<PAGE> 1
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 / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
PRIME HOSPITALITY CORP.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $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 transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / 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:
<PAGE> 2
PRIME HOSPITALITY CORP.
700 ROUTE 46 EAST
FAIRFIELD, NEW JERSEY 07004
April 10, 1995
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Prime Hospitality Corp. (the "Company") to be held on May 16, 1995, 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 two Class III Directors of the Company to
serve until the 1998 Annual Meeting of Stockholders, to approve an amendment to
the Company's Restated Certificate of Incorporation providing for an increase in
the number of authorized shares of the Company's Common Stock, to approve the
1995 Employee Stock Option Plan, to approve the 1995 Non-Employee Director Stock
Option Plan, and to ratify the Board of Directors' selection of independent
auditors for the year ending December 31, 1995. THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR BOTH NOMINEES AND 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 16, 1995
---------------------
To the Stockholders of
Prime Hospitality Corp.:
The Annual Meeting of Stockholders of Prime Hospitality Corp. (the
"Company") will be held on May 16, 1995 at 10:00 a.m., at the Fairfield Radisson
Hotel, 690 Route 46 East, Fairfield, New Jersey, for the following purposes:
1. To elect two Class III Directors of the Company to serve until the
1998 Annual Meeting of Stockholders;
2. To approve an amendment to the Company's Restated Certificate of
Incorporation providing for an increase the number of authorized shares of
the Company's Common Stock;
3. To approve the 1995 Employee Stock Option Plan;
4. To approve the 1995 Non-Employee Director Stock Option Plan; and
5. 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, 1995;
6. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The close of business on April 3, 1995 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 both Nominees and FOR Items 2, 3, 4 and 5.
The Company's Annual Report for the fiscal year ended December 31, 1994,
including financial statements, is also enclosed.
By Order of the Board of Directors,
JOSEPH BERNADINO
Secretary
Fairfield, New Jersey
April 10, 1995
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 10, 1995
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 16, 1995 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 3, 1995 (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
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, 1994, are being mailed to stockholders on or about April 10,
1995.
As of the Record Date, there were [ ] issued and outstanding shares
of Common Stock.
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 TWO NOMINEES NAMED HEREIN TO SERVE AS DIRECTORS FOR
THE TERMS SPECIFIED HEREIN AND UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED,
(2) FOR APPROVAL OF AN AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF THE COMPANY'S
COMMON STOCK, (3) FOR APPROVAL OF THE 1995 EMPLOYEE STOCK OPTION PLAN, (4) FOR
APPROVAL OF THE 1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN, AND (5) FOR THE
RATIFICATION OF THE BOARD OF DIRECTORS' SELECTION OF ARTHUR ANDERSEN LLP TO
SERVE AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER
31, 1995. 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 Common Stock of the Company entitled to vote at
the Annual Meeting. Brokers that do not receive instructions from the beneficial
owner or other persons entitled to vote shares are entitled, under the rules of
the New York Stock Exchange, to vote for the election of Directors and on each
of the proposals. For purposes of determining the presence of a quorum for
transacting business at the Annual Meeting, broker "non-votes"
<PAGE> 5
will be treated as shares that are not present. Abstentions will be treated as
shares that are present and as votes cast against a particular proposal.
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
Certificate of Incorporation. 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 and Class II Directors were
elected or re-elected at the Annual Meeting held on May 13, 1994.
Election for two Class III directors will be held at the Annual Meeting.
Allen J. Ostroff and A. F. Petrocelli have been nominated for election as Class
III directors. Both nominees are presently Directors. THE PERSONS NAMED IN THE
ACCOMPANYING PROXY WILL VOTE ALL SHARES FOR WHICH THEY HAVE RECEIVED PROXIES FOR
THE ELECTION OF ALLEN J. OSTROFF AND A. F. PETROCELLI AS CLASS III DIRECTORS,
UNLESS AUTHORITY TO DO SO IS WITHHELD.
Approval of the nominees requires the affirmative vote of the holders of a
plurality of the shares of Common Stock present or represented by proxy at the
Annual Meeting, and entitled to vote thereon.
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 EXPIRE AT THE 1996 ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<S> <C>
David A. Simon..................... David A. Simon, age 42, has been President, Chief
Executive Officer and a Director since 1992 and Chairman
of the Board of Directors of the Company since 1993. Mr.
Simon was a director of Prime Motor Inns, Inc. ("PMI")
from 1990 to 1992. Mr. Simon was the Chief Executive
Officer of PMI from 1990 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 Elwood, age 40, has been a Director and Executive
Vice President of the Company since 1992 and Chief
Financial Officer since 1993. Mr. Elwood was the
Director of Reorganization of PMI from September 1990,
when PMI filed for protection under chapter 11 of the
United States Bankruptcy Code, through the Effective
Date, and during 1990 was the Director of Reorganization
of Allegheny International, Inc. prior to its emergence
from chapter 11 bankruptcy protection that year.
CLASS II DIRECTORS WHOSE TERMS EXPIRE AT THE 1997 ANNUAL MEETING OF STOCKHOLDERS
Herbert Lust, II................... Herbert Lust, II, age 66, has been a Director since 1992
and Chairman of the Compensation and Audit Committee of
the Company since 1993. Mr. Lust was a member of the
Committee of Unsecured Creditors of PMI from 1990 to
1992. Mr. Lust has been a private investor and President
of Private Water Supply Inc. for more than the past five
years. Mr. Lust is a director of BRT Realty Trust.
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
Jack H. Nusbaum.................... Jack H. Nusbaum, age 54, has been a Director since 1994.
Mr. Nusbaum has been a senior partner and Co-Chairman of
the law firm of Willkie Farr & Gallagher for more than
the past five years. He also is a director of W.R.
Berkley Corporation, The Topps Company, Inc., GEV
Corporation and Signet Star Holdings.
Howard M. Lorber................... Howard M. Lorber, age 46, has been a Director and a
member of the Compensation and Audit Committee since
1994. Mr. Lorber is Chairman of the Board of Directors
of Nathan's Famous, Inc., Hallman & Lorber, Inc. and
Skybox International, Inc., and a director of New Valley
Corporation, United Capital Corp. and Alpine Lace
Brands, Inc. Mr. Lorber has been Chief Executive Officer
of Hallman & Lorber, Inc. for more than the past five
years, President and Chief Operating Officer of New
Valley Corporation since 1994, and Chief Executive
Officer of Nathan's Famous, Inc. since 1993. Mr. Lorber
has also been a general partner or shareholder of a
corporate general partner of various limited partner-
ships organized to acquire and operate real estate
properties. Several of these partnerships filed for
protection under the federal bankruptcy laws in 1990 and
1991.
NOMINEES TO SERVE AS CLASS III DIRECTORS UNTIL THE 1998 ANNUAL MEETING OF STOCKHOLDERS
Allen J. Ostroff................... Allen J. Ostroff, age 58, has been a Director since 1992
and a member of the Compensation and Audit Committee
since 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 50, has been a Director since 1992
and a member of the Compensation and Audit Committee
since 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>
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION
OF THE TWO NOMINEES FOR DIRECTORS
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 $30,000 annually. In addition, each non-employee 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 Compensation and Audit
Committee receives an additional $15,000 annually. The Directors' remuneration
is paid quarterly. All Directors are reimbursed for their expenses.
The Board of Directors held ten meetings during 1994. All members of the
Board of Directors attended at least 75% of the aggregate number of meetings of
the Board of Directors.
COMPENSATION AND AUDIT COMMITTEE
The Compensation and Audit Committee consists of four non-employee
Directors: Messrs. Lust (Chairman), Petrocelli, Ostroff and Lorber. During 1994,
the Committee held three meetings. All members of the Committee attended at
least 75% of the aggregate number of Committee meetings.
3
<PAGE> 7
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, the Committee 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 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.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below are the names, ages and positions of the executive officers
of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
----------------------------- --- ---------------------------------------------------------
<S> <C> <C>
David A. Simon............... 42 President, Chief Executive Officer and Chairman of the
Board of Directors
John M. Elwood............... 40 Executive Vice President, Chief Financial Officer and
Director
Paul H. Hower................ 60 Executive Vice President
Timothy E. Aho............... 51 Senior Vice President/Development
Denis W. Driscoll............ 50 Senior Vice President/Human Resources
John H. Leavitt.............. 41 Senior Vice President/Sales and Marketing
Joseph Bernadino............. 48 Senior Vice President, Secretary and General Counsel
Richard T. Szymanski......... 37 Vice President and Corporate Controller
Douglas W. Vicari............ 35 Vice President and Treasurer
</TABLE>
The following is a biographical summary of the experience of the executive
officers of the Company, other than Mr. Simon and Mr. Elwood who are described
above.
Paul H. Hower has been an Executive Vice President of the Company since
1993. Mr. Hower was President of Integrity Hospitality Services from 1992 to
1993 and Vice President and Hotel Division Manager of B.F. Saul Co. from 1990 to
1991.
Timothy E. Aho has been a Senior Vice President of the Company since 1994.
Mr. Aho was a Senior Vice President of Development for Boykin Management Company
from 1993 to 1994 and Vice President of Development for Interstate Hotels
Corporation from 1990 to 1993.
Denis W. Driscoll has been a Senior Vice President of the Company since
1993. Mr. Driscoll was President of Driscoll Associates, a human resources
consulting organization, from 1990 to 1993.
John H. Leavitt has been a Senior Vice President of the Company since 1992.
Mr. Leavitt was a Senior Vice President of PMI from 1991 to 1992 and a Senior
Vice President of Medallion Hotel corporation from 1990 to 1991.
Joseph Bernadino has been Senior Vice President, Secretary and General
Counsel of the Company since 1992. Mr. Bernadino was an Assistant Secretary and
Assistant General Counsel of PMI from 1990 to 1992 and held such position when
PMI filed for chapter 11 bankruptcy protection.
Richard T. Szymanski has been a Vice President and Corporate Controller of
the Company since 1992. Mr. Szymanski was Corporate Controller of PMI from 1990
to 1992 and held such position when PMI filed for chapter 11 bankruptcy
protection.
Douglas W. Vicari has been a Vice President and Treasurer of the Company
since 1992 and was Vice President and Treasurer of PMI during 1992. Mr. Vicari
was the Director of Budget and Financial Analysis of PMI from 1990 to 1992 and
held such position when PMI filed for chapter 11 bankruptcy protection.
4
<PAGE> 8
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership of Common Stock as
of March 24, 1995, 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(N)
----------------------------------------------------------------- ----------------- ----------
<S> <C> <C>
David A. Simon(a)................................................ 408,895 1.3
John M. Elwood(b)................................................ 121,622 *
Herbert Lust, II(c).............................................. 53,151 *
Allen J. Ostroff(d).............................................. 35,000 *
A.F. Petrocelli(e)............................................... 38,276 *
Jack H. Nusbaum(f)............................................... 15,000 *
Howard M. Lorber(g).............................................. 5,000 *
John H. Leavitt(h)............................................... 2,777 *
Paul H. Hower(i)................................................. 20,300 *
Denis W. Driscoll(j)............................................. 8,450 *
Joseph Bernadino(k).............................................. 3,666 *
Richard T. Szymanski(l).......................................... 1,666 *
Douglas W. Vicari(m)............................................. 1,666 *
Timothy E. Aho................................................... 0 *
All directors and executive officers as a group (14
persons)(n).................................................... 715,469 2.3
</TABLE>
---------------
(a) Includes 151,726 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
5,510 shares with an exercise price of $2.71 per share owned by Mr. Simon,
467 warrants owned by his wife, and 797 warrants held as custodian for his
children. Mr. Simon disclaims beneficial ownership of the warrants owned by
his wife and held as custodian for his children. Also includes options to
purchase 250,000 shares with an exercise price of $3.20 per share as to
30,000 shares and $2.71 as to 220,000 shares.
(b) Includes 47,000 shares, warrants to purchase 12,122 shares with an exercise
price of $2.71 per share and options to purchase 20,000 shares at an
exercise price of $3.81 per share, options to purchase 30,000 shares at an
exercise price of $3.20 per share and options to purchase 12,500 at an
exercise price of $7.38 per share.
(c) Includes 10,000 shares owned by Herbert Lust, 23,151 shares held by a trust
under which Mr. Lust and his wife are co-trustees and beneficiaries and
options held by Mr. Lust to purchase 20,000 shares with an exercise price
of $3.20 per share.
(d) Includes 5,000 shares and options to purchase 30,000 shares with an exercise
price of $3.20 per share.
(e) Includes 8,276 shares held by United Capital Corp. of which Mr. Petrocelli
is Chairman of the Board of Directors and Chief Executive Officer and
options held by Mr. Petrocelli to purchase 30,000 shares with an exercise
price of $3.20 per share.
(f) Includes 10,000 shares and options to purchase 5,000 shares with an exercise
price of $7.25 per share.
(g) Includes options to purchase 5,000 shares with an exercise price of $7.25
per share.
(h) Includes 26 shares, warrants to purchase 85 shares with an exercise price of
$2.71 per share and options to purchase 2,666 shares with an exercise price
of $3.63 per share.
(i) Includes 300 shares owned by his wife and options to purchase 20,000 shares
with an exercise price of $4.00 per share.
(j) Includes 5,520 shares owned by Mr. Driscoll, 200 shares owned by his son and
daughter, warrants to purchase 64 shares with an exercise price of $2.71
per share, and options to purchase 2,666 shares with an exercise price of
$3.63 per share.
(k) Includes 1,000 shares and options to purchase 2,666 shares with an exercise
price of $3.63 per share.
(l) Includes options to purchase 1,666 shares with an exercise price of $3.63
per share.
(m) Includes options to purchase 1,666 shares with an exercise price of $3.63
per share.
5
<PAGE> 9
(n) With the exception of David Simon, the Directors and executive officers each
owns less than one percent of the outstanding Common Stock and own
approximately two percent of the outstanding Common Stock as a group.
Percentages were based on 30,556,385 shares outstanding as of March 8,
1995.
PRINCIPAL HOLDERS OF SECURITIES
The following entities were known to the Company to be the beneficial
holders of more than 5% of the Common Stock as of March 24, 1995.
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS OF BENEFICIAL OWNER NATURE OF OWNERSHIP PERCENT OF CLASS
------------------------------------------------------------ ------------------- ----------------
<S> <C> <C>
First Interstate Bank Corp.(a).............................. 2,271,500 7.4%
633 17th Street
Suite 1800
Denver, CO 80202
Ingalls & Snyder(b)......................................... 1,983,179 6.5%
61 Broadway
New York, New York 10006
</TABLE>
---------------
(a) First Interstate Bank Corp. filed a Schedule 13G, dated February 10, 1995
with the Securities and Exchange Commission (the "SEC") reporting ownership
of 2,271,500 shares of Common Stock, with sole voting power with respect to
1,443,400 shares and sole dispositive power with respect to 2,271,500
shares.
(b) Ingalls & Snyder filed a Schedule 13G, dated January 13, 1995 with the SEC
reporting ownership of 1,983,179 shares of Common Stock, with sole voting
power with respect to 168,286 shares and sole dispositive power with respect
to 1,983,179 shares.
ITEM 2. AMENDMENT TO RESTATED CERTIFICATE OF
INCORPORATION PROVIDING FOR AN INCREASE IN AUTHORIZED COMMON STOCK
On March 21, 1995 the Board of Directors adopted an amendment to the
Restated Certificate of Incorporation of the Company, subject to shareholder
approval, which would increase from 50,000,000 to 75,000,000 the number of
authorized shares of Common Stock of the Company. If the stockholders approve
the amendment, the Restated Certificate of Incorporation of the Company will be
amended, as proposed by the Board of Directors, to increase the number of
authorized shares of Common Stock to 75,000,000.
The Board of Directors is seeking to increase the amount of authorized
Common Stock because it believes that the Company needs additional authorized
and unissued or unreserved Common Stock. Of the 50,000,000 currently authorized
shares of Common Stock, as of March 24, 1995, 30,578,065 were outstanding. As of
March 24, 1995, 1,360,328 shares were reserved for issuance under the Company's
employee and director stock option plans and 1,705,561 shares were reserved for
issuance upon exercise of outstanding warrants. In addition, approximately
7,000,000 shares are currently expected to be reserved for issuance upon
conversion of the Convertible Subordinated Notes due 2002, which the Company is
seeking to register with the Securities and Exchange Commission in connection
with a proposed public offering, and a total of 1,500,000 shares are proposed to
be reserved for issuance pursuant to the Company's 1995 Employee Stock Option
Plan and the 1995 Non-Employee Director Stock Option Plan. The Company has only
approximately 7,850,000authorized shares of Common Stock that are not already
issued, reserved or expected to be reserved for issuance.
While the Board of Directors does not have a present plan to issue
additional shares of Common Stock, it believes it is desirable that the Company
have the flexibility to issue such shares without further stockholder action.
The availability of additional shares of Common Stock will enhance the Company's
flexibility in connection with possible future actions, such as stock dividends,
stock splits, financings, employee benefit programs, corporate mergers,
acquisitions of property, and other corporate purposes. The Board of Directors
6
<PAGE> 10
will determine whether, when, and on what terms the issuance of shares of Common
Stock may be warranted in connection with any of the foregoing purposes.
The availability for issuance of additional shares of Common Stock could
enable the Board of Directors to render more difficult or discourage an attempt
to obtain control of the Company. For example, the issuance of Common Stock in a
public or private sale, merger or similar transaction would increase the number
of outstanding shares, thereby possibly diluting the interest of a party
attempting to obtain control of the Company. The additional shares also could be
used to render more difficult a merger or similar transaction, even if it
appears to be desirable to a majority of the stockholders. The Company is not
aware of any pending or threatened efforts to obtain control of the Company.
If the proposed amendment is approved, all or any of the authorized Common
Stock may be issued without further action by the stockholders and without first
offering such shares to the stockholders for subscription. The issuance of
Common Stock otherwise than on a pro-rata basis to all current stockholders
would reduce the current stockholders' proportionate interests. In any such
event, however, stockholders wishing to maintain their interests may be able to
do so through normal market purchases.
Approval of the amendment to Restated Certificate of Incorporation
providing for an increase in authorized Common Stock requires the affirmative
vote of the holders of a majority of the shares of Common Stock entitled to vote
thereon at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF AN AMENDMENT TO
THE RESTATED CERTIFICATE OF INCORPORATION PROVIDING FOR AN INCREASE IN
AUTHORIZED SHARES OF COMMON STOCK.
ITEM 4. PROPOSAL TO APPROVE THE 1995 EMPLOYEE STOCK OPTION PLAN
On March 21, 1995, the Board of Directors adopted the Prime Hospitality
Corp. 1995 Employee Stock Option Plan (the "Employee Plan"), subject to
stockholder approval, under which 1,200,000 shares of Common Stock were reserved
for issuance upon the exercise of options to purchase Common Stock ("Options").
The Company is seeking stockholder approval of the Employee Plan in order
to comply with the requirements of Rule 16b-3, promulgated pursuant to the
Exchange Act, and the requirements of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"). The following summary of the Employee
Plan is qualified in its entirety by express reference to the text of the
Employee Plan as filed with the SEC. Under the Employee Plan, Options may be
granted which are qualified as "incentive stock options" within the meaning of
Section 422 of the Code ("ISOs") and Options which are not so qualified
("NQSOs").
PURPOSE AND ELIGIBILITY
The primary purpose of the Employee Plan is to attract and retain the best
available personnel for positions of substantial responsibilities with the
Company and any of its subsidiaries and to provide an additional incentive to
such employees to exert their maximum efforts toward the success of the Company
and its subsidiaries. All officers and key employees of the Company and its
subsidiaries are eligible to be granted Options under and participate in the
Employee Plan.
ADMINISTRATION
The Employee Plan is administered by a committee of at least two persons
appointed by the Board of Directors (the "Committee"). The Committee, in its
sole discretion, determines which eligible employees are to receive grants of
Options pursuant to the Employee Plan ("Participants"). In addition, the
Committee determines the terms of all Options granted thereunder including the
exercise price for an Option, the time or times at which Options will be
granted, become exercisable and forfeitable, and the number of shares covered by
an Option. The Committee interprets the Employee Plan and makes all other
determinations deemed advisable for the administration of the Employee Plan. The
Committee may, in its discretion, provide for the
7
<PAGE> 11
accelerated vesting and exercisability of Options, upon the occurrence of such
events as it may deem appropriate.
TERMS AND CONDITIONS OF OPTIONS
The terms and conditions of Options granted under the Employee 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.
The exercise price for any Option granted under the Employee Plan will be the
fair market value of the Common Stock on the date of grant and no Option will be
exercisable after the expiration of ten years from the date of its grant. No
Participant may be granted Options to purchase more than 100,000 shares of
Common Stock in any one calendar year.
SPECIAL CONDITIONS APPLICABLE TO ISOS
No ISO can be granted under the Employee Plan after ten years from the
earlier of (i) the date the Employee Plan is adopted by the Board of Directors,
or (ii) the date the Employee Plan is approved by the stockholders of the
Company. ISOs may not be granted under the Employee Plan to a person who owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company, any of its subsidiary corporations, or any parent
corporation of the Company. If the fair market value of the Common Stock with
respect to which ISOs are exercisable for the first time by any optionee during
any calendar year (under all plans of the Company and its parent corporations
and any subsidiary corporations) exceeds $100,000, such ISOs will be treated, to
the extent of such excess, as NQSOs.
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 may 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 Employee Plan.
WITHHOLDING
With respect to any payments to be made to Participants under the Employee
Plan, the Company or a subsidiary, as appropriate, may require withholding of
shares of Common Stock or payments in cash for any taxes required by law to be
withheld because of such payments. If so provided by the Committee, Participants
may elect to surrender shares of Common Stock to satisfy such withholding
obligations.
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 number of shares of
Common Stock available under the Employee Plan and number of shares and price
per share of Common Stock subject to each outstanding Option.
MARKET VALUE
On March 24, 1995, the closing price for the Common Stock on the New York
Stock Exchange was $10.125.
8
<PAGE> 12
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 Employee Plan at any
time, provided that no such amendment shall increase the maximum number of
shares of Common Stock available under the Employee Plan or change the class of
persons eligible to receive Options under the Employee Plan without stockholder
approval.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief discussion of the Federal income tax consequences
of transactions under the Employee Plan based on the Code, as in effect as of
the date of this summary. The Employee 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.
ISOS. No taxable income is realized by the optionee upon the grant or
exercise of an ISO. If Common Stock is issued to an optionee pursuant to the
exercise of an ISO, and if no disqualifying disposition of such shares is made
by such optionee within two years after the date of grant or within one year
after the transfer of such shares to such optionee, then (1) upon sale of such
shares, any amount realized in excess of the option price will be taxed to such
optionee as a long-term capital gain and any loss sustained will be a long-term
capital loss, and (2) no deduction will be allowed to the optionee's employer
for federal income tax purposes.
If the Common Stock acquired upon the exercise of an ISO is disposed of
prior to the expiration of either holding period described above, generally (1)
the optionee will realize ordinary income in the year of disposition in an
amount equal to the excess (if any) of the fair market value of such shares at
exercise (or, if less, the amount realized on the disposition of such shares)
over the option price paid for such shares, and (2) the optionee's employer will
be entitled to deduct such amount for federal income tax purposes if the amount
represents an ordinary and necessary business expense. Any further gain (or
loss) realized by the optionee upon the sale of the Common Stock will be taxed
as short-term or long-term capital gain (or loss), depending on how long the
shares have been held, and will not result in any deduction by the employer.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following termination of employment, the
exercise of the option will generally be taxed as the exercise of a NQSO.
For purposes of determining whether an optionee is subject to any
alternative minimum tax liability, an optionee who exercises an ISO generally
would be required to increase his or her alternative minimum taxable income, and
compute the tax basis in the stock so acquired, in the same manner as if the
optionee had exercised an NQSO. Each optionee is potentially subject to the
alternative minimum tax. In substance, a taxpayer is required to pay the higher
of his/her alternative minimum tax liability or his/her "regular" income tax
liability. As a result, a taxpayer has to determine his/her potential liability
under the alternative minimum tax.
NQSOS. With respect to NQSOs: (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 excess, if any, of the fair
market value of the shares on such date over the exercise price, 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".
9
<PAGE> 13
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 an NQSO, provided at least
six months have elapsed from the date of the Option grant to the date of the
exercise, and the general tax rules discussed above with respect to NQSOs will
apply to insiders as well as non-insiders. In the event less than six months
have elapsed, insiders will recognize ordinary income at the time such six month
period elapses in an amount equal to the excess, if any, of the fair market
value of the shares on such date over the exercise price.
SECTION 162(M). The structure of the Employee Plan is intended to make
grants of Options thereunder meet the requirements of qualified "performance
based" remuneration under Section 162(m) of the Code.
APPROVAL BY STOCKHOLDERS
The effectiveness of the Employee Plan and any Option granted thereunder is
subject to approval by an affirmative vote of a majority of the shares present
at the Annual Meeting, in person or by proxy, and entitled to vote thereon.
Until such approval is obtained, the Employee Plan and any Option granted
thereunder shall not be effective.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1995
EMPLOYEE STOCK OPTION PLAN.
ITEM 5. PROPOSAL TO APPROVE THE 1995
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
On March 21, 1995, the Board of Directors adopted the Prime Hospitality
Corp. 1995 Non-Employee Director Stock Option Plan (the "Director Plan"),
subject to stockholder approval, under which 300,000 shares of Common Stock were
reserved for issuance upon the exercise of Options.
The Company is seeking stockholder approval of the Director Plan in order
to comply with the requirements of Rule 16b-3, promulgated pursuant to the
Exchange Act. The following summary of the Director Plan is qualified in its
entirety by express reference to the text of the Director Plan as filed with the
SEC. The Director Plan contemplates the award of NQSOs to members of the Board
of Directors who are not employed by the Company or any of its subsidiaries
("Non-Employee Directors").
PURPOSE AND ELIGIBILITY
The primary purpose of the Director Plan is to promote the interests of the
Company by providing an inducement to obtain and retain the services of
qualified persons to serve as Non-Employee Directors and to demonstrate the
Company's appreciation for their services to the Company. There are currently
five persons eligible to participate in the Director Plan.
ADMINISTRATION
The Director Plan is administered by the Compensation and Audit Committee
(the "Director Committee"), who, subject to the provisions of the Director Plan,
have the responsibility to construe the Director Plan, to determine all
questions thereunder, and to adopt and amend such rules and regulations for the
administration of the Director Plan as may be determined by the Board of
Directors.
AUTOMATIC GRANT OF OPTIONS
Each year, on the date of the Annual Meeting, each Non-Employee Director
will be automatically granted, without further action by the Board of Directors,
an Option to purchase 10,000 shares of Common Stock. The exercise price for each
Option granted under the Director Plan will be 100% of the fair market value of
the Common Stock on the date of grant. All Options granted under the Director
Plan will be fully vested and exercisable one year after the date of grant, and
will expire ten years after the date of grant, or earlier if the Non-Employee
Director ceases to be a member of the Board.
10
<PAGE> 14
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 Director
Committee) (i) in cash, (ii) by certified check or bank cashiers check, (iii) by
delivery to the Company of shares of Common Stock, (iv) by irrevocable
instructions to a broker to deliver to the Company an amount of sale or loan
proceeds, or (v) any combination thereof. No fees or commissions are applicable
to purchases of Common Stock under the Director Plan.
WITHHOLDING
With respect to any payments to be made to Non-Employee Directors under the
Director Plan, the Company may require withholding of shares of Common Stock or
payments in cash for any taxes required by law to be withheld because of such
payments. If so provided by the Director Committee, Participants may elect to
surrender shares of Common Stock to satisfy such withholding obligations.
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 Director Committee to the number of
shares of Common Stock available under the Director Plan and number of shares
and price per share of Common subject to each outstanding Option.
MARKET VALUE
On March 24, 1995, the closing price for the Common Stock on the New York
Stock Exchange was $10.125.
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 Director Plan at any
time, provided that no such amendment shall increase the maximum number of
shares of Common Stock available under the Director Plan or change the class of
persons eligible to receive Options under the Director Plan without stockholder
approval. However, amendments to the Director Plan may not be made more than
once every six months other than to comply with changes in the Code.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief discussion of the Federal income tax consequences
of transactions under the Director Plan based on the Code, as in effect as of
the date of this summary. The Director 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.
With respect to Options granted under the Director Plan: (1) no income is
realized by the Non-Employee Director at the time the Option is granted; (2)
generally, at exercise, ordinary income is realized by the Non-Employee Director
in an amount equal to the excess, if any, of the fair market value of the shares
on such date over the exercise price, and the Company is generally entitled to a
tax deduction in the same amount, subject to applicable tax withholding
requirements; provided, however, that in the event less than six months have
elapsed from the date of the Option grant to the date of the exercise
Non-Employee Directors will recognize ordinary income at the time such six month
period elapses in an amount equal to the excess, if
11
<PAGE> 15
any, of the fair market value of the shares on such date over the exercise
price; 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.
APPROVAL BY STOCKHOLDERS
The effectiveness of the Director Plan and any Option granted thereunder is
subject to approval by an affirmative vote of a majority of the shares present
at the Annual Meeting, in person or by proxy, and entitled to vote thereon.
Until such approval is obtained, the Director Plan and any Option granted
thereunder shall not be effective.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1995
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.
ITEM 5. RATIFICATION OF SELECTION OF AUDITORS
Upon the recommendation of the Compensation and Audit Committee, the Board
of Directors has selected Arthur Andersen LLP, independent auditors, 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, 1995; perform audit-related services; and act as consultants in connection
with various accounting and financial reporting matters. Arthur Andersen LLP
provided those services to the Company for the fiscal year ended December 31,
1994.
Representatives of Arthur Andersen LLP 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 LLP 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, and entitled to vote
thereon.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1995.
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<PAGE> 16
NEW PLAN BENEFITS
Set forth below is a tabular presentation of the benefits and amounts that
will be received by or allocated to each of the indicated persons under each of
the plans being submitted for stockholder approval.
<TABLE>
<CAPTION>
1995 NON-EMPLOYEE
1995 EMPLOYEE STOCK DIRECTOR STOCK OPTION
OPTION PLAN(1) PLAN(2)
------------------------ ------------------------
DOLLAR NUMBER OF DOLLAR NUMBER OF
NAME AND POSITION VALUE $(3) UNITS VALUE $(3) UNITS
----------------------------------------------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Executive Officer Group........................ -- -- * *
David A. Simon................................. -- -- * *
Chief Executive Officer
John M. Elwood................................. -- -- * *
Executive Vice President and Chief Financial
Officer
Paul Hower..................................... -- -- * *
Executive Vice President
Denis W. Driscoll.............................. -- -- * *
Senior Vice President -- Human Resources
Joseph Bernadino............................... -- -- * *
Senior Vice President, Secretary and General
Counsel
Non-Executive Director Group................... * * -- 50,000(4)
Non-Executive Officer Employee Group........... -- -- * *
</TABLE>
---------------
* Not eligible for participation.
(1) Because the 1995 Employee Stock Option Plan is a discretionary plan, it is
not possible to determine what awards the Committee will grant under this
plan, nor is it possible to determine what awards the Committee would have
granted had the plan been in place during the last fiscal year.
(2) Each Non-Employee Director will receive an annual grant of options to
purchase 10,000 shares of Common Stock on the date of each Annual Meeting.
(3) The options are granted at the fair market value of the Common Stock on the
date of grant. Because the dollar value of the options depends upon the
market value of the Common Stock which fluctuates, the dollar value of the
options cannot be determined at this time.
(4) The number of units is based on the annual aggregate grants to the five
directors currently eligible to participate.
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.
13
<PAGE> 17
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, 1994, the Company's Chief Executive Officer
and the four 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 years ending December 31,
1992, 1993 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
------------------------------------ SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
-------------------------------- ---- -------- -------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
David A. Simon.................. 1994 $312,552 $161,538 $-0- -0- $ 5,507(1)
President and Chief 1993 303,853 -0- -0- 45,000 6,211
Executive Officer 1992 298,175 655,045 -0- 330,000 1,402
John M. Elwood.................. 1994 $249,423 $129,231 $-0- 50,000 $ 3,147(2)
Executive Vice President 1993 240,000 -0- -0- 45,000 21,981
and Chief Financial Officer 1992 295,170 554,205 -0- 20,000 252
Paul H. Hower................... 1994 $190,000 $ 20,000 $-0- 15,000 $ 5,410(3)
Executive Vice President 1993 94,320 -0- -0- 20,000 113
1992 -0- -0- -0- -0- -0-
Denis W. Driscoll............... 1994 $159,961 $ 10,000 $-0- 8,000 $ 959(4)
Senior Vice President -- Human 1993 68,565 -0- -0- 8,000 73
Resources 1992 -0- -0- -0- -0- -0-
Joseph Bernadino................ 1994 $126,184 $ 24,150 $-0- 8,000 $ 614(5)
Senior Vice President, 1993 120,750 -0- -0- 8,000 87
Secretary and General Counsel 1992 114,648 43,125 -0- -0- 252
</TABLE>
---------------
(1). Represents $102 for premiums of Company-provided life insurance, $141
related to 401k matching contributions and $5,264 in value of use of
Company-provided car.
(2). Represents $102 for premiums for Company-provided life insurance, $3,045 in
value of use of Company-provided car.
(3). Represents $702 for premiums for Company-provided life insurance, $826
related to 401k matching contributions and $3,882 in value of use of
Company-provided car.
(4). Represents $280 for premiums for Company-provided life insurance and $679
related to 401k matching contributions.
(5). Represents $87 for premiums for Company-provided life insurance and $527
related to 401k matching contributions.
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<PAGE> 18
STOCK OPTION GRANTS DURING FISCAL YEAR ENDED DECEMBER 31, 1994
The following table sets forth information concerning individual grants of
stock options made during the year ending December 31, 1994 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.............. -0- -0- -0- -0- -0- -0-
John M. Elwood.............. 50,000(1) 13.6% $7.38 1/23/2000 142,161 284,513
Paul H. Hower............... 15,000(2) 4.0% $7.63 8/2/2000 38,898 88,247
Denis W. Driscoll........... 8,000(2) 2.1% $7.63 8/2/2000 20,746 47,065
Joseph Bernadino............ 8,000(2) 2.1% $7.63 8/2/2000 20,746 47,065
</TABLE>
---------------
(1) These stock options were granted to John M. Elwood under an employment
contract dated January 24, 1994, which options vest in equal annual
installments of 12,500 each on January 24, 1995, 1996, 1997 and 1998 and
will continue to be exercisable through January 23, 2000. These options
become immediately exercisable upon a change in control of the Company.
(2) These stock options vest with respect to one third of the grant on each of
August 2, 1995, 1996, and 1997 and will continue to be exercisable through
August 2, 2000. These options become immediately exercisable upon a change
in control of the Company.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED DECEMBER 31, 1994 AND YEAR-END
OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT YEAR 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- 250,000 125,000 $ 1,182,800 $591,400
John M. Elwood................ -0- -0- 62,500 52,500 $ 204,425 $ 69,375
Paul H. Hower................. -0- -0- 20,000 15,000 $ 70,000 --
Denis W. Driscoll............. -0- -0- 2,666 13,334 $ 10,317 $ 19,603
Joseph Bernadino.............. -0- -0- 2,666 13,334 $ 10,317 $ 19,603
</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 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 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
15
<PAGE> 19
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 January 24, 1994, Mr. Elwood and the Company executed an employment
agreement which had a term of one year. This employment agreement provided for
an annual base salary of $250,000, a discretionary annual bonus based on
attainment of performance objectives set by the Board of Directors, a life
insurance policy in the amount of $500,000 (of which the Company will not pay
premiums which exceed $5,000), an automobile, and other customary welfare
benefits, including medical and disability insurance. Pursuant to the agreement,
Mr. Elwood was granted stock options to purchase 50,000 shares of Common Stock
pursuant to the 1992 Stock Option Plan, which options vest in equal annual
installments of 12,500 shares each on January 24, 1995, 1996, 1997 and 1998.
This employment agreement has expired. The Company intends to execute a new
agreement with Mr. Elwood.
Paul H. Hower
As of May 18, 1993, Mr. Paul H. Hower and the Company executed an
employment agreement which terminated on June 30, 1994. This employment
agreement provides for an annual base salary of $180,000, a cash bonus of
$10,000, 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 $360,000, an automobile, and other customary welfare benefits,
including medical and disability insurance. Pursuant to the agreement, Mr. Hower
was granted stock options as of June 23, 1993 to purchase 20,000 shares of
Common Stock.
CHANGE IN CONTROL AGREEMENTS
As of February 15, 1995, the Company executed change in control agreements
with ten officers of the Company, including each named executive officer. These
agreements provide that, if within two years of a change in control of the
Company, the officer's employment with the Company is terminated by the Company
without cause or if the officer resigns for good reason (as defined in the
agreements), the Company will pay the officer two and one-half times the
aggregate cash compensation earned by the officer during the fiscal year
immediately preceding the termination of employment. Such payments are to be
reduced, however, to the extent necessary to avoid characterization as "excess
parachute payments" within the meaning of Section 280G of the Internal Revenue
Code. In addition, any outstanding options to purchase shares of the Company
held by the officer will vest and become exercisable as of the date of the
change in control.
COMPENSATION AND AUDIT COMMITTEE REPORT ON EXECUTIVE COMPENSATION
All members of the Compensation and Audit 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
16
<PAGE> 20
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 the former directors of the Company. During 1994,
a 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 affect the Company's annual and
long-term share performance.
The Company intends to compensate executives and to grant stock options
pursuant to stockholder approved employee stock option plans 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.
POLICY REGARDING SECTION 162(M)
Section 162(m) of the Internal Revenue Code imposes a one million dollar
ceiling on tax-deductible remuneration paid to the five most highly compensated
executive officers of a publicly-held corporation. The limitation does not apply
to qualified "performance based" remuneration payable solely on account of the
attainment of one or more performance goals approved by an independent
compensation committee, nor to compensation attributable to certain options
granted under shareholder-approved stock option plans. The 1995 Employee Stock
Option Plan is structured to comply with this exception. Compensation paid to
the executive officers for the Company's 1994 fiscal year was well below the
deductibility limit.
COMPENSATION AND AUDIT COMMITTEE
HERBERT LUST, II (Chairman)
A. F. Petrocelli
Allen J. Ostroff
Howard M. Lorber
COMPENSATION AND AUDIT COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation and Audit Committee are Herbert Lust, II
(Chairman), A. F. Petrocelli, Allen J. Ostroff and Howard M. Lorber. Mr.
Petrocelli has certain business relationships with the Company, which are
described under the heading "Certain Relationships and Related Transactions."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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. The Company received $90,000 in
management fees for the fiscal year ended 1994.
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 non-recourse junior loans aggregating $21,590,000. As of
December 31, 1994, the aggregate balance owed on these loans was $21,472,766.
The interest rates on these loans ranged from 9 1/2% to 11% per annum. The
Company has restructured these loans in order to obtain payment based upon the
available cash flow of the hotels. During 1994, the Company
17
<PAGE> 21
recognized $853,000 of interest income related to these loans. The Company
managed these three hotels for the partnership and received $523,000 in
management fees for fiscal year 1994.
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 1994. The Company managed these nine hotels for the
partnership and received $329,000 in accounting and management fees for fiscal
year 1994.
During February 1990, this same partnership purchased from PMI a note owed
by 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
received $40,000 in management fees for the fiscal year 1994.
In 1991, the Company entered into an agreement with ShoLodge, a company
controlled by Leon Moore, a former director, whereby ShoLodge was appointed the
exclusive agent to develop and manage certain hotel properties. The Company had
loans payable to ShoLodge of $39,896,000 at December 31, 1994 related to the
development of hotels. The Company also uses the ShoLodge reservation system for
its Wellesley and AmeriSuites properties.
In February 1995, the Company entered into an agreement to acquire
ShoLodge's option to purchase a 50% interest in 11 of the Company's AmeriSuites
hotels and will also acquire the only AmeriSuites hotel not already owned by the
Company. The total consideration payable by the Company in this transaction is
$34,600,000 of which $16,100,000 will be paid in three cash installments during
1995 and the remaining $18,500,000 will be paid in notes maturing in 1997. As a
result of this transaction, which is scheduled to close on March 31, 1995, the
Company will take over the management of these hotels.
The Company has a note receivable from John H. Leavitt, Senior Vice
President -- Sales and Marketing, with a balance of $39,163 at December 31,
1994. The note bears interest at 8.5% and is due in 2011.
The Company has retained Willkie Farr & Gallagher as its legal counsel
involving certain matters during its last fiscal year and anticipates it will
continue such relationship with the firm in this fiscal year. Mr. Nusbaum,
Director of the Company, 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 SEC, 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 1994, all filing requirements applicable to such persons were
complied with, except; that a report covering one transaction, was filed late by
each of Jack H. Nusbaum and Howard M. Lorber.
Section 16(b) prohibits the Company's directors from selling shares of the
Common Stock within six months of their acquisition. An affiliate of A. F.
Petrocelli included as a portion of an allotment of the Common Shares sold
certain Common Shares not held for six months. Mr. Petrocelli caused his
affiliate to pay to the Company its net gain earned on the improperly
transferred Common Shares.
PERFORMANCE GRAPH
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
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<PAGE> 22
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.
19
<PAGE> 23
COMPARISON OF 1992 THROUGH 1994 CUMULATIVE TOTAL RETURN
AMONG PRIME HOSPITALITY CORP., DOW JONES EQUITY MARKET INDEX AND DOW JONES
LODGING INDEX
<TABLE>
<CAPTION>
Dow Jones
Measurement Period Prime Hospi- Equity Mar- Dow Jones
(Fiscal Year Covered) tality Corp. ket Index Lodging Index
<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
01/31/94 400 114 157
02/28/94 387 111 177
03/31/94 320 106 166
04/30/94 340 107 167
05/31/94 387 108 167
06/31/94 393 105 155
07/31/94 413 108 172
08/31/94 447 112 178
09/30/94 427 109 184
10/31/94 413 111 189
11/30/94 400 107 180
12/31/94 400 108 183
</TABLE>
20
<PAGE> 24
FINANCIAL STATEMENTS
The Company's annual report to stockholders for the year ended December 31,
1994, 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, 1994 (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.
STOCKHOLDER PROPOSALS
It is presently anticipated that the 1996 Annual Meeting will be held on or
about May 6, 1996. Proposals of stockholders submitted for consideration at the
1996 annual meeting of stockholders must be received by the Company not later
than December 11, 1995 in order to be included in the Company's proxy statement
for that meeting. A stockholder desiring to submit a proposal must be a record
or beneficial owner of at least 1% of the outstanding shares or $1,000 in market
value of shares 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.
By Order of the Board of Directors
JOSEPH BERNADINO
Secretary
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<PAGE> 25
PRIME HOSPITALITY CORP.
1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purposes.
The 1995 Non-Employee Director Stock Option Plan (the "Plan") is intended
to promote the interests of Prime Hospitality Corp. (the "Company") by providing
an inducement to obtain and retain the services of qualified persons who are
neither employees nor officers of the Company to serve as members of the Board
of Directors (the "Board") and to demonstrate the Company's appreciation for
their service upon the company's Board of Directors. These purposes shall be
achieved by the granting of options ("Options") to purchase shares of the
Company's Common Stock, par value $.01 per share (the "Common Shares"). 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 the Audit and Compensation Committee of
the Board (the "Committee"). The Committee shall, subject to the provisions of
the Plan, have the power to construe the Plan, to determine all questions
thereunder, and to adopt and amend such rules and regulations for the
administration of the Plan as may be determined by the Board.
3. Shares Subject to the Plan.
The total number of Common Shares which shall be subject to Options granted
under the Plan shall be 300,000 in the aggregate, subject to adjustment as
provided in Paragraph 7. 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 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 pursuant to the Plan only to non-employee
members of the Board.
(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) An individual to whom an Option has been granted under the Plan is
referred to herein as an "Optionee".
5. Terms of Option.
The terms of each Option granted under the Plan are as follows:
(a) The purchase price of the Common Shares covered by an Option granted
pursuant to the Plan shall be 100% of the Fair Market Value of such shares on
the day the Option is granted. The Option price will be subject to adjustment in
accordance with the provisions of Section 7 hereof. For purposes of the Plan,
the "Fair Market Value" of a share shall be deemed to be the mean between the
highest and lowest sale prices of the Common Shares reported on the New York
Stock Exchange on the date immediately preceding, (i) with respect to the grant
of an Option, the date of grant and (ii) with respect to an exercise of an
Option, the date of exercise, or, if there is no such sale on that date, then on
the last preceding date on which such a sale was reported.
(b) Each year, on the date of the Company's Annual Meeting of Stockholders,
each member of the Board (who is a director subsequent to any election of
Directors occurring at the meeting) who is neither an employee nor an officer of
the Company shall be automatically granted on such date without further action
by the Board an Option to purchase 10,000 Common Shares.
22
<PAGE> 26
(c) The Options granted under the Plan shall be fully vested and
exercisable one year after the date of grant and shall expire on the date which
is ten (10) years after the date of grant of the Options. The Plan shall
terminate when all Options granted hereunder have terminated.
(d) Options shall be exercised by the delivery to the Company at its
principal office or at such other address as may be established by the committee
(Attention: General Counsel) of written notice of the number of Common Shares
with respect to which the Option is being exercised accompanied by payment in
full of the purchase price of such Common Shares. Payment for such Common 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 delivery to the Company of Common Shares having
an aggregate Fair Market Value equal to such purchase price, (iv) by irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale
or loan proceeds necessary to pay such purchase price 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 (v) by any combination of the methods of
payment described in (i) through (iv) above.
(e) 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.
(f) 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. Termination of Option Rights.
(a) In the event an Optionee ceases to be a member of the Board for any
reason other than death or disability, any then unexercised Options granted to
such Optionee may be exercised, to the extent exercisable on the date of such
cessation, within a period of thirty (30) days following such time the Optionee
so ceases to be a member of the Board, but in no event later than the expiration
of the Option.
(b) In the event that an Optionee ceases to be a member of the Board by
reason of his or her disability or death, any Option granted to such Optionee
may be exercised (by the Optionee's personal representative, heir or legatee, in
the event of death), to the extent exercisable on the date of such cessation,
during the period ending one hundred eighty (180) days after the date the
Optionee so ceases to be a member of the Board, but in no event later than the
expiration date of the Option.
7. 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 7 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.
8. 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
23
<PAGE> 27
Securities Act of 1933, as amended (the "Securities Act"), and a prospectus
meeting the requirements of Section 10(a)(3) of the Securities Act has been
distributed to Optionees, the notice of exercise with 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 8 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.
9. Termination and Amendment of Plan.
The Board may at any time terminate the Plan or make such modification or
amendment thereof as it deems advisable, provided, however, that
(i) the Board may not, without approval by a majority of the Common Shares
present in person or by proxy and entitled to vote thereon;
(a) increase the maximum number of shares for which Options may be
granted under the Plan or the number of shares for which an Option may be
granted to any participating directors hereunder;
(b) change the period during which any Options may be granted or
remain outstanding or the date on which the Plan shall terminate;
(c) change the designation of the class of persons eligible to receive
Options;
(d) change the price at which Options are granted; or
(e) materially increase benefits accruing to Optionees under the Plan;
and
(ii) the foregoing provisions of the Plan shall in no event be amended more
than once every six months other than to comport with changes in the Internal
Revenue Code. Termination or any modification or amendment of the Plan shall
not, without consent of an Optionee, affect his rights under an Option
previously granted to him.
10. Approval of Stockholders.
The Plan shall be effective upon approval by the affirmative vote of a
majority of Common Shares present in person or by proxy and entitled to vote
thereon.
11. Tax Withholding
Notwithstanding any other provision of the Plan, the Company shall have the
right to deduct from all payments under the Plan Common Shares valued at Fair
Market Value on the date of payment, in an amount necessary to satisfy all
Federal, state or local taxes as required by law to be withheld with respect to
such payments, and Optionees or such other persons receiving Common Shares
pursuant to the exercise of an Option may be required to pay in cash to the
Company prior to delivery of such Common Shares, the amount of any such taxes
which the Company is required to withhold, if any, with respect to such Common
Shares. If so provided by the Committee, the Company may accept Common Shares of
equivalent Fair Market Value in payment of such tax withholding obligations if
the Optionee elects to make payment in such manner at least six months prior to
the date such tax obligation is determined (or such other period as the
Committee may require).
24
<PAGE> 28
PRIME HOSPITALITY CORP.
1995 EMPLOYEE STOCK OPTION PLAN
1. Purposes.
The 1995 Employee 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 options ("Options")
to purchase shares of the Company's Common Stock, par value $.01 per share
("Common Shares"). Under the Plan, Options may be granted which are qualified as
incentive stock options ("ISOs") within the meaning of Section 422 of the
Internal Revenue Code of 1986 (the "Code"), or Options which are not so
qualified ("Non-ISOs").
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") 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 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 shall be granted, and the number of Common Shares to be subject to each
Option, and whether such Options shall be ISOs or Non-ISOs;
(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
(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.
The total number of Common Shares which shall be subject to Options granted
under the Plan shall be 1,200,000 in the aggregate, subject to adjustment as
provided in Paragraph 7. 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 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 and officers of the
Company or of a "subsidiary corporation", as determined by the Committee. For
purposes of the Plan, "subsidiary corporation" shall mean a subsidiary
corporation of the Company within the meaning of Section 424(f) of the Code.
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<PAGE> 29
(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, no person may be
granted Options to purchase more than 100,000 Common Shares in any one calendar
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,
but shall not be less than the "Fair Market Value" (as defined herein) of the
Common Shares on the date of grant.
(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.
(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 ten (10) 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 to the Company at its
principal office or at such other address as may be established by the Committee
(Attention: Administrator, 1995 Employee Stock Option Plan) of written notice of
the number of Common Shares with respect to which the Option is being exercised
accompanied by payment in full of the purchase price of such Common Shares.
Payment for such Common 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 Common Shares to the Company having an aggregate
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.
(e) 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.
(f) 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.
(g) For purposes of the Plan, the "Fair Market Value" of a share shall be
deemed to be the mean between the highest and lowest sale prices of the Common
Shares reported on the New York Stock Exchange on the date immediately
preceding, (i) with respect to the grant of an Option, the date of grant, and
(ii) with respect to the exercise of an Option, the date of exercise, or, if
there is no such sale on that date, then on the last preceding date on which
such a sale was reported.
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<PAGE> 30
(h) The Committee may, in its discretion, accelerate the vesting and
exercisability of Options previously granted under the Plan, or provide for
accelerated vesting and exercisability of such Options upon the occurrence of
such events as it may deem appropriate.
6. Termination of Option Rights.
(a) If the employment 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 by the Company or a subsidiary corporation 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.
(b) If such employment 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) by the Company or a subsidiary corporation 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 Code) 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 the Company or a subsidiary
corporation or (ii) within three months after the termination of his employment
other than (A) a voluntary termination by the Optionee and without the consent
of the Company or a subsidiary corporation, or (B) a termination by the Company
as a subsidiary corporation 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 death, and in any event may not be exercised after
the expiration of ten (10) years from the date the Option was granted.
(e) 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.
7. 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.
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<PAGE> 31
(b) Any adjustment under this Paragraph 7 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.
8. 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"), and a prospectus meeting the requirements of
Section 10(a)(3) of the Securities Act has been distributed to Optionholders,
the notice of exercise with 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.
9. Termination and Amendment of Plan.
The Board may at any time terminate the Plan or make such modification or
amendment thereof as it deems advisable, provided, however, that the Board may
not, without approval by a majority of the Common Shares present in person or by
proxy and entitled to vote thereon:
(a) increase the maximum number of shares for which Options may be granted
under the Plan or the number of shares for which an Option may be granted to any
Optionee hereunder;
(b) change the period during which any Options may be granted or remain
outstanding or the date on which the Plan shall terminate;
(c) change the designation of the class of persons eligible to receive
Options;
(d) change the price at which Options are granted; or
(e) materially increase benefits accruing to Optionees under the Plan.
10. Special Provisions Applicable to ISOs.
The following special provisions shall be applicable to ISOs granted under
the Plan.
(a) No ISOs shall be granted under the Plan after ten (10) years form the
earlier of (i) the date the Plan is adopted by the Board, or (ii) the date the
Plan is approved by the Company's shareholders.
(b) ISOs may not be granted to a person who owns stock possessing more than
10% of the total combined voting power of all classes of stock of the Company,
any of its subsidiary corporations, or any "parent corporation" of the Company
within the meaning of Section 424(e) of the Code.
(c) If the aggregate Fair Market Value of the Common Shares with respect to
which ISOs are exercisable for the first time by any Optionee during a calendar
year (under all plans of the Company and its parent corporations and subsidiary
corporations) exceeds $100,000, such ISOs shall be treated, to the extent of
such excess, as Non-ISOs. For purposes of the preceding sentence, the Fair
market Value of the Common Shares shall be determined at the time the ISOs
covering such shares were granted.
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11. 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 any subsidiary corporation.
12. Approval of Shareholders.
The Plan will be effective upon approval by the affirmative vote of a
majority of the Common Shares present in person or by proxy and entitled to vote
thereon.
13. Tax Withholding
Notwithstanding any other provision of the Plan, the Company or a
subsidiary, as appropriate, shall have the right to deduct from all payments
under the Plan Common Shares valued at Fair Market Value on the date of payment,
in an amount necessary to satisfy all Federal, state or local taxes as required
by law to be withheld with respect to such payments, and Optionees or such other
persons receiving Common Shares pursuant to the exercise of an Option may be
required to pay in cash to the Company or a subsidiary, as appropriate, prior to
delivery of such Common Shares, the amount of any such taxes which the Company
or a subsidiary is required to withhold, if any, with respect to such Common
Shares. If so provided by the Committee, the Company may accept Common Shares of
equivalent Fair Market Value in payment of such tax withholding obligations if
the Optionee elects to make payment in such manner at least six months prior to
the date such tax obligation is determined (or such other period as the
Committee may require).
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PRIME HOSPITALITY CORP.
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR ANNUAL MEETING MAY 16, 1995
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 Radisson Hotel, 690 Route 46 East, Fairfield, New Jersey on Friday,
May 16, 1995, at 10:00 a.m., and any adjournments thereof, on all matters coming
before said meeting.
DIRECTORS RECOMMEND A VOTE "FOR" ELECTION OF BOTH NOMINEES AND "FOR" PROPOSALS
2, 3, 4 AND 5.
1. ELECTION OF TWO CLASS III DIRECTORS.
FOR nominees listed below / / / / WITHHOLD AUTHORITY TO VOTE FOR
NOMINEES
ALLEN J. OSTROFF AND A. F. PETROCELLI
FOR, except vote withheld from the following nominee
-----------------------------------------------------------------------
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION PROVIDING FOR AN INCREASE IN THE NUMBER OF AUTHORIZED SHARES
OF THE COMPANY'S COMMON STOCK.
FOR / / AGAINST / / ABSTAIN / /
3. PROPOSAL TO APPROVE THE 1995 EMPLOYEE STOCK OPTION PLAN.
FOR / / AGAINST / / ABSTAIN / /
4. PROPOSAL TO APPROVE THE 1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.
FOR / / AGAINST / / ABSTAIN / /
5. PROPOSAL TO RATIFY THE BOARD OF DIRECTORS' SELECTION OF ARTHUR ANDERSEN
L.L.P. AS INDEPENDENT PUBLIC ACCOUNTANT OF THE COMPANY.
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> 34
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR BOTH NOMINEES, FOR ITEM 2,
FOR ITEM 3, FOR ITEM 4 AND FOR ITEM 5.
Name and Address Date __________________________________________
__________________________________________
(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 or any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY, USING THE ENCLOSED ENVELOPE, THANK YOU.
