1938, a
print of which is attached to act passed before Louis H. Yarrut,
Notary Public, on July 1, 1938, and according to which said lot
measures a distance of 69 feet, 1 inch, 4 lines from the corner
of South Peters and Poydras Streets, 22 feet, 11 inches, 6 lines
front on South Peters Street, by a depth on the side line nearest
Poydras Street of 69 feet, 2 inches, 7 lines and a depth on the
other side line nearest Lafayette Street of 69 feet, 3 inches, 7
lines, and a width in the rear of 23 feet, being composed of the
greater portion of original Lot 4.
The improvements bear the Municipal Nos. 508-510 South Peters
Street.
In accordance with survey by Gandolfo, Kuhn & Associates, Land
Surveyors, originally dated August 25, 1992, recertified March
10, 1994, said lot measures 23 feet, 1 inch and 2 eighths front
on South Peters Street, and a width in the rear of 23 feet, 1
inch, by a depth on the side line nearest Poydras Street of 69
feet, 2 inches and 7 eighths by a depth on the other side line
nearest Lafayette Street of 69 feet, 3 inches and 7 eighths.
88
PARCEL II
MATT II
A CERTAIN SQUARE OF GROUND, together with all the buildings and
improvements thereon, and all the rights, ways, privileges,
servitudes, appurtenances and advantages thereunto belonging or
in anywise appertaining, situated in the First District of the
City of New Orleans, and designated by the NO. 5, which said
square is bounded by Front, Fulton, Lafayette and Girod Streets
and measures 117 feet, 6 inches, 2 lines front on Lafayette
Street, 120 feet, 1 inch, 2 lines front on Girod Street, 363
feet, 7 inches, 1 line front on Fulton Street and 364 feet, 5
inches, 5 lines front on Front Street, all more or less, said
property being particularly described as follows, to-wit:
1. SIX CERTAIN LOTS OF GROUND, together with all the buildings
and improvements thereon, and all the rights, ways, privileges,
servitudes, appurtenances and advantages thereunto belonging or
in anywise appertaining, situated in the First District of New
Orleans, in SQUARE NO. 5, bounded by Front, Fulton, Lafayette and
Girod Streets, and designated by the NOS. 2 TO 7, INCLUSIVE, on a
plan by F.A. Beard, certified unto Hugh Grant, Surveyor, under
date of January 12, 1853, deposited for reference in the office
of H.B. Conas, then a notary in the City of New Orleans. Said
lots adjoin each other and measure each 24 feet, 2 inches, 7
lines front on Fulton Street, 24 feet, 3 inches, 3 lines front on
Front Street, by the following depths, viz: 117 feet, 8 inches, 3
lines on the side of Lot 2 adjoining Lot 1, 117 feet, 10 inches,
4 lines on the dividing line between Lots 2 and 3, 118 feet, 5
lines on the dividing line between Lots 3 and 4, 118 feet, 2
inches, 6 lines on the dividing line between Lots 4 and 5, and
118 feet, 4 inches, 7 lines on the dividing line between Lots 5
and 6, and 118 feet, 7 inches on the dividing line between Lots 6
and 7, and 118 feet, 9 inches, 2 lines on the side line of Lot 7,
adjoining Lot 8.
2. THREE CERTAIN LOTS OF GROUND, together with all the
buildings and improvements thereon, and all the rights, ways,
privileges, servitudes, appurtenances and advantages thereunto
belonging or in anywise appertaining, situated in the same
District and Square as the property hereinabove described
designated by the NOS. 8, 9 AND 10, and measuring, in American
Measure, as follows, to-wit:
Lot 8 measures 24 feet, 2 inches, 7 lines front on Fulton Street,
24 feet, 3 inches, 3 lines front on Front Street, by 118 feet, 9
inches, 2 lines in depth on the line dividing it from Lot 7 and
118 feet, 11 inches, 2 lines in depth on the line dividing it
from Lot 9, and Lot 9 measures 24 feet, 2 inches, 7 lines front
on Fulton Street, 24 feet, 3 inches, 3 lines front on Front
Street, by 118 feet, 11 inches, 2 lines in depth on the line
dividing it from Lot 8 and 119 feet, 1 inch, 2 lines in depth on
the line dividing it from Lot 10, and Lot 10 measures 24 feet, 2
inches, 7 lines front on Fulton Street, 24 feet, 3 inches, 3
lines front on Front Street, by 119 feet, 1 inch, 2 lines on the
line dividing it from Lot 9 and 119 feet, 3 inches, 2 lines in
depth on the line dividing it from Lot 11.
89
3. TWO CERTAIN LOTS OF GROUND, together with all the buildings
and improvements thereon, and all the rights, ways, privileges,
servitudes, appurtenances and advantages thereunto belonging or
in anywise appertaining, situated in the same District and Square
as the property hereinabove firstly described, designated by the
NOS. 11 AND 12 on a plan by J.A. Beard, duly certified by H.
Grant, dated January 12, 1852, and deposited in the office of
H.B. Conas, then a Notary Public, which said lots measure as
follows:
Lot 11 measures 24 feet, 2 inches, 7 lines front on Fulton
Street, 24 feet, 3 inches, 3 lines front on Front Street, by 119
feet, 5 inches, 2 lines in depth on the line dividing it from Lot
12, and 119 feet, 3 inches, 2 lines in depth on the line dividing
it from Lot 10, all American Measure; and Lot 12 measures 24
feet, 2 inches, 7 lines front on Fulton Street; 24 feet, 3
inches, 2 lines front on Front Street, by 119 feet, 5 inches, 2
lines in depth on the line dividing it from Lot 11 and 119 feet,
7 inches, 2 lines on the line dividing it from Lot 13.
4. THREE CERTAIN LOTS OF GROUND, together with all the
buildings and improvements thereon, and all the rights, ways,
privileges, servitudes, appurtenances and advantages thereunto
belonging or in anywise appertaining, situated in the First
District of New Orleans, in SQUARE NO. 5, bounded by Fulton,
Girod, Front and Lafayette Streets, designated by the NOS. 15,
13, AND 14.
Lot 15 measures 24 feet, 2 inches, 7 lines front on Fulton
Street, 120 feet, 1 inch and 2 lines front on Girod Street, 24
feet, 3 inches, 3 lines front on Front Street, and 119 feet, 11
inches, 2 lines on the line of Lot 14; Lot 13 measures 24 feet, 2
inches and 7 lines front on Fulton Street; 24 feet, 3 inches and
3 lines on Front Street, by 119 feet, 7 inches and 2 lines in
depth on the line dividing it from Lot 12, and 119 feet, 9 inches
and 2 lines in depth on the line dividing it from Lot 14; Lot 14
measures 24 feet, 2 inches and 7 lines on Fulton Street, 24 feet,
3 inches and 3 lines on Front Street, by 119 feet, 9 inches and 2
lines in depth on the line dividing it from Lot 13, and 119 feet,
11 inches, 2 lines in depth on the line dividing it from Lot 15.
5. A LOT OF GROUND, together with all the buildings and
improvements thereon, and all the rights, ways, privileges,
servitudes, appurtenances and advantages thereunto belonging or
in anywise appertaining, situated in the First District of New
Orleans, in SQUARE NO. 5, bounded by Front, Fulton, Lafayette and
Girod Streets, designated as LOT NO. 1, on a plan certified by
Hugh Grant, late Surveyor of Municipality No. 1, under date of
January 12, 1852, and deposited for reference in the office of
H.B. Conas, then Notary, which said lot forms the corner of
Fulton and Lafayette Streets, and measures 24 feet, 3 inches, 3
lines front on Front Street, 24 feet, 2 inches, 7 lines front on
Fulton Street, by 117 feet, 6 inches, 2 lines in depth and front
on Lafayette Street, and 117 feet, 8 inches, 3 lines in depth on
the line dividing it from Lot 2, all American Measure.
90
In accordance with survey by Gandolfo, Kuhn & Associates, Land
Surveyors, originally dated November 23, 1992, and recertified
March 10, 1994, said square measures 363 feet, 6 inches, 2 eights
front on Fulton Street; 364 feet, 0 inches and 6 eighths front on
Convention Center Boulevard (formerly S. Front Street); 120 feet,
2 inches and 6 eighths front on Girod Street and 118 feet, 1 inch
and 1 eighth front on Lafayette Street.
PARCEL III
228 POYDRAS STREET
TWO CERTAIN LOTS OF GROUND, together with all the buildings and
improvements thereon, and all the rights, ways, privileges,
servitudes, appurtenances and advantages thereunto belonging or
in anywise appertaining, situated in the First District of the
City of New Orleans, in SQUARE NO. 16, bounded by Poydras, South
Peters, Lafayette and Fulton Streets, designated as LOTS NOS. 4
AND 5 on a survey made by F.C. Gandolfo, Jr., Surveyor, dated
July 20, 1940, redated December 17, 1941, and according to which
said lots adjoin and together measure 46 feet, 0 inches and 2
lines front on Poydras Street, 46 feet, 3 inches and 3 lines in
width in the rear, by a depth and front on South Peters Street of
68 feet, 10 inches and 2 lines, title measurement, 68 feet, 11
inches and 4 lines, actual measurement, and a depth on the other
side, nearer to Fulton Street, of 68 feet, 10 inches and 2 lines,
title measurement, 69 feet, 1 inch and 2 lines, actual
measurement.
The above is also in accordance with survey by Gandolfo, Kuhn &
Associates, Land Surveyors, originally dated August 25, 1992,
recertified March 10, 1994.
Improvements thereon bear the Municipal Number 228 Poydras
Street.
PARCEL IV
RIVERFRONT INVESTORS
A CERTAIN PLOT OF GROUND, together with all the buildings and
improvements thereon, and all the rights, ways, privileges,
servitudes, appurtenances and advantages thereunto belonging or
in anywise appertaining, situated in the Parish of Orleans in the
First District of the City of New Orleans, SQUARE NO. 26, bounded
by Peters (New Levee), Front, Gaiennie and Calliope (late Louisa)
Streets, measuring 191 feet, 10 inches front on Peters Street and
about 306 feet front on each Calliope and Gaiennie Street.
91
And in accordance with survey made by Gandolfo, Kuhn &
Associates, Surveyors, originally dated May 7, 1992, recertified
March 10, 1994, said property is shown to be the whole of Square
26 of the First District of the City of New Orleans, said square
being bounded by South Peters, Calliope, Gaiennie Streets and
Convention Center Boulevard (formerly S. Front Street), and
measures a distance of 192.14 feet front on South Peters Street,
a distance of 307.14 feet front on Calliope Street, a distance of
192.14 feet front on Convention Center Boulevard (formerly S.
Front Street) and a distance of 307.14 feet front on Gaiennie
Street.
PARCEL V
512 SOUTH PETERS STREET
A CERTAIN PORTION OF GROUND, together with all the buildings and
improvements thereon, and all the rights, ways, privileges,
servitudes, appurtenances and advantages thereunto belonging or
in anywise appertaining, situated in the First District of New
Orleans, Orleans Parish, State of Louisiana, in SQUARE
NO. SIXTEEN, bounded by Fulton, Lafayette, South Peters and
Poydras Street, designated by the LETTER "A" on a sketch and
certificate of survey by F.C. Gandolfo, Jr., Surveyor, dated June
7th, 1946, annexed to an act before Leon Sarpy, Notary Public in
the City of New Orleans, dated June 15, 1946, registered in COB
547, folio 132, which said sketch and certificate of survey is
made a part thereof, according to which said Lot "A" commences at
a distance of ninety-one feet, eleven inches and one line
(91'11"1 ''') from the corner of Poydras and South Peters
Streets, at a distance of ninety-two feet, four inches and five
lines (92'4"5''') from the corner of Poydras and Fulton Streets,
and has the following measurements:
Lot "A" measures one hundred fifteen feet, two inches and two
lines (115'2"2''') front on South Peters Street, by actual
measurement, one hundred fourteen feet, nine inches and six lines
114'9"6') according to title measurement, by a depth on the side
line nearest Poydras Street running through said square from
South Peters to Fulton Street, of one hundred fifteen feet, six
inches and five lines (115'6"5''') by actual measurement, and one
hundred fifteen feet, four inches and six lines (115'4"6''')
according to title measurements, and thence has a front on Fulton
Street of one hundred fifteen feet, no inches and two lines
(115'0"2''') according to actual measurement, one hundred fifteen
feet, three inches and six lines (115'3"6''') according to title
measurements, by a depth on the side line nearest Lafayette
Street, running through said square from South Peters to Fulton
Street, of one hundred sixteen feet, two inches and one line
(116'2"1''') actual and title measurement, one hundred sixteen
feet, three inches, four lines (116'3"4''') according to
Gandolfo's measurements. Said Lot "A" is composed of original
Lots Five, Six, Seven, Eight and Nine (5, 6, 7, 8 and 9).
92
Together with all the buildings, improvements and other
constructions situated on the above described immovable property
and all appurtenances, rights, ways, privileges, servitudes,
prescriptions and advantages thereunto belonging or in anywise
appertaining, including, but without limitation, all component
parts of the above-described immovable property, and all
component parts of any building, improvement, or other
construction located on the abovedescribed immovable property.
The improvements bear the Municipal Nos. 512-526 South Peters
Street.
And according to a survey dated November 30, 1979, redated June
22, 1981, and recertified July 27, 1992, January 13, 1993 and
March _____, 1994, by John E. Walker, Civil Engineer.
PARCEL VI
224 POYDRAS
THAT PORTION OF GROUND, together with all the buildings and
improvements thereon, and all of the rights, ways, privileges,
servitudes, appurtenances and advantages thereunto belonging or
in anywise appertaining, situated in the First District of the
City of New Orleans, State of Louisiana, in SQUARE NO. 16,
bounded by South Peters Street, Fulton Street, Lafayette Street
and Poydras Street, designated by the NO. 3 on plan or sketch
marked "A" annexed to an act passed on May 13, 1852, before H. P.
Cenas, late Notary Public, said lot measures 22 feet, 11 inches,
4 lines front on Poydras Street by a depth of 68 feet, 6 inches,
2 lines, all more or less.
The improvements thereon bear Municipal No. 224 Poydras Street,
New Orleans, Louisiana.
In accordance with survey of James H. Couturie, dated September
22, 1982, the property is described as follows:
Lot 3 begins 46.02 feet from the intersection of South Peters and
Poydras Streets and measures thence 22 feet, 11 inches, 4 lines
front on Poydras Street, same width in the rear, by a depth of 69
feet, 1 inch 2 lines (actual) 68 feet, 6 inches, 2 lines, more or
less, (title), on the South Peters Street side, and 69 feet, 2
inches, 1 line (actual) 68 feet, 6 inches, 2 lines, more or less
(title) on the Fulton Street side.
All in accordance with the plat of survey of Gandolfo, Kuhn &
Associates bearing Drawing No. L-15, originally dated August 25,
1992, and most recently recertified March 10, 1994, a print of
which is annexed hereto and made a part hereof.
93
PARCEL VII
LOT 3CP
A CERTAIN PIECE OR PORTION OF GROUND, together with all the
buildings and improvements thereon, situated in the Second
District, City of New Orleans, designated as Lot 3CP of Canal
Place, on a plan of resubdivision by the office of Gandolfo,
Kuhn, Luecke & Associates, dated March 15, 1982, (Dwg. No. E-170-
12), approved by the City Planning Commission on July 8, 1982,
registered as Declaration of Title Change under COB 783, folio 63
and more particularly described as follows in accord with a plan
of Gandolfo, Kuhn & Associates, bearing Dwg. No. E-170-13A dated
May 13, 1985, and Drawing No. T-144-31, dated November 23, 1992,
as follows:
Commence at the intersection of the northerly line of Canal
Street and the easterly line of No. Peters Street, said point
being designated by the letter B; thence along the northerly line
of Canal Street, S52 44'02"E, 398.18 feet to the division line
between Lots 2CP and 3CP and the point of beginning; thence along
said division line N37 15'58"E, 169.50 feet; thence along said
division line S52 44'02"E, 129.37 feet to the division line
between Lots 3CP and S-1; thence along said division line
S8 17'09"W, 193.76 feet to the northerly line of Canal Street,
thence along said line, N52 44'02"W, 223.25 feet to the point of
beginning, containing 29,885 square feet.
All in accordance with the plat of survey of Gandolfo, Kuhn,
Luecke & Associates, Dwg. No. E170-13B, originally dated July 29,
1993, and recertified March 10, 1994, annexed hereto and made a
part hereof.
II. EXISTING LIENS WITH RESPECT TO ASSEMBLED REAL ESTATE
1. Collateral Mortgage by Celebration Park Casino, Inc.,
in favor of future holder or holders of the collateral
mortgage note thereby secured, in the amount of
$50,000,000.00, passed before Margaret T. Alphonso,
Notary Public, dated December 15, 1992, recorded
December 16, 1992, under N.A. No. 962316, as Mortgage
Office Instrument No. 190775; in MOB 2923, folio 400,
as supplemented by Act of Supplement to Collateral
Mortgage by Celebration Park Casino, Inc., passed
before Kay W. Eagan, Notary Public, dated January 15,
1993, recorded January 19, 1993, under N.A. No. 93-
03466, as Mortgage Office Instrument No. 194606,
records of Orleans Parish, Louisiana; as supplemented
by Act of Supplement to Collateral Mortgage by
Celebration Park Casino, Inc. dated February 1, 1993,
recorded February 1, 1993, under N.A. No.
93-05848, as Mortgage Office Instrument No. 196614; as
supplemented by Act of Supplement to Collateral
Mortgage by Celebration Park Casino, Inc., dated April
27, 1993, recorded April 27, 1993, under N.A. No.
93-18039, as Mortgage Office Instrument No. 206500, MOB
2950, folio 478 securing the Celebration Park Senior
Debt (as hereinafter defined).
94
2. Mortgage by 228 Poydras Street Parking Limited
Partnership, in favor of Resort Income Investors, dated
August 27, 1992, passed before Laura L. Featherstone,
Notary Public, securing debt in the amount of
$580,000.00, recorded in Orleans Parish, Louisiana on
September 2, 1992 under N.A. No. 947775 and registered
as Mortgage Office Instrument No. 179275 securing the
Resort Income Investors Debt (as hereinafter defined).
3. Act of Credit Sale and Mortgage, in favor of Riverfront
Investors Group, dated July 27 and 28, 1992, passed
before Albert J. Derbes III, Notary Public and Gayle
Mercer, Notary Public, received in Orleans Parish on
August 14, 1992, N.A. No. 945887 and registered
recorded as Mortgage Officer Instrument No. 177803,
Conveyance Office Instrument No. 56490 securing the
Square 26 Debt (as hereinafter defined).
4. Collateral Mortgage by Grand Palais Casino, Inc., in
favor of future holders (payable at First National Bank
of Commerce), dated July 30, 1993, filed August 2,
1993, under N.A. No. 93-31984, in MOI No. 217805
securing the 3CP Debt (as hereinafter defined).
5. That certain Collateral Mortgage Note in the amount of
$50,000,000.00 dated December 15, 1992, payable to
Bearer in connection with the Celebration Park Senior
Debt.
6. That certain note by 228 Poydras Street Parking Limited
Partnership in the amount of $580,000.00 dated August
27, 1992 payable to Resort Income Investors in
connection with the Resort Income Investors Debt.
7. Note payable to Riverfront Investors Group dated July
27, 1992, in the amount of $1,000,000.00 in connection
with the Square 26 Debt.
8. Collateral Mortgage Note dated July 30, 1993 in the
amount of $10,000,000.00 payable to Bearer in
connection with the 3CP Debt.
III. EXISTING DEBT WITH RESPECT TO ASSEMBLED REAL ESTATE
1. 3CP Debt. Debt under that Credit Agreement dated July
30, 1993 among Grand Palais Casino, Inc., Grand Palais
Enterprises, Inc., Grand Palais Riverboat, Inc., Grand
Palais Terminal, Inc., Christopher B. Hemmeter,
Patricia K. Hemmeter and First National Bank of
Commerce, in the original principal amount of
$3,187,500.00 and having an outstanding principal
balance as of March 1, 1994 equal to $3,087,992.43 (the
"3CP Debt").
2. Celebration Park Senior Debt. The following debt (the
"Celebration Park Senior Debt"):
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(a) Debt evidenced by those certain 12% Senior Secured
Notes due August 15, 1994 issued December 15, 1992
by Celebration Park Casino, Inc. (n/k/a Grand
Palais Casino, Inc.) under that certain Indenture
dated as of December 15, 1992, as amended, in the
original principal amount of $5.5 Million, having
an outstanding principal as of February 15, 1994
equal to $4,146,000.00.
(b) Debt evidenced by those certain Senior Secured
Exchangeable Notes due August 15, 1994 issued
January 28, April 27 and September 15, 1993 by
Celebration Park Casino, Inc. under that certain
Indenture dated as of January 28, 1993 in the
original principal amount of $43 Million, having
an outstanding principal balance as of February
15, 1994 equal to $39,185,013.53.
3. Square 26 Debt. Debt evidenced by that certain
Promissory Note given by Square No. 26 Parking Limited
Partnership to Riverfront Investors Group, a
partnership in commendam, dated July 28, 1993, in the
original and current principal amount of $1,000,000.00
(the "Square 26 Debt").
4. Resort Income Investors Debt. Debt evidenced by that
certain Promissory Note dated August 27, 1992 given by
228 Poydras Street Limited Partnership to Resort Income
Investors, Inc. in the original principal amount of
$580,000, having a principal balance outstanding as of
March 1, 1994 equal to $580,000 (the "Resort Income
Investors Debt").
EXHIBIT B-2 - NOVEMBER REAL ESTATE
I. LEGAL DESCRIPTION OF NOVEMBER REAL ESTATE
The following real property constitutes the "November Real
Estate":
PARCEL I
237 LAFAYETTE STREET
THAT PORTION OF GROUND, together with all rights, ways,
privileges, servitudes, appurtenances and advantages thereunto
belonging, situated in the First District of the City of New
Orleans, Parish of Orleans, State of Louisiana, in SQUARE NO. 16,
bounded by New Levee, now Peters, Fulton, Poydras and Lafayette
Streets, designated as LOTS NUMBERS FOURTEEN AND FIFTEEN on a
plan of J. A. Beard, certified by Hugh Grant, dated January 12,
1852, deposited in the office of H. B. Cenas, late Notary Public,
and measuring as follows:
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Lot 14, twenty-one feet, eleven inches and five lines front on
Peters Street, twenty-three feet and six lines front on Fulton
Street, by one hundred and sixteen feet, nine inches and three
lines deep on the line of Lot No. 13, and one hundred and sixteen
feet, eleven inches and one line deep on the line of Lot No. 15.
Lot 15, measures twenty-one feet, eleven inches and five lines
front on Peters Street, by twenty-three feet and six lines front
on Fulton Street, by one hundred and sixteen feet, eleven inches
and one line of Lot 14, and one hundred and seventeen feet and
seven lines on the line of Lot No. 16.
THAT PORTION OF GROUND, together with all the buildings and
improvements thereon, situated in the First District of the City
of New Orleans, Parish of Orleans, State of Louisiana, in SQUARE
NO. 16, bounded by Peters (late New Levee), Fulton, Lafayette and
Poydras Streets, designated as Lot 16 on a plan of J. A. Beard,
certified by H. Grant, Surveyor, on January 12, 1852, and
deposited for reference in the office of H. B. Cenas, late Notary
Public. Said lot measures twenty-two feet, eleven inches and
five lines front on S. Peters Street, twenty-three feet, six
lines front on Fulton Street by a depth in front on Lafayette
Street of one hundred and seventeen feet, two inches and five
lines and a depth of one hundred and seventeen feet, seven inches
on the opposite side line.
Improvements thereon bear the Municipal Number 237 Lafayette
Street, New Orleans, Louisiana (the "Land").
All as more fully described on a survey drawing no. L-15 by
Gandolfo, Kuhn & Associates originally dated August 25, 1992, and
most recently recertified March 10, 1994.
PARCEL II
528 SOUTH PETERS STREET
ONE CERTAIN LOT OF GROUND, together with all rights, ways,
privileges, servitudes, appurtenances and advantages thereunto
belonging, situated in the First District of the City of New
Orleans, Orleans Parish, State of Louisiana, in SQUARE 16
thereof, bounded by South Peters, Lafayette, Fulton and Poydras
Streets, designated as LOT 10 on the survey made by Gilbert,
Kelly & Couturie, Inc., Surveying and Engineering, dated
September 17, 1979, and according to which said lot commences at
a distance of 137 feet, 9 inches and 6 lines from the corner of
South Peters and Lafayette Streets, and also commences at a
distance of 138 feet, 4 inches and 4 lines from the corner of
Fulton and Lafayette Streets, and measures 22 feet, 11 inches and
5 lines front on South Peters Street, a width in the rear and
front on Fulton Street of 23 feet, 0 inches and 6 lines, by a
depth on the sideline nearer to Lafayette Street of 116 feet, 4
inches, by a depth on the opposite sideline of 116 feet, 2 inches
and 1 line.
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The improvements thereon bear Municipal No. 528 South Peters
Street and No. 529 Fulton Street.
All as more fully described on a survey by Gandolfo, Kuhn &
Associates originally dated August 25, 1992 and most recently
recertified March 10, 1994.
PARCEL III
530 S. PETERS STREET
THREE CERTAIN LOTS OF GROUND, together with all rights, ways,
privileges, servitudes, appurtenances and advantages thereunto
belonging, situated in the First District of the City of New
Orleans, Orleans Parish, State of Louisiana, in the SQUARE NO.
16, bounded by South Peters (late New Levee), Fulton, Lafayette
and Poydras Streets, said three lots being designated by the NOS.
11, 12 and 13 on print of survey of E.L. Eustis, Civil Engineer,
dated January 15, 1941, and according to which said lots adjoin
each other and measure as follows:
Lot 13 lies nearest to Lafayette Street and begins at a distance
from the intersection of Lafayette and South Peters Streets of
sixty-six feet, ten inches and seven lines (66'10"7''') title
(sixty eight feet, ten inches, and seven lines, 68'10"7'''
actual) and measures on South Peters Street in the direction of
Poydras Street twenty-two feet, eleven inches and five lines
(22'11"5''') by a depth on the side line nearest Lafayette Street
of one hundred sixteen feet, nine inches, and three lines
(116'9"3'''), a depth on the opposite side line nearer Poydras
Street of one hundred sixteen feet, seven inches and five lines
(116'7"5''') with a frontage on Fulton Street of twenty-three
feet, six inches, and no lines (23'6"0''') title (twenty-three
feet, no inches, and six lines 23'0"6''' actual). The nearest
point of said frontage being sixty-nine feet, two inches, and two
lines (69'2"2''') from the intersection of Lafayette and Fulton
Streets.
Lot 12 adjoins Lot 13 and measures twenty-two feet, eleven
inches, and five lines (22'11"5''') front on South Peters Street
by a depth on a side line nearer Lafayette Street side line being
the dividing line between Lots 12 and 13 of one hundred sixteen
feet, seven inches, and five lines (116'7"5'''), a depth on the
opposite side adjoining Lot 11 of one hundred sixteen feet, five
inches, and seven lines (116'5"7''') with a frontage on Fulton
Street of twenty-three feet, six inches, and no lines (23'6"0''')
title (twenty-three feet, no inches and six lines, 23'0"6'''
actual).
Lot 11 adjoins Lot 12 on the side of Lot 12 nearer Poydras Street
and measures twenty-two feet, eleven inches and five lines
(22'11"5''') front on South Peters Street by a depth on the side
line nearer Lafayette Street, which is the dividing line between
Lots 11 and 12, one hundred sixteen feet, five inches, and seven
lines (116'5"7''') with a depth on the opposite side line nearer
Poydras Street of one hundred sixteen feet, four inches, and no
lines (116'4"0''') with a frontage on Fulton Street of twenty-
three feet, six inches, and no lines (23'6"0''') title (twenty-
three feet, no inches, and six lines, 23'0"6''' actual) (the
"Land").
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All as more fully described on a survey by Gandolfo, Kuhn &
Associates originally dated August 25, 1992, and most recently
recertified March 10, 1994.
PARCEL IV
MATT I
A CERTAIN PARCEL OF LAND, together with all rights, ways,
privileges, servitudes, appurtenances and advantages thereunto
belonging, and any and all buildings, improvements and other
constructions located thereon, situated in the First District of
the City of New Orleans, in SQUARE 4, Orleans Parish, Louisiana,
bounded by Convention Center Boulevard (formerly Front Street),
Lafayette, Fulton and Poydras Streets, which said parcel is
designated as LOT 1 and is the only lot of and comprises the
whole of said Square 4, on plan of subdivision of Stephen L.
Gremillion of Engineering Technology, Inc., dated June 28, 1982,
approved by the City Planning Commission under Subdivision Docket
No. 96/82, registered as a Declaration of Title Change under
Entry No. 466470 in COB 781, folio 237, records of Orleans
Parish. According to survey by John J. Avery, Jr., L.S., dated
August 24, 1990 (the "Survey"), said Lot 1 is described as
follows:
Commencing at the intersection of the westerly right of way line
of Convention Center Boulevard (late South Front Street) and the
southerly right of way line of Poydras Street and being the POINT
OF BEGINNING; from said POINT OF BEGINNING, thence South 02
degrees, 24 minutes, 03 seconds East along the westerly right of
way line of Convention Center Boulevard a distance of 371 feet, 1
inch, 0 eighths (371.35' Title) to a point on the northerly right
of way line of Lafayette Street; thence North 75 degrees, 59
minutes, 06 seconds West along the northerly right of way line of
Lafayette Street a distance of 117 feet, 7 inches, 4 eights
(117.24' Title) to a point on the easterly right of way line of
Fulton Street; thence North 02 degrees, 01 minutes, 00 seconds
West along the easterly right of way line of Fulton Street a
distance of 369 feet, 10 inches, 1 eighth (370.10' Title) to a
point on the southerly right of way line of Poydras Street;
thence South 76 degrees, 14 minutes, 00 seconds East along the
southerly right of way line of Poydras Street a distance of 114
feet, 10 inches, 6 eighths (114.65' Title) to the POINT OF
BEGINNING.
AND
A CERTAIN LOT OF GROUND, together with all rights, ways,
privileges, servitudes, appurtenances and advantages thereunto
belonging, and any and all buildings, improvements and other
constructions located thereon, situated in the First District of
the City of New Orleans, in SQUARE 16, bounded by Poydras,
Fulton, South Peters and Lafayette Streets, which said lot is
designated as LOT F on a plan of resubdivision by Stephen L.
Gremillion of Engineering Technology, Inc., dated June 28, 1982,
approved by the City Planning Commission under Subdivision Docket
No. 96/82, registered as a Declaration of Title Change under
Entry No. 466470 in COB 781, folio 237, records of Orleans
Parish.
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According to the Survey, said Lot F is more fully described and
measures as follows:
Commencing at the intersection of the westerly right of way line
of Fulton Street and the southerly right of way line of Poydras
Street and being the POINT OF BEGINNING; from said POINT OF
BEGINNING, thence South 02 degrees, 01 minutes, 00 seconds East
along the westerly right of way line of Fulton Street a distance
of 92 feet, 4 inches, 5 eighths (91.93' Title) to a point; thence
North 76 degrees, 07 minutes, 00 seconds West a distance of 46
feet, 9 inches, 7 eighths (46.82' Title) to a point; thence North
02 degrees, 01 minutes, 00 seconds West a distance of 23 feet, 6
inches, 0 eighths (23.50' Title) to a point; thence South 76
degrees, 07 minutes, 00 seconds East a distance of 0 feet, 8
inches, 0 eighths (0.44' Title) to a point; thence North 01
degrees, 53 minutes, 46 seconds West a distance of 68 feet, 9
inches, 0 eighths (68.85' Title) to a point on the southerly
right of way line of Poydras Street; thence South 76 degrees, 14
minutes, 00 seconds East along the southerly right of way line of
Poydras Street a distance of 45 feet, 11 inches, 6 eighths
(45.92' Title) to the POINT OF BEGINNING (the "Land and
Improvements").
All as more fully described on a survey by Gandolfo, Kuhn &
Associates originally dated August 25, 1992, and most recently
recertified March 10, 1994.
II. EXISTING LIENS WITH RESPECT TO NOVEMBER REAL ESTATE
1. Collateral Mortgage by Louisiana Jazz Company, in favor
of Bearer, in the amount of $25,000,000.00, passed
before L. R. Adler, Notary Public, dated November 30,
1993, recorded December 1, 1993, under N.A. No.
93-51172, as Mortgage Office Instrument No. 2350801, in
MOB 2991, folio 15, securing the FNBC Debt (as
hereinafter defined).
2. That certain Collateral Mortgage Note in the amount of
$25,000,000.00 dated November 30, 1993, payable to
Bearer, in connection with the FNBC Debt.
III. EXISTING DEBT WITH RESPECT TO NOVEMBER REAL ESTATE
Debt evidenced by that certain Term Note given by Louisiana
Jazz Company, a Louisiana general partnership to First
National Bank of Commerce dated November 30, 1993 in the
original principal amount of $17,827,177.49, having an
outstanding principal balance as of March 1, 1994 equal to
$17,755,177.49 (the "FNBC Debt").
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EX-11
THE PROMUS COMPANIES INCORPORATED
COMPUTATION OF PER SHARE EARNINGS
First Quarter Ended
March 31, March 31,
1994 1993
Income before extraordinary items $ 27,372,000 $ 11,965,000
Extraordinary items, net - (1,009,000)
------------ ------------
Net income $ 27,372,000 $ 10,956,000
============ ============
Primary earnings per share (1)
Weighted average number of common
shares outstanding 101,503,574 99,375,771
Common stock equivalents
Additional shares based on average
market price for period
applicable to:
Restricted stock 459,462 1,484,790
Stock options 944,198 391,314
------------ ------------
Average number of primary common and
common equivalent shares outstanding 102,907,234 101,251,875
============ ============
Primary earnings per common and
common equivalent share
Income before extraordinary items $0.27 $ 0.12
Extraordinary items - (0.01)
----- ------
Net income $0.27 $ 0.11
===== ======
Fully diluted earnings per share (1)
Average number of primary common and
common equivalent shares outstanding 102,907,234 101,251,875
Additional shares based on period-
end price applicable to:
Restricted stock 11,618 32,616
Stock options - 100,635
------------ ------------
Average number of fully diluted common
and common equivalent shares
outstanding 102,918,852 101,385,126
============ ============
Fully diluted earnings per common
and common equivalent share
Income before extraordinary items $0.27 $ 0.12
Extraordinary items - (0.01)
----- ------
Net income $0.27 $ 0.11
===== ======
(1) March 31, 1993 amounts have been retroactively adjusted for
three-for-two stock split approved by Promus' Board of Directors on October
29, 1993.
101