<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant / /
Filed by a party other than the registrant /X/
Check the appropriate box:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
PRIME HOSPITALITY CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ---------------
1Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
PRELIMINARY COPIES
PRIME HOSPITALITY CORP.
700 ROUTE 46 EAST
FAIRFIELD, NEW JERSEY 07004
April 8, 1994
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Prime Hospitality Corp. (the "Company") to be held on May 13, 1994, at 10:00
a.m., at the Fairfield Radisson Hotel, 690 Route 46 East, Fairfield, New Jersey.
This year we are asking you to elect three Class II Directors of the Company to
serve until the 1997 Annual Meeting of Stockholders, to ratify the Board of
Directors' selection of independent auditors for the year ending December 31,
1994 and to approve an increase in shares of the Company's Common Stock
authorized for issuance under the 1992 Stock Option Plan. THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR THE PROPOSALS.
At the Annual Meeting, the Board of Directors will also report on the
Company's affairs and a discussion period will be provided for questions and
comments. The Board of Directors appreciates and encourages stockholder
participation.
Whether or not you plan to attend the Annual Meeting, it is important that
your shares be represented. Accordingly, we request that you complete, sign,
date and promptly return the enclosed proxy in the enclosed postage prepaid
envelope in order to make certain that your shares will be represented at the
Annual Meeting.
Thank you for your cooperation.
Sincerely,
DAVID A. SIMON
Chairman of the Board of Directors
<PAGE> 3
PRIME HOSPITALITY CORP.
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1994
---------------------
To the Stockholders of
Prime Hospitality Corp.
The Annual Meeting of Stockholders of Prime Hospitality Corp. (the
"Company") will be held on May 13, 1994 at 10:00 a.m., at the Fairfield Radisson
Hotel, 690 Route 46 East, Fairfield, New Jersey, for the following purposes:
1. To elect three Class II Directors of the Company to serve until the
1997 Annual Meeting of Stockholders;
2. To ratify the Board of Directors' selection of Arthur Andersen &
Co. to serve as the Company's independent auditors for the fiscal year
ending December 31, 1994;
3. To approve an increase in shares of the Company's Common Stock
authorized for issuance under the 1992 Stock Option Plan; and
4. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The close of business on April 4, 1994 has been fixed by the Board of
Directors as the record date for the determination of stockholders entitled to
notice of, and to vote at, the Annual Meeting or any adjournments thereof.
All stockholders are cordially invited to attend the Annual Meeting. If you
do not expect to be present, please promptly complete, sign and date the
enclosed proxy and mail it in the enclosed postage prepaid envelope. If you
attend the Annual Meeting, you may revoke your proxy and vote your shares in
person.
The Company's Proxy Statement is submitted herewith. The Board of Directors
recommends that you vote FOR Items 1, 2 and 3.
The Company's Annual Report for the fiscal year ended December 31, 1993,
including financial statements, is also enclosed.
By Order of the Board of Directors,
JOSEPH BERNADINO
Secretary
Fairfield, New Jersey
April 8, 1994
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN YOUR PROXY IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE
WITH YOUR WISHES.
<PAGE> 4
PRIME HOSPITALITY CORP.
700 ROUTE 46 EAST
FAIRFIELD, NEW JERSEY 07004
---------------------
PROXY STATEMENT
---------------------
April 8, 1994
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Prime Hospitality Corp. (the "Company") for use at the Annual
Meeting of Stockholders to be held on May 13, 1994 at 10:00 a.m. at the
Fairfield Radisson Hotel, 690 Route 46 East, Fairfield, New Jersey or any
adjournments thereof (the "Annual Meeting"). This Proxy Statement is being sent
to all holders of record of the Company's common stock, par value $.01 per share
(the "Common Stock"), at the close of business on April 4, 1994 (the "Record
Date"). Only stockholders of record on the Record Date will be entitled to
notice of, and to vote at, the Annual Meeting. Each share of Common Stock
outstanding on the Record Date will be entitled to one vote per share on all
matters to be voted upon at the Annual Meeting. Stockholders may revoke the
authority granted by their execution of proxies at any time prior to their use
by filing with the Secretary of the Company a written revocation or duly
executed proxy bearing a later date or by attending the Annual Meeting and
voting in person. Solicitation of proxies will be made principally through the
mails, but additional solicitation may be made by telephone or telegram by the
officers or regular employees of the Company without additional compensation.
The Company has retained Continental Stock Transfer and Trust Company to assist
in connection with the solicitation at an estimated fee of $3,000 plus
reimbursement of out-of-pocket expenses. The Company may also enlist the aid of
brokerage houses in soliciting proxies. The Company will reimburse bank, broker
and other custodians, nominees and fiduciaries for their costs in sending the
proxy material to the beneficial owners of the Common Stock. The expenses of
preparing, printing, mailing and soliciting will be paid by the Company. This
proxy statement, together with the Company's Annual Report for the fiscal year
ended December 31, 1993, are being mailed to stockholders on or about April 8,
1994.
As of the Record Date, there were issued and outstanding shares
of Common Stock. Each of these shares of Common Stock is entitled to one vote at
the Annual Meeting.
THE INTENTION OF THE PERSONS NAMED IN THE PROXY, UNLESS OTHERWISE
SPECIFICALLY INSTRUCTED IN THE PROXY, IS TO VOTE ALL PROXIES RECEIVED BY THEM
(1) FOR THE ELECTION OF THE THREE NOMINEES NAMED HEREIN TO SERVE AS DIRECTORS
FOR THE TERMS SPECIFIED HEREIN AND UNTIL THEIR SUCCESSORS ARE ELECTED AND
QUALIFIED (2) FOR THE RATIFICATION OF THE BOARD OF DIRECTORS' SELECTION OF
ARTHUR ANDERSEN & CO. TO SERVE AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1994, AND (3) FOR THE ADOPTION OF THE AMENDED
AND RESTATED 1992 STOCK OPTION PLAN. ALL SHARES REPRESENTED BY PROXY AT THE
ANNUAL MEETING WILL BE VOTED. IF A STOCKHOLDER SPECIFIES A CHOICE AS TO THE
MATTERS TO BE ACTED UPON, THE SHARES WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATION.
In the event that a quorum is present at the Annual Meeting but sufficient
votes to approve any of the proposals are not received, the persons named as
proxies may propose one or more adjournments of the Annual Meeting to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the Annual Meeting
in person or by proxy. If a quorum is present, the persons named as proxies will
vote those proxies that they are entitled to vote FOR any proposal in favor of
an adjournment and will vote those proxies required to be voted AGAINST any such
proposal against any adjournment. A stockholder vote may be taken on one or more
of the proposals in the Proxy Statement prior to any adjournment if sufficient
votes have been received and it is otherwise appropriate. A quorum of
stockholders is constituted by the presence in person or by proxy of the holders
of a majority of the outstanding securities of the Company entitled to vote at
the Annual Meeting. For purposes of determining the presence of a quorum for
transacting business at the Annual Meeting, broker "non-votes" (that is, proxies
from brokers or nominees indicating that such persons have not received
instructions from the beneficial owner or other persons entitled to vote shares
on a particular matter with respect to which the brokers or nominees do not
<PAGE> 5
have discretionary power) will be treated as shares that are not present.
Abstentions will be treated as shares that are present but that are not voted.
Proxies marked as abstaining (including broker non-votes) will be treated as
present at the meeting for purposes of determining a quorum.
ITEM 1. ELECTION OF DIRECTORS
The Board of Directors is divided into three classes (Class I, Class II,
and Class III) serving staggered terms in accordance with the Company's Restated
Articles of Incorporation and Bylaws. The number of the full Board of Directors
is seven and Directors were initially elected on July 31, 1992. Class I
Directors were re-elected at the annual meeting held on May 6, 1993. Class III
directors have a term which expires at the 1995 Annual Meeting of Stockholders.
Election for three Class II directors will be held at the Annual Meeting on
May 13, 1994. Herbert Lust, Jack H. Nusbaum and Howard M. Lorber have been
nominated for election as Class II directors. Of the nominees, only Herbert Lust
is presently a director. THE PERSONS NAMED IN THE ACCOMPANYING PROXY WILL VOTE
ALL SHARES FOR WHICH THEY HAVE RECEIVED PROXIES FOR THE ELECTION OF HERBERT
LUST, JACK H. NUSBAUM AND HOWARD M. LORBER AS CLASS II DIRECTORS, UNLESS YOU
SPECIFY OTHERWISE.
Approval of the nominees requires the affirmative vote of a plurality of
the votes cast at the Annual Meeting by the holders of the outstanding shares of
Common Stock.
In the event that any of the nominees should become unable or unwilling to
serve as a Director, it is intended that the proxies will be voted for the
election of such other person, if any, as shall be designated by the Board of
Directors. It is not anticipated that any of the nominees will be unable or
unwilling to serve as a Director.
CLASS I DIRECTORS WHOSE TERMS EXPIRES AT THE 1996 ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<S> <C>
David A. Simon..................... David A. Simon, age 41, has been President, Chief
Executive Officer and a Director since 1992 and Chairman
of the Board of the Company since 1993. Mr. Simon was a
director of PMI from 1988 to 1992. Mr. Simon was the
Chief Operating Officer of Prime Motor Inns Inc.
("PMI")PMI from 1988 to 1989 and Chief Executive Officer
of PMI from 1989 to 1992 and was an executive officer in
September 1990 when PMI filed for protection under
Chapter 11 of the United States Bankruptcy Code.
John M. Elwood..................... John M. Elwood, age 39, has been a Director and
Executive Vice President of the Company since 1992,
Chief Financial Officer since 1993 and the Director of
Reorganization of the Company during 1992. Mr. Elwood
was the Director of Reorganization of PMI from 1990 to
1992. Mr. Elwood was the director of Reorganization of
Allegheny International, Inc. from 1988 to 1990 and a
Vice President of Mellon Bank, N.A. during 1988.
NOMINEES TO SERVE AS CLASS II DIRECTORS UNTIL THE 1997 ANNUAL MEETING OF STOCKHOLDERS
Herbert Lust, II................... Herbert Lust, II, age 65, has been a Director since 1992
and Chairman of the Compensation and Audit Committee of
the Company since 1993 and Chairman of the Compensation
Committee and a member of the Audit Committee of the
Company from 1992 to 1993. Mr. Lust was a member of the
Committee of Unsecured Creditors of PMI from 1990 to
1992. Mr. Lust is a director of BRT Realty Trust.
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
Jack H. Nusbaum.................... Jack H. Nusbaum, age 53, is a Senior Partner and
Co-Chairman of the New York law firm of Willkie Farr &
Gallagher. He is a director of W.R. Berkley Corporation,
The Topps Company, Inc., Signet Star Holdings, Inc. and
GEV Corporation. He is also a Director of Republic New
York Securities Corporation and a Director and member of
the Executive Committee of the New York City Economic
Development Corporation.
Harold M. Lorber................... Harold M. Lorber, age 45, has been Chairman of the Board
of Hallman & Lorber Associates, Inc., a consulting and
actuarial firm for pension and profit sharing plans for
more than the past five years. Mr. Lorber is Chairman of
the Board of Directors of Nathan's Famous Inc. (chain of
fast food restaurants), VTX Electronics Corp.
(distributor of wire and cable products) and Sky Box
International Inc. (a producer, marketer and distributor
of collectible sports and entertainment trading cards
and related products). Mr. Lorber is a member of the
Board of Directors of New Valley Corporation, United
Capital Corp. and Alpine Lace Brands, Inc. and a Trustee
of the Board of Long Island University. Since before
1988, Mr. Lorber has also been a general partner or
shareholder of a corporate general partner of various
limited partnerships organized to acquire and operate
real estate properties. Several of these partnerships
filed for protection under the federal bankruptcy laws
in 1989, 1990 and 1991.
CLASS III DIRECTORS WHOSE TERM EXPIRES AT THE 1995 ANNUAL MEETING OF STOCKHOLDERS
Allen J. Ostroff................... Allen J. Ostroff, age 57, has been a Director since
1992. Mr. Ostroff was Chairman of the Board of the
Company and a member of the Audit Committee from 1992 to
1993. Mr. Ostroff has been a Senior Vice President of
the Prudential Realty Group, a subsidiary of the
Prudential Insurance Company of America, for more than
the last five years.
A. F. Petrocelli................... A. F. Petrocelli, age 49, has been a Director since 1992
and a member of the Compensation and Audit Committee of
the Company since 1993 and of the Compensation Committee
of the Company from 1992 to 1993. Mr. Petrocelli has
been the Chairman of the Board of Directors and Chief
Executive Officer of United Capital Corp. for more than
the past five years.
</TABLE>
BOARD OF DIRECTORS COMPENSATION AND BENEFITS
Directors who are employees of the Company do not receive additional
compensation for serving on the Board of Directors. Non-employee Directors
receive $24,000 annually. In addition, each Director receives $1,500 for each
Board of Directors meeting attended, $1,500 for each committee meeting attended
and $500 for each telephonic meeting if such meeting extends beyond a period of
15 minutes. The Chairman of the Audit Committee receives an additional $10,000
annually and the Chairman of the Compensation Committee receives an additional
$5,000 annually. The Directors' remuneration is paid quarterly. The Directors
are reimbursed for their expenses. In August of 1993, each member of the Board
of Directors received a grant of options to purchase 45,000 shares of Common
Stock. These options became exercisable at the rate of 15,000 shares per year
commencing August of 1993.
From January 1, 1993 to December 31, 1993, the Board of Directors held 8
meetings. All members of the Board of Directors attended at least 75% of the
aggregate number of meetings of the Board of Directors and all committees on
which such Director served.
3
<PAGE> 7
AUDIT AND COMPENSATION COMMITTEE
On May 6, 1993 the Board of Directors combined the functions of the Audit
Committee and the Compensation Committee to create the Audit and Compensation
Committee. The Audit and Compensation Committee consists of three non-employee
Directors: Messrs. Moore, Petrocelli, and Lust (Chairman). During the fiscal
year 1993 the Committee held three meetings.
As part of its audit oversight the Committee meets with representatives of
the Company's independent auditors and with representatives of senior
management. In addition, it reviews the plans and results of the independent
auditors, the scope and results of the Company's internal auditing, and
procedures and systems of internal accounting and financial control.
As part of its compensation oversight the Committee administers the
Company's 1992 Stock Option Plan and in this capacity grants options to the
Company's employees, officers and directors. In addition, the Committee makes
recommendations to the Board of Directors regarding compensation and approves
the compensation paid to the Company's Chief Executive Officer, executive
officers and other employees.
Prior to May 6, 1994 the Company had a separate Audit Committee consisting
of Messrs. Bacon (Chairman), Ostroff and Lust. The Audit Committee met two times
during 1993. The Company also had a separate Compensation Committee consisting
of Messrs. Lust (Chairman), Moore, and Petrocelli. The Compensation Committee
met two times during 1993.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership of Common Stock as
of March 1, 1994 for all executive officers, all Directors, all nominees to the
Board of Directors, and all executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OF OWNERSHIP CLASS(F)
- ----------------------------------------------------------------- ----------------- ----------
<S> <C> <C>
David A. Simon(a)................................................ 108,895 *
John M. Elwood(b)................................................ 42,122 *
Herbert Lust, II(c).............................................. 20,700 *
Leon Moore....................................................... 50,000 *
Allen J. Ostroff................................................. 5,000 *
A.F. Petrocelli(d)............................................... 161,026 *
Jack H. Nusbaum.................................................. 0 *
Howard M. Lorber................................................. 0 *
John H. Leavitt(e)............................................... 111 *
Joseph Bernadino................................................. 1,000 *
Richard T. Szymanski............................................. 0 *
Douglas W. Vicari................................................ 0 *
All directors and executive officers as a group (13 persons)..... 395,140 1.4
</TABLE>
- ---------------
(a) Includes 101,726 shares owned by David A. Simon, 146 shares owned by his
wife and 249 shares held by Mr. Simon as custodian for his children. Mr.
Simon disclaims beneficial ownership of the shares owned by his wife and
held as custodian for his children. Also includes warrants to purchase
6,774 shares with an exercise price of $2.71 a share, of which Mr. Simon
disclaims beneficial ownership of 467 warrants owned by his wife and 697
warrants held as custodian for his children.
(b) Includes warrants to purchase 12,122 shares with an exercise price of $2.71
a share.
(c) Held by a trust under which Mr. Lust and his wife are co-trustees and
beneficiaries.
(d) These shares are owned by United Capital Corp. Mr. Petrocelli is Chairman of
the Board of Directors and Chief Executive Officer of United Capital Corp.
(e) Includes warrants to purchase 85 shares with an exercise price of $2.71.
4
<PAGE> 8
(f) The Directors and executive officers each owns less than one percent of the
outstanding Common Stock and own approximately one percent of the
outstanding Common Stock as a group. Percentages were based on 29,200,204
shares outstanding as of March 10, 1994.
PRINCIPAL HOLDERS OF SECURITIES
The following entity was known to the Company to be the beneficial holders
of more than 5% of the Common Stock as of March 1, 1994:
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS OF BENEFICIAL OWNER NATURE OF OWNERSHIP PERCENT OF CLASS
- ------------------------------------------------------------ ------------------- ----------------
<S> <C> <C>
Ingalls & Snyder(a)......................................... 2,506,123 8.6%
61 Broadway
New York, New York 10006
</TABLE>
- ---------------
(a) Ingalls & Snyder filed a Schedule 13G, dated February 1, 1994, with the
Securities and Exchange Commission (the "SEC") reporting ownership of
2,506,123 shares of common stock, with sole voting power with respect to
208,754 shares and sole dispositive power with respect to 2,506,123 shares.
ITEM 2. RATIFICATION OF SELECTION OF AUDITORS
Upon the recommendation of the Audit and Compensation Committee, the Board
of Directors has selected Arthur Andersen & Co., independent public accountants,
to serve as independent accountants for the Company. Arthur Andersen & Co. will
audit the Company's consolidated financial statements for the fiscal year ending
December 31, 1994, perform audit-related services and act as consultants in
connection with various accounting and financial reporting matters. Arthur
Andersen & Co. provided those service to the Company for the fiscal year ended
December 31, 1993.
On October 20, 1992, in connection with the consummation of the Plan, the
Company dismissed J.H. Cohn & Company as its principal independent public
accountants. J.H. Cohn & Company's reports on the consolidated financial
statements of PMI as of and for the fiscal years ended June 30, 1992 and 1991
did not contain an adverse opinion or a disclaimer of opinion. Such reports were
not qualified or modified as to uncertainty, audit scope or accounting
principles, except for the modifications described below.
The reports on the consolidated financial statements of PMI as of and for
the fiscal years ended June 30, 1992 and 1991 were both modified with respect to
uncertainties related to: the ability of PMI to realize the carrying value of an
investment due to litigation involving the underlying collateral; the aggregate
amount of allowable pre-petition and postpetition bankruptcy claims recognized
as liabilities; and the ultimate outcome of certain stockholder litigation. The
report on the consolidated financial statements as of and for the fiscal year
ended June 30, 1991 was also modified with respect to uncertainties related to
PMI's ability to continue as a going concern and to state that PMI's
consolidated financial statements as of and for the fiscal year ended June 30,
1989 had been restated primarily to eliminate the effects of the premature
recognition of certain income.
During the fiscal years ended June 30, 1992 and 1991 and the interim period
preceding the dismissal of J.H. Cohn & Company, (x) there were no disagreements
between PMI and J.H. Cohn & Company on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure and (y)
none of the reportable events specified in Section (a)(i)(v) of Item 304 of
Regulation S-K occurred. J.H. Cohn & Company has furnished a letter to the
Company stating that they agree with the foregoing statements that relate to
their firm.
The decision to change accountants was recommended by the Audit Committee
and approved by the Board of Directors. On October 20, 1992, the Board of
Directors appointed Arthur Andersen & Co. as the principal independent
accountants to audit the Company's consolidated financial statements. During the
fiscal years ended June 30, 1992 and 1991 and the interim period preceding the
engagement of Arthur Andersen
5
<PAGE> 9
& Co., PMI did not consult with Arthur Andersen & Co. regarding either the
application of accounting principles to a specified transaction or the type of
audit opinion that might be rendered.
Representatives of Arthur Andersen & Co. are expected to be present at the
Annual Meeting and will be given the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions. Although it is not required to do so, the Board of Directors is
submitting the selection of auditors for ratification at the Annual Meeting. If
this selection is not ratified, the Board of Directors will reconsider its
choice.
Ratification of the selection of Arthur Andersen & Co. requires the
affirmative vote of the holders of a majority of the shares of Common Stock
present or represented by proxy at the Annual Meeting.
The Board of Directors recommends that stockholders vote FOR ratification
of the selection of Arthur Andersen & Co. as the Company's independent auditors
for the fiscal year ending December 31, 1994, and your proxy will be so voted
unless you specify otherwise.
ITEM 3. PROPOSAL TO APPROVE AN INCREASE IN SHARE AUTHORIZATION
UNDER THE 1992 STOCK OPTION PLAN
(as amended and restated on April 1, 1994)
The Board of Directors has previously adopted the Prime Hospitality Corp.
1992 Stock Option Plan under which 1,320,000 Shares of Common Stock were
reserved for issuance upon the exercise of awards. On , 1994 the Board of
Directors amended and restated the 1992 Stock Option Plan (the "1992 Plan") (i)
subject to stockholder approval and ratification, to increase the number of
shares of Common Stock available for issuance under the plan by an additional
1,500,000 shares, (ii) to make such other modifications deemed appropriate.
The Company is seeking stockholder approval of the 1992 Plan in order to
comply with the requirements of Rule 16b-3, promulgated by the SEC under the
Exchange Act, and the requirements of Section 162(m) of the Code. The following
summary of the 1992 Plan is qualified in its entirety by express reference to
the text of the 1992 Plan as filed with the SEC. The 1992 Plan contemplates the
issuance of non-statutory stock options to purchase Common Stock ("Options").
PURPOSE AND ELIGIBILITY
The primary purpose of the 1992 Plan is to enable key employees of the
Company to share in the growth and prosperity of the Company by encouraging
stock ownership by such persons and to attract and retain skilled personnel. All
key employees of the Company and any of its subsidiaries ("Participants") are
eligible for Options under the 1992 Plan. The approximate number of persons
eligible to participate is 200.
ADMINISTRATION
The Amended 1992 Plan is administered by a committee consisting of at least
two persons appointed by the Board of Directors ("Committee"). The Committee, in
its sole discretion, has the authority, among other things, to determine the
terms of all Options granted including the exercise price for an Option, the
employees to whom, and the time or times at which, Options will be granted,
exercised and become forfeitable, the number of shares covered by an Option, and
to interpret the 1992 Plan and to make all other determinations deemed advisable
for the administration of the 1992 Plan.
TERMS AND CONDITIONS OF OPTIONS
The Committee may from time to time grant Options to any Participant. The
terms of Options granted under the 1992 Plan will be set out in Option
agreements between the Company and Participants which will contain such
provisions as the Committee from time to time deems appropriate, including the
exercise price and expiration date of such Options. The maximum number of
Options available for grant to any one Participant for any year is 100,000
6
<PAGE> 10
PAYMENT UPON EXERCISE
Payment in full for the number of shares of Common Stock purchased pursuant
to the exercise of any Option must be made to the Company at the time of such
exercise. Payment for such shares must be made (as determined by the Committee)
(i) in cash, (ii) by certified check or bank cashiers check, (iii) by promissory
note, (iv) by delivery of Common Stock, (v) by irrevocable instructions to a
broker to deliver to the Company an amount of sale or loan proceeds, or (vi) any
combination thereof. No fees or commissions are applicable to purchases of
Common Stock under the Plan.
WITHHOLDING
With respect to any payments made to Participants under the 1992 Plan, the
Company will withhold any taxes required by law to be withheld because of such
payments.
ADJUSTMENT FOR RECAPITALIZATION, MERGER, ETC.
If any change is made to the shares of Common Stock by reason of any
merger, consolidation, reorganization, recapitalization, reclassification, stock
dividend, split-up, combination of shares, exchange of shares, or otherwise,
appropriate adjustments will be made by the Committee to the kind and number of
shares and price per share of stock subject to each outstanding Option.
MARKET VALUE
On April , 1994, the closing price for the Common Stock on the New York
Stock Exchange was $
TRANSFERABILITY OF OPTIONS
No grant of Options, or any right or interest therein, is assignable or
transferable except by will or the laws of descent and distribution. During the
lifetime of an optionee, Options are exercisable only by the optionee or his
legal representative.
TERMINATION OR AMENDMENT
The Board of Directors may terminate or amend the 1992 Plan at any time,
provided that no such amendment shall increase the maximum number of shares of
Common Stock available under the 1992 Plan or change the class of persons
eligible to receive Options under the Plan without shareholder approval.
APPROVAL BY STOCKHOLDERS
The increase in share authorizations provided for under the amended Plan is
subject to approval by a majority of the Company's stockholders. Until such
amendment is approved by stockholders no Options granted as a result of such
increase in share authorization thereunder will be exercisable.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief discussion of the Federal income tax consequences
of transactions under the Plan based on the Code, as in effect as of the date of
this Summary. The 1992 Plan is not qualified under Section 401(a) of the Code.
This discussion is not intended to be exhaustive and does not describe the state
or local tax consequences.
Except as noted below, with respect to Options, (1) no income is realized
by the optionee at the time the Option is granted; (2) generally, at exercise,
ordinary income is realized by the optionee in an amount equal to the difference
between the Option price paid for the shares and the fair market value of the
shares on the date of exercise, and the optionee's employer is generally
entitled to a tax deduction in the same amount subject to applicable tax
withholding requirements; and (3) at sale, appreciation (or depreciation) after
the date of exercise is treated as either short-term or long-term capital gain
(or loss) depending on how long the shares have been held. See "Special Rules
Applicable to Corporate Insiders".
7
<PAGE> 11
SPECIAL RULES APPLICABLE TO CORPORATE INSIDERS. As a result of new rules
under Section 16(b) of the Exchange Act, insiders, as with non-insiders, will
generally be taxed immediately upon the exercise of a Non-Statutory Option,
provided at least six months have elapsed from the date of the Option grant to
the date of exercise, and the general tax rules discussed above with respect to
Options will apply to insiders as well as non-insiders.
SECTION 162(M). The structure of the 1992 Plan is intended to make grants
of Options thereunder meet the requirements of "performance based" remuneration
under Section 162(m) of the Code.
RECOMMENDATION AND VOTE
The increase in share authorization from 1,320,000 to 2,820,000 under the
1992 Plan requires the affirmative vote of the holders of a majority of the
shares of Common Stock present, in person or by proxy, at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE INCREASE IN
SHARE AUTHORIZATION UNDER THE 1992 PLAN.
BENEFITS UNDER THE AMENDED AND RESTATED 1992 STOCK OPTION PLAN
Set forth below is a tabular presentation of the benefits and amounts that
may be received by or allocated to each of the indicated persons under the 1992
Plan as amended benefit plans being submitted for stockholder approval. Grants
under the 1992 Plan are discretionary and not ascertainable at this time. This
chart was completed by using grants for the fiscal year 1993.
<TABLE>
<CAPTION>
DOLLAR VALUE NUMBER OF
NAME AND POSITION $ UNITS
- --------------------------------------------------------------------- ------------ ---------
<S> <C> <C>
David A. Simon....................................................... $142,875 45,000
President and Chief Executive Officer
John M. Elwood....................................................... $142,875 45,000
Executive Vice President and Chief Financial Officer
John H. Leavitt...................................................... $ 22,000 8,000
Senior Vice President
Joseph Bernadino..................................................... $ 22,000 8,000
Senior Vice President and General Counsel
Richard T. Szymanski................................................. $ 13,750 5,000
Vice President and Corporate Controller
Douglas W. Vicari.................................................... $ 13,750 5,000
Vice President and Treasurer
All Executive Officers as a group,................................... $418,000 152,000
including those listed above
All Non-Executive Officer Employee Group............................. $833,250 303,000
</TABLE>
OTHER BUSINESS
The Company is not aware of any business to be acted upon at the Annual
Meeting other than that which is explained in this Proxy Statement. In the event
that any other business calling for a vote of the stockholders is properly
presented at the Annual Meeting, the holders of the proxies will vote your
shares in accordance with their best judgment.
8
<PAGE> 12
EXECUTIVE COMPENSATION
The following summary compensation table sets forth information concerning
compensation for services in all capacities awarded to, earned by or paid to the
persons who were, at December 31, 1993, the Company's Chief Executive Officer
and the five other most highly compensated executive officers of the Company.
The information shown reflects compensation for services in all capacities
awarded to, earned by or paid to these persons for the fiscal year ending
December 31, 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ ------------
NAME AND OTHER ANNUAL STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION(1)
- -------------------------------- ---- -------- -------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
David A. Simon.................. 1993 $303,853 $ -0- $-0- 45,000 $ 6,211
President and Chief 1992 298,175 665,045 -0- 330,000 1,402
Executive Officer 1991 282,565 -0- -0- -0- 66
John M. Elwood.................. 1993 240,000 -0- -0- 45,000 21,981
Executive Vice President 1992 295,170 554,205 -0- 20,000 252
and Chief Financial Officer 1991 307,980 -0- -0- -0- -0-
John H. Leavitt................. 1993 127,500 4,000 -0- 8,000 1,273
Senior Vice President 1992 125,000 -0- -0- -0- 299
1991 67,438 -0- -0- -0- 131
Joseph Bernadino................ 1993 120,750 -0- -0- 8,000 87
Senior Vice President, 1992 114,648 43,125 -0- -0- 252
Secretary and General Counsel 1991 114,648 -0- -0- -0- 51
Richard T. Szymanski............ 1993 105,000 -0- -0- 5,000 44
Vice President and 1992 101,956 25,000 -0- -0- 27
Corporate Controller 1991 99,931 -0- -0- -0- 27
Douglas W. Vicari............... 1993 105,000 -0- -0- 5,000 27
Vice President and 1992 101,304 25,000 -0- -0- 27
Treasurer 1991 79,904 -0- -0- -0- -0-
</TABLE>
- ---------------
(1) Amounts in this column are attributal to Company-provided life insurance and
in the case of Mr. Ellwood $19,500 of moving expenses.
9
<PAGE> 13
STOCK OPTION GRANTS DURING FISCAL YEAR ENDED DECEMBER 31, 1993
The following table sets forth information concerning individual grants of
stock options made during the fiscal year ending December 31, 1993 to each of
the officers listed below. The Company did not grant any stock appreciation
rights during such period.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZED
------------------------------------------------ VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERMS
OPTIONS IN FISCAL PRICE PER EXPIRATION ------------------
NAME GRANTED YEAR SHARE DATE 5% 10%
- ------------------------------- ---------- ---------- --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
David A. Simon................. 45,000(1) 6.2% $ 3.20 8/4/99 $82,141 $154,951
John M. Elwood................. 45,000(2) 6.2% $ 3.20 8/4/99 $82,141 $154,951
John H. Leavitt................ 8,000(3) 1.1% $ 3.625 6/18/99 $13,883 $ 27,690
Joseph Bernadino............... 8,000(4) 1.1% $ 3.625 (4) $12,878 $ 26,361
Richard T. Szymanski........... 5,000(3) 0.7% $ 3.625 6/18/99 $ 8,677 $ 17,306
Douglas W. Vicari.............. 5,000(3) 0.7% $ 3.625 6/18/99 $ 8,677 $ 17,306
</TABLE>
- ---------------
(1) These stock options were granted to David A. Simon as a director of the
Company in connection with a grant of options to the directors. These stock
options vest with respect to 15,000 shares on each of August 4, 1993, 1994
and 1995 and will continue to be exercisable through August 4, 1999, subject
to the provisions of the Company's 1992 Stock Option Plan.
(2) These stock options were granted to John M. Elwood as a director of the
Company in connection with a grant of options to the directors. These stock
options vest with respect to 15,000 shares on each of August 4, 1993, 1994,
and 1995 and will continue to be exercisable through August 4, 1999, subject
to the provisions of the Company's 1992 Stock Option Plan.
(3) These stock options vest with respect to one third of the grant on each of
June 18, 1994, 1995, and 1996 and will continue to be exercisable through
June 18, 1999, subject to the provisions of the Company's 1992 Stock Option
Plan.
(4) Joseph Bernadino received separate stock option grants of 5,000 shares and
3,000 shares each. One third of the 5,000 share grant vests on each of June
18, 1994, 1995 and 1996 and will continue to be exercisable through June 18,
1999. One third of the 3,000 share grant vests on each of September 1, 1994,
1995 and 1996 and will continue to be exercisable through September 1, 1999.
Both grants are subject to the Company's 1992 Stock Option Plan.
AGGREGATED OPTION IN FISCAL YEAR ENDED DECEMBER 31, 1993 AND YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT F-Y END IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE --------------------------- --------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ----------- -------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
David A. Simon................. -0- -0- 125,000 250,000 $ 450,475 $901,550
John M. Elwood................. -0- -0- 35,000 30,000 98,565 95,250
John H. Leavitt................ -0- -0- -0- 8,000 -0- 22,000
Joseph Bernadino............... -0- -0- -0- 8,000 -0- 22,000
Richard T. Szymanski........... -0- -0- -0- 5,000 -0- 13,750
Douglas W. Vicari.............. -0- -0- -0- 5,000 -0- 13,750
</TABLE>
EMPLOYMENT AGREEMENTS
David A. Simon
As provided in the PMI. Second Amended Joint Plan of Reorganization (the
"Plan"), Mr. Simon and the Company executed an employment agreement are July 31,
1992 which provides for an initial term of three
10
<PAGE> 14
years, with automatic successive one-year extensions unless a prior election is
made by either party not to extend the agreement.
The employment agreement provides for an annual base salary of $300,000
(which will increase annually based upon increases in the consumer price index),
a discretionary annual bonus based on attainment of performance objectives set
by the Board of Directors, a life insurance policy in an amount not less than
$1,000,000, an automobile and other customary welfare benefits, including
medical and disability insurance. The agreement also provides that, to the
extent payments made by the Company for disability insurance, life insurance and
the use of the automobile are subject to federal, state or local income taxes,
the Company will pay Mr. Simon the amount of such additional taxes plus such
additional amount as will be reasonable to hold him harmless from the obligation
to pay such taxes.
Pursuant to this employment agreement, Mr. Simon was granted stock options
on July 31, 1992 to purchase 330,000 shares of Common Stock. Such stock options
are exercisable with respect to 110,000 shares at the end of each of the first,
second and third years of his employment, provided his employment has not been
terminated by such date.
This employment agreement may be terminated by the Company at any time,
with or without cause. If the agreement is terminated by the Company prior to
the expiration of the initial three-year term without cause, or if Mr. Simon
resigns because of circumstances amounting to constructive termination of
employment, severance would be paid in a single lump sum equal to one-year's
base salary or, if greater, the base salary that would have been payable over
the remainder of the initial term. All stock options would become fully vested
and remain exercisable for 90 days after termination or, if longer, until the
expiration of the initial three year term. Any bonus awarded for the year of
termination would be prorated. If the Company does not terminate the agreement
prior to the expiration thereof, but elects not to extend the agreement beyond
the initial term, severance would be payable in a single lump sum equal to
one-year's base salary. If the agreement is terminated by the Company for cause
(as such term is defined in the employment agreement), or if Mr. Simon resigns
voluntarily under circumstances not amounting to a constructive termination of
employment, no benefits are payable other than accrued but unpaid salary.
John Elwood
As of December 31, 1992, Mr. Elwood and the Company executed an employment
agreement which has a term of one year. This employment agreement provides for
an annual base salary of $240,000, a discretionary annual bonus based on
attainment of performance objectives set by the Board of Directors, a life
insurance policy in an amount not less than $480,000 (of which the Company will
not pay premiums which exceed $5,000), moving expenses, an automobile, and other
customary welfare benefits, including medical and disability insurance. Pursuant
to the agreement, Mr. Elwood was granted stock options to purchase 20,000 shares
of Common Stock which are now fully vested. The agreement expired on December
31, 1993 by its terms. On January 24, 1994 Mr. Elwood and the Company entered
into a one-year employment agreement with a base salary of $250,000, options to
purchase 20,000 shares of Common Stock, and other terms substantially similar to
his expired agreement.
AUDIT AND COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
All members of the Audit and Compensation Committee are independent,
non-employee Directors.
As provided in the Plan, Mr. Simon and the Company are parties to an
employment agreement dated July 31, 1992 which provides for an initial term of
three years, with automatic successive one-year extensions unless a prior
election is made by either party not to extend the agreement. The agreement
provides for an annual base salary of $300,000 (which will increase annually
based upon increases in the consumer price index) and a discretionary annual
bonus based on attainment of performance objectives to be set by the Board of
Directors. Pursuant to the Plan and his employment agreement, Mr. Simon was
granted options to purchase 330,000 shares of Common Stock. Mr. Simon's
employment agreement and option grants were approved by
11
<PAGE> 15
the former directors of the Company. During 1993, no bonus was paid to Mr. Simon
pursuant to his employment agreement.
The Company's compensation policy is designed to help the Company achieve
its business objectives by:
- setting levels of compensation designed to attract and retain qualified
executive in a highly competitive business environment;
- providing incentive compensation that varies directly with both the
Company's financial performance and individual initiative and achievement
contributing to such performance; and
- linking compensation to elements which effect the Company's annual and
long-term share performance.
The Company intends to compensate executives and to grant stock options
pursuant to the SOP in order to provide executives with a competitive total
compensation package and reward them for their contribution to the Company's
annual and long-term share performance.
AUDIT AND COMPENSATION COMMITTEE
HERBERT LUST, II (Chairman)
Leon Moore
A. F. Petrocelli
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Moore and Mr. Petrocelli have certain business relationships with the
Company, which are described under the heading "Certain Relationships and
Related Transactions."
12
<PAGE> 16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Leon Moore, a Director of the Company, is the President, Chief Executive
Officer and Chairman of the Board of ShoLodge, Inc. ("ShoLodge"). Pursuant to an
agreement with the Company and Suites of America, Inc. ("SOA"), a wholly owned
subsidiary of the Company, ShoLodge was appointed the exclusive agent to develop
certain AmeriSuites hotel properties. ShoLodge is entitled to receive fees for
each hotel property developed. In addition, ShoLodge may receive, among other
things, a profit sharing interest in certain sites. During the fiscal year ended
December 31, 1993, ShoLodge earned development fees of $-0-and loan origination
fees of $40,349.
As of December 31, 1993, the Company and SOA have outstanding loans in the
amount of $18,361,000 owed to ShoLodge and in the amount of $5,066,000 owed to
the Bank of Nashville. Mr. Leon Moore is a director of The Bank of Nashville.
The foregoing loans are secured by hotel properties owned by SOA.
ShoLodge manages eight AmeriSuites hotel properties for the Company. During
the fiscal year ended December 31, 1993, ShoLodge earned management fees and
incentive fees totalling $468,000 from these AmeriSuites hotel properties.
The Company and SOA are parties to agreements with ShoLodge which provide
that, under certain circumstances, ShoLodge will contribute hotels to SOA,
receive 50% ownership interest, and manage the AmeriSuites hotels owned by SOA
pursuant to a new management agreement.
In April 1993, the Company sold land located in Flagstaff, Arizona to an
affiliate of Mr. Moore for the sum of $1.3 million. Upon its completion of the
construction of an AmeriSuites hotel on the land in October 1993, Mr. Moore's
affiliate sold the completed hotel to SOA for the sum of $5,875,000. ShoLodge
financed a portion of the purchase price and received a mortgage on the hotel in
the principal sum of $5,045,000. ShoLodge manages the hotel for SOA. In
addition, in May 1993, the Company sold to an affiliate of Mr. Moore land
located in Overland Park, Kansas on which the affiliate will build an
AmeriSuites hotel for sum of $486,000.
During 1993, the Company paid $2,376,000 in cash and cancelled its note
receivable of $486,000 in full satisfaction of the profit participation of
ShoLodge in four AmeriSuites hotels owned by SOA.
An affiliate of Mr. Moore has entered into a contract to build a hotel for
the Company in Tampa, Florida for $3,587,900.
In April 1993, an affiliate of Mr. Moore completed construction of an
AmeriSuites hotel located in Brentwood, Tennessee on land it leased from SOA and
sold it to SOA for the sum of $4,035,000. ShoLodge financed the full purchase
price and received a deed of trust on the hotel. The lease from SOA to the
affiliate was terminated. ShoLodge manages the property for SOA.
The Company uses the ShoLodge reservation system for its AmeriSuites and
Wellesley Inn hotel properties. The total amount of reservation fees paid to
ShoLodge for the fiscal year ended December 31, 1993 was approximately $222,000.
A.F. Petrocelli, a Director of the Company, is the Chairman of the Board
and Chief Executive Officer of United Capital Corp. In March 1994, the Company
entered into management agreements with the corporate owners of two hotels who
are affiliates of United Capital Corp.
During 1993, the Company managed and held a nonrecourse junior note and
mortgage on a hotel property owned partially by a partnership comprised of David
A. Simon and certain former officers and directors of the Company. In connection
with a settlement in lieu of foreclosure between the first mortgagee and the
owners in which the hotel was conveyed to the first mortgagee, the Company
discharged its junior mortgage.
During 1989, a partnership in which Peter E. Simon, father of David A.
Simon, is a partner acquired an interest in three hotels from PMI. In partial
payment PMI received nonrecourse junior loans aggregating $21,590,000. As of
December 31, 1993, the aggregate balance owed on these loans was $21,472,766.
The Company is currently in the process of restructuring these loans. Due to the
nonrecourse junior nature of these
13
<PAGE> 17
loans and the insufficient cash generated by the hotels, no debt payments were
made on these loans during 1993.
During 1989, this same partnership acquired PMI's interest in eight hotel
properties. In partial payment PMI received a junior non-recourse mortgage note
in the principal amount of $9,647,450. The Company restructured this transaction
as of December 1, 1992 by (i) conveying to the partnership its interest in one
hotel property, and (ii) amending the principal amount and interest rate of the
note to $8,103,362 and 8.2% per annum, respectively. No debt payments were made
on these loans during 1993.
During February 1990, this same partnership purchased from PMI a note owing
from a third party in the original principal amount of $3,255,380. This
partnership paid PMI $488,318 in cash and granted PMI an 85% note participation.
In partial settlement of its claim on the note, the Company acquired a hotel
located in Miami, Florida in which the partnership has a 15% interest.
In December 1993, the Company entered into a management agreement with the
corporate owner of a hotel in which Peter E. Simon is a stockholder.
The Company has retained Willkie Farr & Gallagher as its legal counsel
involving certain matters during its last fiscal year and proposes to continue
such relationship with the firm in this fiscal year. Mr. Nusbaum, a nominee for
director, is a Senior Partner and Co-Chairman of the firm.
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors, executive officers, and persons who own more
than ten percent of the Common Stock, to file reports of beneficial ownership
with the Securities and Exchange Commission, the New York Stock Exchange and the
Company. Based solely upon its review of the copies of such forms received by
it, the Company believes that, during fiscal year 1993, all filing requirements
applicable to such persons were complied with, except; that report,
covering transactions, was filed late by each of ,
and .
The SEC requires the Company to present a graph comparing the cumulative
total stockholder return on its Common Stock with the cumulative total
stockholder return (a) of a broad equity market index and (b) of a published
industry index or peer group. The Common Stock began trading on the NYSE under
the symbol "PDQ" on August 3, 1992. As a result, the following graph commences
as of August 3, 1992. The graph compares the Common Stock with (a) the Dow Jones
Equity Market Index and (b) the Dow Jones Lodging Index. Furthermore, the
following graph assumes an investment of $100 on August 3, 1992 in each of the
Common Stock, the stocks comprising the Dow Jones Equity Market Index and the
Dow Jones Lodging Index.
14
<PAGE> 18
COMPARISON OF 1992 AND 1993 CUMULATIVE TOTAL RETURN
AMONG PRIME HOSPITALITY CORP., DOW JONES EQUITY MARKET INDEX AND DOW JONES
LODGING INDEX
<TABLE>
<CAPTION>
DOW JONES DOW JONES
MEASUREMENT PERIOD PRIME HOSPI- EQUITY MAR- LODGING INDE
(FISCAL YEAR COVERED) TALITY CORP. KET INDEX X
<S> <C> <C> <C>
08/03/92 100 100 100
08/31/92 107 97 98
09/30/92 87 99 104
10/31/92 93 99 107
11/30/92 100 102 111
12/31/92 120 103 108
01/31/93 133 104 123
02/28/93 127 105 122
03/31/93 187 107 131
04/30/93 193 104 122
05/31/93 213 107 132
06/30/93 213 107 127
07/31/93 193 106 127
08/31/93 200 110 136
09/30/93 253 109 148
10/31/93 253 111 150
11/30/93 253 109 144
12/31/93 320 111 177
</TABLE>
<TABLE>
<CAPTION>
DOW
JONES
LODGING
PRIME HOSPITALITY CORP. DOW JONES EQUITY MARKET INDEX INDEX
-------------------------------------------- ------------------------------------------------ -------
$ % CUM. $ % CUM.
OPEN CLOSE CHANGE CHANGE RETURN OPEN -- CLOSE CHANGE CHANGE RETURN OPEN --
----- ----- ------ ------ ------ ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8/03/92............... N/A 1.875 N/A N/A 100 399.953 100
8/31/92............... 1.875 2 0.13 6.67 % 107 399.953 389.547 (10.41) -2.60 % 97 290.188
9/30/92............... 1.875 1.625 (0.25 ) -13.33% 87 399.953 394.016 (5.94 ) -1.48 % 99 290.188
10/31/92.............. 1.875 1.75 (0.13 ) -6.67 % 93 399.953 395.984 (3.97 ) -0.99 % 99 290.188
11/30/92.............. 1.875 1.875 0.00 0.00 % 100 399.953 408.688 8.73 2.18 % 102 290.188
12/31/92.............. 1.875 2.25 0.38 20.00 % 120 399.953 413.297 13.34 3.34 % 103 290.188
01/31/93.............. 1.875 2.5 0.63 33.33 % 133 399.953 416.297 16.34 4.09 % 104 290.188
02/28/93.............. 1.875 2.375 0.50 26.67 % 127 399.953 420.625 20.67 5.17 % 105 290.188
03/31/93.............. 1.875 3.5 1.63 86.67 % 187 399.953 429.094 29.14 7.29 % 107 290.188
4/30/93............... 1.875 3.625 1.75 93.33 % 193 399.953 417.563 17.61 4.40 % 104 290.188
05/31/93.............. 1.875 4 2.13 113.33% 213 399.953 427.016 27.06 6.77 % 107 290.188
06/30/93.............. 1.875 4 2.13 113.33% 213 399.953 427.844 27.89 6.97 % 107 290.188
07/31/93.............. 1.875 3.625 1.75 93.33 % 193 399.953 425.813 25.86 6.47 % 106 290.188
08/31/93.............. 1.875 3.75 1.88 100.00% 200 399.953 439.938 39.98 10.00 % 110 290.188
09/30/93.............. 1.875 4.75 2.88 153.33% 253 399.953 436.781 36.83 9.21 % 109 290.188
10/31/93.............. 1.875 4.75 2.88 153.33% 253 399.953 442.953 43.00 10.75 % 111 290.188
11/30/93.............. 1.875 4.75 2.88 153.33% 253 399.953 436.938 36.98 9.25 % 109 290.188
12/31/93.............. 1.875 6.00 4.13 220.00% 320 399.953 442.188 42.23 10.56 % 111 290.188
<CAPTION>
$ % CUM.
CLOSE CHANGE CHANGE RETURN
------- ------ ------ ------
<S> <C><C> <C> <C> <C>
8/03/92............... 290.188 100
8/31/92............... 285.453 (4.73 ) -1.63 % 98
9/30/92............... 301.75 11.56 3.98 % 104
10/31/92.............. 309.77 19.58 6.75 % 107
11/30/92.............. 323.42 33.23 11.45 % 111
12/31/92.............. 314.17 23.98 8.26 % 108
01/31/93.............. 357.98 67.80 23.36 % 123
02/28/93.............. 354.01 63.82 21.99 % 122
03/31/93.............. 380.47 90.28 31.11 % 131
4/30/93............... 352.66 62.47 21.53 % 122
05/31/93.............. 383.734 93.55 32.24 % 132
06/30/93.............. 368.484 78.30 26.98 % 127
07/31/93.............. 369.563 79.38 27.35 % 127
08/31/93.............. 394.563 104.38 35.97 % 136
09/30/93.............. 430.5 140.31 48.35 % 148
10/31/93.............. 434.734 144.55 49.81 % 150
11/30/93.............. 416.688 126.50 43.59 % 144
12/31/93.............. 513.63 223.44 77.00 % 177
</TABLE>
FINANCIAL STATEMENTS
The Company's annual report to stockholders for the year ended December 31,
1993 (the "Annual Report"), including audited financial statements, is being
mailed to stockholders concurrently with this Proxy Statement. The Annual Report
is on file with the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 and the
New York Stock Exchange.
STOCKHOLDER PROPOSALS
It is presently anticipated that the 1995 Annual Meeting will be held on or
about May 6, 1995. Proposals of stockholders submitted for consideration at the
1995 annual meeting of stockholders must be received by the Company not later
than November 26, 1994 in order to be included in the Company's proxy statement
for
15
<PAGE> 19
that meeting. A stockholder desiring to submit a proposal must be a record or
beneficial owner of at least 1% of the outstanding shares of $1,000 in market
value of shares of securities entitled to be voted at the annual meeting and
must have held such shares for at least one year. Further, the stockholder must
continue to hold such shares through the date on which the meeting is held.
Documentary support regarding the foregoing must be provided along with the
proposal. There are additional requirements regarding proposals of the
stockholders, and a stockholder contemplating submission of a proposal is
referred to Rule 14a-8 promulgated under the Exchange Act. In addition, the
bylaws of the Company require, among other things, that notice of proposals of
stockholders be delivered to or mailed and received at the principal executive
offices of the Company not less than fifty (50) days nor more than seventy-five
(75) days prior to the meeting; provided, however, that in the event that less
than sixty-five (65) days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the fifteenth (15th)
day following the day on which such notice of the date of the meeting was mailed
or such public disclosure was made, whichever first occurs.
OTHER INFORMATION
The Company's annual report to stockholders for the year ended December 31,
1993 (the "annual Report"), including audited financial statements, is being
mailed to stockholders concurrently with this Proxy Statement. The Annual Report
is on file with the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 and the
New York Stock Exchange.
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993 (excluding exhibits) is available without charge to any
stockholder of the company who requests a copy in writing. Requests for copies
of the Report should be directed to the Secretary, Prime Hospitality Corp., 700
Route 46 East, Fairfield, New Jersey 07004.
By Order of the Board of Directors
JOSEPH BERNADINO
Secretary
16
<PAGE> 20
PRIME HOSPITALITY CORP.
1992 STOCK OPTION PLAN
(AS AMENDED AND RESTATED APRIL , 1994)
1. Purposes.
The 1992 Stock Option Plan (the "Plan") is intended to attract and retain
the best available personnel for positions with substantial responsibilities
with Prime Hospitality Corp. (the "Company") or any of its subsidiary
corporations, and to provide an additional incentive to such employees to exert
their maximum efforts toward the success of the Company and its subsidiary
corporations through the granting of certain stock options ("Options"). Under
the Plan, no options may be granted which are qualified as Incentive Stock
Options.
2. Administration of the Plan.
The Plan shall be administered by a committee (the "Committee") appointed
by the Board of Directors of the Company (the "Board of Directors") from among
its members and consisting of at least two members thereof, each of whom is a
"disinterested person" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934 (the "Exchange Act"). The Committee may exercise the power
and authority vested in the Board of Directors under the Plan. Within the limits
of the express provisions of the Plan, the Committee shall have the authority,
in its discretion, to take the following actions under the Plan:
(i) to determine the individuals to whom, and the time or times at which,
Options to purchase the Company's shares of Common Stock, par value $.01 per
share ("Common Shares"), shall be granted, and the number of Common Shares to be
subject to each Option;
(ii) to interpret the Plan;
(iii) to prescribe, amend and rescind rules and regulations relating to the
Plan;
(iv) to determine the terms and provisions of the respective stock option
agreements granting Options (which need not be identical and may, in the
Committee's discretion, contain provisions more favorable to the Optionee (as
hereinafter defined) relating to the matters covered under Paragraphs 5, 6, 8 or
9 hereof); and
(v) to make all other determinations and take all other actions necessary
or advisable for the administration of the Plan. In making such determinations,
the Committee may take into account the nature of the services rendered by such
individuals, their present and potential contributions to the Company's success,
and such other factors as the Committee, in its discretion, shall deem relevant.
An individual to whom an option has been granted under the Plan is referred to
herein as an "Optionee." The Committee's determinations on the matters referred
to in this paragraph shall be conclusive. Any determination by a majority of the
members of the Committee shall be deemed to have been made by the whole
Committee.
3. Shares Subject to the Plan.
As of the date the Plan is amended and restated the total number of Common
Shares which shall be subject to Options granted under the Plan shall be
increased from 1,320,000 to 2,820,000 in the aggregate, subject to adjustment as
provided in Paragraph 8 or in any related stock option agreement. The Company
shall at all times while the Plan is in force reserve such number of Common
Shares as will be sufficient to satisfy the requirements of outstanding Options.
The Common Shares to be issued upon exercise of Options shall in whole or in
part be authorized and unissued or reacquired Common Shares. The unexercised
portion of any expired, terminated or cancelled Option shall again be available
for the grant of Options under the Plan.
4. Eligibility.
(a) Options may be granted only to key employees, directors and officers of
the Company or of a subsidiary corporation, as determined by the Committee.
17
<PAGE> 21
(b) Nothing contained in the Plan shall be construed to limit the right of
the Company to grant options otherwise than under the Plan for proper corporate
purposes.
(c) Nothing contained in the Plan shall be construed to limit the right of
the Committee to grant additional Options from time to time to the Optionee
holding Options, and Options may be granted from time to time to one or more
employees who have not previously been granted Options.
(d) Notwithstanding anything to the contrary herein, after the date the
Plan is amended and restated, no person may be granted Options to purchase more
than 100,000 Common Shares in any one year.
5. Terms of Options.
The terms of each Option granted under the Plan shall be determined by the
Committee consistent with the provisions of the Plan, including the following:
(a) The purchase price of the Common Shares subject to each Option shall be
fixed by the Committee, in its discretion, at the time such Option is granted.
(b) The dates on which each Option (or portion thereof) shall be
exercisable shall be fixed by the Committee, in its discretion, at the time such
Option is granted; provided, however, that with respect to Options granted
covering Common Shares added pursuant to the amendment and restatement of the
Plan, no Option shall be exercisable unless and until the Plan is approved by
the majority vote of the Company's shareholders.
(c) The expiration of each Option shall be fixed by the Committee, in its
discretion, at the time such Option is granted. No Option shall be exercisable
after the expiration of six (6) years from the date of its grant and each Option
shall be subject to earlier termination as expressly provided in Paragraph 6
hereof or as determined by the Committee, in its discretion, at the date such
Option is granted.
(d) Options shall be exercised by the delivery by the Optionee thereof to
the Company at its principal office or at such other address as may be
established by the Committee (Attention: Administrator, 1992 Stock Option Plan)
of written notice of the number of shares with respect to which the Option is
being exercised accompanied by payment in full of the purchase price of such
shares. Payment for such shares may be made (as determined by the Committee) (i)
in cash, (ii) by certified check or bank cashier's check payable to the order of
the Company in the amount of such purchase price, (iii) by promissory note
issued by the Optionee in favor of the Company in an amount equal to such
purchase price and payable on terms prescribed by the Committee and which
provides for the payment of interest at a fair market rate, as determined by the
Committee, (iv) by delivery of capital stock to the Company having a fair market
value equal to said purchase price, (v) by irrevocable instructions to a broker
to deliver promptly to the Company the amount of sale or loan proceeds necessary
to pay the aggregate purchase price of the Common Shares as to which such
exercise relates and to sell the Common Shares to be issued upon exercise of the
Option and deliver the cash proceeds less commissions and brokerage fees to the
Optionee or to deliver the remaining Common Shares to the Optionee, or (vi) by
any combination of the methods of payment described in (i) through (v) above.
(f) An Optionee shall not have any of the rights of a shareholder with
respect to the Common Shares subject to his Option until such shares are issued
to him upon the exercise of his Option as provided herein.
(g) No Option shall be transferable, except by will or the laws of descent
and distribution, and any Option may be exercised during the lifetime of the
Optionee only by him. No Option granted under the Plan shall be subject to
execution, attachment or other process.
6. Death or Termination of Employment.
(a) If the employment or other relationship of an Optionee with the Company
or any of its subsidiary corporations shall be terminated voluntarily by the
employee and without the consent of the Company or a subsidiary corporation, as
the case may be, or for cause, and immediately after such termination such
Optionee shall not then be employed by the Company or any of its subsidiary
corporations, as the case may be, any Option or Options granted to such Optionee
to the extent not theretofore exercised shall expire forthwith.
18
<PAGE> 22
(b) If such employment or other relationship of an Optionee with the
Company shall terminate other than (i) by reason of death, (ii) voluntarily by
the employee and without the consent of the Company or any of its subsidiary
corporations, as the case may be, or (iii) for cause, and immediately after such
termination such Optionee shall not then be employed by the Company or any of
its subsidiary corporations, as the case may be, any Option or Options granted
to such Optionee may be exercised at any time within three months after such
termination, subject to the provisions of subparagraph (d) of this Paragraph 6.
For the purposes of the Plan, the retirement of an Optionee either pursuant to a
pension or retirement plan adopted by the Company or a subsidiary corporation,
as the case may be, on the normal retirement date prescribed from time to time
by the Company or such subsidiary corporation, and the termination of employment
as a result of a disability (as defined in Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended) shall be deemed to be a termination of such
Optionee's employment other than voluntarily by the Optionee or for cause.
(c) If an Optionee dies (i) while employed by, or while engaged in another
relationship with, the Company or a subsidiary corporation or (ii) within three
months after the termination of his employment or other relationship other than
voluntarily by the Optionee and without the consent of the Company or a
subsidiary corporation or for cause, any Option or Options granted to such
Optionee may be exercised at any time within six months after such Optionee's
death, subject to the provisions of subparagraph (d) of this Paragraph 6.
(d) An Option may not be exercised pursuant to this Paragraph 6 except to
the extent that the Optionee was entitled to exercise the Option at the time of
termination of employment or such other relationship, or death, and in any event
may not be exercised after the expiration of six (6) years from the date the
Option was granted.
7. Leave of Absence.
For purposes of the Plan, an individual who is on military or sick leave or
other bona fide leave of absence (such as temporary employment by the United
States or any state government) shall be considered as remaining in the employ
of the Company or of a subsidiary corporation for 90 days or such longer period
as shall be determined by the Committee.
8. Adjustment upon Changes in Capitalization.
(a) In the event that the outstanding Common Shares are hereafter changed
by reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination or exchange of shares and the
like, or dividends payable in Common Shares, an appropriate adjustment shall be
made by the Committee in the aggregate number of shares available under the Plan
and in the number of shares and price per share subject to outstanding Options.
If the Company shall be reorganized, consolidated, or merged with another
corporation, or if all or substantially all of the assets of the Company shall
be sold or exchanged, an Optionee shall at the time of issuance of the stock
under such corporate event be entitled to receive upon the exercise of his
Option the same number and kind of shares of stock or the same amount of
property, cash or securities as he would have been entitled to receive upon the
occurrence of any such corporate event as if he had been, immediately prior to
such event, the holder of the number of shares covered by his Option.
(b) Any adjustment under this Paragraph 8 in the number of Common Shares
subject to Options shall apply proportionately to only the unexercised portion
of any Option granted hereunder. If fractions of a share would result from any
such adjustment, the adjustment shall be revised to the next lower whole number
of shares.
9. Further Conditions of Exercise.
(a) Unless prior to the exercise of an Option the Common Shares issuable
upon such exercise are the subject of a registration statement filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), a prospectus meeting the requirements of Section
10(a)(3) of the Securities Act has been distributed to Optionholders, the notice
of exercise with
19
<PAGE> 23
respect to such Option shall be accompanied by a representation or agreement of
the Optionee to the Company to the effect that such shares are being acquired
for investment only and not with a view to the resale or distribution thereof,
or such other documentation as may be required by the Company, unless, in the
opinion of counsel to the Company, such representation, agreement or
documentation is not necessary to comply with the Securities Act.
(b) Anything in subparagraph (a) of this Paragraph 9 to the contrary
notwithstanding, the Company shall not be obligated to issue or sell any Common
Shares until they have been listed on each securities exchange on which the
Common Shares may then be listed and until and unless, in the opinion of counsel
to the Company, the Company may issue such shares pursuant to a qualification or
an effective registration statement, or an exemption from registration, under
such state and federal laws, rules or regulations as such counsel may deem
applicable. The Company shall use reasonable efforts to effect such listing,
qualification and registration, as the case may be.
10. Termination, Modification and Amendment.
(a) The Plan (but not Options previously granted under the Plan) shall
terminate ten (10) years from the date of its adoption by the Board of
Directors, and no Option shall be granted after termination of the Plan.
(b) The Plan may from time to time be terminated, modified or amended by
the affirmative vote of the holders of a majority of the outstanding shares of
the capital stock of the Company entitled to vote thereon.
(c) The Board of Directors of the Company may at any time terminate the
Plan or from time to time make such modifications or amendments of the Plan as
it may deem advisable; provided, however, that the Board of Directors shall not,
without approval by the affirmative vote of the holders of a majority of the
outstanding shares of the capital stock of the Company entitled to vote thereon,
increase (except as provided by Paragraph 8) the maximum number of Common Shares
as to which Options may be granted under the Plan or change the class of persons
eligible to receive Options under the Plan.
(d) No termination, modification or amendment of the Plan may adversely
affect the rights conferred by any Options without the consent of the Optionee
thereof.
11. Effectiveness of the Plan.
The Plan was originally adopted pursuant to authorization of the U.S.
Bankruptcy Court for the Southern District of Florida, after disclosure and
approval of the Second Amended Joint Plan of Reorganization by Creditors and
Shareholders. Accordingly, the Plan became effective upon adoption by the Board
of Directors of the Company.
12. Not a Contract of Employment.
Nothing contained in the Plan or in any stock option agreement executed
pursuant hereto shall be deemed to confer upon Optionee any right to remain in
the employ of the Company or subsidiary corporation.
20
<PAGE> 24
PRIME HOSPITALITY CORP.
PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY
FOR ANNUAL MEETING MAY 13, 1994
The undersigned hereby constitutes and appoints David A. Simon, John M.
Elwood and Joseph Bernadino, and each of them, his true and lawful agents and
proxies with full power of substitution in each, to represent the undersigned
at the Annual Meeting of Stockholders of Prime Hospitality Corp. to be held at
the Fairfield Sheraton Hotel, 690 Route 46 East, Fairfield, New Jersey on
Friday, May 13, 1994, at 10:00 a.m., and any adjournments thereof, on all
matters coming before said meeting.
Directors recommend a Vote "FOR" all Nominees
1. Election of Class II Directors
For nominees listed below WITHHELD
--- ---
Jack H. Nusbaum and Howard M. Lorber
For, except vote withheld from the following nominee(s).
Directors recommend a Vote "FOR" Item 2.
2. Proposal to ratify the appointment of ARTHUR ANDERSEN & CO. as independent
public accountants of the Company.
FOR AGAINST ABSTAIN
--- --- ---
Directors recommend a Vote "FOR" Item 3.
3. Proposal to adopt the Amended and Restated 1992 Stock Option Plan
FOR AGAINST ABSTAIN
--- --- ---
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
You are encouraged to specify your choices by marking the appropriate boxes,
but you need not mark any boxes if you wish to vote in accordance with the
Board of Directors' recommendations. The Proxy cannot vote your shares unless
you sign and return this card in the enclosed postage prepaid envelope.
<PAGE> 25
This proxy, when properly executed, will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR Item 1, FOR Item
2, AND FOR Item 3.
Date 1994
-------------------------------------
- ------------------------------------------
(Signature)
- ------------------------------------------
(Signature if held jointly)
Note: please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting of any adjournments thereof.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE, THANK YOU.
