<PAGE>
As filed with the Securities and Exchange Commission on July 14, 1997
Registration Statement No. 333-29671
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
PATRIOT AMERICAN PATRIOT AMERICAN HOSPITALITY
HOSPITALITY, INC. OPERATING COMPANY
(Exact Name of Registrant (Exact Name of Registrant
as Specified in its Charter) as Specified in its Charter)
DELAWARE DELAWARE
(State or Other Jurisdiction of (State or Other Jurisdiction of
Incorporation or Organization) Incorporation or Organization)
94-0358820 94-2878485
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
3030 LBJ Freeway, Suite 1500 3030 LBJ Freeway, Suite 1500
Dallas, TX 75234 Dallas, TX 75234
(972) 888-8000 (972) 888-8000
(Address, Including Zip Code, and (Address, Including Zip Code, and
Telephone Number, Including Telephone Number, Including
Area Code, of Registrant's Area Code, of Registrant's
Principal Executive Offices) Principal Executive Offices)
Paul A. Nussbaum Paul A. Nussbaum
Chairman of the Board Chairman of the Board
Patriot American Patriot American Hospitality
Hospitality, Inc. Operating Company
3030 LBJ Freeway, Suite 1500 3030 LBJ Freeway, Suite 1500
Dallas, TX 75234 Dallas, TX 75234
(922) 888-8000 (972) 888-8000
(Name, Address, Including Zip Code, (Name, Address, Including Zip Code,
and Telephone Number, Including and Telephone Number, Including
Area Code, of Agent for Service) Area Code and of Agent for Service)
--------------------
copies to:
GILBERT G. MENNA, P.C.
KATHRYN I. MURTAGH, ESQ.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109-2881
(617) 570-1000
--------------------
Approximate date of commencement of proposed sale to public: As soon as
practicable after this registration statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
The registrants hereby amend this registration statement on such date or dates
as may be necessary to delay its effective date until the registrants shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ Information contained herein is subject to completion or amendment. A +
+ registration statement relating to these securities has been filed with the +
+ Securities and Exchange Commission. These securities may not be sold nor may+
+ offers to buy be accepted prior to the time the registration statement +
+ becomes effective. This prospectus shall not constitute an offer to sell or +
+ the solicitation of an offer to buy nor shall there be any sale of these +
+ securities in any State in which such offer, solicitation or sale would be +
+ unlawful prior to registration or qualification under the securities laws of +
+ any such State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JULY ___, 1997
PROSPECTUS
- ----------
$475,000,000
PATRIOT AMERICAN HOSPITALITY, INC.
Common Stock
Preferred Stock
$25,000,000
PATRIOT AMERICAN HOSPITALITY OPERATING COMPANY
Common Stock
Preferred Stock
---------------
Patriot American Hospitality, Inc. (the "REIT" or the "Corporation") and
Patriot American Hospitality Operating Company (the "Operating Company", and,
together with the REIT, the "Companies"), may offer from time to time (i) shares
of common stock, $.01 par value, of the REIT ("REIT Common Stock") and shares of
common stock, $.01 par value, of the Operating Company ("Operating Company
Common Stock") which are "paired" and trade as units consisting of one share of
REIT Common Stock and one share of Operating Company Common Stock (the "Paired
Common Stock"); and (ii) one or more series of shares of preferred stock, $.01
par value, of the REIT ("REIT Preferred Stock") and shares of preferred stock,
$.01 par value, of the Operating Company ("Operating Company Preferred Stock,"
and collectively with REIT Preferred Stock, the "Preferred Stock") which may be,
but are not required to be "paired." The Preferred Stock and the Paired Common
Stock (collectively, the "Securities") may be offered separately or together, in
separate series, in amounts, at prices and on terms, all to be set forth in one
or more supplements to this Prospectus (each, a "Prospectus Supplement"). Of the
$500,000,000 aggregate public offering price of Securities, up to $475,000,000
will be offered by the REIT and up to $25,000,000 will be offered by the
Operating Company.
The specific terms of the Securities for which this Prospectus is being
delivered will be set forth in the applicable Prospectus Supplement and will
include, where applicable: (i) in the case of Preferred Stock, the specific
designations and stated value per share, any dividend, liquidation, redemption,
conversion, voting and other rights, and any initial public offering price; and
(ii) in the case of Paired Common Stock, any public offering price. In addition,
such specific terms may include limitations on direct or beneficial ownership
and restrictions on transfer of the Securities, in each case as may be
consistent with the REIT's Certificate of Incorporation as then in effect and/or
the Operating Company's Certificate of Incorporation as then in effect, as the
case may be, or otherwise appropriate to preserve the status of the REIT as a
real estate investment trust for federal income tax purposes. See "Restrictions
on Transfers of Capital Stock."
The applicable Prospectus Supplement will also contain information, where
appropriate, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Securities covered
by such Prospectus Supplement.
The Securities may be offered by the Companies directly to one or more
purchasers, through agents designated from time to time by the Companies or to
or through underwriters or dealers. If any agents or underwriters are involved
in the sale of any of the Securities, their names, and any applicable purchase
price, fee, commission or discount arrangement between or among them, will be
set forth, or will be calculable from the information set forth, in an
accompanying Prospectus Supplement. See "Plan of Distribution." No Securities
may be sold without delivery of a Prospectus Supplement describing the method
and terms of the offering of such Securities.
___________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
___________________
The date of this Prospectus is , 1997
<PAGE>
AVAILABLE INFORMATION
The Companies have filed with the Securities and Exchange Commission (the
"SEC" or "Commission") a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Securities. This Prospectus, which constitutes part of the
Registration Statement, omits certain of the information contained in the
Registration Statement and the exhibits thereto on file with the Commission
pursuant to the Securities Act and the rules and regulations of the Commission
thereunder. Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference. The Registration Statement, including
exhibits thereto, may be inspected and copies obtained from the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the following Regional Offices of the Commission: 7 World Trade Center, 13th
Floor, New York, New York 10048, and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material may be obtained from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Companies file information electronically with the Commission, and
the Commission maintains a Web Site that contains reports, proxy and information
statements and other information regarding registrants (including the Companies)
that file electronically with the Commission. The address of the Commission's
Web Site is (http://www.sec.gov).
The Companies are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports and proxy statements and other information
with the Commission. Such reports, proxy statements and other information can be
inspected and copied at the locations described above. Copies of such materials
can be obtained by mail from the Public Reference Section of the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. In addition, reports, proxy and information statements and
other information concerning the Companies can be inspected at the offices of
the New York Stock Exchange ("NYSE"), 20 Broad Street, New York, New York
10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are incorporated herein by reference:
REIT and Operating Company
1. Current report on Form 8-K of Patriot American Hospitality, Inc. and
Patriot American Hospitality Operating Company dated July 1, 1997 (Nos.
0001-13127 and 0001-13127-01 filed July __, 1997) and
2. The description of the paired shares of REIT Common Stock and
Operating Company Common Stock contained or incorporated by reference in the
REIT's and the Operating Company's Registration Statement on Form 8-A (Nos.
001-13127, 001-13127-01), including any amendments thereto.
California Jockey Club and Bay Meadows Operating Company
1. Annual report on Form 10-K of California Jockey Club and Bay Meadows
Operating Company (Nos. 001-09319, 001-09320) for the fiscal year ended December
31, 1996;
2. Current Reports on Form 8-K of California Jockey Club and Bay Meadows
Operating Company dated (i) February 24, 1997 (Nos. 001-09319, 001-09320) filed
March 3, 1997 and (ii) May 28, 1997 (Nos. 001-09319, 001-09320 filed June 5,
1997);
3. Quarterly Report on Form 10-Q of California Jockey Club and Bay
Meadows Operating Company (Nos. 001-09319, 001-09320) for the fiscal quarter
ended March 31, 1997; and
4. Quarterly Report on Form 10-Q/A of California Jockey Club and Bay
Meadows Operating Company (Nos. 001-09319, 001-09320) for the fiscal quarter
ended March 31, 1997 (filed May 16, 1997).
Patriot American Hospitality, Inc.(Patriot)
1. Annual Report on Form 10-K of Patriot American Hospitality, Inc., (No.
001-13898) for the fiscal year ended December 31, 1996;
2. Current Reports on Form 8-K of Patriot American Hospitality, Inc.,
dated: (i) April 2, 1996, as amended (No. 001-13898 filed April 17, 1996 and
June 14, 1996) reporting the acquisition of certain assets, (ii) December 5,
1996 (No. 001-13898 filed December 5, 1996) reporting the acquisition of certain
assets, (iii) January 16, 1997, as amended (No. 001-13898 filed January 31,
1997, February 21, 1997, April 8, 1997, April 9, 1997 and May 19, 1997),
reporting the consummation of the acquisition of Carefree Resorts Corporation
and Resorts Limited Partnership and certain other assets, (iv) February 24, 1997
(No. 001-13898 filed March 3, 1997) reporting the execution of the Merger
Agreement and (v) April 14, 1997, as amended (No. 001-13898 filed April 17, 1997
and April 18, 1997), reporting the execution of a merger agreement between
Patriot and Wyndham Hotel Corporation and the related stock purchase agreement
and the execution of agreements with partnerships affiliated with members of the
Trammell Crow family providing for the acquisition by the REIT of 11 full-
service Wynham-branded hotels; and
3. Quarterly Report on Form 10-Q of Patriot American Hospitality, Inc.
(No. 001-13898) as of and for the fiscal quarter ended March 31, 1997.
2
<PAGE>
All other documents filed with the Commission by the REIT or the Operating
Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Securities are to be incorporated herein by reference and such
documents shall be deemed to be a part hereof from the date of filing of such
documents. Any statement contained in this Prospectus or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document that also
is or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this
Prospectus.
Any person receiving a copy of this Prospectus may obtain, without charge,
upon written or oral request, a copy of any of the documents incorporated by
reference herein, except for the exhibits to such documents. Written requests
should be mailed to 3030 LBJ Freeway, Suite 1500, Dallas, TX 75234, Attention:
Shareholder Relations (Telephone No. 972-888-8000).
THE COMPANIES
Recent Developments
On July 1, 1997, the REIT (formerly known as California Jockey Club, "Cal
Jockey") merged (the "Merger") with Patriot American Hospitality, Inc., a
Virginia corporation ("Patriot"), with the REIT being the surviving corporation.
Upon completion of the Merger, the REIT and the Operating Company (formerly
known as Bay Meadows Operating Company, "Bay Meadows") were the surviving
entities, each with a limited partnership subsidiary which holds substantially
all of its assets and conducts substantially all of its operations. Following
the Merger, the surviving entities have continued the operations of Patriot, the
REIT and the Operating Company.
The REIT
The REIT is a self-administered real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code"). The REIT owns interests
in a portfolio of hotels which are diversified by franchise or brand
affiliation, including Marriott(R), Crowne Plaza(R), Radisson(R),
Hilton(R), Four Points by Sheraton(R), Holiday Inn(R), Wyndham(R),
Wyndham Garden(R), WestCoast(R), Doubletree(R), Embassy Suites(R),
Hampton Inn(R), Registry(R), Carefree(R) and Grand Heritage(R) and serve
primarily major U.S. business centers, including Atlanta, Boston, Chicago,
Cleveland, Dallas, Denver, Houston, Miami, San Francisco and Seattle. In
addition to hotels catering primarily to business travelers, the REIT's
portfolio also includes world-class resort hotels in Scottsdale and Tucson,
Arizona, Carmel, California and Telluride, Colorado and prominent hotels in
major tourist destinations, including Fort Lauderdale, Florida, New Orleans, San
Antonio and San Diego. The REIT also owns approximately 175 acres of land in San
Mateo, California on which the Bay Meadows Racecourse (the "Racecourse") is
situated.
The REIT conducts substantially all of its operations through Patriot
American Hospitality Partnership, L.P., a Virginia partnership (the "Realty
Partnership"), which owns, directly and through its subsidiaries, the REIT's
interests in each of its hotels. Through its wholly-owned subsidiaries, PAH
GP, Inc. and PAH, LP, Inc., the REIT owns the sole general partnership interest
and its limited partnership interest in the Realty Partnership.
Since 1983, the shares of REIT Common Stock have been paired and have
traded together with the shares of Operating Company Common Stock as a single
unit pursuant to a stock pairing agreement. The terms of the pairing agreement
are set forth in the Pairing Agreement dated as of February 17, 1983 and amended
from time to time thereafter, by and between the REIT and the Operating Company.
The REIT's principal executive offices are located at 3030 LBJ Freeway,
Suite 1500, Dallas, Texas 75234 and its telephone number at that location is
(972) 888-8000.
The Operating Company
The Operating Company is a gaming and entertainment company engaged
primarily in the business of conducting and offering pari-mutuel wagering
(meaning that individuals wager against each other and not against the operator
of the facility) on Thoroughbred horse racing at the Racecourse. In addition to
live horse racing at the Racecourse, the Operating Company simulcasts its horse
races to as many as 31 sites in California and as many as 450 sites in the
remainder of the world. Additionally, the Operating Company acts as an off-track
wagering facility, allowing patrons to wager on horse races at other tracks,
even when live horse racing is not being conducted at the Racecourse, by
accepting simulcasts of horse races conducted throughout the United States,
Canada, Mexico, Australia and Hong Kong. The Operating Company generates
revenues from commissions on pari-mutuel wagering, admissions, parking, program
sales and the food and beverage concessions at the Racecourse. As described
above, shares of Operating Company Common Stock are paired and trade together
with the shares of REIT Common Stock as a single unit on the NYSE pursuant to
the Pairing Agreement.
Following the Merger, the REIT expects to terminate its leases with a
limited liability company owned by certain executive officers of Patriot and
release such hotels to the Operating Company.
The Operating Company's principal executive offices are located at 3030 LBJ
Freeway, Suite 1500, Dallas, Texas 75234 and its telephone number at that
location is (972) 888-8000.
3
<PAGE>
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the
Companies intend to apply the net proceeds from the sale of Securities to
general corporate and working capital purposes, including, without limitation,
repayment of indebtedness, investment in new properties and maintenance of
currently owned properties.
RATIOS OF EARNINGS TO FIXED CHARGES
CAL JOCKEY AND BAY MEADOWS
The following table sets forth the historical consolidated ratios of
earnings to fixed charges for California Jockey Club and Bay Meadows Operating
Company for the periods shown:
<TABLE>
<CAPTION>
Year Ended December 31,
Three Months Ended -------------------------------------
March 31, 1997 1996 1995 1994 1993 1992
-------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio........ 76.84x (a) 84.20x 55.09x 8.49x 20.52x
- ---------------------
</TABLE>
(a) Earnings were insufficient to cover fixed charges by $501,000.
PATRIOT
The following table sets forth the historical consolidated ratios of
earnings to fixed charges for Patriot for the periods shown:
<TABLE>
<CAPTION>
Year Ended December 31,
Three Months Ended -----------------------
March 31, 1997 1996 1995(a)
-------------------- ---- ----
<S> <C> <C>
Ratio........ 2.75x 7.00x 80.37x
- ---------------------
</TABLE>
(a) Patriot commenced operations on October 2, 1995.
The ratios of earnings to fixed charges were computed by dividing earnings by
fixed charges. For this purpose, earnings consist of pre-tax income from
continuing operations plus fixed charges. Fixed charges consist of interest
expense, rent expense, and the amortization of debt issuance costs. To date,
the Companies have not issued any Preferred Stock; therefore, the ratios of
earnings to combined fixed charges and Preferred Stock dividend requirements are
the same as the ratios of earnings to fixed charges presented above.
DESCRIPTION OF CAPITAL STOCK
The Amended and Restated Certificate of Incorporation of the REIT (the
"REIT Charter"), authorizes the REIT to issue up to 1.5 billion shares of
capital stock, consisting of (i) 650 million shares of REIT Common Stock,
(ii) 100 million shares of REIT Preferred Stock, and (iii) 750 million shares of
excess stock, $.01 par value (the "Excess Stock"). The REIT Charter grants the
REIT Board of Directors the power to create and authorize the issuance of REIT
Preferred Stock in one or more series, having such voting rights, such rights to
dividends and distributions and rights in liquidation, such conversion, exchange
and redemption rights and such designations, preferences and participations and
such other limitations and restrictions as are not prohibited by the REIT
Charter or applicable law as are specified by the REIT Board of Directors in its
discretion. As of July 9, 1997, the REIT Board of Directors had not created or
authorized any class or series of REIT Preferred Stock and no shares of Excess
Stock were outstanding.
The Amended and Restated Certificate of Incorporation of the Operating
Company (the "Operating Company Charter") currently authorizes the Operating
Company to issue up to 1.5 billion shares of capital stock, consisting of
(i) 650 million shares of Operating Company Common Stock, (ii) 100 million
shares of Operating Company Preferred Stock, and (iii) 750 million shares of
Excess Stock. The Operating Company Charter grants the Operating Company Board
of Directors the power to create and authorize the issuance of Operating Company
Preferred Stock in one or more series, having such voting rights, such rights to
dividends and distributions and rights in liquidation, such conversion, exchange
and redemption rights and such designations, preferences and participations and
such other limitations and restrictions as are not prohibited by the Operating
Company Charter or applicable law as are specified by the Operating Company
Board of Directors in its discretion. As of July 9, 1997, the Operating Company
Board of Directors had not created or authorized any class or series of
Operating Company Preferred Stock and no shares of Excess Stock were
outstanding.
4
<PAGE>
Under the Pairing Agreement, shares of Paired Common Stock and shares of
Preferred Stock of either the REIT or the Operating Company that are convertible
into shares of Paired Common Stock shall not be transferrable or transferred on
the books of the REIT or the Operating Company unless a simultaneous transfer is
made by the same transferor to the same transferee of an equal number of shares
of that same class or series of common stock or Preferred Stock of the other
company. Neither the REIT nor the Operating Company may issue shares of REIT
Common Stock and Operating Company Common Stock, as the case may be, or shares
of Preferred Stock that are convertible into shares of Paired Common Stock
unless provision has been made for the simultaneous issuance or transfer to the
same person of the same number of shares of that same class or series of common
stock or Preferred Stock of the other company and for the pairing of such
shares. Each certificate issued for paired shares of REIT Common Stock and
Operating Company Common Stock must be issued "back-to-back" with a certificate
evidencing the same number of shares of the other company. Each certificate must
bear a conspicuous legend on its face referring to the restrictions on ownership
and transfer under the Pairing Agreement.
In addition, neither the REIT nor the Operating Company may declare a stock
dividend, issue any rights or warrants or otherwise reclassify shares unless the
other company simultaneously takes the same or equivalent action.
DESCRIPTION OF PREFERRED STOCK
The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any Prospectus Supplement
may relate. The statements below describing the Preferred Stock are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of the REIT Charter and the Operating Company Charter
(collectively the "Charters") and any applicable amendment to the REIT Charter
or the Operating Company Charter designating terms of a series of Preferred
Stock (a "Designating Amendment").
With the exception of Preferred Stock that is convertible into Paired
Common Stock, the REIT may authorize and issue REIT Preferred Stock without the
issuance by the Operating Company of corresponding shares, and the Operating
Company may authorize and issue Operating Company Preferred Stock without the
issuance by the REIT of corresponding shares. Furthermore, the Pairing
Agreement does not limit the power of the Board of Directors of each of the REIT
and the Operating Company to independently determine the rights, preferences and
restrictions of such shares. However, if either the REIT or the Operating
Company were to issue Preferred Stock for which the other entity did not issue
corresponding (i.e., paired) shares in such an amount that greater than 50% of
such entity's beneficial equity interests were represented by such unpaired
Preferred Stock, then the REIT could lose its status as "grandfathered" from the
application of Section 269B of the Code and jeopardize the REIT's ability to
qualify as a real estate investment trust. See "Federal Income Tax
Considerations--REIT Qualification of the REIT--Paired Shares." Neither the REIT
nor the Operating Company intends to issue unpaired Preferred Stock in excess of
such limitation.
Subject to the limitations prescribed by the REIT Charter and the Operating
Company Charter, respectively, the Board of Directors of each of the REIT and
the Operating Company is authorized to provide for the issuance of shares of
Preferred Stock in one or more series, to establish the number of shares in each
series and to fix the designations, powers, preferences and rights of each such
series and the qualifications, limitations or restrictions thereof. The
Preferred Stock will, when issued, be fully paid and nonassessable and will have
no preemptive rights. Because the Board of Directors of each of the REIT and the
Operating Company has the power to establish the preferences and rights of each
class or series of Preferred Stock, the Board of Directors of each of the REIT
and the Operating Company may afford the holders of any series or class of
Preferred Stock preferences, powers and rights, voting or otherwise, senior to
the rights of holders of shares of Paired Common Stock.
Terms
Reference is made to the Prospectus Supplement relating to the Preferred
Stock offered thereby for specific terms, including:
(1) The title and stated value of such Preferred Stock and whether such
Preferred Stock is paired;
5
<PAGE>
(2) The number of shares of such Preferred Stock offered, the
liquidation preference per share and the offering price of such
Preferred Stock;
(3) The dividend rate(s), period(s) and/or payment date(s) or method(s)
of calculation thereof applicable to such Preferred Stock;
(4) The date from which dividends on such Preferred Stock shall
accumulate, if applicable;
(5) The procedures for any auction and remarketing, if any, for such
Preferred Stock;
(6) The provision for a sinking fund, if any, for such Preferred Stock;
(7) The provision for redemption, if applicable, of such Preferred
Stock;
(8) Any listing of such Preferred Stock on any securities exchange;
(9) The terms and conditions, if applicable, upon which such Preferred
Stock will be convertible into Paired Common Stock, including the
conversion price or rate (or manner of calculation thereof);
(10) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock;
(11) A discussion of federal income tax considerations applicable to
such Preferred Stock;
(12) The relative ranking and preference of such Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding
up of the affairs of the REIT or the Operating Company,
respectively;
(13) Any limitations on issuance of any series of Preferred Stock
ranking senior to or on a parity with such series of Preferred
Stock as to dividend rights and rights upon liquidation,
dissolution or winding up of the affairs of the REIT or the
Operating Company, respectively; and
(14) Any limitations on direct or beneficial ownership and restrictions
on transfer, in each case as may be appropriate to preserve the
status of the REIT as a real estate investment trust.
Rank
Unless otherwise specified in the Prospectus Supplement, the Preferred
Stock will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of the REIT or the Operating Company, as the case may
be, rank (i) senior to all classes or series of Paired Common Stock, and to all
equity securities ranking junior to such Preferred Stock, (ii) on a parity with
all equity securities issued by the REIT or the Operating Company, respectively,
the terms of which specifically provide that such equity securities rank on a
parity with the Preferred Stock and (iii) junior to all equity securities issued
by the REIT or the Operating Company, respectively, the terms of which
specifically provide that such equity securities rank senior to the Preferred
Stock. The term "equity securities" does not include convertible debt
securities.
Dividends
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of the REIT or the Board of
Directors of the Operating Company, as the case may be, out of the respective
assets of the REIT or the Operating Company legally available for payment, cash
dividends at such rates and on such dates as will be set forth in the applicable
Prospectus Supplement. Each such dividend shall be payable to holders of record
as they appear on the share transfer books of the REIT or the Operating Company,
as the case may be, on such record dates as shall be fixed by the Board of
Directors of the REIT or the Board of Directors of the Operating Company, as the
case may be.
6
<PAGE>
Dividends on any series of the Preferred Stock may be cumulative or non-
cumulative, as provided in the applicable Prospectus Supplement. Dividends, if
cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement. If the Board of Directors of the REIT or the
Board of Directors of the Operating Company, as the case may be, fails to
declare a dividend payable on a dividend payment date on any series of the
Preferred Stock for which dividends are non-cumulative, then the holders of such
series of the Preferred Stock will have no right to receive a dividend in
respect of the dividend period ending on such dividend payment date, and the
REIT or the Operating Company, as the case may be, will have no obligation to
pay the dividend accrued for such period, whether or not dividends on such
series are declared payable on any future dividend payment date.
If Preferred Stock of any series is outstanding, no dividends will be
declared or paid or set apart for payment on any capital stock of the REIT or
the Operating Company, as the case may be, of any other series ranking, as to
dividends, on a parity with or junior to the Preferred Stock of such series for
any period unless (i) if such series of Preferred Stock has a cumulative
dividend, full cumulative dividends have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof is set apart
for such payment on the Preferred Stock of such series for all past dividend
periods and the then current dividend period or (ii) if such series of Preferred
Stock does not have a cumulative dividend, full dividends for the then current
dividend period have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof is set apart for such payment on
the Preferred Stock of such series. When dividends are not paid in full (or a
sum sufficient for such full payment is not so set apart) upon Preferred Stock
of any series and the shares of any other series of Preferred Stock ranking on a
parity as to dividends with the Preferred Stock of such series, all dividends
declared upon Preferred Stock of such series and any other series of Preferred
Stock ranking on a parity as to dividends with such Preferred Stock shall be
declared pro rata so that the amount of dividends declared per share of
Preferred Stock of such series and such other series of Preferred Stock shall,
in all cases, bear to each other the same ratio that accrued dividends per share
on the Preferred Stock of such series (which shall not include any accumulation
in respect of unpaid dividends for prior dividend periods if such Preferred
Stock does not have a cumulative dividend) and such other series of Preferred
Stock bear to each other. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on Preferred
Stock of such series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Stock has a cumulative dividend, full cumulative
dividends on the Preferred Stock of such series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
is set apart for payment for all past dividend periods and the then current
dividend period and (ii) if such series of Preferred Stock does not have a
cumulative dividend, full dividends on the Preferred Stock of such series have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof is set apart for payment for the then current dividend
period, no dividends (other than of shares of Paired Common Stock or other
shares of capital stock ranking junior to the Preferred Stock of such series as
to dividends and upon liquidation) shall be declared or paid or set aside for
payment nor shall any other distribution be declared or made upon the Paired
Common Stock, or any other capital stock of the REIT or the Operating Company,
as the case may be, ranking junior to or on a parity with the Preferred Stock of
such series as to dividends and upon liquidation, nor shall any shares of Paired
Common Stock, or any other shares of capital stock of the REIT or the Operating
Company, as the case may be, ranking junior to or on a parity with the Preferred
Stock of such series as to dividends or upon liquidation be redeemed, purchased
or otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any such shares) by the REIT
or the Operating Company, as the case may be, (except by conversion into or
exchange for other capital stock of the REIT or the Operating Company, as the
case may be, ranking junior to the Preferred Stock of such series as to
dividends and upon liquidation).
Any dividend payment made on shares of a series of Preferred Stock shall
first be credited against the earliest accrued but unpaid dividends due with
respect to shares of such series which remain payable.
Redemption
If so provided in the applicable Prospectus Supplement, the Preferred Stock
will be subject to mandatory redemption or redemption at the option of the REIT
or the Operating Company, as the case may be, as a whole or in part, in each
case upon the terms, at the times and at the redemption prices set forth in such
Prospectus Supplement.
7
<PAGE>
The Prospectus Supplement relating to a series of Preferred Stock that is
subject to mandatory redemption will specify the number of shares of such
Preferred Stock that shall be redeemed by the REIT or the Operating Company, as
the case may be, in each year commencing after a date to be specified, at a
redemption price per share to be specified, together with an amount equal to all
accrued and unpaid dividends thereon (which shall not, if such Preferred Stock
does not have a cumulative dividend, include any accumulation in respect of
unpaid dividends for prior dividend periods) to the date of redemption. The
redemption price may be payable in cash or other property, as specified in the
applicable Prospectus Supplement. If the redemption price for Preferred Stock of
any series is payable only from the net proceeds of the issuance of shares of
capital stock of the REIT or the Operating Company, as the case may be, the
terms of such Preferred Stock may provide that, if no such shares of capital
stock shall have been issued or to the extent the net proceeds from any issuance
are insufficient to pay in full the aggregate redemption price then due, such
Preferred Stock shall automatically and mandatorily be converted into the
applicable shares of capital stock of the REIT or the Operating Company, as the
case may be, pursuant to conversion provisions specified in the applicable
Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if a series of Preferred Stock
has a cumulative dividend, full cumulative dividends on all shares of such
series of Preferred Stock shall have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof is set apart for
payment for all past dividend periods and the then current dividend period and
(ii) if a series of Preferred Stock does not have a cumulative dividend, full
dividends on all shares of the Preferred Stock of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for payment for the then current dividend period,
no shares of such series of Preferred Stock shall be redeemed unless all
outstanding shares of Preferred Stock of such series are simultaneously
redeemed; provided, however, that the foregoing shall not prevent the purchase
or acquisition of Preferred Stock of such series to preserve the status of the
REIT as a real estate investment trust or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding shares of Preferred
Stock of such series. In addition, unless (i) if such series of Preferred Stock
has a cumulative dividend, full cumulative dividends on all outstanding shares
of such series of Preferred Stock have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof is set apart
for payment for all past dividend periods and the then current dividend period
and (ii) if such series of Preferred Stock does not have a cumulative dividend,
full dividends on the Preferred Stock of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for payment for the then current dividend period,
the REIT or the Operating Company, as the case may be, shall not purchase or
otherwise acquire directly or indirectly any shares of Preferred Stock of such
series (except by conversion into or exchange for capital shares of the REIT or
the Operating Company, as the case may be, ranking junior to the Preferred Stock
of such series as to dividends and upon liquidation); provided, however, that
the foregoing shall not prevent the purchase or acquisition of shares of
Preferred Stock of such series to preserve the status of the REIT as a real
estate investment trust or pursuant to a purchase or exchange offer made on the
same terms to holders of all outstanding shares of Preferred Stock of such
series.
If fewer than all of the outstanding shares of Preferred Stock of any
series are to be redeemed, the number of shares to be redeemed will be
determined by the REIT or the Operating Company, as the case may be, and such
shares may be redeemed pro rata from the holders of record of such shares in
proportion to the number of such shares held or for which redemption is
requested by such holder (with adjustments to avoid redemption of fractional
shares) or by any other equitable manner determined by the REIT or the Operating
Company, as the case may be.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Preferred Stock of
any series to be redeemed at the address shown on the stock transfer books of
the REIT or the Operating Company, as the case may be. Each notice shall state:
(i) the redemption date; (ii) the number of shares and series of the Preferred
Stock to be redeemed; (iii) the redemption price; (iv) the place or places where
certificates for such Preferred Stock are to be surrendered for payment of the
redemption price; (v) that dividends on the shares to be redeemed will cease to
accrue on such redemption date; and (vi) the date upon which the holder's
conversion rights, if any, as to such shares shall terminate. If fewer than all
the shares of Preferred Stock of any series are to be redeemed, the notice
mailed to each such holder thereof shall also specify the number of shares of
Preferred Stock to be redeemed from each such holder. If notice of redemption of
any Preferred Stock has been given and if the funds necessary for such
redemption have been set aside by the REIT or the Operating Company, as the case
may be, in trust for the benefit of the holders of any Preferred Stock so called
for redemption, then from
8
<PAGE>
and after the redemption date dividends will cease to accrue on such Preferred
Stock, and all rights of the holders of such shares will terminate, except the
right to receive the redemption price.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the REIT or the Operating Company, as the case may be, then,
before any distribution or payment shall be made to the holders of any Paired
Common Stock or any other class or series of capital stock of the REIT or the
Operating Company, as the case may be, ranking junior to the Preferred Stock in
the distribution of assets upon any liquidation, dissolution or winding up of
the REIT or the Operating Company, as the case may be, the holders of each
series of Preferred Stock shall be entitled to receive out of assets of the REIT
or the Operating Company, as the case may be, legally available for distribution
to stockholders liquidating distributions in the amount of the liquidation
preference per share, if any, set forth in the applicable Prospectus Supplement,
plus an amount equal to all dividends accrued and unpaid thereon (which shall
not include any accumulation in respect of unpaid noncumulative dividends for
prior dividend periods). After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Preferred Stock will
have no right or claim to any of the remaining assets of the REIT or the
Operating Company, as the case may be. In the event that, upon any such
voluntary or involuntary liquidation, dissolution or winding up, the available
assets of the REIT or the Operating Company, as the case may be, are
insufficient to pay the amount of the liquidating distributions on all
outstanding shares of Preferred Stock and the corresponding amounts payable on
all shares of other classes or series of capital stock of the REIT or the
Operating Company, as the case may be, ranking on a parity with the Preferred
Stock in the distribution of assets, then the holders of the Preferred Stock and
all other such classes or series of capital stock shall share ratably in any
such distribution of assets in proportion to the full liquidating distributions
to which they would otherwise be respectively entitled.
If liquidating distributions shall have been made in full to all holders of
Preferred Stock, the remaining assets of the REIT or the Operating Company, as
the case may be, shall be distributed among the holders of any other classes or
series of capital stock ranking junior to the Preferred Stock upon liquidation,
dissolution or winding up, according to their respective rights and preferences
and in each case according to their respective number of shares. For such
purposes, the consolidation or merger of the REIT or the Operating Company, as
the case may be, with or into any other corporation, trust or entity, or the
sale, lease or conveyance of all or substantially all of the property or
business of the REIT or the Operating Company, as the case may be, shall not be
deemed to constitute a liquidation, dissolution or winding up of the REIT or the
Operating Company, as the case may be.
Voting Rights
Holders of the Preferred Stock will not have any voting rights, except as
set forth below or as otherwise from time to time required by law or as
indicated in the applicable Prospectus Supplement.
Unless provided otherwise for any series of Preferred Stock, so long as any
shares of Preferred Stock of a series remain outstanding, the REIT or the
Operating Company, as the case may be, will not, without the affirmative vote or
consent of the holders of at least two-thirds of the shares of such series of
Preferred Stock outstanding at the time, given in person or by proxy, either in
writing or at a meeting (such series voting separately as a class), (i)
authorize or create, or increase the authorized or issued amount of, any class
or series of capital stock ranking junior to such series of Preferred Stock with
respect to payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up, or reclassify any authorized capital stock of the
REIT or the Operating Company, as the case may be, into such shares, or create,
authorize or issue any obligation or security convertible into or evidencing the
right to purchase any such shares or (ii) amend, alter or repeal the provisions
of the REIT Charter or the Operating Company Charter or the Designating
Amendment for such series of Preferred Stock, whether by merger, consolidation
or otherwise (any such occurrence, an "Event"), so as to materially and
adversely affect any right, preference, privilege or voting power of such series
of Preferred Stock or the holders thereof; provided, however, with respect to
the occurrence of any of the Events set forth in (ii) above, so long as the
Preferred Stock remains outstanding with the terms thereof materially unchanged,
taking into account that, upon the occurrence of an Event, the REIT or the
Operating Company, as the case may be, may not be the surviving entity, the
occurrence of any such Event shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting power of holders of
Preferred Stock, and provided further that (A) any increase in the amount of the
authorized Preferred Stock or the creation or issuance of any other series of
Preferred Stock or (B) any increase in the amount of authorized shares
9
<PAGE>
of such series or any other series of Preferred Stock, in each case ranking on a
parity with or junior to the Preferred Stock of such series with respect to
payment of dividends or the distribution of assets upon liquidation, dissolution
or winding up, shall not be deemed to materially and adversely affect such
rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of such series of Preferred Stock shall have
been redeemed or called for redemption and sufficient funds shall have been
deposited in trust to effect such redemption.
Conversion Rights
The terms and conditions, if any, upon which any series of Preferred Stock
is convertible into Paired Common Stock will be set forth in the applicable
Prospectus Supplement relating thereto. Such terms will include the number of
shares of Paired Common Stock into which the shares of Preferred Stock are
convertible, the conversion price or rate (or manner of calculation thereof),
the conversion period, provisions as to whether conversion will be at the option
of the holders of the Preferred Stock or the REIT or the Operating Company, as
the case may be, the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event of the redemption of such series of
Preferred Stock.
Restrictions on Ownership
For the REIT to qualify as a real estate investment trust under the Code,
not more than 50% in value of its outstanding capital stock may be owned,
directly or indirectly, by five or fewer individuals (as defined in the Code to
include certain entities) during the last half of a taxable year. To assist the
REIT in meeting this requirement, the REIT may take certain actions to limit the
beneficial ownership, directly or indirectly, by a single person of the REIT's
outstanding equity securities, including any Preferred Stock of the REIT.
Therefore, the Designating Amendment for each series of Preferred Stock of the
REIT may contain provisions restricting the ownership and transfer of the
Preferred Stock. The applicable Prospectus Supplement will specify any
additional ownership limitations relating to a series of Preferred Stock. See
"Restrictions on Transfers of Capital Stock."
Transfer Agent
The transfer agent and registrar for the Preferred Stock will be set forth
in the applicable Prospectus Supplement.
DESCRIPTION OF PAIRED COMMON STOCK
The following description of the Paired Common Stock sets forth certain
general terms and provisions of the Paired Common Stock to which any Prospectus
Supplement may related. The statements below describing the Paired Common Stock
are in all respects subject to and qualified in their entirety by reference to
the applicable provisions of the REIT Charter and the Operating Company Charter
and the REIT Bylaws and the Operating Company Bylaws.
General
The Paired Common Stock is currently listed on the NYSE under the symbol
"PAH." As of July 9, 1997, there were 22,727,430 shares of Paired Common Stock
outstanding. The Paired Common Stock will, when issued, be fully paid and
nonassessable and will have no preemptive rights.
10
<PAGE>
Terms
Subject to the preferential rights of any other shares or series of stock,
holders of shares of Paired Common Stock will be entitled to receive dividends
and other distributions in cash, stock or property of the REIT or the Operating
Company, as the case may be, as and when authorized and declared by the
respective Board of Directors of each company out of assets legally available
therefor and to share ratably in the assets of the respective company legally
available for distribution to its respective stockholders in the event of its
liquidation, dissolution or winding up after payment of, or adequate provision
for, all known debts and liabilities of the REIT or the Operating Company, as
the case may be.
Each outstanding share of Paired Common Stock entitles its holder to one
vote on all matters submitted to a vote of stockholders, including the election
of Directors and, except as otherwise required by law or except as provided with
respect to any other class or series of stock, the holders of Paired Common
Stock will possess the exclusive voting power. A stockholder complying with
certain notice requirements set forth in the REIT Charter and the Operating
Company Charter may cumulate such stockholder's votes with respect to the
election of directors and give one candidate a number of votes equal to the
number of directors to be elected multiplied by the number of votes to which the
stockholder's shares are normally entitled, or distribute the stockholder's
votes on the same principle among as many candidates as the stockholder thinks
fit. Following the Merger, there will be no cumulative voting in the election of
Directors, which means that the holders of a majority of the outstanding shares
of Paired Common Stock will be able to elect all of the Directors then standing
for election, and the holders of the remaining shares of Common Stock will not
be able to elect any Directors.
Holders of Paired Common Stock have no conversion, sinking fund or
redemption rights, or preemptive rights to subscribe for any securities of the
REIT or the Operating Company.
Each of the REIT and the Operating Company intends to furnish its
stockholders with annual reports containing audited consolidated financial
statements and an opinion thereon expressed by an independent public accounting
firm and quarterly reports for the first three quarters of each fiscal year
containing unaudited financial information.
All shares of Paired Common Stock have equal dividend, distribution,
liquidation and other rights, and will have no preference, appraisal or exchange
rights.
Pursuant to the Delaware General Corporation Law (the "DGCL"), a merger or
consolidation involving either of the REIT or the Operating Company requires the
approval of a majority of the outstanding shares of the constituent corporation
to the transaction entitled to vote on such a matter.
Restrictions on Ownership
For the REIT to qualify as a real estate investment trust under the Code,
not more than 50% in value of its outstanding capital stock may be owned,
directly or indirectly, by five or fewer individuals (as defined in the Code to
include certain entities) during the last half of a taxable year. To assist the
REIT in meeting this requirement, the REIT and the Operating Company may take
certain actions to limit the beneficial ownership, directly or indirectly, by a
single person of the REIT's or the Operating Company's outstanding equity
securities. See "Restrictions on Transfers of Capital Stock."
Transfer Agent
The transfer agent and registrar for the Paired Common Stock is American
Stock Transfer of New York, New York.
RESTRICTIONS ON TRANSFERS OF CAPITAL STOCK
For the REIT to qualify as a real estate investment trust under the Code,
among other things, not more than 50% in value of its outstanding capital stock
may be owned, directly or indirectly, by five or fewer individuals (defined in
the Code to include certain entities) during the last half of a taxable year,
and such capital stock must be beneficially owned by 100 or more persons during
at least 335 days of a taxable year of 12 months or during a proportionate part
of a
11
<PAGE>
shorter taxable year (in each case, other than the first such year). Each of the
REIT Bylaws and the Operating Company Bylaws provides that if the Board of
Directors shall at any time and in good faith be of the opinion that direct or
constructive ownership of shares has or may become concentrated to an extent
which would cause the REIT to fail to qualify or to be disqualified to be taxed
as a real estate investment trust under the Code, or would cause any rent paid
to the REIT to fail to qualify or to be disqualified as "rent from real
properties," as defined by the Code, the REIT Board of Directors shall have
the power to call for purchase from any stockholder of the REIT, and the
Operating Company Board of Directors shall have the power to call for purchase
from any stockholder of the Operating Company, such number of shares as is
sufficient in the opinion of the directors of the REIT or the directors of the
Operating Company to maintain or bring the direct or indirect ownership of
shares into conformity with the Code, and to refuse to register any proposed
transfer of shares which would result in the REIT's being unable to conform to
the requirements of the Code. Thus, the REIT and the Operating Company have the
power to repurchase shares from any stockholder of the REIT or the Operating
Company who actually or constructively owns 10% or more of the outstanding
shares of Paired Common Stock and to refuse to register any transfer of shares
which would result in a holder actually or constructively owning 10% or more of
the outstanding shares of Paired Common Stock.
The purchase price for the shares of Paired Common Stock purchased by the
Board of Directors of the REIT or the Operating Company, as the case may be, as
described above shall be equal to the fair market value of such shares as
reflected in the closing price for such shares on the principal stock exchange
on which such shares are listed, or if such shares are not listed, then the last
bid quotation for shares of Paired Common Stock, as of the close of business on
the date fixed by the Board of Directors of the REIT or the Operating Company,
as the case may be, for such purchase or, if no quotation for the shares is
available, as determined in good faith by the Board of Directors of the REIT or
the Operating Company, as the case may be. In order to further assure that
ownership of the shares of stock does not become so concentrated, any transfer
of shares that would prevent the REIT from continuing to be qualified as a real
estate investment trust by virtue of the application of Section 856(d)(2)(B) of
the Code shall be void ab initio and the intended transferee of such shares
shall be deemed never to have had an interest therein. If the foregoing
provision is determined to be void or invalid by virtue of any legal decision,
statute, rule or regulation, then the transferee of such shares shall be deemed
to have acted as agent on behalf of the REIT in acquiring such shares and to
hold such shares on behalf of the REIT. For purposes of determining whether the
REIT is in compliance with Section 856(d)(2)(B), Section 856(d)(5) of the Code,
or similar provisions of successor statutes, shall be applied. The stockholders
of the REIT shall upon demand disclose to the respective Board of Directors in
writing such information with respect to their direct and indirect ownership of
the stock of the REIT or the Operating Company, as the case may be, as such
Board of Directors deems necessary to determine whether the REIT satisfies the
provisions of Section 856(a)(5) and (6) and 856(d) of the Code and the
regulations thereunder as the same shall be from time to time amended, or to
comply with the requirements of any other taxing authority.
The Charters provide that no person or entity may Beneficially Own or
Constructively Own (as those terms are defined in the Charters) in excess of
9.8% of the outstanding shares of any class or series of the common stock or
Preferred Stock (collectively, the "Equity Stock") of the REIT or the Operating
Company (the "Ownership Limit"), unless the Ownership Limit is waived by the
Board of Directors of the relevant corporation in accordance with the Charters.
Any transfer of Equity Stock of the REIT or the Operating Company that would (i)
result in any person or entity owning, directly or indirectly, shares of Equity
Stock of the REIT or the Operating Company in excess of the Ownership Limit,
unless the Ownership Limit is waived by the Board of Directors of the relevant
corporation in accordance with the Charters, (ii) result in the capital stock of
the REIT being beneficially owned (within the meaning of Section 856(a)(5) of
the Code) by fewer than 100 persons within the meaning of Section 856(a)(5) of
the Code, (iii) result in the REIT being "closely held" within the meaning of
Section 856(h) of the Code or (iv) cause the REIT to own, actually or
constructively, 10% or more of the ownership interests in a tenant of the real
property of the REIT or a subsidiary of the REIT within the meaning of section
856(d)(2)(B) of the Code, shall be void ab initio, and the intended transferee
will acquire no right or interest in such shares of Equity Stock.
Upon the violation of any of the foregoing transfer restrictions contained
in the Charters, that number of shares which violate any of such transfer
restrictions shall automatically be converted into an equal number of shares of
Excess Stock of the REIT or the Operating Company, as the case may be, and
transferred to a trust (a "Trust"). Such shares of Excess Stock held in trust
shall remain outstanding shares of stock of the REIT and the Operating Company
and shall be held by the trustee of the Trust (the "Trustee") for the benefit of
a charitable beneficiary (a "Beneficiary"). In the case of Equity Stock that is
paired, upon the conversion of a share of Equity Stock into a
12
<PAGE>
share of Excess Stock, the corresponding paired share of that same class or
series of Equity Stock of the other company shall simultaneously be converted
into a share of Excess Stock; such shares of Excess Stock shall be paired and
shall be simultaneously transferred to a Trust. Upon the occurrence of such a
conversion of shares of any class or series of Equity Stock into an equal number
of shares of Excess Stock, such shares of Equity Stock shall be automatically
retired and canceled, without any action required by the Board of Directors of
either of the REIT or the Operating Company, and shall thereupon be restored to
the status of authorized but unissued shares of the particular class or series
of Equity Stock from which such Excess Stock was converted and may be reissued
as that particular class or series of Equity Stock. The Trustee and the
Beneficiary shall be designated pursuant to the terms of the Pairing Agreement.
Each share of Excess Stock shall entitle the holder to the number of votes the
holder would have if such share of Excess Stock was a share of Equity Stock of
the same class or series from which such Excess Stock was converted, on all
matters submitted to a vote at any meeting of stockholders. The Trustee, as
record holder of the Excess Stock, shall be entitled to vote all shares of
Excess Stock. Each share of Excess Stock shall be entitled to the same dividends
and distributions (as to timing and amount) as may be declared by the Board of
Directors of the REIT or the Operating Company, as the case may be, as shares of
the class or series of Equity Stock from which such Excess Stock was converted.
The Trustee of the Trust, as record holder of the shares of the Excess Stock,
shall be entitled to receive all dividends and distributions and shall hold such
dividends and distributions in trust for the benefit of the Beneficiary of the
Trust.
Pursuant to the Charters, the Trustee shall have the exclusive and absolute
right to designate a permitted transferee (a "Permitted Transferee") of any and
all shares of Excess Stock if the REIT or the Operating Company or both, in the
case of paired shares, fail to exercise its or their option with respect to such
shares as described below; provided, however, that (i) the Permitted Transferee
so designated purchases for consideration (whether in a public or private sale)
the shares of Excess Stock and (ii) the Permitted Transferee so designated may
acquire such shares of Excess Stock without violating any of the aforementioned
transfer restrictions and without such acquisition resulting in the exchange of
such shares of Equity Stock so acquired for shares of Excess Stock and the
transfer of such shares of Excess Stock to a Trust. Upon the designation by the
Trustee of a Permitted Transferee, the Trustee shall cause to be transferred to
the Permitted Transferee that number of shares of Excess Stock of the REIT or
the Operating Company, as the case may be, acquired by the Permitted Transferee.
Upon such transfer of the shares of Excess Stock to the Permitted Transferee,
such shares of Excess Stock shall be automatically converted into an equal
number of shares of Equity Stock of the same class and series from which such
Excess Stock was converted. In the case of Equity Stock that is paired, upon the
conversion of a share of Excess Stock into a share of Equity Stock of the same
class or series from which such Excess Stock was converted, the corresponding
paired share of Excess Stock of the other company shall simultaneously be
converted into a share of Equity Stock of the same class or series from which
such Excess Stock was converted and such shares of Equity Stock shall be paired.
Upon the occurrence of such a conversion of shares of Excess Stock into an equal
number of shares of Equity Stock, such shares of Excess Stock shall be
automatically retired and canceled, without any action required by the Board of
Directors of the REIT or the Operating Company, and shall thereupon be restored
to the status of authorized but unissued shares of Excess Stock and may be
reissued as such. The Trustee shall (i) cause to be recorded on the stock
transfer books of the REIT or the Operating Company or both, in the case of
paired shares, that the Permitted Transferee is the holder of record of such
number of shares of Equity Stock and (ii) distribute to the Beneficiary any and
all amounts held with respect to the shares of Excess Stock after making payment
to the record holders of the shares of Equity Stock that were converted into
Excess Stock (each, a "Prohibited Owner"). If the transfer of shares of Excess
Stock to a purported Permitted Transferee shall violate any of the
aforementioned transfer restrictions including, without limitation, the
Ownership Limit, such transfer shall be void ab initio as to that number of
shares of Excess Stock that cause the violation of any such restriction when
such shares are converted into shares of Equity Stock and the purported
Permitted Transferee shall be deemed to be a Prohibited Owner and shall acquire
no rights in such shares of Excess Stock. Such shares of Equity Stock shall be
automatically re-converted into Excess Stock and transferred to the Trust from
which they were originally sold.
A Prohibited Owner shall be entitled to receive from the Trustee following
the sale or other disposition of such shares of Excess Stock the lesser of (i)
(a) in the case of a purported transfer in which the Prohibited Owner gave value
for shares of Equity Stock and which transfer resulted in the conversion of such
shares into shares of Excess Stock, the price per share, if any, such Prohibited
Owner paid for the shares of Equity Stock and (b) in the case of a non-transfer
event or transfer in which the Prohibited Owner did not give value for such
shares (e.g., if the shares were received through a gift or devise) and which
non-transfer event or transfer, as the case may be, resulted in the conversion
of such shares into shares of Excess Stock, the price per share equal to the
Market Price (as determined
13
<PAGE>
in the manner set forth in the Charters) on the date of such non-transfer event
or transfer and (ii) the price per share received by the Trustee from the sale
or other disposition of such shares of Excess Stock. Any amounts received by the
Trustee in respect of such shares of Excess Stock and in excess of such amounts
to be paid the Prohibited Owner shall be distributed to the Beneficiary.
In addition, shares of Excess Stock shall be deemed to have been offered
for sale by a Trust to the REIT or the Operating Company or both, in the case of
paired shares, or a designee of such company or companies, at a price per share
equal to the lesser of (i) the price per share in the transaction that created
such shares of Excess Stock (or, in the case of devise, gift or non-transfer
event, the Market Price at the time of such devise, gift or non-transfer event)
or (ii) the Market Price on the date either company or both companies, in the
case of paired shares, accept such offer. Either company or both companies, in
the case of paired shares, shall have the right to accept such offer for a
period of 90 days following the later of (a) the date of the non-transfer event
or purported transfer which results in such shares of Excess Stock or (b) the
date on which either company or both companies, in the case of paired shares,
determine in good faith that a transfer or non-transfer event resulting in
shares of Excess Stock has previously occurred, if either company or both
companies, in the case of paired shares, do not receive a notice of such
transfer or non-transfer event. In the case of shares of Excess Stock that are
paired, neither the REIT nor the Operating Company shall accept such an offer
with respect to its shares of Excess Stock without the agreement of the other
company to accept such offer with respect to the corresponding paired shares of
its Excess Stock.
Any person or entity that acquires or attempts to acquire shares of Equity
Stock in violation of the aforementioned transfer restrictions, or any person or
entity that owned shares of Equity Stock that were transferred to a Trust, shall
immediately give written notice to the REIT or the Operating Company or both, in
the case of paired shares, of such event and shall provide such other
information as the appropriate company or both companies, as the case may be,
may request to determine the effect, if any, of such violation, on the REIT's
status as a real estate investment trust.
Each person or entity that is an owner, actually or constructively, of
shares of Equity Stock and each person or entity that (including the stockholder
of record) is holding shares of Equity Stock for such an owner shall provide to
the REIT or the Operating Company or both, in the case of paired shares, a
written statement or affidavit stating such information as the appropriate
company or both companies, as the case may be, may request to determine the
REIT's status as a real estate investment trust and to ensure compliance with
the Ownership Limit. In addition, every person or entity that owns of record,
actually or constructively, more than 5%, or such lower percentages as required
pursuant to regulations under the Code, of the outstanding shares of any class
or series of Equity Stock of the REIT or the Operating Company shall, within 30
days after January 1 of each year, provide to the REIT or the Operating Company
or both, in the case of paired shares, a written statement or affidavit stating
the name and address of such owner, the number of shares of Equity Stock owned,
actually or constructively, and a description of how such shares are held.
All certificates representing shares of Equity Stock shall bear a legend
referring to the aforementioned transfer restrictions. The transfer restrictions
will continue to apply until the Board of Directors of the REIT determines that
it is no longer in the best interests of the REIT to attempt to qualify, or to
continue to qualify, as a real estate investment trust.
The restrictions on transfer contained in the Charters could have the
effect of delaying, deferring or preventing the acquisition of control of the
REIT and the Operating Company, including certain acquisitions that stockholders
might deem to be in their best interest.
FEDERAL INCOME TAX CONSIDERATIONS
Each of the Corporation and Patriot believes it has operated, and Patriot
intends to operate the Corporation following the Merger, in such a manner as to
qualify as a REIT under the Code, but no assurance can be given that such
companies have and will at all times so qualify.
The provisions of the Code pertaining to REITs are highly technical and
complex. The following is a brief and general summary of the material federal
income tax considerations of an investment in the Corporation's and the
Operating Company's Securities to the extent those considerations relate to the
federal income taxation of the Corporation and the Operating Company. To the
extent such considerations relate to the tax treatment of particular Securities,
they will be addressed in the applicable Prospectus Supplement. Goodwin, Procter
& Hoar LLP has reviewed this summary and
14
<PAGE>
is of the opinion that, to the extent that it constitutes matters of law,
summaries of legal matters, or legal conclusions, this summary is accurate in
all material respects. For the particular provisions that govern the federal
income tax treatment of the Corporation and its stockholders, reference is made
to Sections 856 through 860 of the Code and the regulations thereunder. The
following summary is qualified in this entirety by such reference.
The statements in this discussion and the opinions of Goodwin, Procter and
Hoar LLP are based on current provisions of the Code, Treasury Regulations, the
legislative history of the Code, existing administrative rulings and practices
of the Internal Revenue Service (the "IRS"), and judicial decisions. No
assurance can be given that future legislative, judicial, or administrative
actions or decisions, which may be retroactive in effect, will not affect that
accuracy of any statements in this Prospectus with respect to the transaction
entered into or contemplated prior to the effective date of such changes.
EACH INVESTOR IS ADVISED TO CONSULT HIS OR HER OWN TAX ADVISOR REGARDING
THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF AN INVESTMENT IN THE COMPANIES'
SECURITIES.
REIT Qualification of the Corporation
General
If certain detailed conditions imposed by the provisions of the Code are
met, entities such as the Corporation and Patriot that invest primarily in real
estate and that otherwise would be treated for federal income tax purposes as
corporations generally are not taxed at the corporate level on their "real
estate investment trust taxable income" that is currently distributed to
stockholders. This treatment substantially eliminates the "double taxation" on
earnings (i.e., taxation at both the corporate and stockholder levels) that
ordinarily results from the use of corporations.
Prior to the consummation of the Merger, the Corporation and Patriot have
been operated in a manner intended to allow each of them to qualify as a REIT.
Patriot intends that the Corporation will operate following the Merger in a
manner so that the Corporation will continue to qualify as a REIT. If the
Corporation failed to qualify as a REIT in any taxable year, the Corporation
would be subject to federal income taxation as if it were a domestic
corporation, and the Corporation's stockholders would be taxed in the same
manner as stockholders of ordinary corporations. In this event, the Corporation
could be subject to potentially significant tax liabilities, and the amount of
cash available for distribution to stockholders would be reduced and possibly
eliminated. Moreover, the liabilities of the Corporation following the Merger
will include any unpaid taxes of Patriot, including taxes resulting if Patriot
failed to qualify as REIT for periods prior to the Merger, which also could
reduce or eliminate cash available for distribution to the Corporation's
stockholders following the Merger. Unless entitled to relief under certain Code
provisions, and subject to the discussion below regarding Section 269B(a)(3) of
the Code, the Corporation also would be disqualified from re-electing REIT
status for the four taxable years following the year during which qualification
was lost.
The Corporation's qualification and taxation as a REIT following the Merger
will depend upon the Corporation's continuing ability to meet, through actual
operating results, the income and asset requirements, distribution levels,
diversity of stock ownership and other requirements for qualification as a REIT
under the Code. Counsel will not review the Corporation's compliance with these
tests on a continuing basis. Moreover, qualification as a REIT involves the
application of highly technical and complex Code provisions for which there are
only limited judicial or administrative interpretations and the determination of
various factual matters and circumstances not entirely within the Corporation's
control. The complexity of these provisions is greater in the case of a REIT
that owns hotels and leases them to a corporation with which its stock is
paired. Accordingly, no assurance can be given that the Corporation will satisfy
such tests on a continuing basis. Moreover, the Corporation's ability to qualify
as a REIT following the Merger also generally will depend on the qualification
of the Corporation and of Patriot as REITs for periods prior to the Merger.
Goodwin, Procter & Hoar LLP, special tax counsel to the Corporation, has
rendered an opinion to the Corporation to the effect that commencing with the
taxable year ending December 31, 1983, the Corporation has been organized and
operated in conformity with the requirements for qualification and taxation as a
REIT under the Code, and the Corporation's proposed method of operation will
enable it to continue to meet the requirements for qualification and
15
<PAGE>
taxation as a REIT under the Code. Investors should be aware, however, that
opinions of counsel are not binding upon the IRS or any court. Goodwin, Procter
& Hoar LLP's opinion is based on various assumptions and is conditioned upon
certain representations made by the Corporation and Patriot as to factual
matters, including representations regarding the nature of the Corporation's
properties, and the future conduct of the Corporation's business. The opinion
also assumes that the Merger and related transactions contemplated by the Merger
Agreement occurred as contemplated by such documents. Qualification and taxation
as a REIT depends upon the Corporation's having met and continuing to meet,
through actual annual operating results, the distribution levels, stock
ownership, and other various qualification tests imposed under the Code.
Goodwin, Procter & Hoar LLP has not reviewed and will not review the
Corporation's compliance with those tests on a continuing basis. Accordingly, no
assurance can be given that the actual results of the Corporation's operations
for any particular taxable year have satisfied or will satisfy such
requirements.
Paired Shares
Section 269B(a)(3) of the Code provides that if the shares of a REIT and a
non-REIT are paired, then the REIT and the non-REIT shall be treated as one
entity for purposes of determining whether either company qualifies as a REIT.
If Section 269B(a)(3) applied to the Corporation and the Operating Company, then
the Corporation would not be eligible to be taxed as a REIT. Section 269B(a)(3)
does not apply, however, if the shares of the REIT and the non-REIT were paired
on June 30, 1983 and the REIT was taxable as a REIT on June 30, 1983. As a
result of this "grandfathering" rule, Section 269B(a)(3) has not applied to the
Corporation and the Operating Company. By its terms, this "grandfathering" rule
will continue to apply to the Corporation after the Merger. There are, however,
no judicial or administrative authorities interpreting this "grandfathering"
rule in the context of a merger or otherwise, and this interpretation, as well
as the opinion of Goodwin, Procter & Hoar LLP regarding the Corporation's
qualification as a REIT, is based solely on the literal language of the statute.
Moreover, no assurance can be given that new legislation will not change these
"grandfathering" provisions. In addition, if for any reason the Corporation
failed to qualify as a REIT in 1983, the benefit of the "grandfathering" rule
would not be available to the Corporation, in which case the Corporation would
not qualify as a REIT for any taxable year.
Potential Reallocation of Income
Due to the paired share structure, the Corporation, the Operating Company,
and their respective subsidiary entities will be controlled by the same
interests. As a result, the IRS could, pursuant to Section 482 of the Code, seek
to distribute, apportion or allocate gross income, deductions, credits or
allowances between or among them if it determines that such distribution,
apportionment or allocation is necessary in order to prevent evasion of taxes or
to clearly reflect income. The Corporation and the Operating Company believe
that all material transactions between them have been negotiated and structured
with the intention of achieving an arm's-length result. Patriot believes that
all material transactions between the Corporation and the Operating Company, and
among them and/or their subsidiary entities, will be negotiated and structured
with the intention of achieving an arm's-length result. If true, the potential
application of Section 482 of the Code should not have a material effect on the
Corporation or the Operating Company. There can be no assurance, however, that
the IRS will not challenge the terms of such transactions, or that such
challenge would not be successful.
Sale of Land by the Corporation
The agreements governing the Corporation's sales of a stable area (the
"Stable Area") and a 5/8 mile training track oval (the "Training Track Area") at
the Race course and the agreement governing the sale of substantially all of the
land which is currently owned by the Corporation to an affiliate of PaineWebber
Incorporated (the "Proposed PaineWebber Land Sale"), provide that the purchasers
will cooperate with the Corporation in structuring the transactions as tax-
deferred like-kind exchanges. There can be no assurances that the transactions
will qualify as tax-deferred like-kind exchanges or that suitable properties for
exchange will be located and the exchanges completed within the relatively short
time periods allowed by applicable IRS regulations. If the sales cannot be
qualified as tax-deferred like-kind exchanges, but the gain qualifies for
capital gains treatment, the Corporation can elect to distribute the gain to its
stockholders, who would be taxed at applicable capital gains rates. If the
proceeds are not distributed, the gain will be taxed to the Corporation at
applicable capital gains rates. To the extent that the gain does not qualify for
capital gains treatment, the gain will be combined with the Corporation's other
taxable income, 95% of which must be distributed each year in order to maintain
the Corporation's status as a REIT. There can be no assurance, however, that the
Corporation will make any such distribution. Legislative proposals to restrict
like-kind exchanges, if enacted with an effective date that included the
Proposed PaineWebber Land Sale, could adversely
16
<PAGE>
affect the Corporation's ability to complete a like-kind exchange, although it
is currently anticipated that the new rules would not apply to exchanges made
pursuant to binding agreements in place at the time of enactment and thus would
not apply to the Proposed PaineWebber Land Sale.
Notwithstanding the foregoing, in the event that any of the property
proposed to be sold by the Corporation in the Proposed PaineWebber Land Sale
constitutes "dealer property," then the sales thereof would not be eligible for
tax-deferred like-kind exchange treatment, the gain would be subject to a 100%
tax, and the amount of gain would constitute nonqualifying income that likely
would disqualify the Corporation as a REIT; provided that the 100% tax would not
apply and the amount of gain would not disqualify the Corporation as a REIT if
the sales were eligible for a certain statutory safe harbor (but the gain would
have to be distributed to maintain REIT qualification if the properties
nonetheless constituted dealer property). Although the Corporation believes that
the Stable Area and the Training Track Area do not constitute dealer property,
and Patriot believes that the Proposed PaineWebber Land Sale will not constitute
a sale of dealer property, whether or not such sales constitute sales of dealer
property are factual determinations not susceptible of legal opinion, and the
companies are not receiving opinions from counsel on such determinations.
Moreover, there can be no assurance that the proposed sales will qualify for the
statutory safe harbor referred to above. As a result, the opinion rendered by
Goodwin, Procter & Hoar LLP regarding the Corporation's qualification as a REIT
necessarily relies on representations from Patriot to the effect that none of
the proposed sales will constitute sales of dealer property.
Effects of Compliance with REIT Requirements
Operating income derived from hotels or a racetrack does not constitute
qualifying income under the REIT requirements. Accordingly, all of the
Corporation's hotels, other than hotels held by taxable entities in which the
Corporation does not hold voting control (currently the Crowne Plaza Ravinia
Hotel and the Marriott WindWatch Hotel), have been leased to lessees, and the
Corporation will continue to lease such hotels after the Merger. Similarly, the
Corporation has leased the Racecourse to the Operating Company, and the
Corporation will continue to lease the Racecourse for so long as the Corporation
owns the Racecourse (or will sublease it following the Proposed PaineWebber Land
Sale). Rent derived from such leases will be qualifying income under the REIT
requirements, provided several requirements are satisfied. Among other
requirements, a lease may not have the effect of giving the Corporation a share
of the net income of the lessee, and the amount of personal property leased
under the lease must not exceed a defined, low level. The Corporation also may
not provide services, other than customary services, to the lessee or their
subtenants. In addition, the leases must also qualify as "true" leases for
federal income tax purposes (as opposed to service contracts, joint ventures or
other types of arrangements). There are, however, no controlling Treasury
Regulations, published rulings, or judicial decisions that discuss whether
leases similar to these leases constitute "true" leases. Therefore, there can be
no complete assurance that the IRS will not successfully assert a contrary
position.
Payments under a lease will not constitute qualifying income for purposes
of the REIT requirements if the Corporation owns, directly or indirectly, 10% or
more of the ownership interests in the relevant lessee. Constructive ownership
rules apply, such that, for instance, the Corporation is deemed to own the
assets of stockholders who own 10% or more in value of the stock of the
Corporation. The Charters are therefore designed to prevent a stockholder of the
Corporation from owning REIT stock or Operating Company stock that would cause
the Corporation to own, actually or constructively, 10% or more of the ownership
interests in a lessee (including the Operating Company and Patriot American
Hospitality Operating Partnership, L.P. (the "Operating Partnership")). Thus,
the Corporation should never own, actually or constructively, 10% or more of a
lessee. However, because the relevant constructive ownership rules are broad and
it is not possible to monitor continually direct and indirect transfers of
Paired Shares, and because the charter provisions referred to above may not be
effective, no absolute assurance can be given that such transfers, or other
events of which the Corporation has no knowledge, will not cause the Corporation
to own constructively 10% or more of one or more lessees at some future date.
In addition to the considerations discussed above, the REIT requirements
will impose a number of other restrictions on the operations of the Corporation.
For example, net income from sales of property sold to customers in the ordinary
course of business (other than inventory acquired by reason of certain
foreclosures) is subject to a 100% tax unless eligible for a certain safe
harbor. If the gross income subject to the 100% tax, when added to gain from the
sale of (i) stock or securities held for less than one year and (ii) real
property held for less than four years (with certain exceptions) exceeds 30% of
the Corporation's gross income in any taxable year, the Corporation will fail to
qualify as a REIT. Minimum distribution requirements also generally require the
Corporation to distribute each year at least 95%
17
<PAGE>
of its taxable income for the year (excluding any net capital gain). In
addition, certain asset tests limit the Corporation's ability to acquire non-
real estate assets.
Tax Aspects of the Corporation's Investment in the Realty Partnership and the
Operating Company's Investment in the Operating Partnership
As a result of the Merger, the Corporation acquired Patriot's general
partner and limited partner interests in the Realty Partnership. In addition,
the Operating Company conducts substantially all of its operations following the
Merger through the Operating Partnership. The Corporation's interest in the
Realty Partnership and the Operating Company's investment in the Operating
Partnership involve special tax considerations, including those described below.
Classification as Publicly Traded Partnership
Notwithstanding that the Realty Partnership and the Operating
Partnership are partnerships rather than associations taxable as corporations,
the IRS could allege that the Realty Partnership or the Operating
Partnership is a "publicly traded partnership" under Section 7704 of the Code.
If such an assertion were successfully made, such partnership would be subject
to tax as a corporation under the Code unless certain conditions regarding the
nature of its income were satisfied. In the case of the Realty Partnership,
taxation as a corporation would disqualify the Corporation as a REIT.
A partnership is a publicly traded partnership if interests in such
partnership are either traded on an established securities market or are
"readily tradable on a secondary market (or the substantial equivalent
thereof)." A publicly traded partnership is not taxed as a corporation, however,
if at least 90% of its gross income for each taxable year consists of certain
passive income, including interest, dividends, real property rents, and gains
from the sale or other disposition of real property.
Interests in the Realty Partnership or its subsidiary partnerships have not
been traded on an established securities market and no interests in such
partnerships will be traded on an established securities market following the
Merger and related transactions. Moreover, Patriot believes that, for periods
ending on or before the Merger, the Realty Partnership and each subsidiary
partnership has qualified and will qualify for a certain safe harbor from
treatment as a publicly traded partnership based on the number of partners in
such partnerships as well as the 90% qualifying income exemption referred to
above. It is currently anticipated that following the Merger, these partnerships
will continue to rely on the safe harbor based on the number of their partners
and/or the qualifying income exception and that the Operating Partnership will
rely on the safe harbor based on the number of its partners. Alternatively,
following the Merger, the Realty Partnership Agreement and the Operating
Partnership may rely on restrictions on transfers and redemptions to be included
in their respective partnership agreements designed to prevent such partnerships
being taxed as corporations under Section 7704 of the Code. There can be no
assurance, however, that efforts to avoid taxation as a corporation under these
provisions will be successful.
Taxation of Operating Company
As a "C" corporation under the Code, the Operating Company will be
subject to United States federal income tax on its taxable income at corporate
rates.
Investors are urged to consult their own tax advisors with respect to the
appropriateness of an investment in the Securities offered hereby and with
respect to the tax consequences arising under federal law and the laws of any
state, municipality or other taxing jurisdiction, including tax consequences
resulting from such investor's own tax characteristics. In particular, foreign
investors should consult their own tax advisors concerning the tax consequences
of an investment in the Corporation and the Operating Partnership including the
possibility of United States income tax withholding on distributions.
18
<PAGE>
PLAN OF DISTRIBUTION
The REIT and the Operating Company may sell Securities through underwriters
or dealers, directly to one or more purchasers, through agents or through a
combination of any such methods of sale.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, or at negotiated prices.
In connection with the sale of Securities, underwriters or agents may
receive compensation from the REIT, the Operating Company or from purchasers of
Securities, for whom they may act as agents, in the form of discounts,
concessions or commissions. Underwriters may sell Securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agents. Underwriters, dealers, and agents
that participate in the distribution of Securities may be deemed to be
underwriters under the Securities Act, and any discounts or commissions they
receive from the REIT or the Operating Company and any profit on the resale of
Securities they realize may be deemed to be underwriting discounts and
commissions under the Securities Act. Any such underwriter or agent will be
identified, and any such compensation received from the REIT or the Operating
Company will be described, in the applicable Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, each
series of Securities will be a new issue with no established trading market,
other than the Paired Common Stock which is listed on the NYSE. Any shares of
Paired Common Stock sold pursuant to a Prospectus Supplement will be listed on
the NYSE, subject to official notice of issuance. The REIT or the Operating
Company may elect to list any series of Preferred Stock on an exchange, but is
not obligated to do so. It is possible that one or more underwriters may make a
market in a series of Securities, but will not be obligated to do so and may
discontinue any market making at any time without notice. Therefore, no
assurance can be given as to the liquidity of, or the trading market for, the
Securities.
Under agreements into which, the REIT or the Operating Company may enter,
underwriters, dealers and agents who participate in the distribution of
Securities may be entitled to indemnification by the REIT or the Operating
Company against certain liabilities, including liabilities under the Securities
Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be tenants of, the REIT or the Operating Company in the
ordinary course of business.
In order to comply with the securities laws of certain states, if
applicable, the Securities offered hereby will be sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in certain
states Securities may not be sold unless they have been registered or qualified
for sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Securities offered hereby may not
simultaneously engage in market making activities with respect to the Securities
for a period of two business days prior to the commencement of such
distribution.
LEGAL MATTERS
Certain legal matters, including the legality of the securities and federal
income tax considerations, will be passed upon for the REIT and the Operating
Company by Goodwin, Procter & Hoar LLP, Boston, Massachusetts.
EXPERTS
The Separate and Combined Financial Statements of Cal Jockey and Bay
Meadows and its subsidiary as of December 31, 1996 and 1995, and for each of the
three years in the period ended December 31, 1996, incorporated
19
<PAGE>
by reference in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report with respect thereto (which
expresses an unqualified opinion and includes an explanatory paragraph relating
to a proposed merger and certain disagreements between Cal Jockey and Bay
Meadows) and are incorporated by reference herein in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
The (a) Consolidated Financial Statements of Patriot as of December 31, 1996
and 1995 and for the year ended December 31, 1996 and the period October 2,
1995 (inception of operations) through December 31, 1995 and the related
financial statement schedules, (b) the Combined Financial Statements of the
Initial Hotels as of December 31, 1994 and for the year ended December 31,
1994 and the period January 1, 1995 through October 1, 1995, and (c) the
Financial Statements of NorthCoast Hotels, L.L.C. as of December 31, 1996 and
the period April 2, 1996 (inception of operations) through December 31, 1996
appearing in Patriot's 1996 Annual Report on Form 10-K (and with respect to the
Consolidated financial statements of Patriot referred to above also appearing in
the Current Report on Form 8-K of Patriot American Hospitality Inc. and Patriot
American Hospitality Operating Company dated July 1, 1997), have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
included therein and incorporated herein by reference. With respect to the
Combined Financial Statements of the Initial Hotels, such report is based in
part on the reports of Coopers & Lybrand L.L.P., independent accountants, as set
forth in their respective reports for Certain of the Initial Hotels and Troy
Hotel Investors. The (a) Financial Statements of Buckhead Hospitality Joint
Venture as of December 31, 1995 and for the year then ended, (b) the Combined
Financial Statements of Gateway Hotel Limited Partnership and Wenatchee Hotel
Limited Partnership as of December 31, 1995 and for the year then ended, and (c)
the individual Statements of Direct Revenue and Direct Operating Expenses for
the Plaza Park Suites Hotel and the Roosevelt Hotel for the year ended December
31, 1995, appearing in Patriot's Current Report on Form 8-K, dated April 2,
1996, as amended (filed April 17, 1996 and June 14, 1996), have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
included therein and incorporated herein by reference. The (a) Statement of
Direct Revenue and Direct Operating Expenses of the Mayfair Suites Hotel for the
year ended December 31, 1995, (b) Statement of Direct Revenue and Direct
Operating Expenses of Marriott Windwatch Hotel for the year ended December 29,
1995, and (c) the Financial Statements of Concorde O'Hare Limited Partnership as
of December 29, 1995 and for the year then ended appearing in Patriot's Current
Report on Form 8-K, dated December 5, 1996 (filed December 5, 1996), have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon included therein and incorporated herein by reference. The (a)
Consolidated Financial Statements of Resorts Limited Partnership as of and for
the years ended December 31, 1996 and 1995, (b) the Financial Statements of CV
Ranch Limited Partnership as of and for the years ended December 31, 1996 and
1995, and (c) the Financial Statements of Telluride Resort and Spa Limited
Partnership as of and for the years ended December 31, 1996 and 1995, appearing
in Patriot's Current Report on Form 8-K, dated January 16, 1997, as amended
(filed January 31, 1997, February 21, 1997, April 8, 1997, April 9, 1997, and
May 19, 1997) have been audited by Ernst & Young LLP, independent auditors, as
set forth in their reports thereon included therein and incorporated herein by
reference. Each of the above referenced financial statements are incorporated
herein by reference in reliance upon such reports given upon the authority of
such firm as experts in accounting and auditing.
The Financial Statements of Certain of the Initial Hotels as of December 31,
1994 and for the period from January 1, 1995 to October 1, 1995 and for the
year ended December 31, 1994, the Financial Statements of Troy Hotel Investors
as of October 1, 1995 and for the period January 1, 1995 to October 1, 1995
and Troy Park Associates as of December 29, 1994 and for the period January 1,
1994 through December 29, 1994, and the statement of Direct Revenue and Direct
Operating Expenses for the Holiday Inn-- Miami Airport for the year ended August
31, 1996, incorporated by reference in this Prospectus, have been audited by
Coopers & Lybrand, L.L.P., independent accountants, as set forth in their
reports thereon. Each of the above referenced financial statements have been
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing.
The Financial Statements of Historic Hotel Partners of Birmingham Limited
Partnership as of December 31, 1994 and 1995 and for the years then ended,
incorporated by reference in this Prospectus, have been audited by Pannell Kerr
Forster PC, independent auditors, as set forth in their report thereon. The
above referenced financial statements have been incorporated by reference herein
in reliance upon the authority of said firm as experts in accounting and
auditing.
The CHC Lease Partners financial statements as of December 31, 1996 and 1995
and for the year ended December 31, 1996 and the period inception (October 2,
1995) through December 31, 1995, incorporated by reference in this Prospectus,
by reference to the Current Report on Form 8-K dated July 1, 1997 have been so
incorporated in reliance on the report of Price Waterhouse LLP, independent
certified public accountants, given on the authority of said firm as experts in
auditing and accounting.
20
<PAGE>
No person has been authorized to give any information or to make any
representation in connection with this offering other than those contained in
this Prospectus and, if given or made, such other information or representations
must not be relied upon as having been authorized by the Companies or any other
person. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Companies since the date hereof or that the
information contained herein is correct as of any time subsequent to its date.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any securities other than the registered Securities to which it
relates.
-------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information.................................................. 2
Incorporation of Certain
Documents by Reference............................................... 2
The Companies.......................................................... 3
Use of Proceeds........................................................ 4
Ratios of Earnings to Fixed Charges.................................... 4
Description of Capital Stock........................................... 4
Description of Preferred Stock......................................... 5
Description of Paired Common Stock..................................... 10
Restrictions on Transfers of Capital Stock............................. 11
Federal Income Tax Considerations...................................... 14
Plan of Distribution................................................... 19
Legal Matters.......................................................... 19
Experts................................................................ 19
</TABLE>
$475,000,000
Patriot American Hospitality, Inc.
Common Stock
Preferred Stock
$25,000,000
Patriot American Hospitality
Operating Company
Common Stock
Preferred Stock
-------------------
PROSPECTUS
-------------------
_______, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.*
<TABLE>
<S> <C>
Registration fee.............................. $151,516
NASD fee...................................... 30,500
Printing fees and expenses.................... 200,000
Legal fees and expenses....................... 200,000
Accounting fees and expenses.................. 30,000
Blue sky fees and expenses.................... 25,000
Miscellaneous................................. 50,000
--------
Total......................................... $687,016
</TABLE>
* Fees and expenses are estimated with the exception of the registration fee.
Item 15. Indemnification of Directors and Officers.
Pursuant to Section 145 of the Delaware General Corporation Law (the
"DGCL"), the REIT Charter and the Operating Company Charter each include a
provision which eliminates any personal liability for a director to the REIT or
the Operating Company, as the case may be, and to the 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 REIT or the Operating
Company, as the case may be, or to the stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) in connection with certain unlawful dividend payments or stock
redemptions or repurchases or (iv) for any transaction from which such director
derived an improper personal benefit. In addition, the REIT Charter and the
Operating Company Charter each provide that if the DGCL is amended to authorize
the further elimination or limitation of the personal liability of directors,
then the liability of a director of the REIT or the Operating Company shall be
eliminated or limited to the fullest extent permitted by the DGCL, as so
amended.
Article VII of each the REIT Bylaws and the Operating Company Bylaws
provides for indemnification by the REIT or the Operating Company, as the case
may be, of their respective officers, directors and the officers and directors
of their respective subsidiaries to the fullest extent permitted by Section 145
of the DGCL, as amended from time to time and the REIT and the Operating Company
may, by action of their respective Board of Directors, indemnify all other
persons the REIT or the Operating Company may indemnify under the DGCL.
II-1
<PAGE>
Item 16. Exhibits.
Exhibit
Number Exhibit
- ------ -------
3.1 -- Amended and Restated Certificate of Incorporation of Patriot
American Hospitality, Inc.
3.2 -- Amended and Restated Bylaws of Patriot American Hospitality,
Inc.
3.3 -- Amended and Restated Certificate of Incorporation of Patriot
American Hospitality Operating Company.
3.4 -- Amended and Restated Bylaws of Patriot American Hospitality
Operating Company.
*5.1 -- Opinion of Goodwin, Procter & Hoar LLP.
*8.1 -- Opinion of Goodwin, Procter & Hoar LLP as to Tax Matters.
*12.1 -- Combined Statement of Ratio of Earnings to Fixed Charges.
*23.1 -- Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1
and Exhibit 8.1).
23.2 -- Consent of Deloitte & Touche LLP.
23.3 -- Consent of Ernst & Young LLP, Dallas, Texas.
23.4 -- Consent of Ernst & Young LLP, Seattle, Washington.
23.5 -- Consent of Ernst & Young LLP, Phoenix, Arizona.
23.6 -- Consent of Coopers & Lybrand L.L.P., Fort Lauderdale,
Florida.
23.7 -- Consent of Coopers & Lybrand, L.L.P., Pittsburgh, Pennsylvania.
23.8 -- Consent of Coopers & Lybrand, L.L.P., Dallas, Texas.
23.9 -- Consent of Pannell Kerr Forster PC.
23.10 -- Consent of Price Waterhouse LLP.
23.11 -- Consent of Coopers & Lybrand L.L.P., Newport Beach, California.
24.1 -- Powers of Attorney (included on Signature Pages to the
Registration Statement).
- -----------------------------
*Previously filed.
II-2
<PAGE>
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table
in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) herein do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference
in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication
of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
Registrants has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Dallas, State of Texas, July 14, 1997.
PATRIOT AMERICAN PATRIOT AMERICAN HOSPITALITY
HOSPITALITY, INC. OPERATING COMPANY
By: /s/ PAUL A. NUSSBAUM By: /s/ PAUL A. NUSSBAUM
--------------------------- -----------------------------
Paul A. Nussbaum, Paul A. Nussbaum,
Chairman of the Board Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicted, each of whom also constitutes and appoints
Paul A. Nussbaum and Rex E. Stewart and each of them singly, his true and lawful
attorney-in-fact and agent, for him, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement and to
file the same and all exhibits thereto, and any other documents in connection
therewith with the Securities and Exchange Commission, granting unto each
attorney-in-fact and agent full power and authority to do and perform each and
every at and thing requisite and necessary to be done, as fully to all intent
and purposes as he might or could do in person, hereby ratifying and confirming
all that each attorney-in-fact and agent or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ PAUL A. NUSSBAUM Chairman of the Board of Directors, July 14, 1997
- -------------------- Chief Executive Officer and President,
Paul A. Nussbaum Patriot American Hospitality, Inc.
(Principal Executive Officer)
/s/ REX E. STEWART Chief Financial Officer and Treasurer, July 14, 1997
- ------------------ Patriot American Hospitality, Inc.
Rex E. Stewart (Principal Financial Officer and
Principal Accounting Officer)
/s/ JOHN H. DANIELS Director, Patriot American July 14, 1997
- ------------------- Hospitality, Inc.
John H. Daniels
/s/ JOHN C. DETERDING Director, Patriot American July 14, 1997
- --------------------- Hospitality, Inc.
John C. Deterding
/s/ GREGORY R. DILLON Director, Patriot American July 14, 1997
- --------------------- Hospitality, Inc.
Gregory R. Dillon
/s/ THOMAS S. FOLEY Director, Patriot American July 14, 1997
- --------------------- Hospitality, Inc.
Thomas S. Foley
/s/ ARCH K. JACOBSON Director, Patriot American July 14, 1997
- -------------------- Hospitality, Inc.
Arch K. Jacobson
</TABLE>
II-4
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated, each of whom also constitutes and
appoints Paul A. Nussbaum and Rex E. Stewart and each of them singly, his true
and lawful attorney-in-fact and agent, for him, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement and to
file the same and all exhibits thereto, and any other documents in connection
therewith with the Securities and Exchange Commission, granting unto each
attorney-in-fact and agent full power and authority to do and perform each and
every at and thing requisite and necessary to be done, as fully to all intent
and purposes as he might or could do in person, hereby ratifying and confirming
all that each attorney-in-fact and agent or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ PAUL A. NUSSBAUM Chairman of the Board of July 14, 1997
- -------------------- Directors, Chief Executive
Paul A. Nussbaum Officer and President, Patriot
American Hospitality Operating
Company (Principal Executive
Officer)
/s/ REX E. STEWART Chief Financial Officer and July 14, 1997
- ------------------ Treasurer of Patriot American
Rex E. Stewart Hospitality Operating Company
(Principal Financial Officer
and Principal Accounting
Officer)
/s/ ARCH K. JACOBSON Director, Patriot American July 14, 1997
- -------------------- Hospitality Operating Company
Arch K. Jacobson
/s/ LEONARD BOXER Director, Patriot American July 14, 1997
- ----------------- Hospitality Operating Company
Leonard Boxer
/s/ RUSTY LYON, JR. Director, Patriot American July 14, 1997
- ------------------- Hospitality Operating Company
Rusty Lyon, Jr.
/s/ BURTON C. EINSPRUCH Director, Patriot American July 14, 1997
- ----------------------- Hospitality Operating Company
Burton C. Einspruch
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit
- ------ -------
3.1 Amended and Restated Certificate of Incorporation of Patriot
American Hospitality, Inc.
3.2 Amended and Restated Bylaws of Patriot American Hospitality,
Inc.
3.3 Amended and Restated Certificate of Incorporation of Patriot
American Hospitality Operating Company.
3.4 Amended and Restated Bylaws of Patriot American Hospitality
Operating Company.
*5.1 Opinion of Goodwin, Procter & Hoar LLP.
*8.1 Opinion of Goodwin, Procter & Hoar LLP as to Tax Matters.
*12.1 Combined Statement of Ratio of Earnings to Fixed Charges.
*23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1 and
Exhibit 8.1).
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Ernst & Young LLP, Dallas, Texas.
23.4 Consent of Ernst & Young LLP, Seattle, Washington.
23.5 Consent of Ernst & Young LLP, Phoenix, Arizona.
23.6 Consent of Coopers & Lybrand L.L.P., Fort Lauderdale, Florida.
23.7 Consent of Coopers & Lybrand, L.L.P., Pittsburgh, Pennsylvania.
23.8 Consent of Coopers & Lybrand, L.L.P., Dallas, Texas.
23.9 Consent of Pannell Kerr Forster PC.
23.10 Consent of Price Waterhouse LLP.
23.11 Consent of Coopers & Lybrand L.L.P., Newport Beach, California.
24.1 Powers of Attorney (included on Signature Pages to the Registration
Statement).
- ----------------------------
*Previously filed
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PATRIOT AMERICAN HOSPITALITY, INC.
California Jockey Club, a corporation organized and existing under the laws
of the State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is California Jockey Club. The date of the
filing of its original Certificate of Incorporation with the Secretary of
State of the State of Delaware was January 27, 1983 (the "Original Certificate
of Incorporation"). The name under which the Corporation filed the Original
Certificate of Incorporation was Bay Meadows Realty Enterprises, Inc. The name
of the Corporation was changed to California Jockey Club on March 31, 1983, by
way of amendment to the Original Certificate of Incorporation. Pursuant to
this Amended and Restated Certificate of Incorporation, the name of the
Corporation is hereby changed to Patriot American Hospitality, Inc.
2. This Amended and Restated Certificate of Incorporation (the
"Certificate") amends, restates and integrates the provisions of the Original
Certificate of Incorporation, was duly adopted by the Board of Directors of
the Corporation in accordance with the provisions of Sections 242 and 245 of
the Delaware General Corporation Law, as amended from time to time (the
"DGCL"), and was duly adopted by the stockholders of the Corporation in
accordance with the applicable provisions of Sections 242 and 245 of the DGCL.
3. The text of the Original Certificate of Incorporation, as amended to
date, is hereby amended and restated in its entirety to provide as herein set
forth in full.
I.
NAME
The name of the corporation is Patriot American Hospitality, Inc.
II.
PURPOSES
The nature of business or purposes to be conducted or promoted by the
Corporation is to engage in any lawful act for which corporations may be
organized under the DGCL.
III.
REGISTERED OFFICE
The address of the registered office of the Corporation in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
IV.
CAPITAL STOCK
The Corporation shall have the authority to issue 650,000,000 shares of
common stock, par value $.01 per share (the "Common Stock"), 750,000,000
shares of excess stock, par value $.01 per share (the "Excess Stock"), and
100,000,000 shares of preferred stock, par value $.01 per share (the
"Preferred Stock"). The rights, preferences, voting powers and the
qualifications, limitations and restrictions of the authorized stock shall be
as follows:
1
<PAGE>
A. Common Stock.
1. Voting Rights. Each share of Common Stock shall be entitled to one
vote on all matters submitted to a vote at any meeting of stockholders.
2. Dividend Rights. Subject to the rights of holders of Preferred Stock
and subject to any other provisions of this Certificate or any amendment
hereto, holders of Common Stock shall be entitled to receive such dividends
and other distributions in cash, stock or property of the Corporation as
may be declared thereon by the Board of Directors from time to time.
3. Action Without a Meeting. Any action required or permitted to be taken
by the stockholders of the Corporation at any annual or special meeting of
stockholders of the Corporation may be taken in lieu of such a meeting only
by an unanimous written consent of the stockholders signed by each
stockholder entitled to vote on the matter.
B. Preferred Stock.
1. The Preferred Stock may be issued from time to time in one or more
series, with such distinctive designations, rights and preferences as shall
be stated and expressed herein or in the resolution or resolutions
providing for the issue of shares of a particular series, and in such
resolution or resolutions providing for the issue of shares of such series,
the Board of Directors is expressly authorized to fix or establish the
basis for determining:
a. The annual or other periodic dividend rate for such series, the
dividend payment dates, the date from which dividends on all shares of
such series issued shall be cumulative, and the extent of participation
rights, if any;
b. The redemption price or prices, if any, for such series and other
terms and conditions on which such series may be retired and redeemed;
c. The obligation, if any, of the Corporation to purchase and retire
or redeem shares of such series as a sinking fund or otherwise, and the
terms and conditions of any such redemption;
d. The designation and maximum number of shares of such series
issuable;
e. The right to vote, if any, with holders of shares of any other
class or series, either generally or as a condition to specified
corporate action;
f. The amount payable upon shares in the event of involuntary
liquidation;
g. The amount payable upon shares in the event of voluntary
liquidation;
h. The rights, if any, of the holders of shares of such series to
convert such shares into other classes of stock of the Corporation, or
to exchange such shares for other securities or assets, and the terms
and conditions of any such conversion or exchange; and
i. Such other rights as may be specified by the Board of Directors
and not prohibited by law.
All shares of Preferred Stock of any one series shall be identical with
each other in all respects except, if so determined by the Board of
Directors, as to the dates from which dividends thereon shall be
cumulative; and all shares of Preferred Stock shall be of equal rank with
each other, regardless of series, and shall be identical with each other in
all respects except as provided herein or in the resolution or resolutions
providing for the issue of a particular series. In case dividends on all
shares of Preferred Stock for any regular dividend period are not paid in
full, all such shares shall participate ratably in any partial payment of
dividends for such period in proportion to the full amounts of dividends
for such period to which they are respectively entitled.
2
<PAGE>
C. Restrictions on Ownership and Transfer of Equity Stock.
1. Definitions. For purposes of this Article IV, the following terms
shall have the meanings set forth below:
"Beneficial Ownership" shall mean, with respect to any Person, ownership
of shares of Equity Stock equal to the sum of (i) the shares of Equity
Stock directly or indirectly owned by such Person, (ii) the number of
shares of Equity Stock treated as owned directly or indirectly by such
Person through the application of the constructive ownership rules of
Section 544 of the Internal Revenue Code of 1986, as amended (the "Code"),
as modified by Section 856(h)(l)(B) of the Code, and (iii) the number of
shares of Equity Stock which such person is deemed to beneficially own
pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The terms "Beneficial Owner," "Beneficially
Owns" and "Beneficially Owned" shall have correlative meanings.
"Beneficiary" shall mean, with respect to any Trust, one or more
organizations described in each of Section 170(b)(1)(A) (other than clauses
(vii) and (viii) thereof) and Section 170(c)(2) of the Code that are named
by the Corporation as the beneficiary or beneficiaries of such Trust, in
accordance with the provisions of Section (D)(4) of this Article IV.
"Constructive Ownership" shall mean ownership of shares of Equity Stock
by a Person who is or would be treated as a direct or indirect owner of
such shares of Equity Stock through the application of Section 318 of the
Code, as modified by Section 856(d)(5) of the Code. The terms "Constructive
Owner," "Constructively Owns" and "Constructively Owned" shall have
correlative meanings.
"Equity Stock" shall mean Common Stock and Preferred Stock of the
Corporation.
"Market Price" on any date shall mean the average of the Closing Price
for the five consecutive Trading Days ending on such date. The "Closing
Price" on any date shall mean the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the shares of
Equity Stock are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national
securities exchange on which the shares of Equity Stock are listed or
admitted to trading or, if the shares of Equity Stock are not listed or
admitted to trading on any national securities exchange, the last quoted
price, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the Nasdaq Stock
Market, Inc. or, if such system is no longer in use, the principal other
automated quotation system that may then be in use or, if the shares of
Equity Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
selected by the Board of Directors making a market in the shares of Equity
Stock. In the case of Equity Stock that is paired, "Market Price" shall
mean the "Market Price" for paired shares multiplied by a fraction
(expressed as a percentage) determined by dividing the value for such
Equity Stock most recently determined under Section 2(c) of the Pairing
Agreement by the value of a paired share most recently determined under
Section 2(c) of the Pairing Agreement (the "Valuation Percentage").
"Non-Transfer Event" shall mean an event other than a purported Transfer
that would cause any Person to Beneficially Own or Constructively Own
shares of Equity Stock in excess of the Ownership Limit, including, but not
limited to, (i) the granting of any option or entering into any agreement
for the sale, transfer or other disposition of shares of Equity Stock or
(ii) the sale, transfer, assignment or other disposition of interests in
any Person or of any securities or rights convertible into or exchangeable
for shares of Equity Stock that results in changes in Beneficial Ownership
or Constructive Ownership of shares of Equity Stock.
"Ownership Limit" shall mean, with respect to any class or series of
Equity Stock, 9.8% of the number of outstanding shares of such class or
series of Equity Stock. For purposes of computing the percentage of shares
of any class or series of Equity Stock of the Corporation that is
Beneficially Owned by any Person, any shares of Equity Stock of the
Corporation which are deemed to be Beneficially Owned by such Person
pursuant to Rule 13d-3 of the Exchange Act but which are not outstanding
shall be deemed to be outstanding.
3
<PAGE>
"Pairing Agreement" shall mean the Pairing Agreement, dated as of
February 17, 1983, by and between Bay Meadows Realty Enterprises, Inc. (the
predecessor of California Jockey Club) and Bay Meadows Operating Company,
as amended from time to time in accordance with the provisions thereof.
"Permitted Transferee" shall mean any Person designated as a Permitted
Transferee in accordance with the provisions of Section (D)(8) of this
Article IV.
"Person" shall mean (a) an individual or any corporation, partnership,
estate, trust, association, private foundation, joint stock company or any
other entity and (b) a "group" as that term is defined for purposes of Rule
13d-5 of the Exchange Act.
"Prohibited Owner" shall mean, with respect to any purported Transfer or
Non-Transfer Event, any Person who is prevented from being or becoming the
owner of record title to shares of Equity Stock by the provisions of
Section (D)(1) of this Article IV.
"Restriction Termination Date" shall mean the first day on which the
Board of Directors determines that it is no longer in the best interests of
the Corporation to attempt to, or continue to, qualify under the Code as a
real estate investment trust (a "REIT").
"Trading Day" shall mean a day on which the principal national securities
exchange on which shares of Equity Stock are listed or admitted to trading
is open for the transaction of business or, if shares of Equity Stock are
not listed or admitted to trading on any national securities exchange, any
day other than a Saturday, a Sunday or a day on which banking institutions
in the State of New York are authorized or obligated by law or executive
order to close.
"Transfer" (as a noun) shall mean any sale, transfer, gift, assignment,
devise or other disposition of shares of Equity Stock, whether voluntary or
involuntary, whether of record, constructively or beneficially and whether
by operation of law or otherwise. "Transfer" (as a verb) shall have the
correlative meaning.
"Trust" shall mean any separate trust created and administered in
accordance with the terms of Section (D) of this Article IV, for the
exclusive benefit of any Beneficiary.
"Trustee" shall mean any Person or entity unaffiliated with both the
Corporation and any Prohibited Owner designated by the Corporation to act
as trustee of any Trust, or any successor trustee thereof. The Trustee
shall be designated by the Corporation and Patriot American Hospitality
Operating Company (the "Operating Company") in accordance with the Pairing
Agreement.
2. Restriction on Ownership and Transfer.
a. Except as provided in Section (C)(4) of this Article IV, until the
Restriction Termination Date, (i) no Person shall Beneficially Own or
Constructively Own outstanding shares of Equity Stock in excess of the
Ownership Limit and (ii) any Transfer (whether or not the result of a
transaction entered into through the facilities of the New York Stock
Exchange) that, if effective, would result in any Person Beneficially
Owning or Constructively Owning shares of Equity Stock in excess of the
Ownership Limit shall be void ab initio as to the Transfer of that
number of shares of Equity Stock which would be otherwise Beneficially
Owned or Constructively Owned by such Person in excess of the Ownership
Limit and the intended transferee shall acquire no rights in such
shares of Equity Stock.
b. Until the Restriction Termination Date, any Transfer (whether or
not the result of a transaction entered into through the facilities of
the New York Stock Exchange) of shares of Equity Stock that, if
effective, would result in the Corporation being "closely held" within
the meaning of Section 856(h) of the Code shall be void ab initio as to
the Transfer of that number of shares of Equity Stock that would cause
the Corporation to be "closely held" within the meaning of Section
856(h) of the Code, and the intended transferee shall acquire no rights
in such shares of Equity Stock.
c. Until the Restriction Termination Date, any Transfer (whether or
not the result of a transaction entered into through the facilities of
the New York Stock Exchange) of shares of Equity Stock that, if
effective, would cause the Corporation to Constructively Own 10% or
more of the ownership interests in a tenant of the real property of the
Corporation or any direct or indirect subsidiary (whether a
corporation, partnership, limited liability company or other entity) of
the Corporation (a "Subsidiary"), within the meaning of Section
856(d)(2)(B) of the Code, shall be void ab initio as to the Transfer of
that number of shares of Equity Stock that would cause the Corporation
to Constructively Own 10%
4
<PAGE>
or more of the ownership interests in a tenant of the real property of
the Corporation or a Subsidiary within the meaning of Section
856(d)(2)(B) of the Code, and the intended transferee shall acquire no
rights in such shares of Equity Stock.
d. Until the Restriction Termination Date, any Transfer (whether or
not the result of a transaction entered into through the facilities of
the New York Stock Exchange) that, if effective, would result in the
shares of capital stock of the Corporation being beneficially owned
(within the meaning of Section 856(a)(5) of the Code) by fewer than 100
persons within the meaning of Section 856(a)(5) of the Code shall be
void ab initio and the intended transferee shall acquire no rights in
such shares of Equity Stock.
3. Owners Required to Provide Information. Until the Restriction
Termination Date:
a. Every Beneficial Owner or Constructive Owner of more than 5%, or
such lower percentages as required pursuant to regulations under the
Code, of the outstanding shares of any class or series of Equity Stock
of the Corporation shall, within 30 days after January 1 of each year,
provide to the Corporation a written statement or affidavit stating the
name and address of such Beneficial Owner or Constructive Owner, the
number of shares of Equity Stock Beneficially Owned or Constructively
Owned, and a description of how such shares are held. Each such
Beneficial Owner or Constructive Owner shall provide to the Corporation
such additional information as the Corporation may request to ensure
compliance with the restrictions in this Section C of this Article IV.
b. Each Person who is a Beneficial Owner or Constructive Owner of
shares of Equity Stock and each Person (including the stockholder of
record) who is holding shares of Equity Stock for a Beneficial Owner or
Constructive Owner shall provide to the Corporation a written statement
or affidavit stating such information as the Corporation may request in
order to determine the Corporation's status as a REIT and to ensure
compliance with the Ownership Limit.
4. Exception. The Board of Directors, upon receipt of a ruling from the
Internal Revenue Service or an opinion of counsel in each case to the
effect that the restrictions contained in Sections (C)(2)(b) through (d) of
this Article IV would not be violated, may exempt a Person from the
Ownership Limit, provided that (A) the Board of Directors obtains such
representations and undertakings from such Person as are reasonably
necessary to ascertain that no Person's Beneficial Ownership or
Constructive Ownership of shares of Equity Stock will (i) result in the
capital stock of the Corporation being beneficially owned (within the
meaning of Section 856(a)(5) of the Code) by fewer than 100 persons within
the meaning of Section 856(a)(5) of the Code, (ii) result in the
Corporation being "closely held" within the meaning of Section 856(h) of
the Code or (iii) cause the Corporation to Constructively Own 10% or more
of the ownership interests in the real property of a tenant of the
Corporation or a Subsidiary within the meaning of Section 856(d)(2)(B) of
the Code and (B) such Person agrees in writing that any violation or
attempted violation of the Ownership Limit will result in the conversion of
such shares into shares of Excess Stock pursuant to Section (D)(1) of this
Article IV.
5. New York Stock Exchange Transactions. Notwithstanding any provision
contained herein to the contrary, nothing in this Certificate shall
preclude the settlement of any transaction entered into through the
facilities of the New York Stock Exchange.
D. Excess Stock.
1. Conversion into Excess Stock.
a. If, notwithstanding the other provisions contained in this Article
IV, prior to the Restriction Termination Date, there is a purported
Transfer or Non-Transfer Event such that any Person would either
Beneficially Own or Constructively Own shares of Equity Stock in excess
of the Ownership Limit, then, (i) except as otherwise provided in
Section (C)(4) of this Article IV, the purported transferee shall be
deemed to be a Prohibited Owner and shall acquire no right or interest
(or, in the case of a Non-Transfer Event, the Person holding record
title to the shares of Equity Stock Beneficially
5
<PAGE>
Owned or Constructively Owned by such Beneficial Owner or Constructive
Owner, shall cease to own any right or interest) in such number of
shares of Equity Stock which would cause such Beneficial Owner or
Constructive Owner to Beneficially Own or Constructively Own shares of
Equity Stock in excess of the Ownership Limit, (ii) such number of
shares of Equity Stock in excess of the Ownership Limit (rounded up to
the nearest whole share) shall be automatically converted into an equal
number of shares of Excess Stock and transferred to a Trust in
accordance with Section (D)(4) of this Article IV and (iii) the
Prohibited Owner shall submit such number of shares of Equity Stock to
the Corporation for registration in the name of the Trustee of the
Trust. Such conversion into Excess Stock and transfer to a Trust shall
be effective as of the close of trading on the Trading Day prior to the
date of the Transfer or Non-Transfer Event, as the case may be.
b. If, notwithstanding the other provisions contained in this Article
IV, prior to the Restriction Termination Date, there is a purported
Transfer or Non-Transfer Event that, if effective, would (i) result in
the capital stock of the Corporation being beneficially owned (within
the meaning of Section 856(a)(5) of the Code) by fewer than 100 persons
within the meaning of Section 856(a)(5) of the Code, (ii) result in the
Corporation being "closely held" within the meaning of Section 856(h)
of the Code or (iii) cause the Corporation to Constructively Own 10% or
more of the ownership interest in a tenant of the Corporation's or a
Subsidiary's real property within the meaning of Section 856(d)(2)(B)
of the Code, then (x) the purported transferee shall be deemed to be a
Prohibited Owner and shall acquire no right or interest (or, in the
case of a Non-Transfer Event, the Person holding record title of the
shares of Equity Stock with respect to which such Non-Transfer Event
occurred, shall cease to own any right or interest) in such number of
shares of Equity Stock, the ownership of which by such purported
transferee or record holder would (A) result in the shares of capital
stock of the Corporation being beneficially owned (within the meaning
of Section 856(a)(5) of the Code) by fewer than 100 persons within the
meaning of Section 856(a)(5) of the Code, (B) result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code
or (C) cause the Corporation to Constructively Own 10% or more of the
ownership interests in a tenant of the Corporation's or a Subsidiary's
real property within the meaning of Section 856(d)(2)(B) of the Code,
(y) such number of shares of Equity Stock (rounded up to the nearest
whole share) shall be automatically converted into an equal number of
shares of Excess Stock and transferred to a Trust in accordance with
Section (D)(4) of this Article IV and (z) the Prohibited Owner shall
submit such number of shares of Equity Stock to the Corporation for
registration in the name of the Trustee of the Trust. Such conversion
into Excess Stock and transfer to a Trust shall be effective as of the
close of trading on the Trading Day prior to the date of the Transfer
or Non-Transfer Event, as the case may be.
c. Upon the occurrence of such a conversion of shares of any class or
series of Equity Stock into an equal number of shares of Excess Stock,
such shares of Equity Stock shall be automatically retired and
canceled, without any action required by the Board of Directors of the
Corporation, and shall thereupon be restored to the status of
authorized but unissued shares of the particular class or series of
Equity Stock from which such Excess Stock was converted and may be
reissued by the Corporation as that particular class or series of
Equity Stock.
2. Remedies for Breach. If the Corporation, or its designees, shall at
any time determine in good faith that a Transfer has taken place in
violation of Section (C)(2) of this Article IV or that a Person intends to
acquire or has attempted to acquire Beneficial Ownership or Constructive
Ownership of any shares of Equity Stock in violation of Section (C)(2) of
this Article IV, the Corporation shall take such action as it deems
advisable to refuse to give effect to or to prevent such Transfer or
acquisition, including, but not limited to, refusing to give effect to such
Transfer on the stock transfer books of the Corporation or instituting
proceedings to enjoin such Transfer or acquisition.
3. Notice of Restricted Transfer. Any Person who acquires or attempts to
acquire shares of Equity Stock in violation of Section (C)(2) of this
Article IV, or any Person who owns shares of Equity Stock that were
converted into shares of Excess Stock and transferred to a Trust pursuant
to Sections (D)(1) and (D)(4) of this Article IV, shall immediately give
written notice to the Corporation of such event and shall provide
6
<PAGE>
to the Corporation such other information as the Corporation may request in
order to determine the effect, if any, of such Transfer or Non-Transfer
Event, as the case may be, on the Corporation's status as a REIT.
4. Ownership in Trust. Upon any Transfer or Non-Transfer Event that
results in Excess Stock pursuant to Section (D)(1) of this Article IV, such
Excess Stock shall be automatically transferred to a Trust to be held for
the exclusive benefit of the Beneficiary. The Corporation and the Operating
Company shall name a Beneficiary for each Trust pursuant to the terms of
the Pairing Agreement. Any conversion of shares of Equity Stock into shares
of Excess Stock and transfer to a Trust shall be effective as of the close
of trading on the Trading Day prior to the date of the Transfer or Non-
Transfer Event that results in the conversion. Shares of Excess Stock so
held in trust shall remain issued and outstanding shares of stock of the
Corporation.
5. Dividend Rights. Each share of Excess Stock shall be entitled to the
same dividends and distributions (as to both timing and amount) as may be
declared by the Board of Directors as shares of the class or series of
Equity Stock from which such Excess Stock was converted. The Trustee, as
record holder of the shares of Excess Stock, shall be entitled to receive
all dividends and distributions and shall hold all such dividends or
distributions in trust for the benefit of the Beneficiary. The Prohibited
Owner with respect to such shares of Excess Stock shall repay to the Trust
the amount of any dividends or distributions received by it (i) that are
attributable to any shares of Equity Stock that have been converted into
shares of Excess Stock and (ii) the record date of which was on or after
the date that such shares were converted into shares of Excess Stock. The
Corporation shall take all measures that it determines reasonably necessary
to recover the amount of any such dividend or distribution paid to a
Prohibited Owner, including, if necessary, withholding any portion of
future dividends or distributions payable on shares of Equity Stock
Beneficially Owned or Constructively Owned by the Person who, but for the
provisions of this Article IV, would Constructively Own or Beneficially Own
the shares of Equity Stock that were converted into shares of Excess Stock;
and, as soon as reasonably practicable following the Corporation's receipt
or withholding thereof, shall pay over to the Trust for the benefit of the
Beneficiary the dividends so received or withheld, as the case may be.
6. Rights upon Liquidation. In the event of any voluntary or involuntary
liquidation of, or winding up of, or any distribution of the assets of, the
Corporation, each holder of shares of Excess Stock shall be entitled to
receive, ratably with each other holder of shares of Equity Stock of the
same class or series from which the Equity Stock was converted, that
portion of the assets of the Corporation that is available for distribution
to the holders of such class or series of Equity Stock. The Trust shall
distribute to the Prohibited Owner the amounts received upon such
liquidation, dissolution, or winding up, or distribution; provided,
however, that the Prohibited Owner shall not be entitled to receive amounts
in excess of, in the case of a purported Transfer in which the Prohibited
Owner gave value for shares of Equity Stock and which Transfer resulted in
the conversion of the shares into shares of Excess Stock, the price per
share, if any, such Prohibited Owner paid for the shares of Equity Stock
(which, in the case of Equity Stock that is paired, shall equal the price
per paired share multiplied by the most recent Valuation Percentage) and,
in the case of a Non-Transfer Event or Transfer in which the Prohibited
Owner did not give value for such shares (e.g., if the shares were received
through a gift or devise) and which Non-Transfer Event or Transfer, as the
case may be, resulted in the conversion of the shares into shares of Excess
Stock, the price per share equal to the Market Price on the date of such
Non-Transfer Event or Transfer. Any remaining amount in such Trust shall be
distributed to the Beneficiary.
7. Voting Rights. Each share of Excess Stock shall entitle the holder to
the number of votes the holder would have, if such share of Excess Stock
was a share of Equity Stock of the same class or series from which such
Excess Stock was converted, on all matters submitted to a vote at any
meeting of stockholders. The holders of shares of Excess Stock converted
from the same class or series of Equity Stock shall vote together with the
holders of such Equity Stock as a single class on all such matters. The
Trustee, as record holder of the Excess Stock, shall be entitled to vote
all shares of Excess Stock. Any vote by a Prohibited Owner as a purported
holder of shares of Equity Stock prior to the discovery by the Corporation
that the shares of Equity Stock have been converted into shares of Excess
Stock shall, subject to applicable law, be rescinded and shall be void ab
initio with respect to such shares of Excess Stock, and the Prohibited
Owner
7
<PAGE>
shall be deemed to have given, as of the close of trading on the Trading
Day prior to the date of the purported Transfer or Non-Transfer Event that
results in the conversion of the shares of Equity Stock into shares of
Excess Stock and the transfer of such shares to a Trust pursuant to
Sections (D)(1) and (D)(4) of this Article IV, an irrevocable proxy to the
Trustee to vote the shares of Excess Stock in the manner in which the
Trustee, in its sole and absolute discretion, desires.
8. Designation of Permitted Transferee.
a. The Trustee shall have the exclusive and absolute right to
designate a Permitted Transferee of any and all shares of Excess Stock
if the Company fails to exercise its option with respect to such shares
pursuant to Section (D)(10) hereof within the time period set forth
therein. As soon as practicable, but in an orderly fashion so as not to
materially adversely affect the Market Price of the shares of Excess
Stock, the Trustee shall designate any Person as a Permitted
Transferee; provided, however, that (i) the Permitted Transferee so
designated purchases for valuable consideration (whether in a public or
private sale) the shares of Excess Stock (which, in the case of paired
Excess Stock, shall be determined based on the Valuation Percentage)
and (ii) the Permitted Transferee so designated may acquire such shares
of Excess Stock without violating any of the restrictions set forth in
Section (C)(2) of this Article IV and without such acquisition
resulting in the conversion of the shares of Equity Stock so acquired
into shares of Excess Stock and the transfer of such shares to a Trust
pursuant to Sections (D)(1) and (D)(4) of this Article IV.
b. Upon the designation by the Trustee of a Permitted Transferee in
accordance with the provisions of this Section (D)(8), the Trustee
shall cause to be transferred to the Permitted Transferee that number
of shares of Excess Stock acquired by the Permitted Transferee. Upon
such transfer of the shares of Excess Stock to the Permitted
Transferee, such shares of Excess Stock shall be automatically
converted into an equal number of shares of Equity Stock of the same
class and series from which such Excess Stock was converted. Upon the
occurrence of such a conversion of shares of Excess Stock into an equal
number of shares of Equity Stock, such shares of Excess Stock shall be
automatically retired and canceled, without any action required by the
Board of Directors of the Corporation, and shall thereupon be restored
to the status of authorized but unissued shares of Excess Stock and may
be reissued by the Corporation as Excess Stock.
c. The Trustee shall (i) cause to be recorded on the stock transfer
books of the Corporation that the Permitted Transferee is the holder of
record of such number of shares of Equity Stock, and (ii) distribute to
the Beneficiary any and all amounts held with respect to the shares of
Excess Stock after making payment to the Prohibited Owner pursuant to
Section (D)(9) of this Article IV.
d. If the Transfer of shares of Excess Stock to a purported Permitted
Transferee shall violate any of the transfer restrictions set forth in
Section (C)(2) of this Article IV, such Transfer shall be void ab
initio as to that number of shares of Excess Stock that cause the
violation of any such restriction when such shares are converted into
shares of Equity Stock (as described in clause (b) above) and the
purported Permitted Transferee shall be deemed to be a Prohibited Owner
and shall acquire no rights in such shares of Excess Stock or Equity
Stock. Such shares of Equity Stock shall be automatically re-converted
into Excess Stock and transferred to the Trust from which they were
originally Transferred. Such conversion and transfer to the Trust shall
be effective as of the close of trading on the Trading Day prior to the
date of the Transfer to the purported Permitted Transferee and the
provisions of this Article IV shall apply to such shares, including,
without limitation, the provisions of Sections D(8) through (D)(10)
with respect to any future Transfer of such shares by the Trust.
9. Compensation to Record Holder of Shares of Equity Stock that are
Converted into Shares of Excess Stock. Any Prohibited Owner shall be
entitled (following discovery of the shares of Excess Stock and subsequent
designation of the Permitted Transferee in accordance with Section (D)(8)
of this Article IV or following the acceptance of the offer to purchase
such shares in accordance with Section (D)(10) of this Article IV) to
receive from the Trustee following the sale or other disposition of such
shares of Excess Stock the lesser of (i) (a) in the case of a purported
Transfer in which the Prohibited Owner gave value for shares of Equity
Stock and which Transfer resulted in the conversion of such shares into
shares of Excess Stock,
8
<PAGE>
the price per share, if any, such Prohibited Owner paid for the shares of
Equity Stock (which, in the case of paired Excess Stock, shall be
determined based on the Valuation Percentage) and (b) in the case of a Non-
Transfer Event or Transfer in which the Prohibited Owner did not give value
for such shares (e.g., if the shares were received through a gift or
devise) and which Non-Transfer Event or Transfer, as the case may be,
resulted in the conversion of such shares into shares of Excess Stock, the
price per share equal to the Market Price on the date of such Non-Transfer
Event or Transfer or (ii) the price per share (which, in the case of paired
Excess Stock, shall be determined based on the Valuation Percentage)
received by the Trustee from the sale or other disposition of such shares
of Excess Stock in accordance with this Section (D)(9) or Section (D)(10)
of this Article IV. Any amounts received by the Trustee in respect of such
shares of Excess Stock and in excess of such amounts to be paid the
Prohibited Owner pursuant to this Section (D)(9) shall be distributed to
the Beneficiary in accordance with the provisions of Section (D)(8) of this
Article IV. Each Beneficiary and Prohibited Owner shall waive any and all
claims that it may have against the Trustee and the Trust arising out of
the disposition of shares of Excess Stock, except for claims arising out of
the gross negligence or willful misconduct of, or any failure to make
payments in accordance with this Section (D) of this Article IV by, such
Trustee or the Corporation.
10. Purchase Right in Excess Stock. Shares of Excess Stock shall be
deemed to have been offered for sale to the Corporation or its designee, at
a price per share equal to the lesser of (i) the price per share (which, in
the case of paired Excess Stock, shall be determined based on the Valuation
Percentage) in the transaction that created such shares of Excess Stock
(or, in the case of devise, gift or Non-Transfer Event, the Market Price at
the time of such devise, gift or Non-Transfer Event) or (ii) the Market
Price on the date the Corporation, or its designee, accepts such offer. The
Corporation shall have the right to accept such offer for a period of 90
days following the later of (a) the date of the Non-Transfer Event or
purported Transfer which results in such shares of Excess Stock or (b) the
date on which the Corporation determines in good faith that a Transfer or
Non-Transfer Event resulting in shares of Excess Stock has previously
occurred, if the Corporation does not receive a notice of such Transfer or
Non-Transfer Event pursuant to Section (D)(3) of this Article IV.
E. Preemptive Rights. No holder of shares of any class or series of capital
stock shall as such holder have any preemptive or preferential right to
purchase or subscribe to (i) any shares of any class or series of capital
stock of the Corporation, whether now or hereafter authorized, (ii) any
warrants, rights or options to purchase any such capital stock or (iii) any
obligations convertible into any such capital stock or into warrants, rights
or options to purchase any such capital stock.
F. Remedies Not Limited. Nothing contained in this Article IV shall limit
the authority of the Corporation to take such other action as it deems
necessary or advisable to protect the Corporation and the interests of its
stockholders by preservation of the Corporation's status as a REIT and to
ensure compliance with the requirements of the Pairing Agreement and with the
restrictions set forth in Section C of this Article IV.
G. Ambiguity. In the case of an ambiguity in the application of any of the
provisions of this Article IV, including any definition contained in Section
(C)(1) of this Article IV, the Board of Directors shall have the power to
determine the application of the provisions of this Article IV with respect to
any situation based on the facts known to it.
H. Legend. Each certificate for shares of Equity Stock shall bear the
following legend:
"The shares of Patriot American Hospitality, Inc. and Patriot American
Hospitality Operating Company represented by this combined certificate are
subject to restrictions in the respective Amended and Restated Certificate
of Incorporation of each company which prohibit (a) any Person from
Beneficially Owning or Constructively Owning (as these terms are defined in
the respective Amended and Restated Certificate of Incorporation of each
company) in excess of 9.8% of the number of outstanding shares of any class
or series of Equity Stock (as that term is defined in the respective
Amended and Restated Certificate of Incorporation of each company), (b) any
Person (as that term is defined in the respective Amended and Restated
Certificate of Incorporation of each company), from acquiring or
maintaining any ownership interest in the stock of either company that is
inconsistent with (i) the requirements of the Internal Revenue Code of
1986, as amended, pertaining to real estate investment trusts or (ii)
Article IV of the respective Amended and Restated Certificate of
Incorporation of each company and (c) any transfer of shares of any
9
<PAGE>
class or series of Equity Stock of either company that are paired pursuant
to the Pairing Agreement, dated as of February 17, 1983, by and between the
two companies, as amended from time to time in accordance with the
provisions thereof (the "Pairing Agreement"), except in combination with an
equal number of shares of the other company in accordance with the
respective Amended and Restated Bylaws of each company and the Pairing
Agreement, copies of which are on file with the transfer agent, and the
holder of this certificate by his acceptance hereof consents to be bound by
such restrictions.
Patriot American Hospitality, Inc. and Patriot American Hospitality
Operating Company will furnish without charge to each stockholder who so
requests a copy of the relevant provisions of the respective Amended and
Restated Certificate of Incorporation and the respective Amended and
Restated Bylaws of each company, a copy of the Pairing Agreement and a copy
of the provisions setting forth the designations, preferences, privileges
and rights of each class of stock or series thereof that each company is
authorized to issue and the qualifications, limitations and restrictions of
such preferences and/or rights. Any such request may be addressed to the
Secretary of either company or to the transfer agent named on the face
hereof."
I. Severability. Each provision of this Article IV shall be severable and an
adverse determination as to any such provision shall be in no way affect the
validity of any other provision.
V.
DIRECTORS
A. General Powers. The property, affairs and business of the Corporation
shall be managed under the direction of the Board of Directors and, except as
otherwise expressly provided by law, the Bylaws or this Certificate, all of
the powers of the Corporation shall be vested in such Board.
B. Number of Directors. The number of directors shall be fixed by resolution
duly adopted from time to time by the Board of Directors. A director need not
be a stockholder of the Corporation.
C. Terms of Directors. The directors shall be classified, with respect to
the term for which they severally hold office, into three classes, as nearly
equal in number as possible. The initial Class I Directors of the Corporation
shall be Paul A. Nussbaum, Arch K. Jacobson and Leonard Boxer; the initial
Class II Directors of the Corporation shall be Thomas S. Foley and Gregory R.
Dillon; and the initial Class III Directors of the Corporation shall be John
H. Daniels and John C. Deterding. The initial Class I Directors shall serve
for a term expiring at the annual meeting of stockholders to be held in 1997;
the initial Class II Directors shall serve for a term expiring at the annual
meeting of stockholders to be held in 1998; and the initial Class III
Directors shall serve for a term expiring at the annual meeting of
stockholders to be held in 1999. At each annual meeting of stockholders, the
successor or successors of the class of directors whose term expires at that
meeting shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at such meeting and entitled to vote on the
election of directors, and shall hold office for a term expiring at the annual
meeting of stockholders held in the third year following the year of their
election. The directors elected to each class shall hold office until their
successors are duly elected and qualified or until their earlier resignation
or removal.
Notwithstanding the foregoing, whenever, pursuant to the provisions of
Article IV of this Certificate, the holders of any one or more series of
Preferred Stock shall have the right, voting separately as a series or
together with holders of other such 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 and any certificates of designation applicable
thereto, and such directors so elected shall not be divided into classes
pursuant to this Section C of this Article V.
During any period when the holders of any series of Preferred Stock have the
right to elect additional directors as provided for or fixed pursuant to the
provisions of Article IV of this Certificate, then upon commencement and for
the duration of the period during which such right continues: (a) the then
otherwise total authorized number of directors of the Corporation shall
automatically be increased by such specified number of directors, and the
holders of such Preferred Stock shall be entitled to elect the additional
directors so provided for or fixed pursuant to said provisions and (b) each
such additional director shall serve until such director's
10
<PAGE>
successor shall have been duly elected and qualified, or until such director's
right to hold such office terminates pursuant to said provisions, whichever
occurs earlier, subject to such director's earlier death, disqualification,
resignation or removal. Except as otherwise provided by the Board in the
resolution or resolutions establishing such series, whenever the holders of
any series of Preferred Stock having such right to elect additional directors
are divested of such right pursuant to the provisions of such stock, the terms
of office of all such additional directors elected by the holders of such
stock, or elected to fill any vacancies resulting from the death, resignation,
disqualification or removal of such additional directors, shall forthwith
terminate and the total and authorized number of directors of the Corporation
shall be reduced accordingly.
D. Removal of Directors. Subject to the rights, if any, of any series of
Preferred Stock to elect directors and to remove any director whom the holders
of any such stock have the right to elect, any director (including persons
elected by directors to fill vacancies in the Board of Directors) may be
removed from office (a) only with cause and (b) only by the affirmative vote
of the holders of at least 75% of the shares then entitled to vote at an
election of directors. At least 30 days prior to any meeting of stockholders
at which it is proposed that any director be removed from office, written
notice of such proposed removal shall be sent to the director whose removal
will be considered at the meeting. For purposes of this Certificate, "cause,"
with respect to the removal of any director shall mean only (i) conviction of
a felony, (ii) declaration of unsound mind by order of a court, (iii) gross
dereliction of duty, (iv) commission of any act involving moral turpitude or
(v) commission of an act that constitutes intentional misconduct or a knowing
violation of law if such action in either event results both in an improper
substantial personal benefit to such director and a material injury to the
Corporation.
E. Vacancies. Subject to the rights, if any, of the holders of any series of
Preferred Stock to elect directors and to fill vacancies in the Board of
Directors relating thereto, any and all vacancies in the Board of Directors,
however occurring, including, without limitation, by reason of an increase in
size of the Board of Directors, or the death, resignation, disqualification or
removal of a director, shall be filled solely by the affirmative vote of a
majority of the remaining directors then in office, even if less than a quorum
of the Board of Directors. Any director appointed in accordance with the
preceding sentence shall hold office for the remainder of the full term of the
class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been duly elected and
qualified or until such director's earlier resignation or removal. Subject to
the rights, if any, of the holders of any series of Preferred Stock, when the
number of directors is increased or decreased, the Board of Directors shall
determine the class or classes to which the increased or decreased number of
directors shall be apportioned; provided, however, that no decrease in the
number of directors shall shorten the term of any incumbent director. In the
event of a vacancy in the Board of Directors, the remaining directors, except
as otherwise provided by law, may exercise the powers of the full Board of
Directors until such vacancy is filled.
VI.
LIMITATION OF LIABILITY
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (a) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (b) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under Section 174 of the DGCL or (d) for any
transaction from which the director derived an improper personal benefit. If
the DGCL is amended after the effective date of this Certificate to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the DGCL, as so
amended.
Any repeal or modification of this Article VI by either (i) the stockholders
of the Corporation or (ii) an amendment to the DGCL shall not adversely affect
any right or protection existing at the time of such repeal or modification
with respect to any acts or omissions occurring before such repeal or
modification of a person serving as a director at the time of such repeal or
modification.
11
<PAGE>
VII.
MAINTENANCE OF REIT STATUS
For so long as the Board of Directors deems the maintenance of REIT status
to be in the best interests of the Corporation, it shall be the duty of the
Board of Directors to ensure that the Corporation satisfies the requirements
for qualification as a REIT under the Code, including, but not limited to, the
ownership of its outstanding stock, the nature of its assets, the sources of
its income, and the amount and timing of its distributions to its
stockholders.
VIII.
RELATED PERSON TRANSACTION
The affirmative vote of the holders of not less than 66 2/3% of the
outstanding shares of capital stock of this corporation, which shall include
the affirmative vote of at least 50% of the outstanding shares of capital
stock held by shareholders other than a "Related Person" (as hereinafter
defined), shall be required for the approval or authorization of any "Business
Combination" (as hereinafter defined) of this corporation with any Related
Person; provided, however, that such 66 2/3% voting requirement shall not be
applicable if the Business Combination was approved by the Board of Directors
of the corporation prior to the acquisition by such Related Person of the
beneficial ownership of 5% or more of the outstanding shares of the capital
stock of the corporation.
For purposes of this Article VIII:
1. The term "Business Combination" shall mean (a) any merger, reorganization
or consolidation of this corporation with or into a Related Person, (b) any
sale, lease, exchange, transfer or other disposition, including, without
limitation, a mortgage or any other security device, of all or any substantial
part of the assets of this corporation (including, without limitation, any
voting securities of a subsidiary) or of a subsidiary, to a Related Person,
(c) any merger or consolidation of a Related Person with or into this
corporation or a subsidiary of this corporation and (d) any sale, lease,
exchange, transfer or other disposition of all or any substantial part of the
assets of a Related Person to this corporation or a subsidiary of this
corporation.
2. The term "Related Person" shall mean and include any individual,
corporation, partnership or other person or entity which, together with its
"affiliates" and "associates" (defined below), beneficially (as defined in
Rule 13d-3 of the Securities Exchange Act of 1934), owns in the aggregate five
percent (5%) or more of the outstanding shares of the capital stock of this
corporation, and any "affiliate" or "associate" (as those terms are defined in
Rule 12b-2 of the Exchange Act) of any such individual, corporation,
partnership or other person or entity; provided, however, that the term
"Related Person" shall not include either Patriot American Hospitality
Operating Company or any subsidiary of this corporation.
3. The term "substantial part of the assets" shall mean assets having a fair
market value or book value, whichever is greater, equal to 25% or more of such
value of the total assets as reflected on the most recent quarterly balance
sheet of the corporation as of a date no earlier than forty-five (45) days
prior to any acquisition of such assets.
4. Without limitation, any share of capital stock of this corporation which
any Related Person has the right to acquire pursuant to any agreement or upon
exercise of conversion rights, warrants or options, or otherwise shall be
deemed beneficially owned by such Related Person.
The provisions set forth in this Article VIII may not be repealed or amended
in any respect, unless such action is approved by the affirmative vote of the
holders of not less than 66 2/3% of the outstanding shares of capital stock of
this corporation; provided, however, that if there is a Related Person (as
defined herein), such 66 2/3% vote must include the affirmative vote of at
least 50% of the outstanding shares of capital stock held by shareholders
other than the Related Person.
12
<PAGE>
IX.
AMENDMENT OF CERTIFICATE OF INCORPORATION
Subject to Article VIII of this Certificate, the Corporation reserves the
right to amend or repeal this Certificate in the manner now or hereafter
prescribed by statute and this Certificate, and all rights conferred upon
stockholders herein are granted subject to this reservation.
13
<PAGE>
EXHIBIT 3.2
AMENDED AND RESTATED
BYLAWS
OF
PATRIOT AMERICAN HOSPITALITY, INC.
ARTICLE I.
DEFINITIONS
For purposes of these Bylaws, the following words shall have the meanings
set forth below:
(a) "Affiliate" of a Person shall mean (i) any Person that, directly or
indirectly, controls or is controlled by or is under common control with such
other Person, (ii) any Person that owns, beneficially, directly or indirectly,
5% or more of the outstanding capital stock, shares or equity interests of
such other Person or (iii) any officer, director, employee, partner or trustee
of such other Person or any Person controlling, controlled by or under common
control with such Person (excluding directors and Persons serving in similar
capacities who are not otherwise Affiliates of such Person). For the purposes
of this definition, the term "Person" shall mean, and includes, any natural
person, corporation, partnership, association, trust, limited liability
company or any other legal entity. For the purposes of this definition,
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities, partnership interests or other equity interests.
(b) "Certificate" shall mean the Amended and Restated Certificate of
Incorporation of the Corporation, as amended from time to time.
(c) "Corporation" shall mean Patriot American Hospitality, Inc.
(d) "DGCL" shall mean the Delaware General Corporation Law, as amended from
time to time.
(e) "Equity Stock" shall mean the common stock, par value $.01 per share,
and the preferred stock, par value $.01 per share of the Corporation and the
Operating Company.
(f) "Independent Director" shall mean a director of the Corporation who is
not (i) an officer or employee of the Corporation, (ii) a director or officer
of Operating Company or (iii) an Affiliate of (a) any lessee of any property
of the Corporation, (b) a subsidiary of the Corporation or (c) any partnership
that is an affiliate of the Corporation.
(g) "Operating Company" shall mean Patriot American Hospitality Operating
Company.
(h) "Public Announcement" shall mean: (i) disclosure in a press release
reported by the Dow Jones News Service, Associated Press or comparable
national news service, (ii) a report or other document filed publicly with the
Securities and Exchange Commission (including, without limitation, a Form 8-K)
or (iii) a letter or report sent to stockholders of record of the Corporation
at the time of the mailing of such letter or report.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
2.1 Places of Meetings. All meetings of the stockholders shall be held at
such place, either within or without the State of Delaware, as from time to
time may be fixed by the Board of Directors.
1
<PAGE>
2.2 Annual Meetings. The annual meeting of the stockholders, for the
election of directors and transaction of such other business as may come
properly before the meeting, shall be held at such date and time as shall be
determined by the Board of Directors.
2.3 Special Meetings. A special meeting of the stockholders for any purpose
or purposes may be called at any time only by the Chairman of the Board or by
a majority of the Board of Directors. At a special meeting no business shall
be transacted and no corporate action shall be taken other than that stated in
the notice of the meeting.
2.4 Notice of Meetings; Adjournments. A written notice of each annual
meeting stating the hour, date and place of such annual meeting shall be given
by the Secretary or an Assistant Secretary of the Corporation (or other person
authorized by these Bylaws or by law) not less than 10 days nor more than 60
days before the annual meeting, to each stockholder entitled to vote thereat
and to each stockholder who, by law or under the Certificate or under these
Bylaws, is entitled to such notice, by delivering such notice to him or her or
by mailing it, postage prepaid, addressed to such stockholder at the address
of such stockholder as it appears on the stock transfer books of the
Corporation. Such notice shall be deemed to be delivered when hand delivered
to such address or deposited in the mail so addressed, with postage prepaid.
Notice of all special meetings of stockholders shall be given in the same
manner as provided for annual meetings, except that the written notice of all
special meetings shall state the purpose or purposes for which the meeting has
been called.
Notice of an annual meeting or special meeting of stockholders need not be
given to a stockholder if a written waiver of notice is signed before or after
such meeting by such stockholder or if such stockholder attends such meeting,
unless such attendance was for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the
meeting was not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any annual meeting or special meeting of
stockholders need be specified in any written waiver of notice.
The Board of Directors may postpone and reschedule any previously scheduled
annual meeting or special meeting of stockholders and any record date with
respect thereto, regardless of whether any notice or public disclosure with
respect to any such meeting has been sent or made pursuant to this Section 2.4
or otherwise. In no event shall the Public Announcement of an adjournment,
postponement or rescheduling of any previously scheduled meeting of
stockholders commence a new time period for the giving of a stockholder's
notice under Section 2.9 of these Bylaws.
When any meeting is convened, the presiding officer of the meeting may
adjourn the meeting if (a) no quorum is present for the transaction of
business, (b) the Board of Directors determines that adjournment is necessary
or appropriate to enable the stockholders to consider fully information that
the Board of Directors determines has not been made sufficiently or timely
available to stockholders or (c) the Board of Directors determines that
adjournment is otherwise in the best interests of the Corporation. When any
annual meeting or special meeting of stockholders is adjourned to another
hour, date or place, notice need not be given of the adjourned meeting, other
than an announcement at the meeting at which the adjournment is taken, of the
hour, date and place to which the meeting is adjourned; provided, however,
that if the adjournment is for more than 30 days, or if after the adjournment
a new record date is fixed for the adjourned meeting, notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote thereat
and each stockholder who, by law or under the Certificate or under these
Bylaws, is entitled to such notice.
2.5 Quorum. Except as otherwise required by the Certificate, any number of
stockholders together holding at least a majority of the outstanding shares of
capital stock entitled to vote with respect to the business to be transacted,
who shall be present in person or represented by proxy at any meeting duly
called, shall constitute a quorum for the transaction of business. If less
than a quorum shall be in attendance at the time for which a meeting shall
have been called, the meeting may be adjourned from time to time by a majority
of the stockholders present or represented by proxy.
2
<PAGE>
2.6 Voting and Proxies. Stockholders shall have one vote for each share of
stock entitled to vote owned by them of record according to the stock transfer
books of the Corporation, unless otherwise provided by law or by the
Certificate. Stockholders may vote either in person or by written proxy, but
no proxy shall be voted or acted upon after three years from its date, unless
the proxy provides for a longer period. Proxies shall be filed with the
secretary of the meeting before being voted. Except as otherwise limited
therein or as otherwise provided by law, proxies shall entitle the persons
authorized thereby to vote at any adjournment of such meeting, but they shall
not be valid after final adjournment of such meeting. A proxy with respect to
stock held in the name of two or more persons shall be valid if executed by or
on behalf of any one of them unless at or prior to the exercise of the proxy
the Corporation receives a specific written notice to the contrary from any
one of them. A proxy purporting to be executed by or on behalf of a
stockholder shall be deemed valid, and the burden of proving invalidity shall
rest on the challenger.
2.7 Action at Meeting. When a quorum is present, any matter before any
meeting of stockholders shall be decided by the affirmative vote of the
majority of shares present in person or represented by proxy at such meeting
and entitled to vote on such matter, except where a larger vote is required by
law, by the Certificate or by these Bylaws. Any election by stockholders shall
be determined by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors, except where a larger vote is required by law, by the Certificate
or by these Bylaws. The Corporation shall not directly or indirectly vote any
shares of its own stock; provided, however, that the Corporation may vote
shares which it holds in a fiduciary capacity to the extent permitted by law.
2.8 Stockholder List. The officer or agent having charge of the stock
transfer books of the Corporation shall make, at least 10 days before every
annual meeting or special meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting or any adjournment thereof, 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 least 10 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 hour, date and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present.
2.9 Stockholder Proposals. In addition to any other applicable requirements,
for business to be properly brought before an annual meeting by a stockholder
of record (both as of the time notice of such proposal is given by the
stockholder as set forth below and as of the record date for the annual
meeting in question) of any shares of capital stock entitled to vote at such
annual meeting, such stockholder shall: (i) give timely written notice as
required by this Section 2.9 to the Secretary of the Corporation and (ii) be
present at such meeting, either in person or by a representative. For the
first annual meeting following the end of the fiscal year ended December 31,
1996, a stockholder's notice shall be timely if delivered to, or mailed to and
received by, the Corporation at its principal executive office not later than
the close of business on the 15th day following the day on which the Public
Announcement of the date of such annual meeting is first made by the
Corporation. For all subsequent annual meetings, a stockholder's notice shall
be timely if delivered to, or mailed to and received by, the Corporation at
its principal executive office not later than 90 days prior to the anniversary
date of the immediately preceding annual meeting (the "Anniversary Date");
provided, however, that in the event the annual meeting is scheduled to be
held on a date more than 30 days before the Anniversary Date or more than 60
days after the Anniversary Date, a stockholder's notice shall be timely if
delivered to, or mailed to and received by, the Corporation at its principal
executive office not later than the close of business on the later of (1) the
90th day prior to the scheduled date of such annual meeting or (2) the 15th
day following the day on which Public Announcement of the date of such annual
meeting is first made by the Corporation.
A stockholder's notice to the Secretary of the Corporation shall set forth
as to each matter proposed to be brought before an annual meeting: (i) a brief
description of the business the stockholder desires to bring before such
annual meeting and the reasons for conducting such business at such annual
meeting, (ii) the name and address, as they appear on the stock transfer books
of the Corporation, of the stockholder proposing such
3
<PAGE>
business, (iii) the class and number of shares of the capital stock of the
Corporation beneficially owned by the stockholder proposing such business,
(iv) the names and addresses of the beneficial owners, if any, of any capital
stock of the Corporation registered in such stockholder's name on such books,
and the class and number of shares of the capital stock of the Corporation
beneficially owned by such beneficial owners, (v) the names and addresses of
other stockholders known by the stockholder proposing such business to support
such proposal, and the class and number of shares of the capital stock of the
Corporation beneficially owned by such other stockholders and (vi) any
material interest of the stockholder proposing to bring such business before
such meeting (or any other stockholders known to be supporting such proposal)
in such proposal.
If the Board of Directors or a designated committee thereof determines that
any stockholder proposal was not made in a timely fashion in accordance with
the provisions of this Section 2.9 or that the information provided in a
stockholder's notice does not satisfy the information requirements of this
Section 2.9 in any material respect, such proposal shall not be presented for
action at the annual meeting in question. If neither the Board of Directors
nor such committee makes a determination as to the validity of any stockholder
proposal in the manner set forth above, the presiding officer of the annual
meeting shall determine whether the stockholder proposal was made in
accordance with the terms of this Section 2.9. If the presiding officer
determines that any stockholder proposal was not made in a timely fashion in
accordance with the provisions of this Section 2.9 or that the information
provided in a stockholder's notice does not satisfy the information
requirements of this Section 2.9 in any material respect, such proposal shall
not be presented for action at the annual meeting in question. If the Board of
Directors, a designated committee thereof or the presiding officer determines
that a stockholder proposal was made in accordance with the requirements of
this Section 2.9, the presiding officer shall so declare at the annual meeting
and ballots shall be provided for use at the meeting with respect to such
proposal.
Notwithstanding the foregoing provisions of this Section 2.9, a stockholder
shall also comply with all applicable requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
thereunder with respect to the matters set forth in this Section 2.9, and
nothing in this Section 2.9 shall be deemed to affect any rights of
stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
2.10 Inspectors of Elections. The Corporation shall, in advance of any
meeting of stockholders, appoint one or more inspectors to act at the meeting
and make a written report thereof. The Corporation may designate one or more
persons as alternate inspectors to replace any inspector who fails to act. If
no inspector or alternate is able to act at a meeting of stockholders, the
presiding officer shall appoint one or more inspectors to act at the meeting.
Any inspector may, but need not, be an officer, employee or agent of the
Corporation. Each inspector, before entering upon the discharge of his or her
duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability. The inspectors shall perform such duties as are required by the DGCL,
including the counting of all votes and ballots. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance
of the duties of the inspectors. The presiding officer may review all
determinations made by the inspectors, and in so doing the presiding officer
shall be entitled to exercise his or her sole judgment and discretion and he
or she shall not be bound by any determinations made by the inspectors. All
determinations by the inspectors and, if applicable, the presiding officer,
shall be subject to further review by any court of competent jurisdiction.
2.11 Presiding Officer. The Chairman of the Board, if one is elected, or if
not elected or in his or her absence, the President, shall preside at all
annual meetings or special meetings of stockholders and shall have the power,
among other things, to adjourn such meeting at any time and from time to time,
subject to Sections 2.4 and 2.5 of this Article II. The order of business and
all other matters of procedure at any meeting of the stockholders shall be
determined by the presiding officer.
4
<PAGE>
ARTICLE III.
DIRECTORS
3.1 General Powers. The property, affairs and business of the Corporation
shall be managed under the direction of the Board of Directors and, except as
otherwise expressly provided by law, the Certificate or these Bylaws, all of
the powers of the Corporation shall be vested in such Board.
3.2 Number of Directors. The number of directors shall be fixed by
resolution duly adopted from time to time by the Board of Directors.
3.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected and removed in the manner provided for in
Article V of the Certificate.
(b) Vacancies in the Board of Directors shall be filled in the manner
provided for in Article V of the Certificate.
(c) At any meeting of the Board of Directors, a majority of the number of
directors then in office shall constitute a quorum for the transaction of
business. However, if less than a quorum is present at a meeting, a
majority of the directors present may adjourn the meeting from time to
time, and the meeting may be held as adjourned without further notice,
except that when any meeting of the Board of Directors, either regular of
special, is adjourned for 30 days or more, notice of the adjourned meeting
shall be given as in the case of the original meeting.
3.4 Meetings of Directors. Meetings of the Board of Directors shall be held
at places within or without the State of Delaware and at times fixed by
resolution of the Board of Directors, or upon call of the Chairman of the
Board, and the Secretary of the Corporation or officer performing the
Secretary's duties shall give not less than 24 hours' notice by letter,
facsimile, telegraph or telephone (or in person) of all meetings of the Board
of Directors, provided that notice need not be given of the annual meeting or
of regular meetings held at times and places fixed by resolution of the Board
of Directors. Meetings may be held at any time without notice if all of the
directors are present, or if those not present waive notice in writing either
before or after the meeting; provided, however, that attendance at a meeting
for the express purpose of objecting at the beginning of a meeting to the
transaction of any business because the meeting is not lawfully convened shall
not be considered a waiver of notice.
3.5 Nominations. Nominations of candidates for election as directors of the
Corporation at any annual meeting may be made only (a) by, or at the direction
of, a majority of the Board of Directors or (b) by any holder of record (both
as of the time notice of such nomination is given by the stockholder as set
forth below and as of the record date for the annual meeting in question) of
any shares of the capital stock of the Corporation entitled to vote at such
annual meeting who complies with the timing, informational and other
requirements set forth in this Section 3.5. Any stockholder who has complied
with the timing, informational and other requirements set forth in this
Section 3.5 and who seeks to make such a nomination must be, or his, her or
its representative must be, present in person at the annual meeting. Only
persons nominated in accordance with the procedures set forth in this Section
3.5 shall be eligible for election as directors at an annual meeting.
Nominations, other than those made by, or at the direction of, the Board of
Directors shall be made pursuant to timely notice in writing to the Secretary
of the Corporation as set forth in this Section 3.5. For the first annual
meeting following the end of the fiscal year ended December 31, 1996, a
stockholder's notice shall be timely if delivered to, or mailed to and
received by, the Corporation at its principal executive office not later than
the close of business on the 15th day following the day on which the Public
Announcement of the date of such annual meeting is first made by the
Corporation. For all subsequent annual meetings, a stockholder's notice shall
be timely if delivered to, or mailed to and received by, the Corporation at
its principal executive office not less than 90 days prior to the Anniversary
Date; provided, however, that in the event the annual meeting is scheduled to
be held on a date more than 30 days before the Anniversary Date or more than
60 days after the Anniversary
5
<PAGE>
Date, a stockholder's notice shall be timely if delivered to, or mailed and
received by, the Corporation at its principal executive office not later than
the close of business on the later of (x) the 90th day prior to the scheduled
date of such annual meeting or (y) the 15th day following the day on which
Public Announcement of the date of such annual meeting is first made by the
Corporation.
A stockholder's notice to the Secretary of the Corporation shall set forth
as to each person whom the stockholder proposes to nominate for election or
re-election as a director: (1) the name, age, business address and residence
address of such person; (2) the principal occupation or employment of such
person; (3) the class and number of shares of the capital stock of the
Corporation which are beneficially owned by such person on the date of such
stockholder notice; and (4) the consent of each nominee to serve as a director
if elected. A stockholder's notice to the Secretary of the Corporation shall
further set forth as to the stockholder giving such notice: (a) the name and
address, as they appear on the stock transfer books of the Corporation, of
such stockholder and of the beneficial owners (if any) of the capital stock of
the Corporation registered in such stockholder's name and the name and address
of other stockholders known by such stockholder to be supporting such
nominee(s); (b) the class and number of shares of the capital stock of the
Corporation which are held of record, beneficially owned or represented by
proxy by such stockholder and by any other stockholders known by such
stockholder to be supporting such nominee(s) on the record date for the annual
meeting in question (if such date shall then have been made publicly
available) and on the date of such stockholder's notice; and (c) a description
of all arrangements or understandings between such stockholder and each
nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by such
stockholder.
If the Board of Directors or a designated committee thereof determines that
any stockholder nomination was not made in accordance with the terms of this
Section 3.5 or that the information provided in a stockholder's notice does
not satisfy the informational requirements of this Section 3.5 in any material
respect, then such nomination shall not be considered at the annual meeting in
question. If neither the Board of Directors nor such committee makes a
determination as to whether a nomination was made in accordance with the
provisions of this Section 3.5, the presiding officer of the annual meeting
shall determine whether a nomination was made in accordance with such
provisions. If the presiding officer determines that any stockholder
nomination was not made in accordance with the terms of this Section 3.5 or
that the information provided in a stockholder's notice does not satisfy the
informational requirements of this Section 3.5 in any material respect, then
such nomination shall not be considered at the annual meeting in question. If
the Board of Directors, a designated committee thereof or the presiding
officer determines that a nomination was made in accordance with the terms of
this Section 3.5, the presiding officer shall so declare at the annual meeting
and ballots shall be provided for use at the meeting with respect to such
nominee.
Notwithstanding anything to the contrary in the second paragraph of this
Section 3.5, in the event that the number of directors to be elected to the
Board of Directors is increased and there is no Public Announcement by the
Corporation naming all of the nominees for director or specifying the size of
the increased Board of Directors at least 90 days prior to the Anniversary
Date, a stockholder's notice required by this Section 3.5 shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if such notice shall be delivered to, or mailed to
and received by, the Corporation at its principal executive office not later
than the close of business on the 15th day following the day on which such
Public Announcement is first made by the Corporation.
No person shall be elected by the stockholders as a director of the
Corporation unless nominated in accordance with the procedures set forth in
this Section 3.5. Election of directors at an annual meeting need not be by
written ballot, unless otherwise provided by the Board of Directors or
presiding officer at such annual meeting. If written ballots are to be used,
ballots bearing the names of all the persons who have been nominated for
election as directors at the annual meeting in accordance with the procedures
set forth in this Section 3.5 shall be provided for use at the annual meeting.
6
<PAGE>
3.6 Voting.
(a) Except as provided in subsection (c) of this Section 3.6, the action
of the majority of the directors present at a meeting at which a quorum is
present shall be the action of the Board of Directors, unless a larger vote
is required for such action by the Certificate, these Bylaws or by law.
(b) Any action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting if all members of the
Board of Directors consent thereto in writing. Such written consent shall
be filed with the records of the meetings of the Board of Directors and
shall be treated for all purposes as a vote at a meeting of the Board of
Directors.
(c) Notwithstanding anything in these Bylaws to the contrary, (i) any
action pertaining to a sale or other disposition of any of the following
hotels: (1) Radisson New Orleans; (2) Bourbon Orleans; (3) North Dallas
Holiday Inn; and (4) San Angelo Holiday Inn and (ii) any other action
pertaining to any transaction involving the Corporation, including the
purchase, sale, lease, or mortgage of any real estate asset, entering into
joint venture investments or any other transaction, in which an advisor,
director or officer of the Corporation, or any Affiliate of any of the
foregoing persons, has any direct or indirect interest other than solely as
a result of their status as a director, officer, or stockholder of the
Corporation, must be approved by a majority of the directors, including a
majority of the Independent Directors, even if the Independent Directors
constitute less than a quorum.
3.7 Manner of Participation. Directors may participate in meetings of the
Board of Directors by means of conference telephone or similar communications
equipment by means of which all directors participating in the meeting can
hear each other, and participation in a meeting in accordance herewith shall
constitute presence in person at such meeting for purposes of these Bylaws.
3.8 Compensation. By resolution of the Board of Directors, directors may be
allowed a fee and expenses for attendance at all meetings, but nothing herein
shall preclude directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE IV.
COMMITTEES
4.1 Executive Committee. The Board of Directors, by resolution duly adopted,
may elect an Executive Committee which shall consist of not less than two
directors, including the Chairman of the Board. The members of the Executive
Committee shall serve until their successors are designated by the Board of
Directors, until removed, or until the Executive Committee is dissolved by the
Board of Directors. All vacancies that may occur in the Executive Committee
shall be filled by the Board of Directors.
When the Board of Directors is not in session, the Executive Committee shall
have all power vested in the Board of Directors by law, by the Certificate, or
by these Bylaws, except as otherwise provided in the DGCL. The Executive
Committee shall report at the next regular or special meeting of the Board of
Directors all action that the Executive Committee may have taken on behalf of
the Board of Directors since the last regular or special meeting of the Board
of Directors.
Meetings of the Executive Committee shall be held at such places and at such
times fixed by resolution of the Executive Committee, or upon call of the
Chairman of the Board. Not less than 12 hours' notice shall be given by
letter, facsimile, telegraph or telephone (or in person) of all meetings of
the Executive Committee; provided, however, that notice need not be given of
regular meetings held at times and places fixed by resolution of the Executive
Committee and that meetings may be held at any time without notice if all of
the members of the Executive Committee are present or if those not present
waive notice in writing either before or after the meeting; provided, further,
that attendance at a meeting for the express purpose of objecting at the
beginning of a meeting to the transaction of any business because the meeting
is not lawfully convened shall not be considered a waiver of notice. A
majority of the members of the Executive Committee then serving shall
constitute a quorum for the transaction of business at any meeting of the
Executive Committee.
7
<PAGE>
4.2 Compensation Committee. The Board of Directors, at its regular annual
meeting, shall designate a Compensation Committee which shall consist of two
or more non-employee directors. In addition, the Board of Directors at any
time may designate one or more alternate members of the Compensation
Committee, who shall be non-employee directors, who may act in place of any
absent regular member upon invitation by the chairman or secretary of the
Compensation Committee.
With respect to bonuses, the Compensation Committee shall have and may
exercise the powers to determine the amounts annually available for bonuses
pursuant to any bonus plan or formula approved by the Board of Directors, to
determine bonus awards to executive officers and to exercise such further
powers with respect to bonuses as may from time to time be conferred by the
Board of Directors.
With respect to salaries, the Compensation Committee shall have and may
exercise the power to fix and determine from time to time all salaries of the
executive officers of the Corporation, and such further powers with respect to
salaries as may from time to time be conferred by the Board of Directors.
The Compensation Committee shall administer the Corporation's stock
incentive plans and from time to time may grant, consistent with the plans,
stock options and other awards permissible under such plans.
Vacancies in the Compensation Committee shall be filled by the Board of
Directors, and members of the Compensation Committee shall be subject to
removal by the Board of Directors at any time.
The Compensation Committee shall fix its own rules of procedure. A majority
of the number of regular members then serving on the Compensation Committee
shall constitute a quorum; and regular and alternate members present shall be
counted to determine whether there is a quorum. The Compensation Committee
shall keep minutes of its meetings, and all action taken by it shall be
reported to the Board of Directors.
4.3 Audit Committee. The Board of Directors, at its regular annual meeting,
shall designate an Audit Committee which shall consist of two or more
directors whose membership on the Audit Committee shall meet the requirements
set forth in the rules of the New York Stock Exchange, as amended from time to
time. Vacancies in the Audit Committee shall be filled by the Board of
Directors with directors meeting the requirements set forth above, giving
consideration to continuity of the Audit Committee, and members shall be
subject to removal by the Board of Directors at any time. The Audit Committee
shall fix its own rules of procedure and a majority of the members serving
shall constitute a quorum. The Audit Committee shall meet at least twice per
year with both the internal and the Corporation's outside auditors present at
each meeting and shall keep minutes of its meetings and all action taken shall
be reported to the Board of Directors. The Audit Committee shall review the
reports and minutes of any audit committees of the Corporation's subsidiaries.
The Audit Committee shall review the Corporation's financial reporting
process, including accounting policies and procedures. The Audit Committee
shall examine the report of the Corporation's outside auditors, consult with
them with respect to their report and the standards and procedures employed by
them in their audit, report to the Board of Directors the results of its study
and recommend the selection of auditors for each fiscal year.
4.4 Nominating Committee. The Board of Directors, by resolution duly
adopted, shall designate a Nominating Committee which shall consist of three
or more directors. The Nominating Committee shall make recommendations to the
Board of Directors regarding nominees for election as directors by the
stockholders at each annual meeting of stockholders and make such other
recommendations regarding tenure, classification and compensation of directors
as the Nominating Committee may deem advisable from time to time. The
Nominating Committee shall fix its own rules of procedure and a majority of
the members then serving shall constitute a quorum.
4.5 Other Committees. The Board of Directors, by resolution adopted, may
establish such other standing or special committees of the Board of Directors
as it may deem advisable, and the members, terms and authority of such
committees shall be as set forth in the resolutions establishing the same.
8
<PAGE>
ARTICLE V.
OFFICERS
5.1 Election of Officers; Terms. The officers of the Corporation shall be
elected by the Board of Directors and shall include a Chairman of the Board, a
President, one or more Vice Presidents, a Secretary and a Treasurer or Chief
Financial Officer. Other officers, including Executive Vice Presidents and
Senior Vice Presidents, may be specified by the Board of Directors, and
assistant and subordinate officers, may from time to time be elected by the
Board of Directors. All officers shall hold office until the next annual
meeting of the Board of Directors and until their successors are duly elected
and qualified. The Chairman of the Board shall be chosen from among the
directors. Any two officers may be combined in the same person as the Board of
Directors may determine.
5.2 Removal of Officers; Vacancies. Any officer of the Corporation may be
removed with or without cause, at any time, by the Board of Directors.
Vacancies shall be filled by the Board of Directors.
5.3 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred by the Board of Directors. The Board of Directors may
require any officer to give such bond for the faithful performance of his or
her other duties as the Board of Directors may see fit.
5.4 Duties of the Chairman of the Board. The Chairman of the Board shall be
the Chief Executive Officer of the Corporation and shall be responsible for
the execution of the policies of the Board of Directors, shall serve as the
Chairman of the Executive Committee and shall have direct supervision over the
business of the Corporation and its several officers, subject to the ultimate
authority of the Board of Directors. He or she shall be a director, and,
except as otherwise provided in these Bylaws or in the resolutions
establishing such committees, he or she shall be ex officio a member of all
committees of the Board of Directors. He or she shall preside at all meetings
of stockholders, the Board of Directors and the Executive Committee. He or she
may sign and execute in the name of the Corporation share certificates, deeds,
mortgages, bonds, contracts or other instruments except in cases where the
signing and the execution thereof shall be expressly delegated by the Board of
Directors or by these Bylaws to some other officer or agent of the Corporation
or shall be required by law otherwise to be signed or executed. In addition,
he or she shall perform all duties incident to the office of the Chairman of
the Board and Chief Executive Officer and such other duties as from time to
time may be assigned to him or her by the Board of Directors.
5.5 Duties of the President. Unless the Board of Directors, by resolution
duly adopted, designates some other person to serve as the Chief Operating
Officer of the Corporation, the President shall serve as Chief Operating
Officer and shall have direct supervision over the business of the Corporation
and its several officers, subject to the authority of the Board of Directors
and the Chairman of the Board, and shall consult with and report to the
aforementioned officer. The President may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts or other instruments, except in
cases where the signing and the execution thereof shall be expressly delegated
by the Board of Directors or by these Bylaws to some other officer or agent of
the Corporation or shall be required by law otherwise to be signed or
executed. In addition, he or she shall perform all duties incident to the
office of the President and such other duties as from time to time may be
assigned to him or her by the Board of Directors or the Chairman of the Board.
5.6 Duties of the Vice Presidents. Each Vice President, if any, shall have
such powers and duties as may from time to time be assigned to him or her by
the Chairman of the Board or the Board of Directors. When there shall be more
than one Vice President of the Corporation, the Board of Directors may from
time to time designate one of them to perform the duties of the President in
the absence of the President. Any Vice President may sign and execute in the
name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized by the Board of Directors, except where the signing and
execution of such documents shall be expressly delegated by the Board of
Directors or the Chairman of the Board to some other officer or agent of the
Corporation or shall be required by law or otherwise to be signed or executed.
9
<PAGE>
5.7 Duties of the Treasurer or Chief Financial Officer. The Treasurer or
Chief Financial Officer shall have charge and custody of and be responsible
for all funds and securities of the Corporation, and shall cause all such
funds and securities to be deposited in such banks and depositories as shall
be designated by the Board of Directors. He or she shall be responsible (i)
for maintaining adequate financial accounts and records in accordance with
generally accepted accounting practices, (ii) for the preparation of
appropriate operating budgets and financial statements, (iii) for the
preparation and filing of all tax returns required by law and (iv) for the
performance of all duties incident to the office of Treasurer or Chief
Financial Officer and such other duties as from time to time may be assigned
to him or her by the Board of Directors, the Audit Committee or the Chairman
of the Board. The Treasurer or Chief Financial Officer may sign and execute in
the name of the Corporation share certificates, deeds, mortgages, bonds,
contracts or other instruments, except where the signing and execution of such
documents shall be expressly delegated by the Board of Directors or the
Chairman of the Board to some other officer or agent of the Corporation or
shall be required by law or otherwise to be signed or executed.
5.8 Duties of the Secretary. The Secretary shall act as secretary of all
meetings of the Board of Directors, all committees of the Board of Directors
and stockholders of the Corporation. He or she shall (i) keep and preserve the
minutes of all such meetings in permanent books, (ii) ensure that all notices
required to be given by the Corporation are duly given and served, (iii) have
custody of the seal of the Corporation and shall affix the seal or cause it to
be affixed to all share certificates of the Corporation and to all documents
the execution of which on behalf of the Corporation under its corporate seal
is duly authorized in accordance with law or the provisions of these Bylaws,
(iv) have custody of all deeds, leases, contracts and other important
corporate documents, (v) have charge of the books, records and papers of the
Corporation relating to its organization and management as a Corporation, (vi)
see that all reports, statements and other documents required by law (except
tax returns) are properly filed and (vii) in general, perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him or her by the Board of Directors or the Chairman of the
Board.
ARTICLE VI.
CAPITAL STOCK
6.1 Certificates. Each stockholder shall be entitled to a certificate of the
capital stock of the Corporation in such form as may from time to time be
prescribed by the Board of Directors. Such certificate shall be signed by the
Chairman of the Board, the President or a Vice President and by the Treasurer
or an Assistant Treasurer, or the Secretary or an Assistant Secretary. The
Corporation seal and the signatures by the Corporation's officers, the
transfer agent or the registrar may be facsimiles. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has
been placed on such certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, the certificate may be
issued by the Corporation with the same effect as if he or she were such
officer, transfer agent or registrar at the time of its issue. Every
certificate for shares of stock which are subject to a restriction on transfer
(as provided in Article IV of the Certificate) and every certificate issued
when the Corporation is authorized to issue more than one class or series of
stock shall contain such legend (as provided in Article IV of the Certificate)
with respect thereto as is required by law.
6.2 Pairing. Until the limitation on transfer provided for in the Pairing
Agreement, dated as of February 17, 1983, by and between Bay Meadows Realty
Enterprises, Inc. (the predecessor of California Jockey Club) and Bay Meadows
Operating Company (the "Pairing Agreement"), as amended from time to time in
accordance with the provisions thereof, shall be terminated:
(a) The shares of Equity Stock of the Corporation that are paired
pursuant to the Pairing Agreement shall not be transferable, and shall not
be transferred on the stock transfer books of the Corporation, unless (i) a
simultaneous transfer is made by the same transferor to the same transferee
or (ii) arrangements have been made with the Operating Company for the
acquisition by the transferee, of a like number of shares of the same class
or series of Equity Stock of the Operating Company and such shares are
paired with one another.
10
<PAGE>
(b) Each certificate evidencing ownership of shares of Equity Stock of
the Corporation that are paired pursuant to the Pairing Agreement and
issued and not canceled prior to the Effective Time of the Restriction
shall be deemed to evidence a like number of shares of the same class or
series of Equity Stock of the Operating Company.
(c) A legend shall be placed on the face of each certificate evidencing
ownership of shares of Equity Stock of the Corporation that are paired
pursuant to the Pairing Agreement referring to the restrictions on transfer
set forth herein.
(d) Notwithstanding the foregoing, the Corporation may issue or transfer
shares of its Equity Stock to the Operating Company without regard to the
restrictions of this Section 6.2.
(e) To the extent that a paired share of Equity Stock of the Corporation
is converted into a share of excess stock, par value $.01 per share (the
"Excess Stock"), of the Corporation in accordance with the provisions of
Article IV of the Certificate, such share of Excess Stock of the
Corporation, together with the corresponding share of Excess Stock of the
Operating Company, which has been converted from a share of Equity Stock of
the Operating Company in accordance with Article IV of the Certificate and
the Pairing Agreement, shall be automatically transferred to a trust
established by the Corporation and the Operating Company for such purpose
in accordance with Article IV of the Certificate.
6.3 Lost, Destroyed and Mutilated Certificates. Holders of the shares of the
Corporation shall immediately notify the Corporation of any loss, destruction
or mutilation of the certificate therefor, and the Board of Directors may in
its discretion cause one or more new certificates for the same number of
shares in the aggregate to be issued to such stockholder upon the surrender of
the mutilated certificate or upon satisfactory proof of such loss or
destruction, and the deposit of a bond in such form and amount and with such
surety as the Board of Directors may require.
6.4 Transfer of Stock. Subject to the restrictions on transfer of stock
described in Section 6.2 of these Bylaws and Article IV of the Certificate,
the stock of the Corporation shall be transferable or assignable only on the
stock transfer books of the Corporation by the holder in person or by attorney
on surrender of the certificate for such shares duly endorsed and, if sought
to be transferred by attorney, accompanied by a written power of attorney to
have the same transferred on the stock transfer books of the Corporation. The
Corporation will recognize, however, the exclusive right of the person
registered on its stock transfer books as the owner of shares to receive
dividends and to vote as such owner.
6.5 Fixing Record Date. For the purpose of determining stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to receive payment of any dividend, or to make a
determination of stockholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not less than 10
nor more than 60 days prior to the date on which the particular action
requiring such determination of stockholders, is to be taken. If no record
date is fixed for the determination of stockholders entitled to notice of or
to vote at a meeting of stockholders, or stockholders entitled to receive
payment of a dividend, the date on which notices of the meeting are mailed or
the date on which the resolution of the Board of Directors declaring such
dividend is adopted, as the case may be, shall be the record date for such
determination of stockholders. When a determination of stockholders entitled
to notice of or to vote at any meeting of stockholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
ARTICLE VII.
INDEMNIFICATION
7.1 Definitions. For purposes of this Article VII:
(a) "Corporate Status" describes the status of a person who (i) in the
case of a Director, is or was a director of the Corporation and is or was
acting in such capacity, (ii) in the case of an Officer, is or was an
11
<PAGE>
officer, employee or agent of the Corporation or is or was a director,
officer, employee or agent of any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise that such Officer
is or was serving at the request of the Corporation and (iii) in the case
of a Non-Officer Employee, is or was an employee of the Corporation or is
or was a director, officer, employee or agent of any other corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise that such Non-Officer Employee is or was serving at the request
of the Corporation;
(b) "Director" means any person who serves or has served the Corporation
as a director on the Board of Directors;
(c) "Disinterested Director" means, with respect to each Proceeding in
respect of which indemnification is sought hereunder, a Director of the
Corporation who is not and was not a party to such Proceeding;
(d) "Expenses" means all reasonable attorneys' fees, retainers, court
costs, transcript costs, fees of expert witnesses, private investigators
and professional advisors (including, without limitation, accountants and
investment bankers), travel expenses, duplicating costs, printing and
binding costs, costs of preparation of demonstrative evidence and other
courtroom presentation aids and devices, costs incurred in connection with
document review, organization, imaging and computerization, telephone
charges, postage, delivery service fees, and all other disbursements, costs
or expenses of the type customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend, investigating,
being or preparing to be a witness in, settling or otherwise participating
in, a Proceeding;
(e) "Non-Officer Employee" means any person who serves or has served as
an employee of the Corporation, but who is not or was not a Director or
Officer;
(f) "Officer" means any person who serves or has served the Corporation
as an officer appointed by the Board of Directors; and
(g) "Proceeding" means any threatened, pending or completed action, suit,
arbitration, alternate dispute resolution mechanism, inquiry,
investigation, administrative hearing or other proceeding, whether civil,
criminal, administrative, arbitrative or investigative.
7.2 Indemnification of Directors and Officers. Subject to the operation of
Section 7.4 of these Bylaws, each Director and Officer shall be indemnified
and held harmless by the Corporation to the fullest extent authorized by the
DGCL, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than such law permitted the
Corporation to provide prior to such amendment) against any and all Expenses,
judgments, penalties, fines and amounts reasonably paid in settlement that are
incurred by such Director or Officer or on such Director's or Officer's behalf
in connection with any threatened, pending or completed Proceeding or any
claim, issue or matter therein, which such Director or Officer is, or is
threatened to be made, a party to or participant in by reason of such
Director's or Officer's Corporate Status, if such Director or Officer acted in
good faith and in a manner such Director or Officer reasonably believed to be
in or not opposed to the best interests of the Corporation and, with respect
to any criminal proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The rights of indemnification provided by this Section
7.2 shall exist as to a Director or Officer after he or she has ceased to be a
Director or Officer and shall inure to the benefit of his or her heirs,
executors, administrators and personal representatives. Notwithstanding the
foregoing, the Corporation shall indemnify any Director or Officer seeking
indemnification in connection with a Proceeding initiated by such Director or
Officer only if such Proceeding was authorized by the Board of Directors.
7.3 Indemnification of Non-Officer Employees. Subject to the operation of
Section 7.4 of these Bylaws, each Non-Officer Employee may, in the discretion
of the Board of Directors, be indemnified by the Corporation to the fullest
extent authorized by the DGCL, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than such law permitted the Corporation to provide prior to such amendment),
against any
12
<PAGE>
and all Expenses, judgments, penalties, fines and amounts reasonably paid in
settlement that are incurred by such Non-Officer Employee or on such Non-
Officer Employee's behalf in connection with any threatened, pending or
completed Proceeding, or any claim, issue or matter therein, which such Non-
Officer Employee is, or is threatened to be made, a party to or participant in
by reason of such Non-Officer Employee's Corporate Status, if such Non-Officer
Employee acted in good faith and in a manner such Non-Officer Employee
reasonably believed to be in or not opposed to the best interests of the
Corporation and, with respect to any criminal proceeding, had no reasonable
cause to believe his or her conduct was unlawful. The rights of
indemnification provided by this Section 7.3 shall exist as to a Non-Officer
Employee after he or she has ceased to be a Non-Officer Employee and shall
inure to the benefit of his or her heirs, personal representatives, executors
and administrators. Notwithstanding the foregoing, the Corporation may
indemnify any Non-Officer Employee seeking indemnification in connection with
a Proceeding initiated by such Non-Officer Employee only if such Proceeding
was authorized by the Board of Directors.
7.4 Good Faith. Unless ordered by a court, no indemnification shall be
provided pursuant to this Article VII to a Director, to an Officer or to a
Non-Officer Employee unless a determination shall have been made that such
person acted in good faith and in a manner such person reasonably believed to
be in or not opposed to the best interests of the Corporation and, with
respect to any criminal Proceeding, such person had no reasonable cause to
believe his or her conduct was unlawful. Such determination shall be made by
(a) a majority vote of the Disinterested Directors, even though less than a
quorum of the Board of Directors, (b) if there are no such Disinterested
Directors, or if a majority of Disinterested Directors so direct, by
independent legal counsel in a written opinion or (c) by the stockholders of
the Corporation.
7.5 Advancement of Expenses to Directors Prior to Final Disposition. The
Corporation shall advance all Expenses incurred by or on behalf of any
Director in connection with any Proceeding in which such Director is involved
by reason of such Director's Corporate Status within 10 days after the receipt
by the Corporation of a written statement from such Director requesting such
advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or statements shall reasonably
evidence the Expenses incurred by such Director and shall be preceded or
accompanied by an undertaking by or on behalf of such Director to repay any
Expenses so advanced if it shall ultimately be determined that such Director
is not entitled to be indemnified against such Expenses.
7.6 Advancement of Expenses to Officers and Non-Officer Employees Prior to
Final Disposition. The Corporation may, in the discretion of the Board of
Directors, advance any or all Expenses incurred by or on behalf of any Officer
or Non-Officer Employee in connection with any Proceeding in which such
Officer or Non-Officer Employee is involved by reason of such Officer or Non-
Officer Employee's Corporate Status upon the receipt by the Corporation of a
statement or statements from such Officer or Non-Officer Employee requesting
such advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or statements shall reasonably
evidence the Expenses incurred by such Officer or Non-Officer Employee and
shall be preceded or accompanied by an undertaking by or on behalf of such
Officer or Non-Officer Employee to repay any Expenses so advanced if it shall
ultimately be determined that such Officer or Non-Officer Employee is not
entitled to be indemnified against such Expenses.
7.7 Contractual Nature of Rights. The foregoing provisions of this Article
VII shall be deemed to be a contract between the Corporation and each Director
and Officer entitled to the benefits hereof at any time while this Article VII
is in effect, and any repeal or modification thereof shall not affect any
rights or obligations then existing with respect to any state of facts then or
theretofore existing or any Proceeding theretofore or thereafter brought based
in whole or in part upon any such state of facts. If a claim for
indemnification or advancement of Expenses hereunder by a Director or Officer
is not paid in full by the Corporation within (a) 60 days after the receipt by
the Corporation of a written claim for indemnification or (b) in the case of a
Director, 10 days after the receipt by the Corporation of documentation of
Expenses and the required undertaking, such Director or Officer may at any
time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim, and if successful in whole or in part, such Director or
Officer shall also be entitled to be paid the expenses of prosecuting such
claim. The failure of the Corporation (including its Board of Directors or any
committee thereof, independent legal counsel, or stockholders) to make a
determination concerning the permissibility of
13
<PAGE>
such indemnification or, in the case of a Director, advancement of Expenses,
under this Article VII shall not be a defense to the action and shall not
create a presumption that such indemnification or advancement is not
permissible.
7.8 Non-Exclusivity of Rights. The rights to indemnification and advancement
of Expenses set forth in this Article VII shall not be exclusive of any other
right which any Director, Officer or Non-Officer Employee may have or
hereafter acquire under any statute, provision of the Certificate or these
Bylaws, agreement, vote of stockholders or Disinterested Directors or
otherwise.
7.9 Insurance. The Corporation may maintain insurance, at its expense, to
protect itself and any Director, Officer or Non-Officer Employee against any
liability of any character asserted against or incurred by the Corporation or
any such Director, Officer or Non-Officer Employee, or arising out of any such
person's Corporate Status, whether or not the Corporation would have the power
to indemnify such person against such liability under the DGCL or the
provisions of this Article VII.
ARTICLE VIII.
MISCELLANEOUS PROVISIONS
8.1 Seal. The seal of the Corporation shall consist of a flat-faced circular
die, of which there may be any number of counterparts, on which there shall be
engraved the word "Seal" and the name of the Corporation.
8.2 Fiscal Year. The fiscal year of the Corporation shall end on such date
and shall consist of such accounting periods as may be fixed by the Board of
Directors.
8.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders for the
payment of money shall be signed by such persons as the Board of Directors
from time to time may authorize. When the Board of Directors so authorizes,
however, the signature of any such person may be a facsimile.
8.4 Amendment of Bylaws.
(a) Amendment by Directors. Except as provided otherwise by law, these
Bylaws may be amended or repealed by the Board of Directors by the
affirmative vote of a majority of the directors then in office.
(b) Amendment by Stockholders. These Bylaws may be amended or repealed at
any annual meeting of stockholders, or special meeting of stockholders
called for such purpose, by the affirmative vote of at least two-thirds of
the shares present in person or represented by proxy at such meeting and
entitled to vote on such amendment or repeal, voting together as a single
class; provided, however, that if the Board of Directors recommends that
stockholders approve such amendment or repeal at such meeting of
stockholders, such amendment or repeal shall only require the affirmative
vote of a majority of the shares present in person or represented by proxy
at such meeting and entitled to vote on such amendment or repeal, voting
together as a single class.
8.5 Voting of Stock Held. Unless otherwise provided by resolution of the
Board of Directors or of the Executive Committee, if any, the Chairman of the
Board may from time to time appoint an attorney or attorneys or agent or
agents of the Corporation, in the name and on behalf of the Corporation, to
cast the vote that the Corporation may be entitled to cast as a stockholder or
otherwise in any other corporation, any of whose securities may be held by the
Corporation, at meetings of the holders of the shares or other securities of
such other corporation, or to consent in writing to any action by any such
other corporation; and the Chairman of the Board shall instruct the person or
persons so appointed as to the manner of casting such votes or giving such
consent and may execute or cause to be executed on behalf of the Corporation,
and under its corporate seal or
otherwise, such written proxies, consents, waivers or other instruments as may
be necessary or proper in the premises. In lieu of such appointment, the
Chairman of the Board may himself or herself attend any meetings of the
holders of shares or other securities of any such other corporation and there
vote or exercise any or all power of the Corporation as the holder of such
shares or other securities of such other corporation.
14
<PAGE>
EXHIBIT 3.3
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PATRIOT AMERICAN HOSPITALITY OPERATING COMPANY
Bay Meadows Operating Company, a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), hereby certifies as
follows:
1. The name of the Corporation is Bay Meadows Operating Company. The date of
the filing of its original Certificate of Incorporation with the Secretary of
State of the State of Delaware was January 27, 1983 (the "Original Certificate
of Incorporation"). The name under which the Corporation filed the Original
Certificate of Incorporation was Bay Meadows Operating Company. Pursuant to
this Amended and Restated Certificate of Incorporation, the name of the
Corporation is hereby changed to Patriot American Hospitality Operating
Company.
2. This Amended and Restated Certificate of Incorporation (the
"Certificate") amends, restates and integrates the provisions of the Original
Certificate of Incorporation, was duly adopted by the Board of Directors of
the Corporation in accordance with the provisions of Sections 242 and 245 of
the Delaware General Corporation Law, as amended from time to time (the
"DGCL"), and was duly adopted by the stockholders of the Corporation in
accordance with the applicable provisions of Sections 242 and 245 of the DGCL.
3. The text of the Original Certificate of Incorporation, as amended to
date, is hereby amended and restated in its entirety to provide as herein set
forth in full.
I.
NAME
The name of the corporation is Patriot American Hospitality Operating
Company.
II.
PURPOSES
The nature of business or purposes to be conducted or promoted by the
Corporation is to engage in any lawful act for which corporations may be
organized under the DGCL.
III.
REGISTERED OFFICE
The address of the registered office of the Corporation in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
IV.
CAPITAL STOCK
The Corporation shall have the authority to issue 650,000,000 shares of
common stock, par value $.01 per share (the "Common Stock"), 750,000,000
shares of excess stock, par value $.01 per share (the "Excess
1
<PAGE>
Stock"), and 100,000,000 shares of preferred stock, par value $.01 per share
(the "Preferred Stock"). The rights, preferences, voting powers and the
qualifications, limitations and restrictions of the authorized stock shall be
as follows:
A. Common Stock.
1. Voting Rights. Each share of Common Stock shall be entitled to one
vote on all matters submitted to a vote at any meeting of stockholders.
2. Dividend Rights. Subject to the rights of holders of Preferred Stock
and subject to any other provisions of this Certificate or any amendment
hereto, holders of Common Stock shall be entitled to receive such dividends
and other distributions in cash, stock or property of the Corporation as
may be declared thereon by the Board of Directors from time to time.
3. Action Without a Meeting. Any action required or permitted to be taken
by the stockholders of the Corporation at any annual or special meeting of
stockholders of the Corporation may be taken in lieu of such a meeting only
by an unanimous written consent of the stockholders signed by each
stockholder entitled to vote on the matter.
B. Preferred Stock.
1. The Preferred Stock may be issued from time to time in one or more
series, with such distinctive designations, rights and preferences as shall
be stated and expressed herein or in the resolution or resolutions
providing for the issue of shares of a particular series, and in such
resolution or resolutions providing for the issue of shares of such series,
the Board of Directors is expressly authorized to fix or establish the
basis for determining:
a. The annual or other periodic dividend rate for such series, the
dividend payment dates, the date from which dividends on all shares of
such series issued shall be cumulative, and the extent of participation
rights, if any;
b. The redemption price or prices, if any, for such series and other
terms and conditions on which such series may be retired and redeemed;
c. The obligation, if any, of the Corporation to purchase and retire
or redeem shares of such series as a sinking fund or otherwise, and the
terms and conditions of any such redemption;
d. The designation and maximum number of shares of such series
issuable;
e. The right to vote, if any, with holders of shares of any other
class or series, either generally or as a condition to specified
corporate action;
f. The amount payable upon shares in the event of involuntary
liquidation;
g. The amount payable upon shares in the event of voluntary
liquidation;
h. The rights, if any, of the holders of shares of such series to
convert such shares into other classes of stock of the Corporation, or
to exchange such shares for other securities or assets, and the terms
and conditions of any such conversion or exchange; and
i. Such other rights as may be specified by the Board of Directors
and not prohibited by law.
All shares of Preferred Stock of any one series shall be identical with
each other in all respects except, if so determined by the Board of
Directors, as to the dates from which dividends thereon shall be
cumulative; and all shares of Preferred Stock shall be of equal rank with
each other, regardless of series, and shall be identical with each other in
all respects except as provided herein or in the resolution or resolutions
providing for the issue of a particular series. In case dividends on all
shares of Preferred Stock for any regular dividend period are not paid in
full, all such shares shall participate ratably in any partial payment of
dividends for such period in proportion to the full amounts of dividends
for such period to which they are respectively entitled.
2
<PAGE>
C. Restrictions on Ownership and Transfer of Equity Stock.
1. Definitions. For purposes of this Article IV, the following terms
shall have the meanings set forth below:
"Beneficial Ownership" shall mean, with respect to any Person, ownership
of shares of Equity Stock equal to the sum of (i) the shares of Equity
Stock directly or indirectly owned by such Person, (ii) the number of
shares of Equity Stock treated as owned directly or indirectly by such
Person through the application of the constructive ownership rules of
Section 544 of the Internal Revenue Code of 1986, as amended (the "Code"),
as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of
shares of Equity Stock which such Person is deemed to beneficially own
pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The terms "Beneficial Owner," "Beneficially
Owns" and "Beneficially Owned" shall have correlative meanings.
"Beneficiary" shall mean, with respect to any Trust, one or more
organizations described in each of Section 170(b)(1)(A) (other than clauses
(vii) and (viii) thereof) and Section 170(c)(2) of the Code that are named
by the Corporation as the beneficiary or beneficiaries of such Trust, in
accordance with the provisions of Section (D)(4) of this Article IV.
"Constructive Ownership" shall mean ownership of shares of Equity Stock
by a Person who is or would be treated as a direct or indirect owner of
such shares of Equity Stock through the application of Section 318 of the
Code, as modified by Section 856(d)(5) of the Code. The terms "Constructive
Owner," "Constructively Owns" and "Constructively Owned" shall have
correlative meanings.
"Equity Stock" shall mean Common Stock and Preferred Stock of the
Corporation.
"Market Price" on any date shall mean the average of the Closing Price
for the five consecutive Trading Days ending on such date. The "Closing
Price" on any date shall mean the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the shares of
Equity Stock are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national
securities exchange on which the shares of Equity Stock are listed or
admitted to trading or, if the shares of Equity Stock are not listed or
admitted to trading on any national securities exchange, the last quoted
price, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the Nasdaq Stock
Market, Inc. or, if such system is no longer in use, the principal other
automated quotation system that may then be in use or, if the shares of
Equity Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
selected by the Board of Directors making a market in the shares of Equity
Stock. In the case of Equity Stock that is paired, "Market Price" shall
mean the "Market Price" for paired shares multiplied by a fraction
(expressed as a percentage) determined by dividing the value for such
Equity Stock most recently determined under Section 2(c) of the Pairing
Agreement by the value of a paired share most recently determined under
Section 2(c) of the Pairing Agreement (the "Valuation Percentage").
"Non-Transfer Event" shall mean an event other than a purported Transfer
that would cause any Person to Beneficially Own or Constructively Own
shares of Equity Stock in excess of the Ownership Limit, including, but not
limited to, (i) the granting of any option or entering into any agreement
for the sale, transfer or other disposition of shares of Equity Stock or
(ii) the sale, transfer, assignment or other disposition of interests in
any Person or of any securities or rights convertible into or exchangeable
for shares of Equity Stock that results in changes in Beneficial Ownership
or Constructive Ownership of shares of Equity Stock.
"Ownership Limit" shall mean, with respect to any class or series of
Equity Stock, 9.8% of the number of outstanding shares of such class or
series of Equity Stock. For purposes of computing the percentage of shares
of any class or series of Equity Stock of the Corporation that is
Beneficially Owned by
3
<PAGE>
any Person, any shares of Equity Stock of the Corporation which are deemed
to be Beneficially Owned by such Person pursuant to Rule 13d-3 of the
Exchange Act but which are not outstanding shall be deemed to be
outstanding.
"Pairing Agreement" shall mean the Pairing Agreement, dated as of
February 17, 1983, by and between Bay Meadows Realty Enterprises, Inc. (the
predecessor of California Jockey Club) and Bay Meadows Operating Company,
as amended from time to time in accordance with the provisions thereof.
"Permitted Transferee" shall mean any Person designated as a Permitted
Transferee in accordance with the provisions of Section (D)(8) of this
Article IV.
"Person" shall mean (a) an individual or any corporation, partnership,
estate, trust, association, private foundation, joint stock company or any
other entity and (b) a "group" as that term is defined for purposes of Rule
13d-5 of the Exchange Act.
"Prohibited Owner" shall mean, with respect to any purported Transfer or
Non-Transfer Event, any Person who is prevented from being or becoming the
owner of record title to shares of Equity Stock by the provisions of
Section (D)(1) of this Article IV.
"Restriction Termination Date" shall mean the first day on which the
Corporation is no longer a party to the Pairing Agreement, the Pairing
Agreement terminates or the Corporation is no longer required by the
Pairing Agreement to maintain the restrictions set forth in this Section C
of this Article IV.
"Trading Day" shall mean a day on which the principal national securities
exchange on which shares of Equity Stock are listed or admitted to trading
is open for the transaction of business or, if shares of Equity Stock are
not listed or admitted to trading on any national securities exchange, any
day other than a Saturday, a Sunday or a day on which banking institutions
in the State of New York are authorized or obligated by law or executive
order to close.
"Transfer" (as a noun) shall mean any sale, transfer, gift, assignment,
devise or other disposition of shares of Equity Stock, whether voluntary or
involuntary, whether of record, constructively or beneficially and whether
by operation of law or otherwise. "Transfer" (as a verb) shall have the
correlative meaning.
"Trust" shall mean any separate trust created and administered in
accordance with the terms of Section (D) of this Article IV, for the
exclusive benefit of any Beneficiary.
"Trustee" shall mean any Person or entity unaffiliated with both the
Corporation and any Prohibited Owner designated by the Corporation to act
as trustee of any Trust, or any successor trustee thereof. The Trustee
shall be designated by the Corporation and Patriot American Hospitality,
Inc. ("Patriot REIT") in accordance with the Pairing Agreement.
2. Restriction on Ownership and Transfer.
a. Except as provided in Section (C)(4) of this Article IV, until the
Restriction Termination Date, (i) no Person shall Beneficially Own or
Constructively Own outstanding shares of Equity Stock in excess of the
Ownership Limit and (ii) any Transfer (whether or not the result of a
transaction entered into through the facilities of the New York Stock
Exchange) that, if effective, would result in any Person Beneficially
Owning or Constructively Owning shares of Equity Stock in excess of the
Ownership Limit shall be void ab initio as to the Transfer of that
number of shares of Equity Stock which would be otherwise Beneficially
Owned or Constructively Owned by such Person in excess of the Ownership
Limit and the intended transferee shall acquire no rights in such
shares of Equity Stock.
b. Until the Restriction Termination Date, any Transfer (whether or
not the result of a transaction entered into through the facilities of
the New York Stock Exchange) of shares of Equity Stock that are paired
pursuant to the Pairing Agreement that, if effective, would result in
Patriot REIT being "closely held" within the meaning of Section 856(h)
of the Code shall be void ab initio as to the Transfer of that number
of shares of Equity Stock that are paired pursuant to the Pairing
Agreement that would cause Patriot REIT to be "closely held" within the
meaning of Section 856(h) of the Code, and the intended transferee
shall acquire no rights in such shares of Equity Stock.
4
<PAGE>
c. Until the Restriction Termination Date, any Transfer (whether or
not the result of a transaction entered into through the facilities of
the New York Stock Exchange) of shares of Equity Stock that, if
effective, would cause Patriot REIT to Constructively Own 10% or more
of the ownership interests in a tenant of the real property of Patriot
REIT or any direct or indirect subsidiary (whether a corporation,
partnership, limited liability company or other entity) of Patriot REIT
(a "Subsidiary"), within the meaning of Section 856(d)(2)(B) of the
Code, shall be void ab initio as to the Transfer of that number of
shares of Equity Stock that would cause Patriot REIT to Constructively
Own 10% or more of the ownership interests in a tenant of the real
property of Patriot REIT or a Subsidiary within the meaning of Section
856(d)(2)(B) of the Code, and the intended transferee shall acquire no
rights in such shares of Equity Stock.
d. Until the Restriction Termination Date, any Transfer (whether or
not the result of a transaction entered into through the facilities of
the New York Stock Exchange) of Equity Stock that is paired pursuant to
the Pairing Agreement that, if effective, would result in the capital
stock of Patriot REIT being beneficially owned (within the meaning of
Section 856(a)(5) of the Code) by fewer than 100 persons within the
meaning of Section 856(a)(5) of the Code shall be void ab initio and
the intended transferee shall acquire no rights in such shares of
Equity Stock.
3. Owners Required To Provide Information. Until the Restriction
Termination Date:
a. Every Beneficial Owner or Constructive Owner of more than 5%, or
such lower percentages as required pursuant to regulations under the
Code, of the outstanding shares of any class or series of Equity Stock
of the Corporation shall, within 30 days after January 1 of each year,
provide to the Corporation a written statement or affidavit stating the
name and address of such Beneficial Owner or Constructive Owner, the
number of shares of Equity Stock Beneficially Owned or Constructively
Owned, and a description of how such shares are held. Each such
Beneficial Owner or Constructive Owner shall provide to the Corporation
such additional information as the Corporation may request to ensure
compliance with the restrictions in this Section C of this Article IV.
b. Each Person who is a Beneficial Owner or Constructive Owner of
shares of Equity Stock and each Person (including the stockholder of
record) who is holding shares of Equity Stock for a Beneficial Owner or
Constructive Owner shall provide to the Corporation a written statement
or affidavit stating such information as the Corporation may request to
ensure compliance with the restrictions set forth in this Section C of
this Article IV.
4. Exception. The Board of Directors may exempt a Person from the
Ownership Limit, provided that (A) such exemption is permitted by and made
in accordance with the Pairing Agreement and (B) such Person agrees in
writing that any violation or attempted violation of the Ownership Limit
will result in the conversion of such shares into shares of Excess Stock
pursuant to Section (D)(1) of this Article IV and provides such other
representations and undertakings as the Board of Directors may reasonably
require.
5. New York Stock Exchange Transactions. Notwithstanding any provision
contained herein to the contrary, nothing in this Certificate shall
preclude the settlement of any transaction entered into through the
facilities of the New York Stock Exchange.
D. Excess Stock.
1. Conversion into Excess Stock.
a. If, notwithstanding the other provisions contained in this Article
IV, prior to the Restriction Termination Date, there is a purported
Transfer or Non-Transfer Event such that any Person would either
Beneficially Own or Constructively Own shares of Equity Stock in excess
of the Ownership Limit, then, (i) except as otherwise provided in
Section (C)(4) of this Article IV, the purported transferee shall be
deemed to be a Prohibited Owner and shall acquire no right or interest
(or, in the case of a Non-Transfer Event, the Person holding record
title to the shares of Equity Stock Beneficially Owned or
Constructively Owned by such Beneficial Owner or Constructive Owner,
shall cease to own any right or interest) in such number of shares of
Equity Stock which would cause such Beneficial
5
<PAGE>
Owner or Constructive Owner to Beneficially Own or Constructively Own
shares of Equity Stock in excess of the Ownership Limit, (ii) such
number of shares of Equity Stock in excess of the Ownership Limit
(rounded up to the nearest whole share) shall be automatically
converted into an equal number of shares of Excess Stock and
transferred to a Trust in accordance with Section (D)(4) of this
Article IV and (iii) the Prohibited Owner shall submit such number of
shares of Equity Stock to the Corporation for registration in the name
of the Trustee of the Trust. Such conversion into Excess Stock and
transfer to a Trust shall be effective as of the close of trading on
the Trading Day prior to the date of the Transfer or Non-Transfer
Event, as the case may be.
b. If, notwithstanding the other provisions contained in this Article
IV, prior to the Restriction Termination Date, there is a purported
Transfer or Non-Transfer Event that, if effective, would (i) result in
the capital stock of Patriot REIT being beneficially owned (within the
meaning of Section 856(a)(5) of the Code) by fewer than 100 persons
within the meaning of Section 856(a)(5) of the Code, (ii) result in
Patriot REIT being "closely held" within the meaning of Section 856(h)
of the Code or (iii) cause Patriot REIT to Constructively Own 10% or
more of the ownership interest in a tenant of Patriot REIT's or a
Subsidiary's real property within the meaning of Section 856(d)(2)(B)
of the Code, then (x) the purported transferee shall be deemed to be a
Prohibited Owner and shall acquire no right or interest (or, in the
case of a Non-Transfer Event, the Person holding record title of the
shares of Equity Stock with respect to which such Non-Transfer Event
occurred, shall cease to own any right or interest) in such number of
shares of Equity Stock, the ownership of which by such purported
transferee or record holder would (A) result in the capital stock of
Patriot REIT being beneficially owned (within the meaning of Section
856(a)(5) of the Code) by fewer than 100 persons within the meaning of
Section 856(a)(5) of the Code, (B) result in Patriot REIT being
"closely held" within the meaning of Section 856(h) of the Code or
(C) cause Patriot REIT to Constructively Own 10% or more of the
ownership interests in a tenant of Patriot REIT's or a Subsidiary's
real property within the meaning of Section 856(d)(2)(B) of the Code,
(y) such number of shares of Equity Stock (rounded up to the nearest
whole share) shall be automatically converted into an equal number of
shares of Excess Stock and transferred to a Trust in accordance with
Section (D)(4) of this Article IV and (z) the Prohibited Owner shall
submit such number of shares of Equity Stock to the Corporation for
registration in the name of the Trustee of the Trust. Such conversion
into Excess Stock and transfer to a Trust shall be effective as of the
close of trading on the Trading Day prior to the date of the Transfer
or Non-Transfer Event, as the case may be.
c. Upon the occurrence of such a conversion of shares of any class or
series of Equity Stock into an equal number of shares of Excess Stock,
such shares of Equity Stock shall be automatically retired and
canceled, without any action required by the Board of Directors of the
Corporation, and shall thereupon be restored to the status of
authorized but unissued shares of the particular class or series of
Equity Stock from which such Excess Stock was converted and may be
reissued by the Corporation as that particular class or series of
Equity Stock.
2. Remedies for Breach. If the Corporation, or its designees, shall at
any time determine in good faith that a Transfer has taken place in
violation of Section (C)(2) of this Article IV or that a Person intends to
acquire or has attempted to acquire Beneficial Ownership or Constructive
Ownership of any shares of Equity Stock in violation of Section (C)(2) of
this Article IV, the Corporation shall take such action as it deems
advisable to refuse to give effect to or to prevent such Transfer or
acquisition, including, but not limited to, refusing to give effect to such
Transfer on the stock transfer books of the Corporation or instituting
proceedings to enjoin such Transfer or acquisition.
3. Notice of Restricted Transfer. Any Person who acquires or attempts to
acquire shares of Equity Stock in violation of Section (C)(2) of this
Article IV, or any Person who owns shares of Equity Stock that were
converted into shares of Excess Stock and transferred to a Trust pursuant
to Sections (D)(1) and (D)(4) of this Article IV, shall immediately give
written notice to the Corporation of such event and shall provide to the
Corporation such other information as the Corporation may request in order
to determine the effect,
6
<PAGE>
if any, of such Transfer or Non-Transfer Event, as the case may be, on the
Corporation's compliance with the terms of the Pairing Agreement, including
the effect on Patriot REIT's status as a real estate investment trust.
4. Ownership in Trust. Upon any Transfer or Non-Transfer Event that
results in Excess Stock pursuant to Section (D)(1) of this Article IV, such
Excess Stock shall be automatically transferred to a Trust to be held for
the exclusive benefit of the Beneficiary. The Corporation and Patriot REIT
shall name a Beneficiary for each Trust pursuant to the terms of the
Pairing Agreement. Any conversion of shares of Equity Stock into shares of
Excess Stock and transfer to a Trust shall be effective as of the close of
trading on the Trading Day prior to the date of the Transfer or Non-
Transfer Event that results in the conversion. Shares of Excess Stock so
held in trust shall remain issued and outstanding shares of stock of the
Corporation.
5. Dividend Rights. Each share of Excess Stock shall be entitled to the
same dividends and distributions (as to both timing and amount) as may be
declared by the Board of Directors as shares of the class or series of
Equity Stock from which such Excess Stock was converted. The Trustee, as
record holder of the shares of Excess Stock, shall be entitled to receive
all dividends and distributions and shall hold all such dividends or
distributions in trust for the benefit of the Beneficiary. The Prohibited
Owner with respect to such shares of Excess Stock shall repay to the Trust
the amount of any dividends or distributions received by it (i) that are
attributable to any shares of Equity Stock that have been converted into
shares of Excess Stock and (ii) the record date of which was on or after
the date that such shares were converted into shares of Excess Stock. The
Corporation shall take all measures that it determines reasonably necessary
to recover the amount of any such dividend or distribution paid to a
Prohibited Owner, including, if necessary, withholding any portion of
future dividends or distributions payable on shares of Equity Stock
Beneficially Owned or Constructively Owned by the Person who, but for the
provisions of this Article IV, would Constructively Own or Beneficially Own
the shares of Equity Stock that were converted into shares of Excess Stock;
and, as soon as reasonably practicable following the Corporation's receipt
or withholding thereof, shall pay over to the Trust for the benefit of the
Beneficiary the dividends so received or withheld, as the case may be.
6. Rights upon Liquidation. In the event of any voluntary or involuntary
liquidation of, or winding up of, or any distribution of the assets of, the
Corporation, each holder of shares of Excess Stock shall be entitled to
receive, ratably with each other holder of shares of Equity Stock of the
same class or series from which the Equity Stock was converted, that
portion of the assets of the Corporation that is available for distribution
to the holders of such class or series of Equity Stock. The Trust shall
distribute to the Prohibited Owner the amounts received upon such
liquidation, dissolution, or winding up, or distribution; provided,
however, that the Prohibited Owner shall not be entitled to receive amounts
in excess of, in the case of a purported Transfer in which the Prohibited
Owner gave value for shares of Equity Stock and which Transfer resulted in
the conversion of the shares into shares of Excess Stock, the price per
share, if any, such Prohibited Owner paid for the shares of Equity Stock
(which, in the case of Equity Stock that is paired, shall equal the price
per paired share multiplied by the most recent Valuation Percentage) and,
in the case of a Non-Transfer Event or Transfer in which the Prohibited
Owner did not give value for such shares (e.g., if the shares were received
through a gift or devise) and which Non-Transfer Event or Transfer, as the
case may be, resulted in the conversion of the shares into shares of Excess
Stock, the price per share equal to the Market Price on the date of such
Non-Transfer Event or Transfer. Any remaining amount in such Trust shall be
distributed to the Beneficiary.
7. Voting Rights. Each share of Excess Stock shall entitle the holder to
the number of votes the holder would have, if such share of Excess Stock
was a share of Equity Stock of the same class or series from which such
Excess Stock was converted, on all matters submitted to a vote at any
meeting of stockholders. The holders of shares of Excess Stock converted
from the same class or series of Equity Stock shall vote together with the
holders of such Equity Stock as a single class on all such matters. The
Trustee, as record holder of the Excess Stock, shall be entitled to vote
all shares of Excess Stock. Any vote by a Prohibited
7
<PAGE>
Owner as a purported holder of shares of Equity Stock prior to the
discovery by the Corporation that the shares of Equity Stock have been
converted into shares of Excess Stock shall, subject to applicable law, be
rescinded and shall be void ab initio with respect to such shares of Excess
Stock, and the Prohibited Owner shall be deemed to have given, as of the
close of trading on the Trading Day prior to the date of the purported
Transfer or Non-Transfer Event that results in the conversion of the shares
of Equity Stock into shares of Excess Stock and the transfer of such shares
to a Trust pursuant to Sections (D)(1) and (D)(4) of this Article IV, an
irrevocable proxy to the Trustee to vote the shares of Excess Stock in the
manner in which the Trustee, in its sole and absolute discretion, desires.
8. Designation of Permitted Transferee.
a. The Trustee shall have the exclusive and absolute right to
designate a Permitted Transferee of any and all shares of Excess Stock
if the Company fails to exercise its option with respect to such shares
pursuant to Section (D)(10) hereof within the time period set forth
therein. As soon as practicable, but in an orderly fashion so as not to
materially adversely affect the Market Price of the shares of Excess
Stock, the Trustee shall designate any Person as a Permitted
Transferee; provided, however, that (i) the Permitted Transferee so
designated purchases for valuable consideration (whether in a public or
private sale) the shares of Excess Stock (which, in the case of paired
Excess Stock, shall be determined based on the Valuation Percentage)
and (ii) the Permitted Transferee so designated may acquire such shares
of Excess Stock without violating any of the restrictions set forth in
Section (C)(2) of this Article IV and without such acquisition
resulting in the conversion of the shares of Equity Stock so acquired
into shares of Excess Stock and the transfer of such shares to a Trust
pursuant to Sections (D)(1) and (D)(4) of this Article IV.
b. Upon the designation by the Trustee of a Permitted Transferee in
accordance with the provisions of this Section (D)(8), the Trustee
shall cause to be transferred to the Permitted Transferee that number
of shares of Excess Stock acquired by the Permitted Transferee. Upon
such transfer of the shares of Excess Stock to the Permitted
Transferee, such shares of Excess Stock shall be automatically
converted into an equal number of shares of Equity Stock of the same
class and series from which such Excess Stock was converted. Upon the
occurrence of such a conversion of shares of Excess Stock into an equal
number of shares of Equity Stock, such shares of Excess Stock shall be
automatically retired and canceled, without any action required by the
Board of Directors of the Corporation, and shall thereupon be restored
to the status of authorized but unissued shares of Excess Stock and may
be reissued by the Corporation as Excess Stock.
c. The Trustee shall (i) cause to be recorded on the stock transfer
books of the Corporation that the Permitted Transferee is the holder of
record of such number of shares of Equity Stock, and (ii) distribute to
the Beneficiary any and all amounts held with respect to the shares of
Excess Stock after making payment to the Prohibited Owner pursuant to
Section (D)(9) of this Article IV.
d. If the Transfer of shares of Excess Stock to a purported Permitted
Transferee shall violate any of the transfer restrictions set forth in
Section (C)(2) of this Article IV, such Transfer shall be void ab
initio as to that number of shares of Excess Stock that cause the
violation of any such restriction when such shares are converted into
shares of Equity Stock (as described in clause (b) above) and the
purported Permitted Transferee shall be deemed to be a Prohibited Owner
and shall acquire no rights in such shares of Excess Stock or Equity
Stock. Such shares of Equity Stock shall be automatically re-converted
into Excess Stock and transferred to the Trust from which they were
originally Transferred. Such conversion and transfer to the Trust shall
be effective as of the close of trading on the Trading Day prior to the
date of the Transfer to the purported Permitted Transferee and the
provisions of this Article IV shall apply to such shares, including,
without limitation, the provisions of Sections D(8) through (D)(10)
with respect to any future Transfer of such shares by the Trust.
9. Compensation to Record Holder of Shares of Equity Stock that are
Converted into Shares of Excess Stock. Any Prohibited Owner shall be
entitled (following discovery of the shares of Excess Stock and subsequent
designation of the Permitted Transferee in accordance with Section (D)(8)
of this Article IV or following the acceptance of the offer to purchase
such shares in accordance with Section (D)(10) of this
8
<PAGE>
Article IV) to receive from the Trustee following the sale or other
disposition of such shares of Excess Stock the lesser of (i) (a) in the
case of a purported Transfer in which the Prohibited Owner gave value for
shares of Equity Stock and which Transfer resulted in the conversion of
such shares into shares of Excess Stock, the price per share, if any, such
Prohibited Owner paid for the shares of Equity Stock (which, in the case of
paired Excess Stock, shall be determined based on the Valuation Percentage)
and (b) in the case of a Non-Transfer Event or Transfer in which the
Prohibited Owner did not give value for such shares (e.g., if the shares
were received through a gift or devise) and which Non-Transfer Event or
Transfer, as the case may be, resulted in the conversion of such shares
into shares of Excess Stock, the price per share equal to the Market Price
on the date of such Non-Transfer Event or Transfer or (ii) the price per
share (which, in the case of paired Excess Stock, shall be determined based
on the Valuation Percentage) received by the Trustee from the sale or other
disposition of such shares of Excess Stock in accordance with this Section
(D)(9) or Section (D)(10) of this Article IV. Any amounts received by the
Trustee in respect of such shares of Excess Stock and in excess of such
amounts to be paid the Prohibited Owner pursuant to this Section (D)(9)
shall be distributed to the Beneficiary in accordance with the provisions
of Section (D)(8) of this Article IV. Each Beneficiary and Prohibited Owner
shall waive any and all claims that it may have against the Trustee and the
Trust arising out of the disposition of shares of Excess Stock, except for
claims arising out of the gross negligence or willful misconduct of, or any
failure to make payments in accordance with this Section (D) of this
Article IV by, such Trustee or the Corporation.
10. Purchase Right in Excess Stock. Shares of Excess Stock shall be
deemed to have been offered for sale to the Corporation or its designee, at
a price per share equal to the lesser of (i) the price per share (which, in
the case of paired Excess Stock, shall be determined based on the Valuation
Percentage) in the transaction that created such shares of Excess Stock
(or, in the case of devise, gift or Non-Transfer Event, the Market Price at
the time of such devise, gift or Non-Transfer Event) or (ii) the Market
Price on the date the Corporation, or its designee, accepts such offer. The
Corporation shall have the right to accept such offer for a period of 90
days following the later of (a) the date of the Non-Transfer Event or
purported Transfer which results in such shares of Excess Stock or (b) the
date on which the Corporation determines in good faith that a Transfer or
Non-Transfer Event resulting in shares of Excess Stock previously has
occurred, if the Corporation does not receive a notice of such Transfer or
Non-Transfer Event pursuant to Section (D)(3) of this Article IV.
E. Preemptive Rights. No holder of shares of any class or series of capital
stock shall as such holder have any preemptive or preferential right to
purchase or subscribe to (i) any shares of any class or series of capital
stock of the Corporation, whether now or hereafter authorized, (ii) any
warrants, rights or options to purchase any such capital stock or (iii) any
obligations convertible into any such capital stock or into warrants, rights
or options to purchase any such capital stock.
F. Remedies Not Limited. Nothing contained in this Article IV shall limit
the authority of the Corporation to take such other action as it deems
necessary or advisable to protect the Corporation and the interests of its
stockholders to ensure compliance with the requirements of the Pairing
Agreement and with the restrictions set forth in Section C of this Article IV.
G. Ambiguity. In the case of an ambiguity in the application of any of the
provisions of this Article IV, including any definition contained in Section
(C)(1) of this Article IV, the Board of Directors shall have the power to
determine the application of the provisions of this Article IV with respect to
any situation based on the facts known to it.
H. Legend. Each certificate for shares of Equity Stock shall bear the
following legend:
"The shares of Patriot American Hospitality, Inc. and Patriot American
Hospitality Operating Company represented by this combined certificate are
subject to restrictions in the respective Amended and Restated Certificate
of Incorporation of each company which prohibit (a) any Person from
Beneficially Owning or Constructively Owning (as these terms are defined in
the respective Amended and Restated
9
<PAGE>
Certificate of Incorporation of each company) in excess of 9.8% of the
number of outstanding shares of any class or series of Equity Stock (as
that term is defined in the respective Amended and Restated Certificate of
Incorporation of each company), (b) any Person (as that term is defined in
the respective Amended and Restated Certificate of Incorporation of each
company) from acquiring or maintaining any ownership interest in the stock
of either company that is inconsistent with (i) the requirements of the
Internal Revenue Code of 1986, as amended, pertaining to real estate
investment trusts or (ii) Article IV of the respective Amended and Restated
Certificate of Incorporation of each company and (c) any transfer of shares
of any class or series of Equity Stock of either company that are paired
pursuant to the Pairing Agreement, dated as of February 17, 1997 between
the two companies, as amended from time to time in accordance with the
provisions thereof (the "Pairing Agreement"), except in combination with an
equal number of shares of the other company in accordance with the
respective Amended and Restated Bylaws of each company and the Pairing
Agreement, copies of which are on file with the transfer agent, and the
holder of this certificate by his acceptance hereof consents to be bound by
such restrictions.
Patriot American Hospitality, Inc. and Patriot American Hospitality
Operating Company will furnish without charge to each stockholder who so
requests a copy of the relevant provisions of the respective Amended and
Restated Certificates of Incorporation and the respective Amended and
Restated Bylaws of each company, a copy of the Pairing Agreement and a copy
of the provisions setting forth the designations, preferences, privileges
and rights of each class of stock or series thereof that each company is
authorized to issue and the qualifications, limitations and restrictions of
such preferences and/or rights. Any such request may be addressed to the
Secretary of either Company or to the transfer agent named on the face
hereof."
I. Severability. Each provision of this Article IV shall be severable and an
adverse determination as to any such provision shall be in no way affect the
validity of any other provision.
V.
DIRECTORS
A. General Powers. The property, affairs and business of the Corporation
shall be managed under the direction of the Board of Directors and, except as
otherwise expressly provided by law, the Bylaws or this Certificate, all of
the powers of the Corporation shall be vested in such Board.
B. Number of Directors. The number of directors shall be fixed by resolution
duly adopted from time to time by the Board of Directors. A director need not
be a stockholder of the Corporation.
C. Terms of Directors. The directors shall be classified, with respect to
the term for which they severally hold office, into three classes, as nearly
equal in number as possible. The initial Class I Directors of the Corporation
shall be ; the initial Class II Directors of the
Corporation shall be ; and the initial Class III
Directors of the Corporation shall be . The initial Class
I Directors shall serve for a term expiring at the annual meeting of
stockholders to be held in 1997; the initial Class II Directors shall serve
for a term expiring at the annual meeting of stockholders to be held in 1998;
and the initial Class III Directors shall serve for a term expiring at the
annual meeting of stockholders to be held in 1999. At each annual meeting of
stockholders, the successor or successors of the class of directors whose term
expires at that meeting shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at such meeting and entitled
to vote on the election of directors, and shall hold office for a term
expiring at the annual meeting of stockholders held in the third year
following the year of their election. The directors elected to each class
shall hold office until their successors are duly elected and qualified or
until their earlier resignation or removal.
Notwithstanding the foregoing, whenever, pursuant to the provisions of
Article IV of this Certificate, the holders of any one or more series of
Preferred Stock shall have the right, voting separately as a series or
together with holders of other such series, to elect directors at an annual or
special meeting of stockholders, the election,
10
<PAGE>
term of office, filling of vacancies and other features of such directorships
shall be governed by the terms of this Certificate and any certificates of
designation applicable thereto, and such directors so elected shall not be
divided into classes pursuant to this Section C of this Article V.
During any period when the holders of any series of Preferred Stock have the
right to elect additional directors as provided for or fixed pursuant to the
provisions of Article IV of this Certificate, then upon commencement and for
the duration of the period during which such right continues: (a) the then
otherwise total authorized number of directors of the Corporation shall
automatically be increased by such specified number of directors, and the
holders of such Preferred Stock shall be entitled to elect the additional
directors so provided for or fixed pursuant to said provisions and (b) each
such additional director shall serve until such director's successor shall
have been duly elected and qualified, or until such director's right to hold
such office terminates pursuant to said provisions, whichever occurs earlier,
subject to such director's earlier death, disqualification, resignation or
removal. Except as otherwise provided by the Board in the resolution or
resolutions establishing such series, whenever the holders of any series of
Preferred Stock having such right to elect additional directors are divested
of such right pursuant to the provisions of such stock, the terms of office of
all such additional directors elected by the holders of such stock, or elected
to fill any vacancies resulting from the death, resignation, disqualification
or removal of such additional directors, shall forthwith terminate and the
total and authorized number of directors of the Corporation shall be reduced
accordingly.
D. Removal of Directors. Subject to the rights, if any, of any series of
Preferred Stock to elect directors and to remove any director whom the holders
of any such stock have the right to elect, any director (including persons
elected by directors to fill vacancies in the Board of Directors) may be
removed from office (a) only with cause and (b) only by the affirmative vote
of the holders of at least 75% of the shares then entitled to vote at an
election of directors. At least 30 days prior to any meeting of stockholders
at which it is proposed that any director be removed from office, written
notice of such proposed removal shall be sent to the director whose removal
will be considered at the meeting. For purposes of this Certificate, "cause,"
with respect to the removal of any director shall mean only (i) conviction of
a felony, (ii) declaration of unsound mind by order of a court, (iii) gross
dereliction of duty, (iv) commission of any act involving moral turpitude or
(v) commission of an act that constitutes intentional misconduct or a knowing
violation of law if such action in either event results both in an improper
substantial personal benefit to such director and a material injury to the
Corporation.
E. Vacancies. Subject to the rights, if any, of the holders of any series of
Preferred Stock to elect directors and to fill vacancies in the Board of
Directors relating thereto, any and all vacancies in the Board of Directors,
however occurring, including, without limitation, by reason of an increase in
size of the Board of Directors, or the death, resignation, disqualification or
removal of a director, shall be filled solely by the affirmative vote of a
majority of the remaining directors then in office, even if less than a quorum
of the Board of Directors. Any director appointed in accordance with the
preceding sentence shall hold office for the remainder of the full term of the
class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been duly elected and
qualified or until such director's earlier resignation or removal. Subject to
the rights, if any, of the holders of any series of Preferred Stock, when the
number of directors is increased or decreased, the Board of Directors shall
determine the class or classes to which the increased or decreased number of
directors shall be apportioned; provided, however, that no decrease in the
number of directors shall shorten the term of any incumbent director. In the
event of a vacancy in the Board of Directors, the remaining directors, except
as otherwise provided by law, may exercise the powers of the full Board of
Directors until such vacancy is filled.
VI.
LIMITATION OF LIABILITY
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (a) for any breach of the
11
<PAGE>
director's duty of loyalty to the Corporation or its stockholders, (b) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (c) under Section 174 of the DGCL or (d) for any
transaction from which the director derived an improper personal benefit. If
the DGCL is amended after the effective date of this Certificate to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the DGCL, as so
amended.
Any repeal or modification of this Article VI by either (i) the stockholders
of the Corporation or (ii) an amendment to the DGCL shall not adversely affect
any right or protection existing at the time of such repeal or modification
with respect to any acts or omissions occurring before such repeal or
modification of a person serving as a director at the time of such repeal or
modification.
VII.
RELATED PERSON TRANSACTION
The affirmative vote of the holders of not less than 66 2/3% of the
outstanding shares of capital stock of this corporation, which shall include
the affirmative vote of at least 50% of the outstanding shares of capital
stock held by shareholders other than a "Related Person" (as hereinafter
defined), shall be required for the approval or authorization of any "Business
Combination" (as hereinafter defined) of this corporation with any Related
Person; provided, however, that such 66 2/3% voting requirement shall not be
applicable if the Business Combination was approved by the Board of Directors
of the corporation prior to the acquisition by such Related Person of the
beneficial ownership of 5% or more of the outstanding shares of the capital
stock of the corporation.
For purposes of this Article VII:
1. The term "Business Combination" shall mean (a) any merger, reorganization
or consolidation of this corporation with or into a Related Person, (b) any
sale, lease, exchange, transfer or other disposition, including, without
limitation, a mortgage or any other security device, of all or any substantial
part of the assets of this corporation (including, without limitation, any
voting securities of a subsidiary) or of a subsidiary, to a Related Person,
(c) any merger or consolidation of a Related Person with or into this
corporation or a subsidiary of this corporation and (d) any sale, lease,
exchange, transfer or other disposition of all or any substantial part of the
assets of a Related Person to this corporation or a subsidiary of this
corporation.
2. The term "Related Person" shall mean and include any individual,
corporation, partnership or other person or entity which, together with its
"affiliates" and "associates" (defined below), beneficially (as defined in
Rule 13d-3 of the Securities Exchange Act of 1934), owns in the aggregate five
percent (5%) or more of the outstanding shares of the capital stock of this
corporation, and any "affiliate" or "associate" (as those terms are defined in
Rule 12b-2 of the Exchange Act) of any such individual, corporation,
partnership or other person or entity; provided, however, that the term
"Related Person" shall not include either Patriot REIT or any subsidiary of
this corporation.
3. The term "substantial part of the assets" shall mean assets having a fair
market value or book value, whichever is greater, equal to 25% or more of such
value of the total assets as reflected on the most recent quarterly balance
sheet of the corporation as of a date no earlier than forty-five (45) days
prior to any acquisition of such assets.
4. Without limitation, any share of capital stock of this corporation which
any Related Person has the right to acquire pursuant to any agreement or upon
exercise of conversion rights, warrants or options, or otherwise shall be
deemed beneficially owned by such Related Person.
12
<PAGE>
The provisions set forth in this Article VII may not be repealed or amended
in any respect, unless such action is approved by the affirmative vote of the
holders of not less than 66 2/3% of the outstanding shares of capital stock of
this corporation; provided, however, that if there is a Related Person (as
defined herein), such 66 2/3% vote must include the affirmative vote of at
least 50% of the outstanding shares of capital stock held by shareholders
other than the Related Person.
VIII.
AMENDMENT OF CERTIFICATE OF INCORPORATION
Subject to Article VII of this Certificate, the Corporation reserves the
right to amend or repeal this Certificate in the manner now or hereafter
prescribed by statute and this Certificate, and all rights conferred upon
stockholders herein are granted subject to this reservation.
13
<PAGE>
EXHIBIT 3.4
AMENDED AND RESTATED
BYLAWS
OF
PATRIOT AMERICAN HOSPITALITY OPERATING COMPANY
ARTICLE I.
DEFINITIONS
For purposes of these Bylaws, the following words shall have the meanings
set forth below:
(a) "Affiliate" of a Person shall mean (i) any Person that, directly or
indirectly, controls or is controlled by or is under common control with such
other Person, (ii) any Person that owns, beneficially, directly or indirectly,
5% or more of the outstanding capital stock, shares or equity interests of
such other Person or (iii) any officer, director, employee, partner or trustee
of such other Person or any Person controlling, controlled by or under common
control with such Person (excluding directors and Persons serving in similar
capacities who are not otherwise Affiliates of such Person). For the purposes
of this definition, the term "Person" shall mean, and includes, any natural
person, corporation, partnership, association, trust, limited liability
company or any other legal entity. For the purposes of this definition,
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities, partnership interests or other equity interests.
(b) "Certificate" shall mean the Amended and Restated Certificate of
Incorporation of the Corporation, as amended from time to time.
(c) "Corporation" shall mean Patriot American Hospitality Operating Company.
(d) "DGCL" shall mean the Delaware General Corporation Law, as amended from
time to time.
(e) "Equity Stock" shall mean the common stock, par value $.01 per share,
and the preferred stock, par value $.01 per share of the Corporation and
Patriot REIT.
(f) "Independent Director" shall mean a director of the Corporation who is
not (i) an officer or employee of the Corporation, (ii) a director or officer
of Patriot REIT or (iii) an Affiliate of (a) any lessee of any property of the
Corporation, (b) a subsidiary of the Corporation or (c) any partnership that
is an Affiliate of the Corporation.
(g) "Patriot REIT" shall mean Patriot American Hospitality, Inc.
(h) "Public Announcement" shall mean: (i) disclosure in a press release
reported by the Dow Jones News Service, Associated Press or comparable
national news service, (ii) a report or other document filed publicly with the
Securities and Exchange Commission (including, without limitation, a Form 8-K)
or (iii) a letter or report sent to stockholders of record of the Corporation
at the time of the mailing of such letter or report.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
2.1 Places of Meetings. All meetings of the stockholders shall be held at
such place, either within or without the State of Delaware, as from time to
time may be fixed by the Board of Directors.
2.2 Annual Meetings. The annual meeting of the stockholders, for the
election of directors and transaction of such other business as may come
properly before the meeting, shall be held at such date and time as shall be
determined by the Board of Directors.
1
<PAGE>
2.3 Special Meetings. A special meeting of the stockholders for any purpose
or purposes may be called at any time only by the Chairman of the Board or by
a majority of the Board of Directors. At a special meeting no business shall
be transacted and no corporate action shall be taken other than that stated in
the notice of the meeting.
2.4 Notice of Meetings; Adjournments. A written notice of each annual
meeting stating the hour, date and place of such annual meeting shall be given
by the Secretary or an Assistant Secretary of the Corporation (or other person
authorized by these Bylaws or by law) not less than 10 days nor more than 60
days before the annual meeting, to each stockholder entitled to vote thereat
and to each stockholder who, by law or under the Certificate or under these
Bylaws, is entitled to such notice, by delivering such notice to him or her or
by mailing it, postage prepaid, addressed to such stockholder at the address
of such stockholder as it appears on the stock transfer books of the
Corporation. Such notice shall be deemed to be delivered when hand delivered
to such address or deposited in the mail so addressed, with postage prepaid.
Notice of all special meetings of stockholders shall be given in the same
manner as provided for annual meetings, except that the written notice of all
special meetings shall state the purpose or purposes for which the meeting has
been called.
Notice of an annual meeting or special meeting of stockholders need not be
given to a stockholder if a written waiver of notice is signed before or after
such meeting by such stockholder or if such stockholder attends such meeting,
unless such attendance was for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the
meeting was not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any annual meeting or special meeting of
stockholders need be specified in any written waiver of notice.
The Board of Directors may postpone and reschedule any previously scheduled
annual meeting or special meeting of stockholders and any record date with
respect thereto, regardless of whether any notice or public disclosure with
respect to any such meeting has been sent or made pursuant to this Section 2.4
or otherwise. In no event shall the Public Announcement of an adjournment,
postponement or rescheduling of any previously scheduled meeting of
stockholders commence a new time period for the giving of a stockholder's
notice under Section 2.9 of these Bylaws.
When any meeting is convened, the presiding officer of the meeting may
adjourn the meeting if (a) no quorum is present for the transaction of
business, (b) the Board of Directors determines that adjournment is necessary
or appropriate to enable the stockholders to consider fully information that
the Board of Directors determines has not been made sufficiently or timely
available to stockholders or (c) the Board of Directors determines that
adjournment is otherwise in the best interests of the Corporation. When any
annual meeting or special meeting of stockholders is adjourned to another
hour, date or place, notice need not be given of the adjourned meeting, other
than an announcement at the meeting at which the adjournment is taken, of the
hour, date and place to which the meeting is adjourned; provided, however,
that if the adjournment is for more than 30 days, or if after the adjournment
a new record date is fixed for the adjourned meeting, notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote thereat
and each stockholder who, by law or under the Certificate or under these
Bylaws, is entitled to such notice.
2.5 Quorum. Except as otherwise required by the Certificate, any number of
stockholders together holding at least a majority of the outstanding shares of
capital stock entitled to vote with respect to the business to be transacted,
who shall be present in person or represented by proxy at any meeting duly
called, shall constitute a quorum for the transaction of business. If less
than a quorum shall be in attendance at the time for which a meeting shall
have been called, the meeting may be adjourned from time to time by a majority
of the stockholders present or represented by proxy.
2.6 Voting and Proxies. Stockholders shall have one vote for each share of
stock entitled to vote owned by them of record according to the stock transfer
books of the Corporation, unless otherwise provided by law or
2
<PAGE>
by the Certificate. Stockholders may vote either in person or by written
proxy, but no proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period. Proxies shall be filed
with the secretary of the meeting before being voted. Except as otherwise
limited therein or as otherwise provided by law, proxies shall entitle the
persons authorized thereby to vote at any adjournment of such meeting, but
they shall not be valid after final adjournment of such meeting. A proxy with
respect to stock held in the name of two or more persons shall be valid if
executed by or on behalf of any one of them unless at or prior to the exercise
of the proxy the Corporation receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on
behalf of a stockholder shall be deemed valid, and the burden of proving
invalidity shall rest on the challenger.
2.7 Action at Meeting. When a quorum is present, any matter before any
meeting of stockholders shall be decided by the affirmative vote of the
majority of shares present in person or represented by proxy at such meeting
and entitled to vote on such matter, except where a larger vote is required by
law, by the Certificate or by these Bylaws. Any election by stockholders shall
be determined by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors, except where a larger vote is required by law, by the Certificate
or by these Bylaws. The Corporation shall not directly or indirectly vote any
shares of its own stock; provided, however, that the Corporation may vote
shares which it holds in a fiduciary capacity to the extent permitted by law.
2.8 Stockholder List. The officer or agent having charge of the stock
transfer books of the Corporation shall make, at least 10 days before every
annual meeting or special meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting or any adjournment thereof, 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 least 10 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 hour, date and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present.
2.9 Stockholder Proposals. In addition to any other applicable requirements,
for business to be properly brought before an annual meeting by a stockholder
of record (both as of the time notice of such proposal is given by the
stockholder as set forth below and as of the record date for the annual
meeting in question) of any shares of capital stock entitled to vote at such
annual meeting, such stockholder shall: (i) give timely written notice as
required by this Section 2.9 to the Secretary of the Corporation and (ii) be
present at such meeting, either in person or by a representative. For the
first annual meeting following the end of the fiscal year ended December 31,
1996, a stockholder's notice shall be timely if delivered to, or mailed to and
received by, the Corporation at its principal executive office not later than
the close of business on the 15th day following the day on which the Public
Announcement of the date of such annual meeting is first made by the
Corporation. For all subsequent annual meetings, a stockholder's notice shall
be timely if delivered to, or mailed to and received by, the Corporation at
its principal executive office not later than 90 days prior to the anniversary
date of the immediately preceding annual meeting (the "Anniversary Date");
provided, however, that in the event the annual meeting is scheduled to be
held on a date more than 30 days before the Anniversary Date or more than 60
days after the Anniversary Date, a stockholder's notice shall be timely if
delivered to, or mailed to and received by, the Corporation at its principal
executive office not later than the close of business on the later of (1) the
90th day prior to the scheduled date of such annual meeting or (2) the 15th
day following the day on which Public Announcement of the date of such annual
meeting is first made by the Corporation.
A stockholder's notice to the Secretary of the Corporation shall set forth
as to each matter proposed to be brought before an annual meeting: (i) a brief
description of the business the stockholder desires to bring before such
annual meeting and the reasons for conducting such business at such annual
meeting, (ii) the name and address, as they appear on the stock transfer books
of the Corporation, of the stockholder proposing such business, (iii) the
class and number of shares of the capital stock of the Corporation
beneficially owned by the
3
<PAGE>
stockholder proposing such business, (iv) the names and addresses of the
beneficial owners, if any, of any capital stock of the Corporation registered
in such stockholder's name on such books, and the class and number of shares
of the capital stock of the Corporation beneficially owned by such beneficial
owners, (v) the names and addresses of other stockholders known by the
stockholder proposing such business to support such proposal, and the class
and number of shares of the capital stock of the Corporation beneficially
owned by such other stockholders and (vi) any material interest of the
stockholder proposing to bring such business before such meeting (or any other
stockholders known to be supporting such proposal) in such proposal.
If the Board of Directors or a designated committee thereof determines that
any stockholder proposal was not made in a timely fashion in accordance with
the provisions of this Section 2.9 or that the information provided in a
stockholder's notice does not satisfy the information requirements of this
Section 2.9 in any material respect, such proposal shall not be presented for
action at the annual meeting in question. If neither the Board of Directors
nor such committee makes a determination as to the validity of any stockholder
proposal in the manner set forth above, the presiding officer of the annual
meeting shall determine whether the stockholder proposal was made in
accordance with the terms of this Section 2.9. If the presiding officer
determines that any stockholder proposal was not made in a timely fashion in
accordance with the provisions of this Section 2.9 or that the information
provided in a stockholder's notice does not satisfy the information
requirements of this Section 2.9 in any material respect, such proposal shall
not be presented for action at the annual meeting in question. If the Board of
Directors, a designated committee thereof or the presiding officer determines
that a stockholder proposal was made in accordance with the requirements of
this Section 2.9, the presiding officer shall so declare at the annual meeting
and ballots shall be provided for use at the meeting with respect to such
proposal.
Notwithstanding the foregoing provisions of this Section 2.9, a stockholder
shall also comply with all applicable requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
thereunder with respect to the matters set forth in this Section 2.9, and
nothing in this Section 2.9 shall be deemed to affect any rights of
stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
2.10 Inspectors of Elections. The Corporation shall, in advance of any
meeting of stockholders, appoint one or more inspectors to act at the meeting
and make a written report thereof. The Corporation may designate one or more
persons as alternate inspectors to replace any inspector who fails to act. If
no inspector or alternate is able to act at a meeting of stockholders, the
presiding officer shall appoint one or more inspectors to act at the meeting.
Any inspector may, but need not, be an officer, employee or agent of the
Corporation. Each inspector, before entering upon the discharge of his or her
duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability. The inspectors shall perform such duties as are required by the DGCL,
including the counting of all votes and ballots. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance
of the duties of the inspectors. The presiding officer may review all
determinations made by the inspectors, and in so doing the presiding officer
shall be entitled to exercise his or her sole judgment and discretion and he
or she shall not be bound by any determinations made by the inspectors. All
determinations by the inspectors and, if applicable, the presiding officer,
shall be subject to further review by any court of competent jurisdiction.
2.11 Presiding Officer. The Chairman of the Board, if one is elected, or if
not elected or in his or her absence, the President, shall preside at all
annual meetings or special meetings of stockholders and shall have the power,
among other things, to adjourn such meeting at any time and from time to time,
subject to Sections 2.4 and 2.5 of this Article II. The order of business and
all other matters of procedure at any meeting of the stockholders shall be
determined by the presiding officer.
4
<PAGE>
ARTICLE III.
DIRECTORS
3.1 General Powers. The property, affairs and business of the Corporation
shall be managed under the direction of the Board of Directors and, except as
otherwise expressly provided by law, the Certificate or these Bylaws, all of
the powers of the Corporation shall be vested in such Board.
3.2 Number of Directors. The number of directors shall be fixed by
resolution duly adopted from time to time by the Board of Directors.
3.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected and removed in the manner provided for in
Article V of the Certificate.
(b) Vacancies in the Board of Directors shall be filled in the manner
provided for in Article V of the Certificate.
(c) At any meeting of the Board of Directors, a majority of the number of
directors then in office shall constitute a quorum for the transaction of
business. However, if less than a quorum is present at a meeting, a
majority of the directors present may adjourn the meeting from time to
time, and the meeting may be held as adjourned without further notice,
except that when any meeting of the Board of Directors, either regular of
special, is adjourned for 30 days or more, notice of the adjourned meeting
shall be given as in the case of the original meeting.
3.4 Meetings of Directors. Meetings of the Board of Directors shall be held
at places within or without the State of Delaware and at times fixed by
resolution of the Board of Directors, or upon call of the Chairman of the
Board, and the Secretary of the Corporation or officer performing the
Secretary's duties shall give not less than 24 hours' notice by letter,
facsimile, telegraph or telephone (or in person) of all meetings of the Board
of Directors, provided that notice need not be given of the annual meeting or
of regular meetings held at times and places fixed by resolution of the Board
of Directors. Meetings may be held at any time without notice if all of the
directors are present, or if those not present waive notice in writing either
before or after the meeting; provided, however, that attendance at a meeting
for the express purpose of objecting at the beginning of a meeting to the
transaction of any business because the meeting is not lawfully convened shall
not be considered a waiver of notice.
3.5 Nominations. Nominations of candidates for election as directors of the
Corporation at any annual meeting may be made only (a) by, or at the direction
of, a majority of the Board of Directors or (b) by any holder of record (both
as of the time notice of such nomination is given by the stockholder as set
forth below and as of the record date for the annual meeting in question) of
any shares of the capital stock of the Corporation entitled to vote at such
annual meeting who complies with the timing, informational and other
requirements set forth in this Section 3.5. Any stockholder who has complied
with the timing, informational and other requirements set forth in this
Section 3.5 and who seeks to make such a nomination must be, or his, her or
its representative must be, present in person at the annual meeting. Only
persons nominated in accordance with the procedures set forth in this Section
3.5 shall be eligible for election as directors at an annual meeting.
Nominations, other than those made by, or at the direction of, the Board of
Directors shall be made pursuant to timely notice in writing to the Secretary
of the Corporation as set forth in this Section 3.5. For the first annual
meeting following the end of the fiscal year ended December 31, 1996, a
stockholder's notice shall be timely if delivered to, or mailed to and
received by, the Corporation at its principal executive office not later than
the close of business on the 15th day following the day on which the Public
Announcement of the date of such annual meeting is first made by the
Corporation. For all subsequent annual meetings, a stockholder's notice shall
be timely if delivered to, or mailed to and received by, the Corporation at
its principal executive office not less than 90 days prior to the Anniversary
Date; provided, however, that in the event the annual meeting is scheduled
5
<PAGE>
to be held on a date more than 30 days before the Anniversary Date or more
than 60 days after the Anniversary Date, a stockholder's notice shall be
timely if delivered to, or mailed and received by, the Corporation at its
principal executive office not later than the close of business on the later
of (x) the 90th day prior to the scheduled date of such annual meeting or (y)
the 15th day following the day on which Public Announcement of the date of
such annual meeting is first made by the Corporation.
A stockholder's notice to the Secretary of the Corporation shall set forth
as to each person whom the stockholder proposes to nominate for election or
re-election as a director: (1) the name, age, business address and residence
address of such person; (2) the principal occupation or employment of such
person; (3) the class and number of shares of the capital stock of the
Corporation which are beneficially owned by such person on the date of such
stockholder notice; and (4) the consent of each nominee to serve as a director
if elected. A stockholder's notice to the Secretary of the Corporation shall
further set forth as to the stockholder giving such notice: (a) the name and
address, as they appear on the stock transfer books of the Corporation, of
such stockholder and of the beneficial owners (if any) of the capital stock of
the Corporation registered in such stockholder's name and the name and address
of other stockholders known by such stockholder to be supporting such
nominee(s); (b) the class and number of shares of the capital stock of the
Corporation which are held of record, beneficially owned or represented by
proxy by such stockholder and by any other stockholders known by such
stockholder to be supporting such nominee(s) on the record date for the annual
meeting in question (if such date shall then have been made publicly
available) and on the date of such stockholder's notice; and (c) a description
of all arrangements or understandings between such stockholder and each
nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by such
stockholder.
If the Board of Directors or a designated committee thereof determines that
any stockholder nomination was not made in accordance with the terms of this
Section 3.5 or that the information provided in a stockholder's notice does
not satisfy the informational requirements of this Section 3.5 in any material
respect, then such nomination shall not be considered at the annual meeting in
question. If neither the Board of Directors nor such committee makes a
determination as to whether a nomination was made in accordance with the
provisions of this Section 3.5, the presiding officer of the annual meeting
shall determine whether a nomination was made in accordance with such
provisions. If the presiding officer determines that any stockholder
nomination was not made in accordance with the terms of this Section 3.5 or
that the information provided in a stockholder's notice does not satisfy the
informational requirements of this Section 3.5 in any material respect, then
such nomination shall not be considered at the annual meeting in question. If
the Board of Directors, a designated committee thereof or the presiding
officer determines that a nomination was made in accordance with the terms of
this Section 3.5, the presiding officer shall so declare at the annual meeting
and ballots shall be provided for use at the meeting with respect to such
nominee.
Notwithstanding anything to the contrary in the second paragraph of this
Section 3.5, in the event that the number of directors to be elected to the
Board of Directors is increased and there is no Public Announcement by the
Corporation naming all of the nominees for director or specifying the size of
the increased Board of Directors at least 90 days prior to the Anniversary
Date, a stockholder's notice required by this Section 3.5 shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if such notice shall be delivered to, or mailed to
and received by, the Corporation at its principal executive office not later
than the close of business on the 15th day following the day on which such
Public Announcement is first made by the Corporation.
No person shall be elected by the stockholders as a director of the
Corporation unless nominated in accordance with the procedures set forth in
this Section 3.5. Election of directors at an annual meeting need not be by
written ballot, unless otherwise provided by the Board of Directors or
presiding officer at such annual meeting. If written ballots are to be used,
ballots bearing the names of all the persons who have been nominated for
election as directors at the annual meeting in accordance with the procedures
set forth in this Section 3.5 shall be provided for use at the annual meeting.
6
<PAGE>
3.6 Voting.
(a) Except as provided in subsection (c) of this Section 3.6, the action
of the majority of the directors present at a meeting at which a quorum is
present shall be the action of the Board of Directors, unless a larger vote
is required for such action by the Certificate, these Bylaws or by law.
(b) Any action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting if all members of the
Board of Directors consent thereto in writing. Such written consent shall
be filed with the records of the meetings of the Board of Directors and
shall be treated for all purposes as a vote at a meeting of the Board of
Directors.
(c) Notwithstanding anything in these Bylaws to the contrary, any action
pertaining to any transaction involving the Corporation, including entering
into joint venture investments or any other transaction, in which an
advisor, director or officer of the Corporation, or any Affiliate of any of
the foregoing persons, has any direct or indirect interest other than
solely as a result of their status as a director, officer, or stockholder
of the Corporation, must be approved by a majority of the directors,
including a majority of the Independent Directors, even if the Independent
Directors constitute less than a quorum.
3.7 Manner of Participation. Directors may participate in meetings of the
Board of Directors by means of conference telephone or similar communications
equipment by means of which all directors participating in the meeting can
hear each other, and participation in a meeting in accordance herewith shall
constitute presence in person at such meeting for purposes of these Bylaws.
3.8 Compensation. By resolution of the Board of Directors, directors may be
allowed a fee and expenses for attendance at all meetings, but nothing herein
shall preclude directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE IV.
COMMITTEES
4.1 Executive Committee. The Board of Directors, by resolution duly adopted,
may elect an Executive Committee which shall consist of not less than two
directors, including the Chairman of the Board. The members of the Executive
Committee shall serve until their successors are designated by the Board of
Directors, until removed, or until the Executive Committee is dissolved by the
Board of Directors. All vacancies that may occur in the Executive Committee
shall be filled by the Board of Directors.
When the Board of Directors is not in session, the Executive Committee shall
have all power vested in the Board of Directors by law, by the Certificate, or
by these Bylaws, except as otherwise provided in the DGCL. The Executive
Committee shall report at the next regular or special meeting of the Board of
Directors all action that the Executive Committee may have taken on behalf of
the Board of Directors since the last regular or special meeting of the Board
of Directors.
Meetings of the Executive Committee shall be held at such places and at such
times fixed by resolution of the Executive Committee, or upon call of the
Chairman of the Board. Not less than 12 hours' notice shall be given by
letter, facsimile, telegraph or telephone (or in person) of all meetings of
the Executive Committee; provided, however, that notice need not be given of
regular meetings held at times and places fixed by resolution of the Executive
Committee and that meetings may be held at any time without notice if all of
the members of the Executive Committee are present or if those not present
waive notice in writing either before or after the meeting; provided, further,
that attendance at a meeting for the express purpose of objecting at the
beginning of a meeting to the transaction of any business because the meeting
is not lawfully convened shall not be considered a waiver of notice. A
majority of the members of the Executive Committee then serving shall
constitute a quorum for the transaction of business at any meeting of the
Executive Committee.
7
<PAGE>
4.2 Compensation Committee. The Board of Directors, at its regular annual
meeting, shall designate a Compensation Committee which shall consist of two
or more non-employee directors. In addition, the Board of Directors at any
time may designate one or more alternate members of the Compensation
Committee, who shall be non-employee directors, who may act in place of any
absent regular member upon invitation by the chairman or secretary of the
Compensation Committee.
With respect to bonuses, the Compensation Committee shall have and may
exercise the powers to determine the amounts annually available for bonuses
pursuant to any bonus plan or formula approved by the Board of Directors, to
determine bonus awards to executive officers and to exercise such further
powers with respect to bonuses as may from time to time be conferred by the
Board of Directors.
With respect to salaries, the Compensation Committee shall have and may
exercise the power to fix and determine from time to time all salaries of the
executive officers of the Corporation, and such further powers with respect to
salaries as may from time to time be conferred by the Board of Directors.
The Compensation Committee shall administer the Corporation's stock
incentive plans and from time to time may grant, consistent with the plans,
stock options and other awards permissible under such plans.
Vacancies in the Compensation Committee shall be filled by the Board of
Directors, and members of the Compensation Committee shall be subject to
removal by the Board of Directors at any time.
The Compensation Committee shall fix its own rules of procedure. A majority
of the number of regular members then serving on the Compensation Committee
shall constitute a quorum; and regular and alternate members present shall be
counted to determine whether there is a quorum. The Compensation Committee
shall keep minutes of its meetings, and all action taken by it shall be
reported to the Board of Directors.
4.3 Audit Committee. The Board of Directors, at its regular annual meeting,
shall designate an Audit Committee which shall consist of two or more
directors whose membership on the Audit Committee shall meet the requirements
set forth in the rules of the New York Stock Exchange, as amended from time to
time. Vacancies in the Audit Committee shall be filled by the Board of
Directors with directors meeting the requirements set forth above, giving
consideration to continuity of the Audit Committee, and members shall be
subject to removal by the Board of Directors at any time. The Audit Committee
shall fix its own rules of procedure and a majority of the members serving
shall constitute a quorum. The Audit Committee shall meet at least twice per
year with both the internal and the Corporation's outside auditors present at
each meeting and shall keep minutes of its meetings and all action taken shall
be reported to the Board of Directors. The Audit Committee shall review the
reports and minutes of any audit committees of the Corporation's subsidiaries.
The Audit Committee shall review the Corporation's financial reporting
process, including accounting policies and procedures. The Audit Committee
shall examine the report of the Corporation's outside auditors, consult with
them with respect to their report and the standards and procedures employed by
them in their audit, report to the Board of Directors the results of its study
and recommend the selection of auditors for each fiscal year.
4.4 Nominating Committee. The Board of Directors, by resolution duly
adopted, shall designate a Nominating Committee which shall consist of three
or more directors. The Nominating Committee shall make recommendations to the
Board of Directors regarding nominees for election as directors by the
stockholders at each annual meeting of stockholders and make such other
recommendations regarding tenure, classification and compensation of directors
as the Nominating Committee may deem advisable from time to time. The
Nominating Committee shall fix its own rules of procedure and a majority of
the members then serving shall constitute a quorum.
4.5 Other Committees. The Board of Directors, by resolution adopted, may
establish such other standing or special committees of the Board of Directors
as it may deem advisable, and the members, terms and authority of such
committees shall be as set forth in the resolutions establishing the same.
8
<PAGE>
ARTICLE V.
OFFICERS
5.1 Election of Officers; Terms. The officers of the Corporation shall be
elected by the Board of Directors and shall include a Chairman of the Board, a
President, one or more Vice Presidents, a Secretary and a Treasurer or Chief
Financial Officer. Other officers, including Executive Vice Presidents and
Senior Vice Presidents, may be specified by the Board of Directors, and
assistant and subordinate officers, may from time to time be elected by the
Board of Directors. All officers shall hold office until the next annual
meeting of the Board of Directors and until their successors are duly elected
and qualified. The Chairman of the Board shall be chosen from among the
directors. Any two officers may be combined in the same person as the Board of
Directors may determine.
5.2 Removal of Officers; Vacancies. Any officer of the Corporation may be
removed with or without cause, at any time, by the Board of Directors.
Vacancies shall be filled by the Board of Directors.
5.3 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred by the Board of Directors. The Board of Directors may
require any officer to give such bond for the faithful performance of his or
her other duties as the Board of Directors may see fit.
5.4 Duties of the Chairman of the Board. The Chairman of the Board shall be
the Chief Executive Officer of the Corporation and shall be responsible for
the execution of the policies of the Board of Directors, shall serve as the
Chairman of the Executive Committee and shall have direct supervision over the
business of the Corporation and its several officers, subject to the ultimate
authority of the Board of Directors. He or she shall be a director, and,
except as otherwise provided in these Bylaws or in the resolutions
establishing such committees, he or she shall be ex officio a member of all
committees of the Board of Directors. He or she shall preside at all meetings
of stockholders, the Board of Directors and the Executive Committee. He or she
may sign and execute in the name of the Corporation share certificates, deeds,
mortgages, bonds, contracts or other instruments except in cases where the
signing and the execution thereof shall be expressly delegated by the Board of
Directors or by these Bylaws to some other officer or agent of the Corporation
or shall be required by law otherwise to be signed or executed. In addition,
he or she shall perform all duties incident to the office of the Chairman of
the Board and Chief Executive Officer and such other duties as from time to
time may be assigned to him or her by the Board of Directors.
5.5 Duties of the President. Unless the Board of Directors, by resolution
duly adopted, designates some other person to serve as the Chief Operating
Officer of the Corporation, the President shall serve as Chief Operating
Officer and shall have direct supervision over the business of the Corporation
and its several officers, subject to the authority of the Board of Directors
and the Chairman of the Board, and shall consult with and report to the
aforementioned officer. The President may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts or other instruments, except in
cases where the signing and the execution thereof shall be expressly delegated
by the Board of Directors or by these Bylaws to some other officer or agent of
the Corporation or shall be required by law otherwise to be signed or
executed. In addition, he or she shall perform all duties incident to the
office of the President and such other duties as from time to time may be
assigned to him or her by the Board of Directors or the Chairman of the Board.
5.6 Duties of the Vice Presidents. Each Vice President, if any, shall have
such powers and duties as may from time to time be assigned to him or her by
the Chairman of the Board or the Board of Directors. When there shall be more
than one Vice President of the Corporation, the Board of Directors may from
time to time designate one of them to perform the duties of the President in
the absence of the President. Any Vice President may sign and execute in the
name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized by the Board of Directors, except where the signing and
execution of such documents shall be expressly delegated by the Board of
Directors or the Chairman of the Board to some other officer or agent of the
Corporation or shall be required by law or otherwise to be signed or executed.
9
<PAGE>
5.7 Duties of the Treasurer or Chief Financial Officer. The Treasurer or
Chief Financial Officer shall have charge and custody of and be responsible
for all funds and securities of the Corporation, and shall cause all such
funds and securities to be deposited in such banks and depositories as shall
be designated by the Board of Directors. He or she shall be responsible (i)
for maintaining adequate financial accounts and records in accordance with
generally accepted accounting practices, (ii) for the preparation of
appropriate operating budgets and financial statements, (iii) for the
preparation and filing of all tax returns required by law and (iv) for the
performance of all duties incident to the office of Treasurer or Chief
Financial Officer and such other duties as from time to time may be assigned
to him or her by the Board of Directors, the Audit Committee or the Chairman
of the Board. The Treasurer or Chief Financial Officer may sign and execute in
the name of the Corporation share certificates, deeds, mortgages, bonds,
contracts or other instruments, except where the signing and execution of such
documents shall be expressly delegated by the Board of Directors or the
Chairman of the Board to some other officer or agent of the Corporation or
shall be required by law or otherwise to be signed or executed.
5.8 Duties of the Secretary. The Secretary shall act as secretary of all
meetings of the Board of Directors, all committees of the Board of Directors
and stockholders of the Corporation. He or she shall (i) keep and preserve the
minutes of all such meetings in permanent books, (ii) ensure that all notices
required to be given by the Corporation are duly given and served, (iii) have
custody of the seal of the Corporation and shall affix the seal or cause it to
be affixed to all share certificates of the Corporation and to all documents
the execution of which on behalf of the Corporation under its corporate seal
is duly authorized in accordance with law or the provisions of these Bylaws,
(iv) have custody of all deeds, leases, contracts and other important
corporate documents, (v) have charge of the books, records and papers of the
Corporation relating to its organization and management as a Corporation, (vi)
see that all reports, statements and other documents required by law (except
tax returns) are properly filed and (vii) in general, perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him or her by the Board of Directors or the Chairman of the
Board.
ARTICLE VI.
CAPITAL STOCK
6.1 Certificates. Each stockholder shall be entitled to a certificate of the
capital stock of the Corporation in such form as may from time to time be
prescribed by the Board of Directors. Such certificate shall be signed by the
Chairman of the Board, the President or a Vice President and by the Treasurer
or an Assistant Treasurer, or the Secretary or an Assistant Secretary. The
Corporation seal and the signatures by the Corporation's officers, the
transfer agent or the registrar may be facsimiles. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has
been placed on such certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, the certificate may be
issued by the Corporation with the same effect as if he or she were such
officer, transfer agent or registrar at the time of its issue. Every
certificate for shares of stock which are subject to a restriction on transfer
(as provided in Article IV of the Certificate) and every certificate issued
when the Corporation is authorized to issue more than one class or series of
stock shall contain such legend (as provided in Article IV of the Certificate)
with respect thereto as is required by law.
6.2 Pairing. Until the limitation on transfer provided for in the Pairing
Agreement, dated as of February 17, 1983, by and between Bay Meadows Realty
Enterprises, Inc. (the predecessor of California Jockey Club) and Bay Meadows
Operating Company (the "Pairing Agreement"), as amended from time to time in
accordance with the provisions thereof, shall be terminated:
(a) The shares of Equity Stock of the Corporation that are paired
pursuant to the Pairing Agreement shall not be transferable, and shall not
be transferred on the stock transfer books of the Corporation, unless (i) a
simultaneous transfer is made by the same transferor to the same transferee
or (ii) arrangements have been made with Patriot REIT for the acquisition
by the transferee, of a like number of shares of the same class or series
of Equity Stock of Patriot REIT and such shares are paired with one
another.
10
<PAGE>
(b) Each certificate evidencing ownership of shares of Equity Stock of
the Corporation that are paired pursuant to the Pairing Agreement and
issued and not canceled prior to the Effective Time of the Restriction
shall be deemed to evidence a like number of shares of the same class or
series of Equity Stock of Patriot REIT.
(c) A legend shall be placed on the face of each certificate evidencing
ownership of shares of Equity Stock of the Corporation that are paired
pursuant to the Pairing Agreement referring to the restrictions on transfer
set forth herein.
(d) Notwithstanding the foregoing, the Corporation may issue or transfer
shares of its Equity Stock to Patriot REIT without regard to the
restrictions of this Section 6.2.
(e) To the extent that a paired share of Equity Stock of the Corporation
is converted into a share of excess stock, par value $.01 per share (the
"Excess Stock"), of the Corporation in accordance with the provisions of
Article IV of the Certificate, such share of Excess Stock of the
Corporation, together with the corresponding share of Excess Stock of
Patriot REIT, which has been converted from a share of Equity Stock of
Patriot REIT in accordance with Article IV of the Amended and Restated
Certificate of Incorporation of Patriot REIT and the Pairing Agreement,
shall be automatically transferred to a trust established by the
Corporation and Patriot REIT for such purpose in accordance with Article IV
of the Certificate.
6.3 Lost, Destroyed and Mutilated Certificates. Holders of the shares of the
Corporation shall immediately notify the Corporation of any loss, destruction
or mutilation of the certificate therefor, and the Board of Directors may in
its discretion cause one or more new certificates for the same number of
shares in the aggregate to be issued to such stockholder upon the surrender of
the mutilated certificate or upon satisfactory proof of such loss or
destruction, and the deposit of a bond in such form and amount and with such
surety as the Board of Directors may require.
6.4 Transfer of Stock. Subject to the restrictions on transfer of stock
described in Section 6.2 of these Bylaws and Article IV of the Certificate,
the stock of the Corporation shall be transferable or assignable only on the
stock transfer books of the Corporation by the holder in person or by attorney
on surrender of the certificate for such shares duly endorsed and, if sought
to be transferred by attorney, accompanied by a written power of attorney to
have the same transferred on the stock transfer books of the Corporation. The
Corporation will recognize, however, the exclusive right of the person
registered on its stock transfer books as the owner of shares to receive
dividends and to vote as such owner.
6.5 Fixing Record Date. For the purpose of determining stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to receive payment of any dividend, or to make a
determination of stockholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not less than 10
nor more than 60 days prior to the date on which the particular action
requiring such determination of stockholders, is to be taken. If no record
date is fixed for the determination of stockholders entitled to notice of or
to vote at a meeting of stockholders, or stockholders entitled to receive
payment of a dividend, the date on which notices of the meeting are mailed or
the date on which the resolution of the Board of Directors declaring such
dividend is adopted, as the case may be, shall be the record date for such
determination of stockholders. When a determination of stockholders entitled
to notice of or to vote at any meeting of stockholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
11
<PAGE>
ARTICLE VII.
INDEMNIFICATION
7.1 Definitions. For purposes of this Article VII:
(a) "Corporate Status" describes the status of a person who (i) in the
case of a Director, is or was a director of the Corporation and is or was
acting in such capacity, (ii) in the case of an Officer, is or was an
officer, employee or agent of the Corporation or is or was a director,
officer, employee or agent of any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise that such Officer
is or was serving at the request of the Corporation and (iii) in the case
of a Non-Officer Employee, is or was an employee of the Corporation or is
or was a director, officer, employee or agent of any other corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise that such Non-Officer Employee is or was serving at the request
of the Corporation;
(b) "Director" means any person who serves or has served the Corporation
as a director on the Board of Directors;
(c) "Disinterested Director" means, with respect to each Proceeding in
respect of which indemnification is sought hereunder, a Director of the
Corporation who is not and was not a party to such Proceeding;
(d) "Expenses" means all reasonable attorneys' fees, retainers, court
costs, transcript costs, fees of expert witnesses, private investigators
and professional advisors (including, without limitation, accountants and
investment bankers), travel expenses, duplicating costs, printing and
binding costs, costs of preparation of demonstrative evidence and other
courtroom presentation aids and devices, costs incurred in connection with
document review, organization, imaging and computerization, telephone
charges, postage, delivery service fees, and all other disbursements, costs
or expenses of the type customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend, investigating,
being or preparing to be a witness in, settling or otherwise participating
in, a Proceeding;
(e) "Non-Officer Employee" means any person who serves or has served as
an employee of the Corporation, but who is not or was not a Director or
Officer;
(f) "Officer" means any person who serves or has served the Corporation
as an officer appointed by the Board of Directors; and
(g) "Proceeding" means any threatened, pending or completed action, suit,
arbitration, alternate dispute resolution mechanism, inquiry,
investigation, administrative hearing or other proceeding, whether civil,
criminal, administrative, arbitrative or investigative.
7.2 Indemnification of Directors and Officers. Subject to the operation of
Section 7.4 of these Bylaws, each Director and Officer shall be indemnified
and held harmless by the Corporation to the fullest extent authorized by the
DGCL, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than such law permitted the
Corporation to provide prior to such amendment) against any and all Expenses,
judgments, penalties, fines and amounts reasonably paid in settlement that are
incurred by such Director or Officer or on such Director's or Officer's behalf
in connection with any threatened, pending or completed Proceeding or any
claim, issue or matter therein, which such Director or Officer is, or is
threatened to be made, a party to or participant in by reason of such
Director's or Officer's Corporate Status, if such Director or Officer acted in
good faith and in a manner such Director or Officer reasonably believed to be
in or not opposed to the best interests of the Corporation and, with respect
to any criminal proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The rights of indemnification provided by this Section
7.2 shall exist as to a Director or Officer after he or she has ceased to be a
Director or Officer and shall inure to the benefit of his or her heirs,
executors, administrators and personal representatives. Notwithstanding the
foregoing, the Corporation
12
<PAGE>
shall indemnify any Director or Officer seeking indemnification in connection
with a Proceeding initiated by such Director or Officer only if such
Proceeding was authorized by the Board of Directors.
7.3 Indemnification of Non-Officer Employees. Subject to the operation of
Section 7.4 of these Bylaws, each Non-Officer Employee may, in the discretion
of the Board of Directors, be indemnified by the Corporation to the fullest
extent authorized by the DGCL, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than such law permitted the Corporation to provide prior to such amendment),
against any and all Expenses, judgments, penalties, fines and amounts
reasonably paid in settlement that are incurred by such Non-Officer Employee
or on such Non-Officer Employee's behalf in connection with any threatened,
pending or completed Proceeding, or any claim, issue or matter therein, which
such Non-Officer Employee is, or is threatened to be made, a party to or
participant in by reason of such Non-Officer Employee's Corporate Status, if
such Non-Officer Employee acted in good faith and in a manner such Non-Officer
Employee reasonably believed to be in or not opposed to the best interests of
the Corporation and, with respect to any criminal proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The rights of
indemnification provided by this Section 7.3 shall exist as to a Non-Officer
Employee after he or she has ceased to be a Non-Officer Employee and shall
inure to the benefit of his or her heirs, personal representatives, executors
and administrators. Notwithstanding the foregoing, the Corporation may
indemnify any Non-Officer Employee seeking indemnification in connection with
a Proceeding initiated by such Non-Officer Employee only if such Proceeding
was authorized by the Board of Directors.
7.4 Good Faith. Unless ordered by a court, no indemnification shall be
provided pursuant to this Article VII to a Director, to an Officer or to a
Non-Officer Employee unless a determination shall have been made that such
person acted in good faith and in a manner such person reasonably believed to
be in or not opposed to the best interests of the Corporation and, with
respect to any criminal Proceeding, such person had no reasonable cause to
believe his or her conduct was unlawful. Such determination shall be made by
(a) a majority vote of the Disinterested Directors, even though less than a
quorum of the Board of Directors, (b) if there are no such Disinterested
Directors, or if a majority of Disinterested Directors so direct, by
independent legal counsel in a written opinion or (c) by the stockholders of
the Corporation.
7.5 Advancement of Expenses to Directors Prior to Final Disposition. The
Corporation shall advance all Expenses incurred by or on behalf of any
Director in connection with any Proceeding in which such Director is involved
by reason of such Director's Corporate Status within 10 days after the receipt
by the Corporation of a written statement from such Director requesting such
advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or statements shall reasonably
evidence the Expenses incurred by such Director and shall be preceded or
accompanied by an undertaking by or on behalf of such Director to repay any
Expenses so advanced if it shall ultimately be determined that such Director
is not entitled to be indemnified against such Expenses.
7.6 Advancement of Expenses to Officers and Non-Officer Employees Prior to
Final Disposition. The Corporation may, in the discretion of the Board of
Directors, advance any or all Expenses incurred by or on behalf of any Officer
or Non-Officer Employee in connection with any Proceeding in which such
Officer or Non-Officer Employee is involved by reason of such Officer or Non-
Officer Employee's Corporate Status upon the receipt by the Corporation of a
statement or statements from such Officer or Non-Officer Employee requesting
such advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or statements shall reasonably
evidence the Expenses incurred by such Officer or Non-Officer Employee and
shall be preceded or accompanied by an undertaking by or on behalf of such
Officer or Non-Officer Employee to repay any Expenses so advanced if it shall
ultimately be determined that such Officer or Non-Officer Employee is not
entitled to be indemnified against such Expenses.
7.7 Contractual Nature of Rights. The foregoing provisions of this Article
VII shall be deemed to be a contract between the Corporation and each Director
and Officer entitled to the benefits hereof at any time while
13
<PAGE>
this Article VII is in effect, and any repeal or modification thereof shall
not affect any rights or obligations then existing with respect to any state
of facts then or theretofore existing or any Proceeding theretofore or
thereafter brought based in whole or in part upon any such state of facts. If
a claim for indemnification or advancement of Expenses hereunder by a Director
or Officer is not paid in full by the Corporation within (a) 60 days after the
receipt by the Corporation of a written claim for indemnification or (b) in
the case of a Director, 10 days after the receipt by the Corporation of
documentation of Expenses and the required undertaking, such Director or
Officer may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim, and if successful in whole or in part,
such Director or Officer shall also be entitled to be paid the expenses of
prosecuting such claim. The failure of the Corporation (including its Board of
Directors or any committee thereof, independent legal counsel, or
stockholders) to make a determination concerning the permissibility of such
indemnification or, in the case of a Director, advancement of Expenses, under
this Article VII shall not be a defense to the action and shall not create a
presumption that such indemnification or advancement is not permissible.
7.8 Non-Exclusivity of Rights. The rights to indemnification and advancement
of Expenses set forth in this Article VII shall not be exclusive of any other
right which any Director, Officer or Non-Officer Employee may have or
hereafter acquire under any statute, provision of the Certificate or these
Bylaws, agreement, vote of stockholders or Disinterested Directors or
otherwise.
7.9 Insurance. The Corporation may maintain insurance, at its expense, to
protect itself and any Director, Officer or Non-Officer Employee against any
liability of any character asserted against or incurred by the Corporation or
any such Director, Officer or Non-Officer Employee, or arising out of any such
person's Corporate Status, whether or not the Corporation would have the power
to indemnify such person against such liability under the DGCL or the
provisions of this Article VII.
ARTICLE VIII.
MISCELLANEOUS PROVISIONS
8.1 Seal. The seal of the Corporation shall consist of a flat-faced circular
die, of which there may be any number of counterparts, on which there shall be
engraved the word "Seal" and the name of the Corporation.
8.2 Fiscal Year. The fiscal year of the Corporation shall end on such date
and shall consist of such accounting periods as may be fixed by the Board of
Directors.
8.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders for the
payment of money shall be signed by such persons as the Board of Directors
from time to time may authorize. When the Board of Directors so authorizes,
however, the signature of any such person may be a facsimile.
8.4 Amendment of Bylaws.
(a) Amendment by Directors. Except as provided otherwise by law, these
Bylaws may be amended or repealed by the Board of Directors by the
affirmative vote of a majority of the directors then in office.
(b) Amendment by Stockholders. These Bylaws may be amended or repealed at
any annual meeting of stockholders, or special meeting of stockholders
called for such purpose, by the affirmative vote of at least two-thirds of
the shares present in person or represented by proxy at such meeting and
entitled to vote on such amendment or repeal, voting together as a single
class; provided, however, that if the Board of Directors recommends that
stockholders approve such amendment or repeal at such meeting of
stockholders, such amendment or repeal shall only require the affirmative
vote of a majority of the shares present in person or represented by proxy
at such meeting and entitled to vote on such amendment or repeal, voting
together as a single class.
14
<PAGE>
8.5 Voting of Stock Held. Unless otherwise provided by resolution of the
Board of Directors or of the Executive Committee, if any, the Chairman of the
Board may from time to time appoint an attorney or attorneys or agent or
agents of the Corporation, in the name and on behalf of the Corporation, to
cast the vote that the Corporation may be entitled to cast as a stockholder or
otherwise in any other corporation, any of whose securities may be held by the
Corporation, at meetings of the holders of the shares or other securities of
such other corporation, or to consent in writing to any action by any such
other corporation; and the Chairman of the Board shall instruct the person or
persons so appointed as to the manner of casting such votes or giving such
consent and may execute or cause to be executed on behalf of the Corporation,
and under its corporate seal or otherwise, such written proxies, consents,
waivers or other instruments as may be necessary or proper in the premises. In
lieu of such appointment, the Chairman of the Board may himself or herself
attend any meetings of the holders of shares or other securities of any such
other corporation and there vote or exercise any or all power of the
Corporation as the holder of such shares or other securities of such other
corporation.
15
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Pre-Effective Amendment No.
1 to Registration Statement No. 333-29671 of Patriot American Hospitality, Inc.
and Patriot American Hospitality Operating Company on Form S-3 of our report
dated March 28, 1997 (which expresses an unqualified opinion and includes an
explanatory paragraph relating to a proposed merger and certain disagreements
between the Companies), appearing in the Annual Report on Form 10-K of Bay
Meadows Operating Company and of California Jockey Club for the year ended
December 31, 1996 and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
San Francisco, California
July 15, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in this Amendment No. 1 to the Registration Statement
on Form S-3 (No. 333-29671) and the related Prospectus of Patriot American
Hospitality, Inc. and Patriot American Hospitality Operating Company of our
reports (a) dated January 31, 1997 (except for Note 14, as to which the date is
March 18, 1997) with respect to the Consolidated Financial Statements and
financial statement schedules of Patriot American Hospitality, Inc. included in
its 1996 Annual Report on Form 10-K and included in the Current Report on Form
8-K of Patriot American Hospitality Inc. and Patriot American Hospitality
Operating Company dated July 1, 1997; (b) dated February 16, 1996, with respect
to the Combined Financial Statements of the Initial Hotels (which is based in
part on the reports of Coopers & Lybrand L.L.P., independent accountants, as set
forth in their reports on Certain of the Initial Hotels and Troy Hotel
Investors) included in Patriot American Hospitality, Inc.'s 1996 Annual Report
on Form 10-K; (c) dated March 5, 1996, with respect to the Financial Statements
of Buckhead Hospitality Joint Venture included in the Current Report on Form 8-K
of Patriot American Hospitality, Inc., dated April 2, 1996, as amended; (d)
dated March 1, 1996 (except for Note 7, as to which the date is April 2, 1996)
with respect to the Combined Financial Statements of Gateway Hotel Limited
Partnership and Wenatchee Hotel Limited Partnership included in the Current
Report on Form 8-K of Patriot American Hospitality, Inc., dated April 2, 1996,
as amended; (e) dated February 28, 1996 (except for Note 5, as to which the date
is April 2, 1996) with respect to the Statement of Direct Revenue and Direct
Operating Expenses of Plaza Park Suites Hotel included in the Current Report on
Form 8-K of Patriot American Hospitality, Inc., dated April 2, 1996, as amended;
(f) dated February 26, 1996 (except for Note 5, as to which the date is April 2,
1996) with respect to the Statement of Direct Revenue and Direct Operating
Expenses of Roosevelt Hotel included in the Current Report on Form 8-K of
Patriot American Hospitality, Inc., dated April 2, 1996, as amended; (g) dated
April 10, 1996 with respect to the Statement of Direct Revenue and Direct
Operating Expenses of the Marriott WindWatch Hotel for the year ended December
29, 1995 included in the Current Report on Form 8-K of Patriot American
Hospitality, Inc., dated December 5, 1996; (h) dated August 30, 1996 with
respect to the Financial Statements of Concord O'Hare Limited Partnership for
the year ended December 29, 1995 included in the Current Report on Form 8-K of
Patriot American Hospitality, Inc. dated December 5, 1996; and (i) dated
September 10, 1996 with respect to the Statement of Direct Revenue and Direct
Operating Expenses of the Mayfair Suites Hotel for the year ended December 31,
1995 included in the Current Report on Form 8-K of Patriot American Hospitality,
Inc. dated December 5, 1996, all filed with the Securities and Exchange
Commission.
/s/ ERNST & YOUNG LLP
Dallas, Texas
July 15, 1997
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the incorporation by reference in this Amendment No. 1 to the Registration
Statement on Form S-3 (No. 333-29671) and the related Prospectus of Patriot
American Hospitality, Inc. and Patriot American Hospitality Operating Company
of our report dated March 5, 1997 with respect to the Financial Statements of
NorthCoast Hotels, L.L.C. included in Patriot American Hospitality, Inc.'s 1996
Annual Report on Form 10-K filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Seattle, Washington
July 10, 1997
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in this Amendment No. 1 to the Registration Statement
on Form S-3 (No. 333-29671) and the related Prospectus of Patriot American
Hospitality, Inc. and Patriot American Hospitality Operating Company of our
reports (a) dated March 14, 1997 with respect to the Consolidated Financial
Statements of Resorts Limited Partnership included in the Current Report on Form
8-K of Patriot American Hospitality, Inc., dated January 16, 1997, as amended;
(b) dated February 13, 1997, with respect to the Financial Statements of CV
Ranch Limited Partnership included in the Current Report on Form 8-K of Patriot
American Hospitality, Inc., dated January 16, 1997, as amended; and (c) dated
February 12, 1997 with respect to the Financial Statements of Telluride Resort
and Spa Limited Partnership included in the Current Report on Form 8-K of
Patriot American Hospitality, Inc., dated January 16, 1997, as amended, all
filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Phoenix, Arizona
July 10, 1997
<PAGE>
EXHIBIT 23.6
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in the Registration Statement of Patriot American
Hospitality, Inc. and Patriot American Hospitality Operating Company on Form S-3
(File No. 333-29671) of our report dated January 15, 1996, on our audits of the
financial statements of Certain of the Initial Hotels, which report is
incorporated herein.
/s/ COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
July 11, 1997
<PAGE>
EXHIBIT 23.7
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in the Registration Statement of Patriot American
Hospitality, Inc. and Patriot American Hospitality Operating Company on Form S-3
(File No. 333-29671) of our report dated January 17, 1996, on our audits of the
financial statements of Troy Hotel Investors and our report dated February 7,
1995, on our audits of the financial statements of Troy Park Associates, which
reports are incorporated herein.
/s/ COOPERS & LYBRAND, L.L.P.
Pittsburgh, Pennsylvania
July 11, 1997
<PAGE>
EXHIBIT 23.8
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in the Registration Statement of Patriot American
Hospitality, Inc. and Patriot American Hospitality Operating Company on Form S-3
(File No. 333-29671) of our report dated October 15, 1996, on our audit of the
Statement of Direct Revenue and Direct Operating Expenses of the Holiday Inn
Miami Airport.
/s/ COOPERS & LYBRAND L.L.P.
Dallas, Texas
July 11, 1997
<PAGE>
EXHIBIT 23.9
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Prospectus of Patriot
American Hospitality Operating Company and Patriot American Hospitality, Inc. of
our report dated March 1, 1996 with respect to the Financial Statements of
Historic Hotel Partners of Birmingham, Limited Partnership as of and for the
year ended December 31, 1995 and to the reference to us under the heading
"Experts" in this Prospectus.
/s/ PANNELL KERR FORSTER PC
Alexandria, Virginia
July 11, 1997
<PAGE>
EXHIBIT 23.10
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 (No. 333-29671) of
Patriot American Hospitality, Inc. and Patriot American Hospitality Operating
Company of our report dated February 13, 1997, except as to Note 4, which is as
of March 18, 1997, relating to the financial statements of CHC Lease Partners
for the year ended December 31, 1996 and the period inception (October 2, 1995)
through December 31, 1995 which appears in the Current Report on Form 8-K of
Patriot American Hospitality, Inc. and Patriot American Operating Company dated
July 1, 1997. We also consent to the reference to us under the heading "Experts"
in such Prospectus.
/s/ PRICE WATERHOUSE LLP
Miami, Florida
July 9, 1997
<PAGE>
EXHIBIT 23.11
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to
the incorporation by reference in the Registration Statement of Patriot American
Hospitality, Inc. and Patriot American Hospitality Operating Company on Form S-3
(File No. 333-29671) of our report dated March 8, 1996, on our audit of the
financial statements of Newporter Beach Hotel Investments L.L.C. which report is
incorporated herein.
/s/ COOPERS & LYBRAND L.L.P.
Newport Beach, California
July 11, 1997
