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As filed with the Securities and Exchange Commission on August 12, 1998
Registration No. 333-50509
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
POST-EFFECTIVE AMENDMENT NO. 1
ON
FORM S-3
TO FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------------
FELCOR LODGING TRUST INCORPORATED
(FORMERLY FELCOR SUITE HOTELS, INC.)
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
MARYLAND 545 E. JOHN CARPENTER FRWY. , SUITE 1300 75-2541756
(State or other jurisdiction of IRVING, TEXAS 75062 (I.R.S. Employer
incorporation or organization) (972) 444-4900 Identification No.)
(Address, including ZIP code, and telephone number,
including area code, of registrant's principal executive
offices)
---------------------------
</TABLE>
LAWRENCE D. ROBINSON
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
FELCOR LODGING TRUST INCORPORATED
545 E. JOHN CARPENTER FRWY., SUITE 1300
IRVING, TEXAS 75062
(972) 444-4900
(Name, address, including ZIP code, and telephone
number, including area code, of agent for
service)
---------------------------
Copy to:
ROBERT W. DOCKERY
JENKENS & GILCHRIST, P.C.
1445 ROSS AVENUE, SUITE 3200
DALLAS, TEXAS 75202-2799
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Approximate Date of Commencement of Proposed Sale to the Public: AS
SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
---------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
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NOTE:
THE CHANGES FROM THE FINAL FORM S-4 REGISTRATION STATEMENT FILED IN JUNE 1998,
AS CONTAINED IN THIS POST-EFFECTIVE AMENDMENT NO. 1 ON FORM S-3, WERE VERY
EXTENSIVE. A MARKED VERSION WOULD NOT BE MEANINGFUL TO SHOW REVISED LANGUAGE.
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PROSPECTUS
22,486,234 SHARES
FELCOR LODGING TRUST INCORPORATED
(FORMERLY FELCOR SUITE HOTELS, INC.)
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
---------------------------
This prospectus ("Prospectus") relates to the offer and sale by FelCor
Lodging Trust Incorporated (formerly FelCor Suite Hotels, Inc.) ("FelCor") of up
to 1,273,259 shares of common stock, par value $0.01 per share (the "Common
Stock"), pursuant to outstanding options (the "Options") granted under the terms
of the Second Amended and Restated 1995 Equity Incentive Plan (the "Incentive
Plan") and the Stock Option Plan for Non-Employee Directors (the "Non-Employee
Director Plan") (together with the Incentive Plan, the "Plans"). The Plans were
originally adopted by Bristol Hotel Company ("Bristol"), which was merged with
and into FelCor effective July 28, 1998 (the "Merger"). FelCor assumed Bristol's
obligations under the Plans and Options as a result of the Merger. See
"Description of the Plans."
This Prospectus also relates to the offer and sale by certain selling
shareholders named herein under "Selling Shareholders" ("Selling Shareholders")
of up to 21,212,975 shares of Common Stock. FelCor will receive no part of the
proceeds of any sales by the Selling Shareholders. With respect to 19,249,619 of
these shares, certain Selling Shareholders have agreed not to transfer them for
a period of six months after the Merger except in certain circumstances. All
expenses of registration incurred in connection with this offering are being
borne by FelCor, but all selling expenses and commissions incurred by Selling
Shareholders will be borne by the Selling Shareholders. The outstanding shares
of Common Stock held by the Selling Shareholders were originally issued by
FelCor pursuant to the Merger in exchange for shares of Common Stock of Bristol
owned by the Selling Shareholders. The Selling Shareholders were affiliates of
Bristol at the time of the Merger and under applicable securities regulations
cannot freely resell their shares without registration or an exemption
therefrom. This Prospectus is required by FelCor's contractual obligations to
register the shares of the Selling Shareholders for resale, and the Selling
Shareholders are under no obligation to resell their shares. See "Selling
Shareholders."
The Common Stock of FelCor is listed on the New York Stock Exchange
(the "NYSE") under the symbol "FCH." The last reported sale price of Common
Stock on August 10, 1998, on the NYSE was $26-1/16 per share. To preserve its
status as a real estate investment trust ("REIT"), FelCor's Charter limits the
Common Stock that may be owned by any single person or affiliated group, subject
to certain exceptions, to 9.9% of the outstanding shares and restricts the
transferability thereof under certain circumstances.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CAREFULLY CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK OFFERED HEREBY.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------
THE DATE OF THIS PROSPECTUS IS AUGUST 12, 1998.
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WHERE YOU CAN FIND MORE INFORMATION
AVAILABLE INFORMATION
FelCor files annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission (the "SEC").
Prospective purchasers may read and copy any reports, statements or other
information FelCor files at the SEC's public reference facilities in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-
SEC-0330 for further information on the public reference facilities. FelCor's
SEC filings are also available to the public from commercial document retrieval
services and at the web site maintained by the SEC at "http://www.sec.gov." In
addition, FelCor's filings can be inspected at the offices of the NYSE, 20 Broad
Street, New York, New York 10005.
FelCor registered with the SEC the shares of Common Stock covered by
this Prospectus. This Prospectus is a part of a Post-Effective Amendment No. 1
on Form S-3 to Form S-4 Registration Statement (File No. 333-50509) filed with
the SEC (the "Registration Statement"). As allowed by SEC rules, this Prospectus
does not contain all the information contained in the Registration Statement or
in the exhibits to the Registration Statement. The Registration Statement may be
inspected and copied at the public reference facilities of the SEC described
above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows FelCor to include certain information in this document
by "incorporating by reference." The following documents filed with the SEC by
FelCor (File No. 001-14236) pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), are incorporated by reference in this Prospectus:
1. Annual Report on Form 10-K and Forms 10-K/A for the year ended
December 31, 1997;
2. Quarterly Report on Form 10-Q for the three months ended March 31,
1998;
3. Current Report on Form 8-K filed with the SEC on July 11, 1997 and
amended on August 14, 1997;
4. Current Report on Form 8-K filed with the SEC on April 23, 1998;
5. Current Report on Form 8-K filed with the SEC on May 29, 1998;
6. Current Report on Form 8-K filed with the SEC on August 10, 1998;
7. Pro forma financial information contained in the definitive Joint
Proxy Statement/Prospectus dated June 19, 1998 filed with the SEC in
connection with the Registration Statement; and
8. The description of the Common Stock contained in the Registration
Statement on Form 8-A filed with the SEC, including any amendments
or reports filed for the purpose of updating such description.
All documents and reports filed by FelCor pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the date all of the shares of Common Stock are sold will be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
dates of filing of such documents or reports. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein will be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THE DOCUMENTS INCORPORATED BY REFERENCE (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE) ARE
AVAILABLE TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS
IS DELIVERED ON WRITTEN OR ORAL REQUEST, WITHOUT CHARGE, DIRECTED TO FELCOR
LODGING TRUST INCORPORATED, 545 E. JOHN CARPENTER FREEWAY, SUITE 1300, IRVING,
TEXAS 75062 (TELEPHONE NUMBER (972) 444-4900), ATTENTION: SECRETARY.
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THE COMPANY
FelCor Lodging Trust Incorporated (formerly FelCor Suite Hotels, Inc.)
("FelCor") is a self- administered equity REIT that, at August 10, 1998, owned
an approximate 95.7% general partner interest in FelCor Lodging Limited
Partnership (formerly FelCor Suites Limited Partnership), a Delaware limited
partnership (the "Partnership"). At August 10, 1998, following the merger
("Merger") of Bristol Hotel Company ("Bristol") with an into FelCor, the
Partnership owned interests directly, or through subsidiaries, in 193 hotels
(the "Hotels") with an aggregate of approximately 50,000 suites and rooms in 35
states and Canada. Assuming completion of pending conversions, 80 of the Hotels
are operated as all-suite upscale hotels, 32 are operated as upscale full
service hotels, 60 are operated as traditional full service hotels, and 21 are
operated as limited service hotels. The Hotels are operated primarily under the
following brands: Embassy Suites(R) (58 hotels), Holiday Inn(R) and Holiday Inn
Select(R) (52 hotels), Crowne Plaza(R) (20 hotels), Doubletree(R) and Doubletree
Guest Suites(R) (17 hotels), Sheraton(R) and Sheraton Suites(R) (9 hotels) and
other brands (37 hotels). Seventy-three of the Hotels are managed by a
subsidiary of Promus Hotel Corporation ("Promus"), which includes Doubletree
Hotels Corporation and its subsidiaries. Promus is the largest operator of
full-service, all-suite hotels in the United States. Nine of the remaining
Hotels are managed by a subsidiary of Starwood Hotels & Resorts, which includes
ITT Sheraton Corporation and its subsidiaries, and three are managed by two
independent management companies. The remaining 108 Hotels, including all of the
hotels acquired from Bristol in the Merger, are leased or managed by
subsidiaries of Bristol Hotels & Resorts, itself a former subsidiary of Bristol
that was spun-off by Bristol to its stockholders prior to the Merger. Bristol
Hotels & Resorts has succeeded to Bristol's hotel operating business and is one
of the largest independent hotel operating companies in the United States. See
"--Recent Developments--Merger with Bristol Hotel Company." Unless the context
otherwise requires, all references herein to "FelCor" are references to FelCor
Lodging Trust Incorporated, the Partnership and their respective subsidiaries,
on a consolidated basis.
To enable FelCor to satisfy certain requirements for qualification as a
REIT, neither it nor the Partnership can operate the hotels in which they
invest. Accordingly, on August 10, 1998, the Partnership and its subsidiaries
had leased 86 Hotels to DJONT Operations, L.L.C., or one of its consolidated
subsidiaries (collectively, "DJONT"), and 107 Hotels to Bristol Hotels &
Resorts, or one of its consolidated subsidiaries (collectively, "BHR") pursuant
to leases ("Percentage Leases") generally with initial terms (including lessee
renewal options) of 10 to 15 years that provide for rent equal to the greater of
a minimum base rent ("Base Rent") or a percentage rent ("Percentage Rent") based
on hotel revenues.
FelCor was formed as a Delaware corporation on May 16, 1994 and was
reincorporated as a Maryland corporation on June 23, 1995. FelCor's executive
offices are located at 545 E. John Carpenter Frwy., Suite 1300, Irving, Texas
75062, and its telephone number is (972) 444-4900.
RECENT DEVELOPMENTS
MERGER WITH BRISTOL HOTEL COMPANY. Effective July 28, 1998, Bristol was
merged with and into FelCor. As a consequence of the Merger, Bristol's
stockholders acquired approximately 46% of FelCor's outstanding Common Stock,
and FelCor succeeded to Bristol's interest in 109 owned or leased hotels (the
"Bristol Hotels"). References in this Prospectus to the Hotels includes the
Bristol Hotels. In connection with the Merger, Bristol distributed to its
stockholders all of the common stock of BHR as a separate public company (the
"Spin-Off"). The Bristol Hotels have been leased by FelCor to BHR pursuant to
Percentage Leases. BHR has continued Bristol's former hotel operating business
and, as of August 10, 1998, operated 122 hotels, including hotels not owned by
FelCor.
BHR and FelCor are independent public companies with no overlap in
management or their boards of directors. However, BHR's two largest stockholders
also have significant ownership interests in FelCor and have representatives on
the Boards of Directors of both companies, including the Chairman of the Board
of FelCor. FelCor has maintained its existing headquarters facilities in Dallas,
and BHR assumed responsibility for Bristol's employees and existing headquarters
facilities in Dallas.
OTHER RECENT ACQUISITIONS AND DISPOSITIONS. During the period from
April 1, 1998, to August 10, 1998, FelCor acquired interests in 11 hotels with
an aggregate of 2,749 suites and rooms for approximately $324 million in cash.
These 11 hotels consist of (i) a traditional 248-room upscale full-service
Doubletree hotel with approximately 11,000 square feet of meeting space located
in Aurora, Colorado, (ii) a 301-room upscale full
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service Hilton(R) hotel with approximately 19,000 square feet of meeting and
convention space and an exhibition center of approximately 10,000 square feet
located in Secaucus, New Jersey, (iii) eight hotels, located in seven states and
having a total of 1,898 suites that were acquired from Starwood Hotels & Resorts
including five Embassy Suites Hotels and three Doubletree Guest Suites hotels
(two of which have subsequently been converted to the Sheraton Suites brand and
one of which is being converted to an Embassy Suites hotel), and (iv) a
traditional 302-room upscale full-service Doubletree hotel with approximately
14,000 square feet of meeting space in Dallas, Texas.
FelCor has disposed of its interests in the Holiday Inn Washington,
D.C. hotel and the Holiday Inn Express(R)-Atlanta N.E. hotel for total cash
consideration of $7.1 million, in two separate transactions. FelCor may sell a
limited number of the Bristol Hotels in the near future.
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RISK FACTORS
Prospective purchasers should carefully consider the following risk
factors, together with the other information provided, before deciding to
purchase shares of Common Stock. Each of these risk factors could adversely
affect the value of an investment in the Common Stock.
INABILITY TO INTEGRATE BRISTOL'S ASSETS OR REALIZE ANTICIPATED BENEFITS OF
MERGER
As a result of the Merger, the number of hotels owned by FelCor more
than doubled. Although the Bristol Hotels are operated by BHR under long-term
leases, FelCor must integrate these hotels into its hotel portfolio and may need
additional people and resources to handle the increased work load. If FelCor is
unable successfully to integrate the Bristol Hotels into its portfolio, FelCor's
business, financial condition and results of operations could suffer. A large
number of the Bristol Hotels are in the process of, or awaiting, substantial
renovation, modernization and repositioning. If the implementation of these
plans do not yield the anticipated results, then FelCor may have paid too much
for the Bristol Hotels in the Merger.
INCREASES IN LEVERAGE AND FLOATING RATE DEBT; INABILITY TO RETAIN EARNINGS OR
REFINANCE DEBT
As a result of the Merger, FelCor's leverage has increased. At March
31, 1998, on a pro forma basis (assuming completion of the Merger), FelCor would
have had outstanding indebtedness of $1.5 billion, 46.3% of which would have
been secured, and a debt-to-total-market-capitalization ratio of 33%. FelCor's
pro forma ratio of EBITDA to interest paid for the three months ended March 31,
1998 would have been 4.1 to 1.0. Of FelCor's pro forma indebtedness at March 31,
1998, $860.9 million (or 59.3%) provided for the payment of interest at floating
rates. Most of this floating rate debt bears interest at a rate equal to between
0.45% and 1.75% plus the 30-day LIBOR rate. At March 31, 1998, LIBOR was 5.56%.
Changes in economic conditions could result in higher interest rates, thereby
increasing FelCor's interest expense on its floating rate debt and reducing
funds available for distribution to FelCor's stockholders.
In order to qualify as a REIT, FelCor must distribute to its
stockholders, annually, at least 95% of its net taxable income (excluding
capital gains) and, accordingly, cannot retain any substantial portion of its
earnings to meet its capital needs. Because of cross-default provisions in
certain of FelCor's loan agreements, a default in outstanding debt of more than
$10 million could result in the acceleration of most of FelCor's consolidated
indebtedness. FelCor may be unable to refinance or repay this indebtedness in
full under these circumstances.
DEPENDENCE ON LESSEES' HOTEL OPERATIONS
FelCor's revenues currently and in the future will consist primarily of
rents received under its leases. The lessees' payment of such rental obligations
is generally unsecured. As the lessee of the Bristol Hotels, BHR initially had a
net worth of $30 million and is obligated to maintain certain net worth and
liquidity requirements. DJONT, which leases FelCor's other hotels, has limited
assets, derives its revenue solely from the operation of FelCor's hotels and, at
June 30, 1998, had a stockholders' deficit of approximately $6.1 million.
However, DJONT or its subsidiaries have the right to borrow, on a subordinated
basis and subject to certain limitations, up to an aggregate of $17.3 million to
meet its rental obligations from FelCor, Inc., Promus, Doubletree Hotel
Corporation, Lee & Urbahns, L.P. and ITT Sheraton Corporation, which are equity
owners and/or managers of hotels leased by DJONT. FelCor will be substantially
dependent upon the operations of its hotels to enable the lessees (particularly
DJONT) to meet their rental obligations under the leases.
The leases with DJONT and BHR have varying terms, generally no longer
than 15 years. At the expiration of the lease terms, FelCor will be required to
negotiate renewals or seek replacement leases, which could adversely affect its
results of operations.
CONFLICTS OF INTEREST
CERTAIN FELCOR DIRECTORS. As of August 10, 1998, DJONT leased 86 of the
Hotels, either directly or through subsidiaries. All of the voting interests
(and a 50% equity interest) in DJONT are beneficially owned by Hervey A. Feldman
and Thomas J. Corcoran, Jr. All of the non-voting interests (and the remaining
50% equity interest) in DJONT are beneficially owned by the children of Charles
N. Mathewson. Mr. Feldman is a co-founder
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and the current Chairman Emeritus of FelCor. Mr. Corcoran is a co-founder and
the President and Chief Executive Officer of FelCor. Mr. Mathewson and Mr.
Corcoran serve as directors of FelCor.
All of the Bristol Hotels are leased to BHR. No officer or director of
BHR is also an officer or director of FelCor. However, Donald J. McNamara, the
Chairman of the Board of FelCor, is a principal in a firm that controls the
general partner of United/Harvey Holdings, L.P. ("United Harvey"), which
beneficially owns approximately 39.5% of the stock of BHR. Five partnerships
that own substantial equity interests in United Harvey also own in the aggregate
approximately 14.2% of FelCor's outstanding Common Stock. In addition, Michael
D. Rose and Richard C. North have joined FelCor's Board. Mr. Rose is a director
of Promus. Mr. North is the Group Finance Director of the parent of Holiday
Hospitality Franchising, Inc. ("Holiday Hospitality"). Promus is, and will
continue to be, the franchisor and manager of many of the Hotels. Holiday
Hospitality is the franchisor of most of the Bristol Hotels and, together with
its affiliates, owns approximately 9.9% of the stock of BHR and approximately
14.2% of FelCor's outstanding Common Stock.
Issues may arise under these leases, franchise agreements and
management contracts, and in the allocation of acquisition and leasing
opportunities, that present conflicts of interests due to the affiliation of
these directors. As an example, any decreases in lease rental rates payable by
DJONT may increase the profits of DJONT, in which Messrs. Feldman and Corcoran
and Mr. Mathewson's children have a direct economic interest, at the expense of
FelCor and its stockholders. In the event FelCor enters into new or additional
hotel leases or other transactions with BHR, the interests of Mr. McNamara and
Mr. North, as affiliates of significant investors of BHR, may conflict with the
interests of FelCor and its stockholders. For example, any decrease in lease
rental rates payable by BHR may decrease FelCor's profits to the benefit of BHR.
Also, in the selection of franchises under which FelCor's hotels will be
operated, Mr. Rose and Mr. North, as affiliates of Promus and Holiday
Hospitality, respectively, which are hotel franchising companies, may have
interests which conflict with those of FelCor and its stockholders. It is
anticipated that any director who has a conflict of interest with respect to an
issue presented to the FelCor Board will abstain from voting upon that issue
although he will have no legal obligation to do so. FelCor has no provisions in
its bylaws or charter that require an interested director to abstain from voting
upon an issue, although each director will have a fiduciary duty of loyalty to
FelCor. There is a risk that, should an interested director vote upon an issue
in which he or one of his affiliates has an interest, his vote may reflect a
bias that could be contrary to the best interests of FelCor. In addition, even
if an interested director abstains in the actual vote, the director's
participation in the meeting and discussion of an issue in which he or his
affiliates have an interest could influence the votes of other directors
regarding the issue.
NO ARMS-LENGTH BARGAINING ON DJONT PERCENTAGE LEASES. The terms of the
leases between FelCor and DJONT were not negotiated on an arms-length basis.
Accordingly, these percentage leases may not reflect fair market values or
terms. However, the management of FelCor believes that the terms of these leases
are fair to FelCor. The rental terms of these leases are set based upon
historical financial information and projected operating performance of the
applicable hotel. The other terms of the leases are typical of the provisions
found in other leases entered into in similar circumstances. The leases have
been approved by a majority of the directors of FelCor who are not officers or
employees of FelCor, DJONT or affiliates of either of them.
ADVERSE TAX CONSEQUENCES TO CERTAIN AFFILIATES ON A SALE OF CERTAIN
HOTELS. Messrs. Feldman, Corcoran and Mathewson may have additional tax
liability if FelCor sells its investments in six hotels acquired by FelCor in
July 1994 from partnerships controlled by these individuals. Consequently, the
interests of FelCor and of Messrs. Feldman, Corcoran and Mathewson could be
different in the event that FelCor decided to consider a sale of any of these
hotels. Decisions regarding a sale of any of these six hotels must be made by a
majority of the directors of FelCor who are not officers or employees of FelCor,
DJONT or affiliates of either of them.
RESTRICTIVE DEBT COVENANTS
At August 10, 1998, FelCor's unsecured bank credit facilities provided
for borrowings of up to $1.1 billion, of which FelCor had borrowed $930 million.
FelCor also had issued and outstanding $300 million in principal amount of
senior notes. The agreements governing FelCor's credit facilities and senior
notes contain various restrictive covenants, including, among others, provisions
restricting FelCor from incurring indebtedness, making investments, engaging in
transactions with stockholders and affiliates, incurring liens, merging or
consolidating with another person, disposing of all or substantially all of its
assets or permitting limitations on its subsidiaries with respect to the payment
of dividends or other amounts to FelCor. In addition, these agreements
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require FelCor to maintain certain specified financial ratios. Under the most
restrictive of these provisions, FelCor's maximum additional pro forma
indebtedness that could be incurred for the acquisition of hotel properties
would have been limited to approximately $239 million at June 30, 1998. These
covenants also may restrict FelCor's ability to engage in certain transactions.
In addition, any breach of these limitations could result in the acceleration of
most of FelCor's outstanding indebtedness. FelCor may not be able to refinance
or repay this indebtedness in full under such circumstances.
MATTERS THAT MAY ADVERSELY AFFECT THE HOTEL INDUSTRY
FEWER GROWTH OPPORTUNITIES. There has been substantial consolidation
in, and capital allocated to, the U.S. lodging industry since the early 1990s.
This has generally resulted in higher prices for hotels and fewer attractive
acquisition opportunities. An important part of FelCor's growth strategy is the
acquisition and, in many instances, the renovation and repositioning, of hotels
at less than replacement cost. Continued industry consolidation and competition
for acquisitions could adversely affect FelCor's growth prospects. FelCor
competes for hotel investment opportunities with other companies, some of which
have greater financial or other resources. Certain competitors may be able to
pay higher prices or assume greater risks than would be appropriate for FelCor.
POTENTIAL ADVERSE EFFECTS ON HOTEL OPERATIONS. The hotels owned by
FelCor are subject to all of the risks common to the hotel industry. These risks
could adversely affect hotel occupancy and the rates that can be charged for
hotel rooms, and generally include:
o The existence of competition from other hotels;
o The construction of more hotel rooms in a particular area than needed
to meet demand;
o The increase in energy costs and other travel expenses that reduce
business and leisure travel;
o The adverse effects of declines in general and local economic
activity; and
o The risks generally associated with the ownership of hotels and real
estate, as discussed in the following four paragraphs and under
"--Matters That May Adversely Affect Real Estate Ownership."
In addition, annual adjustments (based on changes in the Consumer Price Index)
are made to the base rent and the thresholds used to compute percentage rent
under the Percentage Leases. These adjustments, unless offset by increases in
hotel revenues, would reduce the amount of rent payable to FelCor under the
Percentage Leases and, consequently, FelCor's results of operations.
COMPETITION. Each of the Hotels competes with other hotels in its
geographic area. A number of additional hotel rooms have been or may be built in
a number of the geographic areas in which the Hotels are located, which could
adversely affect the results of operations of these hotels. According to Smith
Travel Research, total hotel room supply in the United States increased by 3.4%,
or approximately 116,000 rooms, from 1996 to 1997. This is compared to an
average annual increase in hotel room supply in the United States of 1.1% from
1991 to 1996. It is possible that a significant increase in the supply of
midscale and upscale hotel suites/rooms could occur which, if demand fails to
increase proportionately, could have an adverse effect on FelCor's operations.
SEASONALITY. The hotel industry is seasonal in nature. Generally, hotel
revenues are highest in the second and third quarters of each year. Seasonality
causes quarterly fluctuations in FelCor's revenue. FelCor may be able to reduce,
but not eliminate, the effects of seasonality by continuing to diversify the
geographic location and primary customer base of its hotels.
INVESTMENT CONCENTRATION IN A SINGLE INDUSTRY. Historically, FelCor has
only invested in hotel-related assets. In the event of a downturn in the hotel
industry, the adverse effect on FelCor may be greater than on a more diversified
company with assets outside of the hotel industry.
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REQUIREMENTS OF FRANCHISE AGREEMENTS. Most of the Hotels are operated
under various franchise licenses. Each license agreement requires that the
franchised hotel be maintained and operated in accordance with certain
standards. The franchisors also may require substantial improvements to the
Hotels, for which FelCor would be responsible under the Percentage Leases, as a
condition to the renewal or continuation of these franchise licenses. If a
franchise license terminates due to FelCor's failure to make required
improvements or to otherwise comply with its terms, FelCor may be liable for
termination payments and for fees for a new franchise. These termination
payments and fees would vary among the various franchise agreements and by
hotel. The loss of a substantial number of franchise licenses and the related
termination payments and new franchise fees could have a material adverse effect
on FelCor's results of operations.
LIMITATIONS ON ACQUISITIONS AND IMPROVEMENTS
FelCor intends to continue its current growth strategy, which includes
acquiring and improving hotel properties. FelCor generally cannot fund its
growth from cash from its operating activities because FelCor must distribute to
its stockholders at least 95% of its taxable income each year to maintain its
status as a REIT. Consequently, FelCor must rely primarily upon the availability
of debt or equity capital to fund hotel acquisitions and improvements. There can
be no assurance that FelCor will continue to have access to the capital markets
to fund future growth at an acceptable cost. In addition, FelCor's Board has
adopted a policy of limiting indebtedness to not more than 40% of FelCor's
investment in hotel assets, at historical cost, which could also limit FelCor's
ability to incur additional indebtedness to fund its continued growth. At March
31, 1998, on a pro forma basis, FelCor's indebtedness would represent 35.9% of
its investment in hotel assets at historical cost.
POTENTIAL TAX RISKS
Failure to qualify as a REIT would subject FelCor to federal income
tax. FelCor has operated and will continue to operate in a manner that is
intended to qualify it as a REIT under federal income tax laws. The REIT
qualification requirements are extremely complicated and interpretations of the
federal income tax laws governing qualification as a REIT are limited.
Accordingly, FelCor cannot be certain that it has been or will continue to be
successful in operating so as to qualify as a REIT. At any time, new laws,
interpretations or court decisions may change the federal tax laws or the
federal income tax consequences of qualification as a REIT.
If FelCor failed to qualify as a REIT, FelCor would be required to pay
federal income tax on its taxable income. FelCor might need to borrow money or
sell hotels in order to pay any such tax. FelCor's payment of income tax would
decrease the amount of its income available to be paid out to its stockholders.
In addition, FelCor would no longer be required to pay out most of its taxable
income to its stockholders. Unless its failure to qualify as a REIT were excused
under federal income tax laws, FelCor could not re-elect REIT status until the
fifth calendar year following the year in which it failed to qualify.
FAILURE TO MAKE REQUIRED DISTRIBUTIONS WOULD SUBJECT FELCOR TO TAX. In
order to qualify as a REIT, each year FelCor must pay out to its stockholders at
least 95% of its taxable income (other than any net capital gain). In addition,
FelCor would be subject to a 4% nondeductible tax if the actual amount it pays
out to its stockholders in a calendar year were less than the minimum amount
specified under federal tax laws. FelCor has paid out and intends to continue to
pay out its income to its stockholders in a manner intended to satisfy the 95%
test and to avoid the 4% tax. In doing so, FelCor may be required to borrow
money or sell assets to pay out enough of its taxable income to satisfy the 95%
test and to avoid the 4% tax in a particular year.
FAILURE TO DISTRIBUTE BRISTOL'S EARNINGS AND PROFITS IN 1998 WOULD
CAUSE FELCOR TO FAIL TO QUALIFY AS A REIT. At the end of any taxable year, a
REIT may not have any accumulated earnings and profits (described generally for
federal income tax purposes as cumulative undistributed net income) from a
non-REIT corporation. Accordingly, by the end of 1998, FelCor must pay out to
its stockholders an amount equal to Bristol's accumulated earnings and profits
through the date of the Merger. If FelCor fails to pay out such amount for its
1998 taxable year, it will fail to qualify as a REIT.
SALE OF ASSETS WITHIN TEN YEARS AFTER ACQUISITION WILL RESULT IN
CORPORATE TAX. If FelCor sells any asset acquired within 10 years after its
acquisition and recognizes gain, FelCor will be taxed at the highest corporate
rate on an amount equal to the fair market value of the asset minus the adjusted
basis of the asset as of its acquisition.
8
<PAGE> 11
EFFECT OF MARKET INTEREST RATES ON THE PRICE OF THE COMMON STOCK
One of the factors that may affect the price of the Common Stock is the
amount of distributions to stockholders in comparison to yields on other
financial instruments. An increase in market interest rates would provide higher
yields on other financial instruments, which could adversely affect the price of
the Common Stock.
RELIANCE ON KEY PERSONNEL AND BOARD OF DIRECTORS
FelCor's stockholders have no right to participate in FelCor's
management, except through the exercise of their voting rights. FelCor's Board
of Directors will be responsible for oversight of the management of FelCor.
FelCor's future success will be dependent in part on its ability to retain key
personnel, including Mr. Corcoran.
MATTERS THAT MAY ADVERSELY AFFECT REAL ESTATE OWNERSHIP
GENERAL. FelCor's investments in hotels are subject to the numerous
risks generally associated with owning real estate. These risks include, among
others, adverse changes in general or local economic or real estate market
conditions, zoning laws, traffic patterns and neighborhood characteristics, real
estate tax assessments and rates, governmental regulations and fiscal policies,
the potential for uninsured or underinsured casualty and other losses, the
impact of environmental laws and regulations (discussed below) and other
circumstances beyond the control of FelCor. Moreover, real estate investments
are relatively illiquid, which means that FelCor's ability to vary its portfolio
in response to changes in economic and other conditions may be limited.
POSSIBLE LIABILITY FOR ENVIRONMENTAL MATTERS. There are numerous
federal, state and local environmental laws and regulations to which owners of
real estate are subject. Under these laws a current or prior owner of real
estate may be liable for the costs of cleaning up and removing hazardous or
toxic substances found on its property, whether or not it was responsible for
their presence. In addition, if an owner of real property arranges for the
disposal of hazardous or toxic substances at another site, it may also be liable
for the costs of cleaning up and removing such substances from the disposal
site, even if it did not own or operate the disposal site. A property owner may
also be liable to third parties for personal injuries or property damage
sustained as a result of its release of hazardous or toxic substances (including
asbestos-containing materials) into the environment. Environmental laws may
require FelCor to incur substantial expenses and limit the use of its
properties. FelCor could be liable for substantial amounts for a failure to
comply with applicable environmental laws, which may be enforced by the
government or, in certain instances, by private parties. The existence of
hazardous or toxic substances on a property can also adversely affect the value
of, and the owner's ability to use, sell or borrow against, the property.
Generally, FelCor obtains a Phase I environmental audit from an
independent environmental engineer prior to its acquisition of a hotel. With
respect to the Bristol Hotels, FelCor has relied upon the Phase I audits
obtained by Bristol in connection with its acquisition of these properties. No
updates or new environmental audits were obtained.
The primary purpose of a Phase I environmental audit is to identify
indications of potential environmental contamination at a property and,
secondarily, to make a limited assessment as to the potential for environmental
regulatory compliance costs. Consistent with current industry standards, the
Phase I environmental audits on which FelCor has relied did not include an
assessment of potential off-site liability or involve any testing of
groundwater, soil or air conditions. Accordingly, they would not reveal
information that could only be obtained by such tests. In addition, the
assessment of environmental compliance contained in such reports is general in
nature and was not a detailed determination of the property's complete
compliance status.
The Phase I environmental audits relied upon by FelCor disclose the
existence of certain hazardous or toxic substances at or near a limited number
of FelCor's hotels. In these instances, FelCor made such additional
investigations, if any, as they considered necessary to evaluate the risk of
liability. However, FelCor's management does not believe that the identified
conditions, or any other environmental conditions known to it, will have a
material adverse effect on FelCor's business, assets or profits. It is possible,
however, that such environmental audits and investigations do not reveal all
environmental conditions or liabilities for which FelCor could be liable and
there could be potential environmental liabilities of which FelCor is unaware.
9
<PAGE> 12
COSTS OF COMPLYING WITH AMERICANS WITH DISABILITIES ACT. Under the
Americans with Disabilities Act of 1990 ("ADA"), all public accommodations
(including hotels) are required to meet certain federal requirements for access
and use by disabled persons. FelCor's management believes that its hotels are
substantially in compliance with the requirements of the ADA. However, a
determination that the hotels are not in compliance with the ADA could result in
liability for both governmental fines and damages to private parties. If FelCor
were required to make unanticipated major modifications to the hotels to comply
with the requirements of the ADA, it could adversely affect its ability to pay
its obligations and make distributions to its stockholders.
OWNERSHIP LIMITATION
In order for FelCor to maintain its status as a REIT, no more than 50%
in value of its outstanding stock may be owned (actually or constructively under
the applicable tax rules) by five or fewer persons during the last half of any
taxable year. In connection with this requirement, FelCor's Charter prohibits,
subject to certain exceptions, any person from owning more than 9.9% (determined
in accordance with the Internal Revenue Code and the Securities Exchange Act of
1934, as amended) of the number of outstanding shares of any class of its
capital stock. FelCor's Charter also prohibits any transfer of its capital stock
that would result in a violation of the 9.9% ownership limit, reduce the number
of stockholders below 100 or otherwise result in FelCor failing to qualify as a
REIT. Any attempted transfer in violation of the charter prohibitions will be
void and the intended transferee will not acquire any right in the shares
resulting in such violation. FelCor has the right to take any lawful action that
it believes necessary or advisable to ensure compliance with these ownership and
transfer restrictions and to preserve its status as a REIT, including refusing
to recognize any transfer of capital stock in violation of its charter.
If a person holds or attempts to acquire shares in excess of FelCor's
ownership and transfer restrictions, these shares will be immediately designated
as "shares-in-trust" and transferred automatically and by operation of law, in
trust, to a trustee designated by FelCor. The trustee will have the right to
receive all distributions on, to vote and to sell these shares. The holder of
the excess shares will have no right or interest in these shares, except the
right (under certain circumstances) to receive the lesser of: (i) the proceeds
of any sale of these shares by the trustee to a permitted owner and (ii) the
amount you paid for these shares (or the market value of these shares,
determined in accordance with the Charter, if the shares were received by gift,
bequest or otherwise without payment). Accordingly, the record owner of any
shares designated as shares-in-trust would suffer a financial loss if the price
at which these shares are sold to a permitted owner is less than what was paid
for these shares.
CERTAIN ANTI-TAKEOVER AND CORPORATE GOVERNANCE PROVISIONS
OWNERSHIP LIMIT. The ownership and transfer restrictions of FelCor's
Charter may have the effect of discouraging or preventing a third party from
attempting to gain control of FelCor without the approval of the FelCor Board.
Therefore, it is less likely that a change in control, even if beneficial to
stockholders, could be effected without the approval of the FelCor Board.
STAGGERED BOARD. The FelCor Board is divided into three classes.
Directors in each class are elected for terms of three years. As a result, the
ability of stockholders to effect a change in control of FelCor through the
election of new directors is limited by the inability of stockholders to elect a
majority of the FelCor Board at any particular meeting.
AUTHORITY TO ISSUE ADDITIONAL SHARES. Under the FelCor Charter, the
FelCor Board may issue preferred stock without stockholder action. The preferred
stock may be issued, in one or more series, with the preferences, qualifications
and terms, designated by the FelCor Board that may discourage, delay or prevent
a change in control of FelCor, even if such change were in the best interests of
stockholders. FelCor currently has outstanding 6,050,000 shares of its $1.95
Series A Cumulative, Convertible Preferred Stock and 57,500 shares of its 9%
Series B Cumulative Redeemable Preferred Stock (represented by 5,750,000
Depository Shares, each representing a 1/100 fractional interest in a share of
such Series B preferred stock). The preferred stock reduces the amount of
dividends available, and has dividend, liquidation and other rights superior, to
the holders of the Common Stock. The Charter and bylaws of FelCor contain other
provisions that also may have the effect of delaying or preventing a change in
control of FelCor.
MARYLAND ANTI-TAKEOVER STATUTES. As a Maryland corporation, FelCor is
subject to various provisions under the Maryland General Corporation Law,
including the Maryland business combination statute, which sets
10
<PAGE> 13
forth certain procedures that must be followed in, and otherwise restricts,
certain takeovers and business combinations. FelCor's Charter currently exempts
FelCor from the operation of the Maryland share control statute, which may deny
voting rights to shares involved in an acquisition of one-fifth or more of the
voting stock of a Maryland corporation. To the extent these laws are applicable
to FelCor, they may have the effect of delaying or preventing a change in
control of FelCor even though beneficial to FelCor's stockholders.
IMPACT OF YEAR 2000 ISSUE
The year 2000 issue relates to computer programs that were written
using two digits rather than four to define the applicable year. In those
programs, the year 2000 may be incorrectly identified as the year 1900, which
could result in a system failure or miscalculations causing a disruption of
operations, including a temporary inability to process transactions, prepare
financial statements or engage in other normal business activities.
FelCor has recently assessed its internal computer systems and believes
that they will properly utilize dates beyond December 31, 1999. Holiday
Hospitality and Promus, franchisors for 165 of the Hotels, have indicated to
FelCor that their reservation systems will be year 2000 compliant by the end of
1998. FelCor has been informed that the companies leasing and managing hotels
owned by it are in the process of studying the year 2000 issue, including
inquiries of their vendors. Upon completion of these studies, which are expected
in late 1998, FelCor will determine the extent to which it may be vulnerable to
third parties' failure to remedy their year 2000 issues and potential effects of
any such failures. FelCor estimates that the expense associated with year 2000
compliance will not be material to FelCor's business, operations or financial
condition.
CERTAIN FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS IN THIS PROSPECTUS CONSTITUTE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995, AND CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS
"MAY," "WILL," "EXPECT," "ANTICIPATE," "ESTIMATE" OR "CONTINUE" OR THE NEGATIVE
THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. THE STATEMENTS
UNDER THE CAPTION "RISK FACTORS" IN THIS PROSPECTUS CONSTITUTE CAUTIONARY
STATEMENTS IDENTIFYING IMPORTANT FACTORS, INCLUDING MATERIAL RISKS AND
UNCERTAINTIES, WITH RESPECT TO SUCH FORWARD-LOOKING STATEMENTS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE REFLECTED IN SUCH FORWARD-LOOKING
STATEMENTS.
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<PAGE> 14
USE OF PROCEEDS
The amount of proceeds to be received by FelCor upon the exercise of
the Options by the Option holders will depend upon the extent to which the
Options are exercised. FelCor intends that the net proceeds from the sale of
Common Stock will be added to its general corporate funds and used for general
corporate purposes.
The Company will not receive any of the proceeds from sales of shares
of Common Stock by the Selling Shareholders.
DESCRIPTION OF THE PLANS AND OPTIONS
GENERAL
Copies of the Plans have been filed as exhibits to the Registration
Statement, of which this Prospectus forms a part. The summaries of certain
provisions of the Plans do not purport to be complete and are subject to, and
are qualified in their entirety by reference to, all of the provisions of the
Plans, including the definitions therein of certain terms. Copies of the Plans
may be obtained by contacting FelCor. Capitalized terms not otherwise defined
below or elsewhere in this Prospectus have the meanings given to such terms in
the Plans.
The Plans were originally adopted by Bristol. The Incentive Plan was
designed to attract and retain qualified officers and other key employees of
Bristol. The Non-Employee Director Plan was designed to attract and retain
qualified outside directors for Bristol.
The Incentive Plan authorizes the grant of options to purchase shares
of Bristol common stock, stock appreciation rights, restricted shares, deferred
shares, performance shares and performance Units. As of July 28, 1998, only
nonqualified options had been granted and were outstanding under the Incentive
Plan. The Non-Employee Director Plan authorizes the grant of options to purchase
Bristol common stock. Under each of the Plans, Bristol issued options at various
times to purchase Bristol common stock (collectively, the "Original Options").
As a result of the Merger and the Spin-Off, each Original Option
outstanding on July 28, 1998 was restated and continued in the form of two
successor options, one successor option exercisable for Common Stock (an
"Option") and one successor option exercisable for shares of BHR common stock (a
"BHR Option"). Under the Merger Agreement, FelCor assumed the Plans and
Bristol's obligations under each Option, while BHR assumed all of Bristol's
obligations for each BHR Option. The exercise prices and numbers of shares
covered by the Original Options were adjusted as appropriate in the Options and
the BHR Options to reflect prior adjustments in Bristol common stock, the
Merger, and the Spin-Off. As required by certain agreements relating to the
Merger, the Plan has been amended to provide that service with FelCor or BHR
will satisfy the vesting requirements and will determine the date of termination
of employment for all Options and BHR Options.
The FelCor Board does not currently intend to authorize any additional
grants of Options under either of the Plans.
ADMINISTRATION OF THE PLANS
The Plans are administered by the Board of Directors of FelCor (the
"FelCor Board") or the Compensation Committee of the FelCor Board. The FelCor
Board or the Compensation Committee, as appropriate, has discretionary authority
(subject to certain restrictions) to determine the individuals to whom Options
are granted and the timing, number, vesting schedule and exercise price of each
Option, and to discharge all administrative and interpretive responsibilities
with respect to the Plans and the Options, including, without limitation, the
discretionary authority to prescribe, amend and rescind rules and regulations of
the Plans.
Under certain agreements relating to the Merger, all decisions relating
to the interpretation or amendment of the Options requires the approval of the
Compensation Committee of BHR, except for adjustments to the exercise price or
nature of securities to be awarded upon exercise of an Option in connection with
a transaction in which the Options are treated in the same manner as options
under other FelCor option plans.
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<PAGE> 15
SHARES COVERED
As of July 28, 1998, the total numbers of shares of Common Stock that
may be purchased under outstanding Options granted under the Non-Employee
Director Plan and the Incentive Plan were 35,966 and 1,237,293, respectively.
ELIGIBILITY
Under the Incentive Plan, the Original Options were granted by Bristol
to certain eligible persons prior to the Merger in amounts, and subject to
terms, as determined by the Compensation Committee of the Board of Directors of
Bristol. Eligible persons included officers, key employees, or consultants of
Bristol. As of July 28, 1998, there were 163 holders of outstanding Options
granted under the Incentive Plan.
Under the Non-Employee Director Plan, the Original Options were granted
by Bristol to eligible directors of Bristol prior to the Merger . These eligible
directors automatically received an Original Option for 7,500 shares of Bristol
common stock, upon becoming a director, one-third of which vested on each annual
meeting date occurring on or after the date of grant of the Initial Option.
Thereafter, eligible directors were automatically granted Original Options
covering an additional 7,500 shares of Bristol common stock on the date of each
annual meeting of Bristol stockholders, which Options become fully vested on the
next annual meeting date. As of July 28, 1998, there are three holders of
outstanding Options granted under the Non-Employee Director Plan.
OPTION PRICE AND EXERCISE
Under the Plans, the purchase price of each Original Option was
generally the closing price of the Bristol common stock on the NYSE on the date
of the grant.
Under either Plan, shares of Common Stock purchased pursuant to the
exercise of an Option must at the time of purchase be paid for in full in cash,
by check, with shares of Common Stock (to be valued at the fair market value on
the date of such exercise) or by a combination of such means. Under the
Non-Employee Director Plan, any of the Common Stock so delivered must have been
beneficially owned by the Option holder for a period of not less than six months
prior to the date of exercise. The Options outstanding under the Incentive Plan
contain a substantially similar six month requirement. The Incentive Plan also
requires the withholding of taxes due in connection with the exercise of the
Option. At the discretion of the FelCor Board or the Compensation Committee,
such taxes may be paid by voluntary or mandatory relinquishment of a portion of
any payment or benefit received upon exercise of the Options or by the surrender
of outstanding Common Stock (with respect to Options) or BHR common stock (with
respect to BHR Options).
VESTING
The Options granted under the Incentive Plans become exercisable over a
period of continuous employment or continuous consulting services specified in
each individual Option contract. Generally, the Option agreements specify a
twenty-five percent, or twenty percent, rate of vesting over a period of four or
five years, although some vest in their entirety only at the end of five years,
or nine years. Uninterrupted service with either FelCor, BHR or any of their
respective subsidiaries for the required period will satisfy the vesting
requirements under the Options.
Initial Options granted pursuant to the Non-Employee Director Plan vest
at the rate of one-third over a period of three annual stockholders meetings,
and subsequent Options granted pursuant to the Non-Employee Director Plan vest
at the next annual stockholders meeting.
As of July 28, 1998, at the conclusion of the Merger, the total numbers
of shares of Common Stock that were subject to immediate purchase under
outstanding Options granted under the Non- Employee Director Plan and the
Incentive Plan were 32,541 and 786,096, respectively.
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<PAGE> 16
TERMINATION
The restated Option agreements generally provide that the Options will
terminate (i) 30 days after the holder of the Option ("Optionee") ceases to be
an employee of FelCor, BHR or any of their respective subsidiaries for any
reason other than death or disability, (ii) 90 days after the Optionee ceases to
be an employee of FelCor, BHR or any of their respective subsidiaries if the
termination of employment is under circumstances determined by the FelCor Board
to be for the convenience of FelCor or BHR or is retirement under a plan at or
after the earliest voluntary retirement age provided for in such plan or
retirement at an earlier age with the consent of the FelCor Board, (iii) one
year after the Optionee's death or disability incurred while employed (or, in
certain circumstances, incurred within 90 days after termination of employment),
or (iv) ten years after the date of grant. The Option will also terminate if the
Optionee commits an act that the FelCor Board determines in good faith to have
been intentionally committed and materially adverse to the interest of FelCor,
BHR or a subsidiary thereof.
Options granted pursuant to the Non-Employee Director Plan expire on
the first to occur of (i) three months following the director ceasing to serve
on either the FelCor Board or BHR Board of Directors (other than due to death or
disability); (ii) one year after ceasing to serve on either the FelCor Board or
BHR Board of Directors due to death or disability; or (iii) five years from the
date of grant.
AMENDMENT OF THE PLANS
Amendments to the Incentive Plan may be made from time to time by the
FelCor Board or Compensation Committee, while the Non-Employee Director Plan may
be amended by the FelCor Board. No amendment may increase the maximum authorized
number of shares of Common Stock or BHR Common Stock that may be issued under
the Plans, or amend the Plans in a manner that results in the Plans not
satisfying the applicable conditions of Rule 16b-3 of the Exchange Act, without
shareholder approval. Under some circumstances, the FelCor Board will be
required to obtain the consent and approval of the BHR Board or Compensation
Committee in order to adopt an effective amendment.
Options granted under the Incentive Plan may, with the consent of the
Optionee, be canceled and new Options granted in their place. The new Options
may or may not cover the same number of shares of Common Stock as the canceled
Options. No amendment of the Plans may adversely affect any outstanding Option
without the consent of the Optionee.
ADJUSTMENTS UPON CERTAIN TRANSACTIONS OR EVENTS
The Plans provide that the FelCor Board or the Compensation Committee
may make such adjustments to the numbers of shares covered by and the exercise
prices of outstanding Options, and the kind of shares (including shares of other
issuers) covered by the Options, as it determines in good faith may be equitably
required in order to prevent dilution or the expansion of the rights of the
Optionees that might occur due to (a) stock dividends, splits, combinations,
recapitalizations or other changes in the capital structure of FelCor or BHR, or
(b) merger, consolidation, spin-off, spin-out, split-off, split-up,
reorganization, or partial or complete liquidation of FelCor or BHR or other
distribution of assets. In such an event, the Committee may provide in
substitution for any or all outstanding Options such alternative consideration
as it may in good faith determine to be equitable under the circumstances and
may require in connection therewith the surrender of all Options so replaced.
Unless such adjustments treat the Optionees and the Options in the same manner
as options under other FelCor option plans, the adjustments are subject to
approval of the Compensation Committee of BHR. The FelCor Board or the
Compensation Committee may also make or provide for such adjustments in the
maximum numbers of shares of Common Stock specified in the Plans as may be in
good faith determined to be appropriate in order to reflect any transaction or
event described above, subject to the same possible requirement of approval by
the Compensation Committee of BHR.
NON-ASSIGNABILITY
The Plans provide that no Option is assignable or transferable by the
Optionee other than by will or by the laws of descent and distribution. During
the lifetime of a Optionee, the Options are exercisable only by the Optionee or
a legal representative.
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<PAGE> 17
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary of certain federal income tax consequences of the
holding or exercise of the Options is based on the Code, as amended to date,
applicable proposed and final Treasury Regulations, judicial authority and
current administrative rulings and practice, all of which are subject to change.
This summary does not attempt to describe all of the possible tax consequences
that could result from the acquisition, holding, exercise, transfer or
disposition of an Option or the Common Stock purchasable thereunder.
Options granted under the Plans are intended to be non-qualified stock
options. An optionee will realize no taxable income at the time he or she is
granted a non-qualified stock option. Such conclusion is predicated on the
assumption that, under existing Treasury Department regulations, a non-qualified
stock option, at the time of its grant, has no readily ascertainable fair market
value. Ordinary income will be realized when a non-qualified stock option is
exercised. The amount of such income will be equal to the excess of the fair
market value on the exercise date of the shares of Common Stock issued to an
optionee over the exercise price. The Optionee's holding period with respect to
the shares acquired will begin on the date of exercise.
The tax basis of the stock acquired upon the exercise of any Option
will be equal to the sum of (i) the exercise price of such option and (ii) the
amount included in income with respect to such Option. Any gain or loss on a
subsequent sale of the stock will be either a long-term or short-term capital
gain or loss, depending on the optionee's holding period for the stock disposed
of. Generally, if the Common Stock is held for more than twelve months after the
date of exercise, the Optionee will be taxed at a maximum 20% tax rate. If the
Optionee holds the shares for at least five years, the Optionee will be taxed at
a maximum 18% rate. It is not clear whether, and to what extent, the Company
will be entitled to a deduction for Federal income tax purposes as a result of
the exercise of the Options.
BECAUSE THE TAX CONSEQUENCES TO A PLAN PARTICIPANT MAY VARY DEPENDING
ON HIS OR HER INDIVIDUAL CIRCUMSTANCES, EACH PLAN PARTICIPANT SHOULD CONSULT HIS
OR HER PERSONAL TAX ADVISOR REGARDING THE FEDERAL AND ANY STATE, LOCAL OR
FOREIGN TAX CONSEQUENCES TO HIM OR HER.
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<PAGE> 18
SELLING SHAREHOLDERS
This Prospectus also related to the potential offer of the
Shareholders' Shares from time to time following the Merger by the holders of
Common Stock identified in the table below (the "Selling Shareholders"). See
"Plan of Distribution." The following table provides the names of each Selling
Shareholder, the number of shares of Common Stock beneficially owned by such
holder as of July 28, 1998, and the number of shares of Common Stock that may be
offered by each Selling Shareholder, to the best knowledge of FelCor.
<TABLE>
<CAPTION>
Shares Shares Offered Percent of All
Beneficially by this Outstanding FelCor
Owned Prospectus Common Shares (1)
----- ---------- -----------------
<S> <C> <C> <C>
United/Harvey Investors I, L.P. 2,170,140 2,170,140 3.2%
United/Harvey Investors II, L.P. 2,034,746 2,034,746 3.0%
United/Harvey Investors III, L.P. 1,356,497 1,356,497 2.0%
United/Harvey Investors IV, 1,356,497 1,356,497 2.0%
L.P.
United/Harvey Investors V, L.P. 2,712,995 2,712,995 4.0%
Bass America Inc. 7,161,698 7,161,698 10.6%
Holiday Corporation 2,457,046 2,457,046 3.6%
J. Peter Kline 817,617 817,617 1.2%
Robert L. Miars 667,195 667,195 1.0%
John A. Beckert 478,544 478,544 0.7%
---------- ----------
Total 21,212,975 21,212,975
========== ==========
</TABLE>
- -------------------------------
(1) Based on 67,599,205 outstanding shares of FelCor's Common Stock.
Each of the five United/Harvey partnerships listed in the foregoing
table ("United/Harvey Partnerships") is an affiliate of Donald J. McNamara, who
served as Chairman of the Board of Bristol prior to the Merger and since the
Merger has served as Chairman of the Board of FelCor. Mr. McNamara also served
as a director of FelCor from July 1994 to November 1997, and is a principal in
The Hampstead Group which may be deemed to be an affiliate of these
partnerships. Bass America Inc. and Holiday Corporation (the "Bass Entities")
are affiliates of the entities that franchise the Bass Hotels & Resorts brands
of hotels and of Richard L. North, who served as a director of Bristol prior to
the Merger and since the Merger has served as a director of FelCor. Each of
Messrs. Kline, Beckert and Miars were executive officers of Bristol prior to the
Merger.
The Selling Shareholders were affiliates of Bristol at the time of the
Merger and under applicable securities regulations cannot freely resell their
shares without registration or an exemption therefrom. This Prospectus is
required by FelCor's contractual obligations to register the shares of the
Selling Shareholders for resale, and the Selling Shareholders are under no
obligation to resell their shares.
PLAN OF DISTRIBUTION
As part of the Merger between Bristol and FelCor, FelCor assumed
Bristol's obligations under the Plans and the outstanding Options previously
granted by Bristol under the Plans. Each Option entitles its holder to purchase
shares of Common Stock, subject to adjustment of certain circumstances. See
"Description of the Plans" for information regarding the terms of the Options,
including the manner of exercise. This Prospectus relates to the offer by FelCor
to issue shares of Common Stock from time to time upon exercise of the Options
by the Option holders. No commission or fee will be paid by FelCor in connection
with the exercise of any Option.
This Prospectus also relates to the offer and sale from time to time
following the Merger by the Selling Shareholders of Common Stock issued to them
pursuant to the Merger (the "Shareholders' Shares"). FelCor has
16
<PAGE> 19
registered these offers and resales by the Selling Shareholders of Shareholders'
Shares to satisfy FelCor's obligations under the Stockholders' and Registration
Rights Agreement among FelCor, the Bass Entities and the United/Harvey
Partnerships (the "Shareholders' Agreement"). Registration of the Shareholders'
Shares does not necessarily mean that any of the Shareholders' Shares will be
offered or sold by the Selling Shareholders. Under the Shareholders' Agreement,
the Bass Entities and the United/Harvey Partnerships have agreed not to sell or
transfer their Common Stock for a period of six months after the Merger, except
in compliance with Rule 145 under the Securities Act. FelCor will not receive
any of the proceeds of the sale of the Shareholders' Shares offered by the
Selling Shareholders.
The distribution of Shareholders' Shares may be effected from time to
time in one or more underwritten transactions at a fixed price or prices, which
may be changed, or in other transactions at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated
prices. Any such underwritten offering may be on either a "best efforts" or a
"firm commitment" basis. In connection with any such underwritten offering,
underwriters or agents may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholders and/or from purchasers
of the Shareholders' Shares for whom they may act as agents. Underwriters may
sell the Shareholders' Shares to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents.
The Selling Shareholders and any underwriters, dealers or agents that
participated in the distribution of Shareholders' Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any profit on the
sale of Shareholders' Shares by them and any discounts, commissions or
concessions received by any such underwriters, dealers or agents might be deemed
to be underwriting discounts and commissions under the Securities Act.
At a time a particular offer of Shareholders' Shares is made by a
Selling Shareholder, a prospectus supplement, if required, will be distributed
that will set forth the names of any underwriters, dealers or agents and any
discounts, commissions and other terms constituting compensation from the
Selling Shareholders and any other required information.
The sale of Shareholders' Shares by the Selling Shareholders may also
be effected from time to time by selling Shareholders' Shares directly to
purchasers or to or through broker-dealers. In connection with any such sale,
any such broker-dealer may act as agent for the Selling Shareholders or may
purchase from the Selling Shareholders all or a portion of the Shareholders'
Shares as principal, and sales may be made pursuant to any of the methods
described below. Such sales may be made on the NYSE or other exchanges on which
the Shareholders' Shares are then traded, in the over-the-counter market, in
negotiated transactions or otherwise, in each case at prices and at terms then
prevailing or at prices related to the then-current market prices or at prices
otherwise negotiated.
The Shareholders' Shares may also be sold in one or more of the
following transactions: (i) block transactions (which may involve crosses) in
which a broker-dealer may sell all or a portion of such shares as agent but may
position and resell all or a portion of the block as principal to facilitate the
transaction; (ii) purchases by any such broker-dealer as principal and resale by
such broker-dealer for its own account pursuant to a prospectus supplement;
(iii) a special offering, an exchange distribution or a secondary distribution
in accordance with applicable NYSE or other stock exchange rules; (iv) ordinary
brokerage transactions and transactions in which any such broker-dealer solicits
purchasers; (v) sales "at the market" to or through a market maker or into an
existing trading market, on an exchange or otherwise, for such shares; and (vi)
sales in other ways not involving market makers or established trading markets,
including direct sales to purchasers. In effecting sales, broker-dealers engaged
by the Selling Shareholders may arrange for other broker-dealers to participate.
Broker-dealers will receive commissions or other compensation from the Selling
Shareholders in amounts to be negotiated immediately prior to the sale that will
not exceed those customary in types of transactions involved. Broker-dealers may
also receive compensation from purchasers of Shareholders' Shares which is not
expected to exceed that customary in the types of transactions involved.
In connection with distributions of Shareholders' Shares or otherwise,
the Selling Shareholders may enter into hedging transactions with broker-dealers
or others. Such broker-dealers may engage in short sales of Shareholders' Shares
or other transactions in the course of hedging the positions assumed by such
persons in
17
<PAGE> 20
connection with such hedging transactions or otherwise. The Selling Shareholders
may also sell Shareholders' Shares short and redeliver Shareholders' Shares to
close out such short positions; enter into option or other transactions with
broker-dealers or others which may involve the delivery to such persons of the
Shareholders' Shares offered hereby, which Shareholders' Shares such persons may
resell pursuant to this Prospectus; and/or pledge Shareholders' Shares to a
broker or dealer or others and, upon default, such persons may effect sales of
Shareholders' Shares pursuant to this Prospectus. In addition, any Shareholders'
Shares covered by this Prospectus that qualify for resale pursuant to Rule 145
of the Securities Act may be sold under Rule 145 rather than with this
Prospectus.
In order to comply with securities laws of certain states, if
applicable, Shareholders' Shares may be sold only through registered or licensed
brokers or dealers.
Until the distribution of Shareholders' Shares is completed, rules of
the SEC may limit the ability of any underwriters and selling group members to
bid for and purchase Shareholders' Shares. As an exception to these rules,
underwriters are permitted to engage in certain transactions that stabilize the
price of Shareholders' Shares. Such transactions consist of bids or purchases
for the purpose of pegging, fixing or maintaining the price of Shareholders'
Shares.
The lead underwriters may also impose a penalty bid on certain other
underwriters participating in the offering and selling group members. This means
that if the lead underwriters purchase Shareholders' Shares in the open market
to reduce the underwriters' short position or to stabilize the price of
Shareholders' Shares, they may reclaim the amount of any selling concession from
the underwriters and selling group members who sold those Shareholders' Shares
as part of the offering.
In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases. The imposition of a penalty
bid might also have an effect on the price of a security to the extent that it
were to discourage resale of the security before the distribution is completed.
FelCor makes no representation or prediction as to the direction or
magnitude of any effect that the transactions described above might have on the
price of Shareholders' Shares. In addition, FelCor makes no representation that
the underwriters will engage in such transactions or that such transactions,
once commenced, will not be discontinued without notice.
All expenses incident to the offering and sale of Shareholders' Shares
(other than brokerage and underwriting commissions and certain taxes) will be
paid by FelCor. FelCor has agreed to indemnify certain of the Selling
Shareholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the issuance of the Common Stock has been passed upon
for FelCor by Jenkens & Gilchrist, a Professional Corporation, Dallas, Texas.
Jenkens & Gilchrist, a Professional Corporation has relied upon the opinion of
Miles & Stockbridge P.C., Baltimore, Maryland, with respect to matters involving
Maryland law relating to the Common Stock issued to the Selling Shareholders in
the Merger.
18
<PAGE> 21
EXPERTS
The consolidated financial statements of FelCor as of December 31, 1997
and 1996 and for the years ended December 31, 1997, 1996 and 1995, the
consolidated financial statements of DJONT Operations, L.L.C. as of December 31,
1997 and 1996 and for the years ended December 31, 1997, 1996 and 1995, the
combined financial statements of the Sheraton Acquisition Hotels as of December
31, 1996 and for the year then ended, the consolidated financial statements of
Bristol for the eleven months ended December 31, 1995 and the combined financial
statements of Harvey Hotel Companies for the one month ended January 31, 1995
have been incorporated by reference in this Prospectus in reliance on the
reports of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of that firm as experts in accounting and auditing.
The consolidated financial statements of Bristol as of December 31,
1997 and 1996 and for the years ended December 31, 1997 and 1996, incorporated
by reference in this Prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in accounting and auditing in giving said reports.
19
<PAGE> 22
================================================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY FELCOR. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF FELCOR SINCE THE DATE HEREOF. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------------------
TABLE OF CONTENTS
---------------------------
<TABLE>
<S> <C>
Where You Can Find More Information.............. 2
The Company...................................... 3
Risk Factors..................................... 5
Use of Proceeds.................................. 12
Description of the Plans and Options............. 12
Selling Shareholders............................. 16
Plan of Distribution............................. 16
Legal Matters.................................... 18
Experts.......................................... 19
</TABLE>
22,486,234 SHARES
FELCOR LODGING TRUST
INCORPORATED
(FORMERLY FELCOR SUITE HOTELS, INC.)
COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
================================================================================
<PAGE> 23
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below is an estimate of the approximate amount of the fees
and expenses (other than underwriting commissions and discounts) payable by the
Registrant in connection with the issuance and distribution of the Common Stock
pursuant to the Prospectus only. The following table is not intended to
summarize all fees and expenses relating to the Merger.
<TABLE>
<S> <C>
Securities and Exchange Commission, registration fee..... $205,607
Printing and mailing..................................... 1,500
Accountant's fees and expenses........................... 3,000
Counsel fees and expenses................................ 10,000
Miscellaneous............................................ 9,893
--------
Total........................................... $230,000
</TABLE>
The Selling Shareholders will pay or bear any selling or underwriting
discounts and commissions and other selling expenses with respect to the offer
and sale of their shares of Common Stock.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Charter of FelCor generally limits the liability of FelCor's
directors and officers to FelCor and the Shareholders for money damages to the
fullest extent permitted from time to time by the laws of the state of Maryland.
The Charter also provides generally for the indemnification of directors and
officers, among others, against judgments, settlements, penalties, fines, and
reasonable expenses actually incurred by them in connection with any proceeding
to which they may be made a party by reason of their service in those or other
capacities except in connection with a proceeding by or in the right of FelCor
in which the director was adjudged liable to FelCor or in connection with any
other proceeding, whether or not involving action in his official capacity, in
which he was adjudged liable on the basis that personal benefit was improperly
received by him. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors and officers of FelCor pursuant to
the foregoing provisions or otherwise, FelCor has been advised that, in the
opinion of the SEC, such indemnification is against public policy as expressed
in the Securities Act, and is, therefore, unenforceable.
FelCor may purchase director and officer liability insurance for the
purpose of providing a source of funds to pay any indemnification described
above.
II-1
<PAGE> 24
ITEM 16. EXHIBITS
<TABLE>
<S> <C>
4.1 -- Form of Share Certificate for Common Stock (filed as Exhibit 4.1 to the Registrant's
Form 10-Q for the quarter ended June 30, 1996 and incorporated herein by reference)
5.1* -- Opinion of Jenkens & Gilchrist, a Professional Corporation (as to shares issued by
Selling Shareholders in the Merger)
5.2* -- Opinion of Miles & Stockbridge P.C. (as to shares issued to Selling Shareholders in
the Merger)
5.3 -- Opinion of Jenkens & Gilchrist, a Professional Corporation (as to shares to be issued
under Options)
23.1 -- Consent of Jenkens & Gilchrist, a Professional Corporation (included in Exhibits 5.1
and 5.3)
23.2 -- Consent of PricewaterhouseCoopers LLP
23.3 -- Consent of Arthur Andersen LLP
23.4 -- Consent of Miles & Stockbridge P.C. (included in Exhibit 5.2)
24.1* -- Power of Attorney
99.1 -- Second Amended and Restated 1995 Equity Incentive Plan
99.2 -- Amended and Restated Stock Option Plan for Non-Employee Directors
99.3 -- Form of Nonqualified Stock Option Agreement for 1995 Equity Incentive Plan
99.4 -- Form of Nonqualified Stock Option Agreement for Non-Employee Directors Stock Option Plan
- ----------------------
*Previously filed
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offering therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the
II-2
<PAGE> 25
Exchange Act) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions referred to in Item 15 of this
Registration Statement, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer, or controlling person of the Registrant in the successful defense of
any action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question as to whether such indemnification by it is against public policy
as expressed in the act, and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this
Post-Effective Amendment No. 1 on Form S-3 to Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas, on the 11th day of August, 1998.
FELCOR LODGING TRUST INCORPORATED
By: /s/ Lawrence D. Robinson
---------------------------------------------
Lawrence D. Robinson
Senior Vice President and General Counsel
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
POST-EFFECTIVE AMENDMENT NO. 1 ON FORM S-3 TO FORM S-4 HAS BEEN SIGNED BY THE
FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Chairman of the Board and
- ------------------------------------------ Director
Donald J. McNamara
President, Chief Executive
- ------------------------------------------ Officer and Director
Thomas J. Corcoran, Jr.
* Senior Vice President and
- ------------------------------------------ Chief Financial Officer
Randall L. Churchey
* Vice President and Controller
- ------------------------------------------ (Principal Accounting
Lester C. Johnson Officer)
* Director
- ------------------------------------------
Charles N. Mathewson
* Director
- ------------------------------------------
Richard S. Ellwood
* Director
- ------------------------------------------
Richard O. Jacobson
* Director
- ------------------------------------------
Charles A. Ledsinger, Jr.
* Director
- ------------------------------------------
Thomas A. McChristy
*By: /s/ Lawrence D. Robinson Attorney-in-Fact August 11, 1998
---------------------------------------
Lawrence D. Robinson
Director
- -------------------------------------------
Richard C. North
Director
- -------------------------------------------
Robert H. Lutz, Jr.
Director
- -------------------------------------------
Michael D. Rose
</TABLE>
II-4
<PAGE> 27
EXHIBIT INDEX
<TABLE>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
4.1 -- Form of Share Certificate for Common Stock (filed as Exhibit 4.1 to the Registrant's
Form 10-Q for the quarter ended June 30, 1996 and incorporated herein by reference)
5.1* -- Opinion of Jenkens & Gilchrist, a Professional Corporation (as to shares issued by
Selling Shareholders in the Merger)
5.2* -- Opinion of Miles & Stockbridge P.C. (as to shares issued to Selling Shareholders in
the Merger)
5.3 -- Opinion of Jenkens & Gilchrist, a Professional Corporation (as to shares to be issued
under Options)
23.1 -- Consent of Jenkens & Gilchrist, a Professional Corporation (included in Exhibits 5.1
and 5.3)
23.2 -- Consent of PricewaterhouseCoopers LLP
23.3 -- Consent of Arthur Andersen LLP
23.4 -- Consent of Miles & Stockbridge P.C. (included in Exhibit 5.2)
24.1* -- Power of Attorney
99.1 -- Second Amended and Restated 1995 Equity Incentive Plan
99.2 -- Amended and Restated Stock Option Plan for Non-Employee Directors
99.3 -- Form of Nonqualified Stock Option Agreement for 1995 Equity Incentive Plan
99.4 -- Form of Nonqualified Stock Option Agreement for Non-Employee Directors Stock Option Plan
- ----------------------
*Previously filed
</TABLE>
<PAGE> 1
EXHIBIT 5.3
[JENKENS & GILCHRIST LETTERHEAD]
August 11, 1998
FelCor Lodging Trust Incorporated
545 E. John Carpenter Frwy., Suite 1300
Irving, Texas 75062
Re: FelCor Lodging Trust Incorporated
Post-Effective Amendment No. 1 on Form S-3 to Form S-4
Ladies and Gentlemen:
This firm has acted as counsel to FelCor Lodging Trust Incorporated
(formerly FelCor Suite Hotels, Inc.), a Maryland corporation (the "Company"), in
connection with the preparation of the Post-Effective Amendment No. 1 on Form
S-3 to Form S-4 Registration Statement (the "Registration Statement") to be
filed with the Securities and Exchange Commission on or about August 12, 1998,
under the Securities Act of 1933, as amended (the "Securities Act"), relating to
the offer and sale of up to 1,273,259 shares (the "Shares") of the Company's
common stock, par value $0.01 per share (the "Common Stock"), that may be issued
by the Company pursuant to outstanding options (the "Options") granted under the
terms of the Second Amended and Restated 1995 Equity Incentive Plan (the
"Incentive Plan") and the Stock Option Plan for Non- Employee Directors (the
"Non-Employee Director Plan") (together with the Incentive Plan, the "Plans"),
which Plans were originally adopted by Bristol Hotel Company ("Bristol"), which
was merged with and into the Company effective July 28, 1998 (the "Merger"),
whereupon the Company assumed Bristol's obligations under the Plans and Options
as a result of the Merger.
You have requested the opinion of this firm with respect to certain
legal aspects of the proposed offering. In connection therewith, this firm has
examined and relied upon the original, or copies identified to our satisfaction,
of (1) the Company's Articles of Amendment and Restatement, as amended and
supplemented; (2) the bylaws of the Company, as amended; (3) minutes and records
of the corporate proceedings of the Company with respect to the Merger, the
assumption of the Plans and Options, and related matters; (4) the Registration
Statement and exhibits thereto, including the Plans; and (5) such other
documents and instruments as this firm has deemed necessary for the expression
of these opinions. In making the foregoing examinations, this firm has assumed
the genuineness of all signatures and the authenticity of all documents
submitted to this firm as originals, and the conformity to original documents of
all documents submitted to this firm as certified or photostatic copies. As to
various questions of fact material to this opinion letter, and as to the content
and form of the Articles of Amendment and Restatement, the bylaws, minutes,
records, resolutions and other documents or writings of the Company, this firm
has relied, to the extent it deems reasonably appropriate, upon representations
or certificates of officers or directors of the Company and upon documents,
records and instruments furnished to this firm by the Company, without
independent check or verification of their accuracy.
<PAGE> 2
FelCor Lodging Trust Incorporated
August 11, 1998
Page 2
Based upon our examination, consideration of, and reliance on the
documents and other matters described above, this firm is of the opinion that:
(1) All corporate actions necessary to authorize the issuance by the
Company of the Shares upon the exercise of the Options have been duly and
validly taken; and
(2) Assuming (i) that all relevant corporate actions heretofore taken
by the Company remain in full force and effect and (ii) that the Shares are
issued, sold and delivered as contemplated by, the Registration Statement and in
accordance with the terms and conditions of the corporate authorization and the
Options and the Plans, such Shares will be duly authorized, validly issued,
fully paid and nonassessable shares of Common Stock of the Company.
The opinions expressed in this letter assume that (1) the Plans and the
Options were duly authorized and validly issued by Bristol, and (2) each
exercise price for the Options remains at not less than the par value per share
of the Common Stock.
This firm hereby consents (i) to the reference to us under the caption
"Legal Matters" in the Prospectus, which constitutes a part of the Registration
Statement referred to above, (ii) to the filing of this opinion letter as an
exhibit to the Registration Statement and (iii) to references to our firm
included in or made a part of the Registration Statement. In giving this
consent, this firm does not admit that it comes within the category of person
whose consent is required under Section 7 of the Securities Act or the Rules and
Regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
JENKENS & GILCHRIST,
a Professional Corporation
By: /s/ DARYL B. ROBERTSON
------------------------------
Daryl B. Robertson,
Authorized Signatory
DBR/em
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
FelCor Lodging Trust Incorporated
We consent to the incorporation by reference in Post-Effective
Amendment No. 1 on Form S-3 to Form S-4 to the registration statement of FelCor
Suite Hotels, Inc. on Form S-4 (File No. 333-50509) of our reports dated (i)
January 20, 1998, except for Note 14 as to which the date is February 17, 1998,
and our audits of the consolidated financial statements and financial statement
schedule of FelCor Suite Hotels, Inc. as of December 31, 1997 and 1996, and for
the years ended December 31, 1997 and 1996, and 1995, (ii) March 13, 1998, on
our audits of the consolidated financial statements of DJONT Operations, L.L.C.
as of December 31, 1997 and 1996, and for the years ended December 1, 1997, 1996
and 1995, (iii) July 25, 1997 on our audit of the combined financial statements
of the Sheraton Acquisition Hotels as of December 31, 1996 and the year then
ended, (iv) February 23, 1996 on our audits of the consolidated financial
statements of Bristol Hotel Company as of December 31, 1995 and for the eleven
months then ended and the combined financial statements of Harvey Hotel
Companies as of January 31, 1995 and for the one month then ended, which
reports are incorporated by reference herein. We also consent to the reference
to our firm under the caption "Experts".
/s/ PRICEWATERHOUSECOOPERS LLP
Dallas, Texas
August 11, 1998
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated February 6, 1998 (except with respect to the matter discussed in Note 20
as to which the date is March 25, 1998), on the consolidated financial
statements of the Bristol Hotel Company and to the use of our report dated
February 6, 1998 (except with respect to the matter discussed in Note 18 as to
which the date is March 25, 1998), on the consolidated financial statements of
the Bristol Hotel Asset Company (and to all references to our Firm),
incorporated by reference into the Post-Effective Amendment No. 1 on Form S-3
to Form S-4 for FelCor Lodging Trust Incorporated.
/s/ ARTHUR ANDERSEN LLP
Dallas, Texas,
August 11, 1998
<PAGE> 1
EXHIBIT 99.1
FELCOR LODGING TRUST INCORPORATED
AMENDED AND RESTATED
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The Bristol Hotel Company Stock Option Plan For Non-Employee Directors
has been amended and restated in its entirety effective July 27, 1998 by the
Committee, acting in accordance with Section 10, in order to reflect and to take
into account the Spin-Off and the Merger, as well as the resulting conversion of
Bristol Hotel Company Common Stock into BHR Common Stock and Common Stock issued
by the Corporation, and further to reflect the ongoing relationship between BHR
and the Corporation which has resulted in the decision by the Corporation to
continue this Plan for the benefit of those Eligible Directors of BHR and the
Corporation whose motivation and performance will benefit the Corporation.
1. PURPOSES. The purposes of this Plan are to encourage outside
directors of BHR and the Corporation to own Common Shares and thereby to align
their interests more closely with the interests of the other stockholders of the
Company, to encourage the highest level of director performance by providing
such directors with a direct interest in the Company's attainment of its
financial goals, and to provide financial incentives that will help attract and
retain the most qualified outside directors.
2. DEFINITIONS. As used in this Plan:
"ANNUAL OPTION" means an Option Right granted to an Eligible
Director pursuant to Section 5 of this Plan.
"BHR" means Bristol Hotels & Resorts, a Delaware corporation
formerly known as Bristol Hotels & Resorts, Inc.
"BHR COMMON STOCK" means shares of common stock, par value $0.01
per share, of BHR.
"BOARD" means the Board of Directors of the Corporation.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
"COMMITTEE" means the Committee described in Section 9 of this
Plan.
"COMMON SHARES" means, collectively, the FelCor Common Stock and
the BHR Common Stock and any security into which Common Shares may be converted
by reason of any transaction or event of the type referred to in Section 7 of
this Plan, except that where a reference
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
<PAGE> 2
to Common Shares is limited to FelCor Common Stock, or BHR Common Stock,
individually, reference shall be made to the appropriate shares.
"COMPANY" means, individually and collectively as the context
requires, whichever of the Corporation (or its Subsidiary), or BHR (or its
Subsidiary), on whose board of directors the Eligible Director of reference
serves at the time of reference.
"CORPORATION" means FelCor Lodging Trust Incorporated (f.k.a.
FelCor Suite Hotels, Inc.) a Maryland corporation.
"DATE OF GRANT" means the date on which an Initial Option or an
Annual Option is granted as provided in Sections 4(a) and 5(a), respectively.
"DIRECTOR" means a member of the Board.
"DISABILITY" means the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 12 months. An
Optionee shall not be considered to be subject to a Disability until he or she
furnishes a certification from a practicing physician in good standing to the
effect that such Optionee meets the criteria described in this definition.
"EFFECTIVE DATE" means the date the Plan is approved by the
Company's stockholders.
"ELIGIBLE DIRECTOR" means a Director who does not beneficially own
(within the meaning of Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) 10% or more of the outstanding Common Shares
and who is not an employee of the Company or any person or entity which
beneficially owns 10% or more of the outstanding Common Shares or an affiliate
thereof. For purposes of this Plan, an employee is an individual whose wages are
subject to the withholding of federal income tax under Sections 3401 and 3402 of
the Code.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time.
"FELCOR COMMON STOCK" means shares of the common stock, par value
$0.01 per share, of the Corporation.
"FIRST ANNUAL MEETING" means the first annual meeting of
stockholders of the Company following the Date of Grant of an Option Right.
"INITIAL OPTION" means an Option Right granted to an Eligible
Director pursuant to Section 4 of this Plan.
"MARKET VALUE" as of a given date means the greater of (i) the
stated par value of the Common Shares or (ii) the closing sale price of the
Common Shares as reported on the
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Composite Tape of the New York Stock Exchange (the "NYSE") on such date. If
there are no Common Share transactions on such date, the Market Value per Share
shall be determined as of the immediately preceding date on which there were
Common Share transactions.
"MERGER" means the merger of Bristol Hotel Company with and into
the Corporation effective at 9:00 a.m. Eastern time on July 28, 1998.
"OPTIONEE" means a Director who has been granted an Option Right
under the Plan.
"OPTION PRICE" means the purchase price payable upon the exercise
of an Option Right.
"OPTION RIGHT" means the right to purchase Common Shares from the
Company upon the exercise of an Initial Option or an Annual Option granted
pursuant to this Plan. Option Rights may be evidenced by written agreements,
notifications or other documents containing terms and conditions not
inconsistent with this Plan.
"PLAN" means the Bristol Hotel Company Stock Option Plan for
Non-Employee Directors, as the same may be amended from time to time.
"RULE 16B-3" means Rule 16b-3 or any successor rule to the same
effect, as promulgated and amended from time to time by the Securities and
Exchange Commission under the Exchange Act.
"SPIN-OFF" means the distribution by Bristol Hotel Company to its
stockholders of all of the outstanding shares of BHR Common Stock effective at
4:30 p.m. Eastern time on July 27, 1998.
"TERMINATION OF SERVICE" means the time at which the Optionee
ceases to serve as a Director for any reason, with or without cause, which
includes termination by resignation, removal, death or retirement.
"VOTING STOCK" has the meaning set forth in Section 13(a).
3. SHARES AVAILABLE UNDER THE PLAN. Subject to Sections 3(b) and 7
of this Plan, the number of Common Shares issued upon exercise of Option Rights,
plus the number of Common Shares covered by outstanding Option Rights, shall not
in the aggregate exceed 500 Common Shares (without limiting the generality of
Section 7, as adjusted to reflect adjustments under Section 7 prior to the
Spin-Off and Merger, and to reflect the Spin-Off and Merger), which may be
Common Shares of original issuance or Common Shares held in treasury or a
combination thereof. In connection with the issuance of Common Shares pursuant
to the Plan, the Company may repurchase Common Shares in the open market or
otherwise.
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(b) For the purposes of this Section 3, Common Shares subject to
an Option Right that has been canceled or terminated prior to exercise shall
again be available for the grant of Option Rights to the extent of such
cancellation or termination.
4. INITIAL OPTIONS. With respect to each person who first becomes
an Eligible Director of the Company after the Effective Date of this Plan, an
option to purchase 25 Common Shares shall be automatically granted to such
Eligible Director as of the date such person first becomes an Eligible Director.
No Option Rights shall be granted under this Section 4(a) after the date of the
Spin-Off.
(b) (i) Subject to subsection (ii) of this Section 4(b) and
Section 13 of this Plan, each Initial Option, until terminated as
provided in Section 6(c), shall become exercisable to the extent
of 34% of the Common Shares subject thereto after the Optionee has
continuously served as a Director through the date of the First
Annual Meeting, and to the extent of an additional 33% of the
Common Shares subject to the Initial Option after the Optionee has
continuously served as a Director through the date of the annual
stockholders' meeting immediately succeeding the First Annual
Meeting and to the extent of an additional 33% of the Common
Shares subject to the Initial Option after the Optionee has
continuously served as a Director through the date of the second
annual stockholders' meeting succeeding the First Annual meeting.
(ii) If an Optionee ceases to be a Director by reason of
death or Disability, all Initial Options held by such Optionee
that would have otherwise become exercisable had such Director
continuously served as a Director through the date of the
Company's annual meeting of stockholders immediately following
such death or Disability shall, notwithstanding subsection (i) of
this Section 4(b), become immediately exercisable in full.
5. ANNUAL OPTIONS. On the date of each annual meeting of the
Company's stockholders (beginning with the annual meeting of stockholders in
1996), an option to purchase 25 Common Shares shall be automatically granted as
such date to each Eligible Director who is elected a Director at such meeting or
whose term of office as a Director continues after such meeting. No Option
Rights shall be granted under this Section 5(a) on or after the date of the
Spin-Off.
(b) (i) Subject to subsection (ii) of this Section 5(b) and
Section 13 of this Plan, each Annual Option, until terminated as
provided in Section 6(c), shall become exercisable to the extent
of 100% of the Common Shares subject thereto after the Optionee
has continuously served as a Director until the date of the First
Annual Meeting.
(ii) If an Optionee ceases to be a Director by reason of
death or Disability, all Annual Options held by such Optionee
shall, notwithstanding subsection (i) of this Section 5(b), become
immediately exercisable in full.
6. TERMS OF OPTION RIGHTS.
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(a) The Option Price per share of each Option Right shall be
equal to the Market Value per Common Share on the Date of Grant.
(b) To the extent exercisable, each Option Right shall be
exercisable in whole or in part from time to time by written notice to the
Company at its principal executive office specifying the number of Common Shares
with respect to which the Option Right is being exercised and payment of the
Option Price for such Common Shares in accordance with Section 6(d) of the Plan.
(c) Each Option Right shall terminate on the earliest to occur
of the following dates:
(i) Three months following the effective date of the
Optionee's Termination of Service, if such Termination of Service
results other than from the Optionee's death or Disability;
(ii) One year following the effective date of the Optionee's
Termination of Service, if such Termination of Service results
from the Optionee's death or Disability; or
(iii) Five years from the Date of Grant.
(d) The Option Price shall be payable (a) in cash or by check
acceptable to the Company whose Common Shares are being acquired, and delivered
(i) in the case of Option Rights with respect to Common Shares which are FelCor
Common Stock, to the Corporation, and (ii) in the case of Option Rights with
respect to Common Shares which are BHR Common Stock, to BHR, (b) by transfer to
the Company whose Common Shares are being acquired, Common Shares (iii) in the
case of an Option Right with respect to Common Shares which are FelCor Common
Stock , of FelCor Common Stock, and (iv) in the case of an Option Right with
respect to Common Shares which are BHR Common Stock , of BHR Common Stock, in
each case which have been owned by the Optionee for more than six months prior
to the date of exercise and which have a Market Value on the date of exercise
equal to the Option Price, or (c) by a combination of such methods of payment.
The requirement of payment in cash shall be deemed satisfied if the Optionee
shall have made arrangements satisfactory to the Company of reference with a
broker who is a member of the National Association of Securities Dealers, Inc.
to sell on the exercise date a sufficient number of Common Shares being
purchased so that the net proceeds of the sale transaction will at least equal
the Option Price of the Common Shares being purchased, and pursuant to which the
broker undertakes to deliver the full Option Price of the Common Shares being
purchased to the Company of reference not later than the date on which the sale
transaction will settle in the ordinary course of business.
(e) No Optionee shall have any rights as a stockholder with
respect to Common Shares subject to an Option Right until a certificate or
certificates representing such Common Shares has been issued.
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<PAGE> 6
(f) No Option Right shall be transferable other than by will or
the laws of descent and distribution. During an Optionee's lifetime, Option
Rights held by such Optionee shall be exercisable only by the Optionee or, in
the event of the Optionee's incapacity, including incapacity arising from a
Disability, by the Optionee's guardian or legal representative acting in a
fiduciary capacity.
(g) Option Rights granted pursuant to this Plan shall be options
that are not intended to qualify under any particular provision of the Code.
7. ADJUSTMENTS. The Committee shall make or provide for such
adjustments in the number of Common Shares covered by outstanding Option Rights,
the Option Prices per Common Share applicable to any such Option Rights, and the
kind of shares (including shares of another issuer) covered thereby, as the
Committee shall in good faith determine to be equitably required in order to
prevent dilution or expansion of the rights of Optionees that otherwise would
result from (a) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, or (b)
any merger, consolidation, spin-off, spin-out, split-off, split-up,
reorganization, partial or complete liquidation or other distribution of assets,
issuance of warrants or other rights to purchase securities or any other
corporate transaction or event having an effect similar to any of the foregoing.
The Committee shall also make or provide for such adjustments in the maximum
number of Common Shares specified in Section 3(a) of this Plan and the number of
Common Shares specified in Sections 4(a) and 5(a) of this Plan as the Committee
may in good faith determine to be appropriate in order to reflect any
transaction or event described in this Section 7.
8. FRACTIONAL SHARES. Neither the Corporation nor BHR shall be
required to issue fractional Common Shares pursuant to this Plan, provided they
settle such fractional Common Shares in cash.
9. ADMINISTRATION OF THE PLAN. (a) Except as provided in
subsection 9(c), this Plan shall be administered by a committee of the Board,
which shall be composed of not less than two Directors ("Committee").
Notwithstanding the foregoing, grants of Option Rights under this Plan shall be
automatic as described in Sections 4 and 5, and the Committee shall have no
authority, discretion or power to determine the terms of Option Rights to be
granted pursuant to the Plan, the number of Common Shares to be issued
thereunder or the time at which such Option Rights are to be granted, or the
duration and nature of Option Rights, except in the sense of administering the
Plan in accordance with the provisions of the Plan.
(b) Except as provided in subsection 9(c) and subject to
subsection 9(a), the interpretation and construction by the Committee of any
provision of this Plan or any agreement, notification or document evidencing the
grant of Option Rights, and any determination by the Committee pursuant to any
provision of this Plan or any such agreement, notification or document, shall be
final and conclusive. No member of the Committee shall be liable for any such
action taken or determination made in good faith.
(c) Notwithstanding any provision of the Plan to the contrary, all
references in the preceding subsection 9(a) and (b) to the Board and the
Committee shall be deemed references to the
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<PAGE> 7
board of directors, and the committee, respectively of BHR to the extent, as
reasonably determined by the Committee, such provisions shall relate to Option
Rights outstanding on the date of the Merger with respect to BHR Common Stock of
(i) Eligible Directors serving on the board of directors of BHR at the time of
reference, or (ii) former Eligible Directors of BHR (or Bristol Hotel Company)
who have not served on the Board of the Corporation; provided, however, that
such authority may not be exercised in a manner which the Committee reasonably
determines to be contrary to the terms of the Plan or of the Option Right(s) of
reference.
10. AMENDMENTS AND OTHER MATTERS. (a) Except as provided in
subsection 9(c), this Plan may be terminated, and from time to time amended, by
the Board;; provided, however, that except as provided in Section 7, no such
amendment shall (i) increase the number of Common Shares specified in Section
3(a) hereof, materially modify the definition of "Eligible Director" or
otherwise cause this Plan or any grant of Option Rights to cease to satisfy any
applicable condition of Rule 16b-3, without further approval of the stockholders
of the Corporation, (ii) cause any Optionee to fail to qualify as a
"disinterested person" within the meaning of Rule 16b-3, or (iii) amend, or
otherwise directly or indirectly limit the scope of, subsections 9(b) and (c)
without the express consent of board of directors, or the compensation
committee, of BHR; provided further that Plan provisions relating to the terms
of Option Rights and the timing of grants of Option Rights shall not be amended
more than once every six months, other than to comport with changes in the Code,
the Employment Retirement Income Security Act, or the rules promulgated
thereunder. No amendment or termination of the Plan shall adversely affect any
outstanding Option Right without the consent of the Optionee.
(b) Any grant of Option Rights pursuant to an amendment to this
Plan shall be null and void if it is subsequently determined that (i)
stockholder approval of such amendment was required in order for this Plan to
continue to satisfy the applicable conditions of Rule 16b-3, or (ii) such grant
or amendment disqualified any Optionee as a "disinterested person" within the
meaning of Rule 16b-3.
11. NO ADDITIONAL RIGHTS. Nothing contained in this Plan or in any
award granted under this Plan shall interfere with or limit in any way the right
of the stockholders of the Company to remove any Director from the Board
pursuant to state law or the Certificate of Incorporation or Bylaws of the
Company, nor confer upon any Director any right to continue in the service of
the Company.
12. SECURITIES LAW MATTERS. (a) The Company may require any
Optionee, as a condition of receiving Option Rights, to give written assurances
in substance and form satisfactory to the Company and its counsel to the effect
that such person is acquiring the Common Shares subject to the Option Rights for
his own account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and applicable state
securities laws.
(b) Each award of Option Rights shall be subject to the
requirement that, if at any time counsel to the Company shall determine that the
listing, registration or qualification of
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<PAGE> 8
the Common Shares subject to such Option Rights upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
or regulatory body, is necessary as a condition of, or in connection with, the
issuance of shares thereunder, such grant of Option Rights may not be accepted
or exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained on
conditions acceptable to such counsel. Nothing herein shall be deemed to require
the Company to apply for or to obtain such listing, registration or
qualification.
(c) To the extent necessary for the grant of an Option Right, its
exercise or the sale of Common Shares acquired thereunder to be exempt from
Section 16(b) of the Exchange Act, such Option Right shall be held six months
from the Date of Grant, or at least six months shall elapse from the Date of
Grant to the date of disposition of the Common Shares acquired upon exercise of
such Option Right.
13. TERMINATION OF THE PLAN. No further Option Rights shall be
granted under this Plan after the passage of ten years from the Effective Date.
14. OPTION AMENDMENTS TO REFLECT SPIN-OFF AND MERGER. (a)
Effective on the date of the Spin-Off each then outstanding Option Right will be
deemed to have been amended to the extent necessary, in the sole judgment of the
Committee, so as to redenominate such Option Right into two Option Rights (each
of which are continuations of such Option Right), one to acquire Common Stock of
Bristol Hotel Company (the Corporation on such date), and the other to acquire
BHR Common Stock, in each case at a price, and in an amount, set forth in the
documents relating to the Spin-Off and otherwise in accordance with the
provisions of Section 7.
(b) Effective on the date of the Merger, each then outstanding
Option Right will be amended in writing, to the extent deemed necessary in the
sole discretion of the Committee, (i) to reflect the matters described in (a)
above, (ii) to reflect the right to acquire FelCor Common Stock in lieu of the
common stock of Bristol Hotel Company at a price, and in an amount, set forth in
the documents evidencing the Merger and otherwise in accordance with the
provisions of Section 7, and (iii) to reflect other matters affected by the
amendment and restatement of this Plan and the requirements set forth in the
documents relating to the Spin-Off and Merger.
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EXHIBIT 99.2
FELCOR LODGING TRUST INCORPORATED
SECOND AMENDED AND RESTATED
1995 EQUITY INCENTIVE PLAN
The Bristol Hotel Company Amended and Restated 1995 Equity Incentive
Plan has been amended and restated in its entirety effective July 27, 1998 by
the Committee, acting in accordance with Section 15, in order to reflect and to
take into account the Spin-Off and the Merger, as well as the resulting
conversion of Bristol Hotel Company Common Stock into BHR Common Stock and
Common Stock issued by the Corporation, and further to reflect the ongoing
relationship between BHR and the Corporation which has resulted in the decision
by the Corporation to continue this Plan for the benefit of those employees of
BHR, the Corporation and Subsidiaries whose motivation and performance will
benefit the Corporation.
1. PURPOSE. The purpose of this Plan is to attract and retain
qualified officers and other key employees of the Corporation, BHR, and
Subsidiaries, and to provide such persons with appropriate incentives.
2. DEFINITIONS. As used in this Plan,
"APPRECIATION RIGHT" means a right granted pursuant to Section 5 of
this Plan, including a Free-standing Appreciation Right and a Tandem
Appreciation Right.
"BASE PRICE" means the price to be used as the basis for determining
the Spread upon the exercise of a Free-standing Appreciation Right.
"BHR" means Bristol Hotels & Resorts, a Delaware corporation formerly
known as Bristol Hotels & Resorts, Inc.
"BHR COMMON STOCK" means shares of common stock, par value $0.01 per
share, of BHR.
"BOARD" means the Board of Directors of the Corporation.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COMMITTEE" means the Compensation Committee of the Board of
Directors, as described in Section 14(a) of this Plan, or, in the absence of a
Compensation Committee, the full Board.
"COMMON SHARES" means, collectively, the FelCor Common Stock and the
BHR Common Stock and any security into which Common Shares may be converted by
reason of any transaction or event of the type referred to in Section 10 of
this Plan, except that where a reference to Common Shares is limited to FelCor
Common Stock, or BHR Common Stock, individually, reference shall be made to the
appropriate shares.
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
<PAGE> 2
"CORPORATION" means FelCor Lodging Trust Incorporated (f.k.a. FelCor
Suite Hotels, Inc.), a Maryland corporation.
"DATE OF GRANT" means the date specified by the Committee on which a
grant of Option Rights, Appreciation Rights or Performance Shares or
Performance Units or a grant or sale of Restricted Shares or Deferred Shares
shall become effective, which shall not be earlier than the date on which the
Committee takes action with respect thereto.
"DEFERRAL PERIOD" means the period of time during which Deferred
Shares are subject to deferral limitations under Section 7 of this Plan.
"DEFERRED SHARES" means an award pursuant to Section 7 of this Plan of
the right to receive Common Shares at the end of a specified Deferral Period.
"EMPLOYER" means, individually and collectively as the context
requires, whichever of the Corporation (or its Subsidiary), or BHR (or its
Subsidiary), employs the Participant of reference at the time of reference.
"FELCOR COMMON STOCK" means shares of the common stock, par value
$0.01 per share, of the Corporation.
"FREE-STANDING APPRECIATION RIGHT" means an Appreciation Right granted
pursuant to Section 5 of this Plan that is not granted in tandem with an Option
Right or similar right.
"INCENTIVE STOCK OPTION" means an Option Right that is intended to
qualify as an "incentive stock option" under Section 422 of the Code or any
successor provision thereto.
"MANAGEMENT OBJECTIVES" means the achievement of a performance
objective or objectives established pursuant to this Plan for Participants who
have received grants of Performance Shares or Performance Units or, when so
determined by the Committee, Restricted Shares, Deferred Shares, Option Rights
or Appreciation Rights. Management Objectives may be described in terms of
Employer-wide objectives or objectives that are related to the performance of
the individual Participant or the Subsidiary, division, department or function
within the Employer or Subsidiary in which the Participant is employed. The
Management Objectives applicable to any award to a Participant who is, or is
determined by the Committee to be likely to become, a "covered employee" within
the meaning of Section 162(m) of the Code (or any successor provision) shall be
limited to specified levels of or growth in:
(i) return on invested capital;
(ii) return on equity;
(iii) return on operating assets;
(iv) earnings per share; and/or
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(v) market value per share.
Except in the case of such a covered employee, if the Committee determines that
a change in the business, operations, corporate structure or capital structure
of the Employer, or the manner in which it conducts its business, or other
events or circumstances render the Management Objectives unsuitable, the
Committee may modify such Management Objectives or the related minimum
acceptable level of achievement, in whole or in part, as the Committee deems
appropriate and equitable.
"MARKET VALUE PER SHARE" means the fair market value of the Common
Shares as determined by the Committee from time to time.
"MERGER" means the merger of Bristol Hotel Company with and into the
Corporation effective at 9:00 a.m. Eastern time on July 28, 1998.
"NONQUALIFIED OPTION" means an Option Right that is not intended to
qualify as a Tax-qualified Option.
"OPTIONEE" means the person so designated in an agreement evidencing
an outstanding Option Right.
"OPTION PRICE" means the purchase price payable upon the exercise of
an Option Right.
"OPTION RIGHT" means the right to purchase Common Shares upon the
exercise of a Nonqualified Option or a Tax-qualified Option granted pursuant to
Section 4 of this Plan.
"PARTICIPANT" means a person who is selected by the Committee to
receive benefits under this Plan and (i) is at that time an officer of the
Employer, including without limitation an officer who may also be a member of
the board of directors of the Employer, or other key employee of or consultant
to the Employer or any Subsidiary, or (ii) has agreed to commence serving in
any such capacity.
"PERFORMANCE PERIOD" means, in respect of a Performance Share or
Performance Unit, a period of time established pursuant to Section 8 of this
Plan within which the Management Objectives relating thereto are to be
achieved.
"PERFORMANCE SHARE" means a bookkeeping entry that records the
equivalent of one Common Share awarded pursuant to Section 8 of this Plan.
"PERFORMANCE UNIT" means a bookkeeping entry that records a unit
equivalent of $1.00 awarded pursuant to Section 8 of this Plan.
"RELOAD OPTION RIGHTS" means additional Option Rights automatically
granted to an Optionee upon the exercise of Option Rights pursuant to Section
4(f) of this Plan.
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"RESTRICTED SHARES" means Common Shares granted or sold pursuant to
Section 6 of this Plan as to which neither the substantial risk of forfeiture
nor the restrictions on transfer referred to in Section 6 hereof has expired.
"RULE 16B-3" means Rule 16b-3, as promulgated and amended from time to
time by the Securities and Exchange Commission under the Securities Exchange
Act of 1934, or any successor rule to the same effect.
"SPIN-OFF" means the distribution by Bristol Hotel Company to its
stockholders of all of the shares of BHR Common Stock effective at 4:30 p.m.
Eastern time on July 27, 1998.
"SPREAD" means, in the case of a Free-standing Appreciation Right, the
amount by which the Market Value per Share on the date when the Appreciation
Right is exercised exceeds the Base Price specified therein or, in the case of
a Tandem Appreciation Right, the amount by which the Market Value per Share on
the date when the Appreciation Right is exercised exceeds the Option Price
specified in the related Option Right.
"SUBSIDIARY" means a corporation, partnership, joint venture,
unincorporated association or other entity in which the Corporation or BHR has
a material direct or indirect ownership or other equity interest.
"TANDEM APPRECIATION RIGHT" means an Appreciation Right granted
pursuant to Section 5 of this Plan that is granted in tandem with an Option
Right or any similar right granted under any other plan of the Corporation.
"TAX-QUALIFIED OPTION" means an Option Right that is intended to
qualify under particular provisions of the Code, including without limitation
an Incentive Stock Option.
3. SHARES AND PERFORMANCE UNITS AVAILABLE UNDER THE PLAN. (a)
Subject to adjustment as provided in Section 10 of this Plan, the number of
Common Shares comprising FelCor Common Stock, and BHR Common Stock,
respectively, which may be (i) issued or transferred upon the exercise of
Option Rights or Appreciation Rights, (ii) awarded as Restricted Shares and
released from substantial risk of forfeiture thereof or Deferred Shares or
(iii) issued or transferred in payment of Performance Shares or Performance
Units that have been earned, shall not in the aggregate exceed 3,130,00 Common
Shares (without limiting the generality of Section 10, as adjusted to reflect
the Spin-Off and Merger), which may be Common Shares of original issuance or
Common Shares held in treasury or a combination thereof; provided, however,
that, notwithstanding any provision hereof to the contrary, no Restricted
Shares shall be granted. For the purposes of this Section 3(a):
(i) The payment of the Option Price with respect to
Common Shares which are FelCor Common Stock shall be made to the
Corporation.
(ii) The payment of the Option Price with respect to
Common Shares which are BHR Common Stock shall be made to BHR.
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(iii) Upon payment in cash of the benefit provided by any
award granted under this Plan, any Common Shares that were covered by
that award shall again be available for issuance or transfer
hereunder.
(iv) Upon the full or partial payment of any Option Price
by the transfer to the Corporation (with respect to FelCor Common
Stock) or to BHR (with respect to BHR Common Stock) of its respective
Common Shares or upon satisfaction of tax withholding obligations in
connection with any such exercise or any other payment made or benefit
realized under this Plan by the transfer or relinquishment of Common
Shares, there shall be deemed to have been issued or transferred under
this Plan only the net number of Common Shares actually issued or
transferred less the number of Common Shares so transferred or
relinquished.
(b) Notwithstanding anything in Section 3(a) hereof, or elsewhere
in this Plan, to the contrary, the aggregate number of Common Shares actually
issued or transferred upon the exercise of the Incentive Stock Options shall
not exceed the total number of Common Shares first specified in Section 3(a)
hereof.
(c) The number of Performance Units that may be granted under this
Plan shall not in the aggregate exceed the number of Common Shares first
specified in Section 3(a) hereof. Performance Units that are granted under
this Plan and are not paid in Common Shares or are not earned by the
Participant at the end of the Performance Period shall be available for future
grants of Performance Units hereunder.
(d) Notwithstanding any other provision of this Plan to the
contrary, in no event shall any Participant in any calendar year receive awards
of Performance Shares and Performance Units having an aggregate value as of
their respective Dates of Grant in excess of $250,000.
(e) Notwithstanding any other provision of this Plan to the
contrary, no Participant shall be granted Option Rights and Appreciation
Rights, in the aggregate, for more than 7.69% of Common Shares of each type
first specified in Section 3(a) hereof.
4. OPTION RIGHTS. The Committee may from time to time authorize
grants to Participants of options to purchase Common Shares upon such terms and
conditions as the Committee may determine in accordance with the following
provisions:
(a) Each grant shall specify the number of Common Shares
to which it pertains.
(b) Each grant shall specify an Option Price per Common
Share, which may be equal to or greater or less than the Market Value
per Share on the Date of Grant.
(c) Each grant shall specify the form of consideration to
be paid in satisfaction of the Option Price and the manner of payment
of such consideration, which may include (i) cash in the form of
currency or check or other cash equivalent acceptable to the
Corporation, (ii) nonforfeitable, unrestricted Common Shares, which
are already owned by the Optionee, (iii) any other legal consideration
that the Committee may deem appropriate, including without
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limitation any form of consideration authorized under Section 4(d)
below, on such basis as the Committee may determine in accordance with
this Plan and (iv) any combination of the foregoing.
(d) Any grant of a Nonqualified Option may provide that
payment of the Option Price may also be made in whole or in part in
the form of Restricted Shares or other Common Shares that are subject
to risk of forfeiture or restrictions on transfer. Unless otherwise
determined by the Committee on or after the Date of Grant, whenever
any Option Price is paid in whole or in part by means of any of the
forms of consideration specified in this Section 4(d), the Common
Shares received by the Optionee upon the exercise of the Nonqualified
Option shall be subject to the same risks of forfeiture or
restrictions on transfer as those that applied to the consideration
surrendered by the Optionee; provided, however, that such risks of
forfeiture and restrictions on transfer shall apply only to the same
number of Common Shares received by the Optionee as applied to the
forfeitable or restricted Common Shares surrendered by the Optionee.
(e) Any grant may, if there is then a public market for
the Common Shares, provide for deferred payment of the Option Price
from the proceeds of sale through a broker of some or all of the
Common Shares to which the exercise relates.
(f) Any grant may provide for the automatic grant to the
Optionee of Reload Option Rights upon the exercise of Option Rights,
including Reload Option Rights, for Common Shares or any other noncash
consideration authorized under Sections 4(c) and (d) above; provided,
however, that the term of any Reload Option Right shall not extend
beyond the term of the Option Right originally exercised.
(g) Successive grants may be made to the same Optionee
regardless of whether any Option Rights previously granted to the
Optionee remain unexercised.
(h) Each grant shall specify the period or periods of
continuous employment, or continuous engagement of the consulting
services, of the Optionee by the Employer that are necessary before
the Option Rights or installments thereof shall become exercisable,
and any grant may provide for the earlier exercise of the Option
Rights in the event of a change in control of the Corporation or other
similar transaction or event.
(i) Option Rights granted pursuant to this Section 4 may
be Nonqualified Options or Tax-qualified Options or combinations
thereof.
(j) Any grant of an Option Right may provide for the
payment to the Optionee of dividend equivalents thereon in cash or
Common Shares on a current, deferred or contingent basis, or the
Committee may provide that any dividend equivalents shall be credited
against the Option Price.
(k) No Option Right granted pursuant to this Section 4
may be exercised more than 10 years from the Date of Grant.
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(l) Each grant shall be evidenced by one or more
agreement(s), which shall be executed on behalf of the Corporation, or
by BHR, by any officer thereof and delivered to and accepted by the
Optionee and shall contain such terms and provisions as the Committee
may determine consistent with this Plan.
5. APPRECIATION RIGHTS. The Committee may also authorize grants
to Participants of Appreciation Rights. An Appreciation Right shall be a right
of the Participant to receive from the Corporation an amount, which shall be
determined by the Committee and shall be expressed as a percentage (not
exceeding 100%) of the Spread at the time of the exercise of an Appreciation
Right. Any grant of Appreciation Rights under this Plan shall be upon such
terms and conditions as the Committee may determine in accordance with the
following provisions:
(a) Any grant may specify that the amount payable upon
the exercise of an Appreciation Right may be paid by the Corporation
in cash, Common Shares or any combination thereof and may (i) either
grant to the Participant or reserve to the Committee the right to
elect among those alternatives or (ii) preclude the right of the
Participant to receive and the Corporation to issue Common Shares or
other equity securities in lieu of cash.
(b) Any grant may specify that the amount payable upon
the exercise of an Appreciation Right shall not exceed a maximum
specified by the Committee on the Date of Grant.
(c) Any grant may specify (i) a waiting period or periods
before Appreciation Rights shall become exercisable and (ii)
permissible dates or periods on or during which Appreciation Rights
shall be exercisable.
(d) Any grant may specify that an Appreciation Right may
be exercised only in the event of a change in control of the
Corporation or other similar transaction or event.
(e) Any grant may provide for the payment to the
Participant of dividend equivalents thereon in cash or Common Shares
on a current, deferred or contingent basis.
(f) Each grant shall be evidenced by an agreement, which
shall be executed on behalf of the Corporation by any officer thereof
and delivered to and accepted by the Optionee and shall describe the
subject Appreciation Rights, identify any related Option Rights, state
that the Appreciation Rights are subject to all of the terms and
conditions of this Plan and contain such other terms and provisions as
the Committee may determine consistent with this Plan.
(g) Regarding Tandem Appreciation Rights only: Each
grant shall provide that a Tandem Appreciation Right may be exercised
only (i) at a time when the related Option Right (or any similar right
granted under any other plan of the Corporation) is also exercisable
and the Spread is positive and (ii) by surrender of the related Option
Right (or such other right) for cancellation.
(h) Regarding Free-standing Appreciation Rights only:
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(i) Each grant shall specify in respect of each
Free-standing Appreciation Right a Base Price per Common
Share, which shall be equal to or greater than the Market
Value per Share on the Date of Grant;
(ii) Successive grants may be made to the same
Participant regardless of whether any Free-standing
Appreciation Rights previously granted to the Participant
remain unexercised;
(iii) Each grant shall specify the period or
periods of continuous employment, or continuous engagement of
the consulting services, of the Participant by the Corporation
or any Subsidiary that are necessary before the Free-standing
Appreciation Rights or installments thereof shall become
exercisable; and any grant may provide for the earlier
exercise of the Free-standing Appreciation Rights in the event
of a change in control of the Corporation or other similar
transaction or event; and
(iv) No Free-standing Appreciation Right granted
under this Plan may be exercised more than 10 years from the
Date of Grant.
6. RESTRICTED SHARES. The Committee may also authorize grants or
sales to Participants of Restricted Shares upon such terms and conditions as
the Committee may determine in accordance with the following provisions:
(a) Each grant or sale shall constitute an immediate
transfer of the ownership of Common Shares to the Participant in
consideration of the performance of services, entitling such
Participant to dividend, voting and other ownership rights, subject to
the substantial risk of forfeiture and restrictions on transfer
hereinafter referred to.
(b) Each grant or sale may be made without additional
consideration from the Participant or in consideration of a payment by
the Participant that is less than the Market Value per Share on the
Date of Grant.
(c) Each grant or sale shall provide that the Restricted
Shares covered thereby shall be subject to a "substantial risk of
forfeiture" within the meaning of Section 83 of the Code for a period
to be determined by the Committee on the Date of Grant, and any grant
or sale may provide for the earlier termination of such period in the
event of a change in control of the Corporation or other similar
transaction or event.
(d) Each grant or sale shall provide that, during the
period for which such substantial risk of forfeiture is to continue,
the transferability of the Restricted Shares shall be prohibited or
restricted in the manner and to the extent prescribed by the Committee
on the Date of Grant. Such restrictions may include without
limitation rights of repurchase or first refusal in the Corporation or
provisions subjecting the Restricted Shares to a continuing
substantial risk of forfeiture in the hands of any transferee.
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(e) Any grant or sale may require that any or all
dividends or other distributions paid on the Restricted Shares during
the period of such restrictions be automatically sequestered and
reinvested on an immediate or deferred basis in additional Common
Shares, which may be subject to the same restrictions as the
underlying award or such other restrictions as the Committee may
determine.
(f) Each grant or sale shall be evidenced by an
agreement, which shall be executed on behalf of the Corporation by an
officer thereof and delivered to and accepted by the Participant and
shall contain such terms and provisions as the Committee may determine
consistent with this Plan. Unless otherwise directed by the
Committee, all certificates representing Restricted Shares, together
with a stock power that shall be endorsed in blank by the Participant
with respect to the Restricted Shares, shall be held in custody by the
Corporation until all restrictions thereon lapse.
7. DEFERRED SHARES. The Committee may also authorize grants or
sales of Deferred Shares to Participants upon such terms and conditions as the
Committee may determine in accordance with the following provisions:
(a) Each grant or sale shall constitute the agreement by
the Corporation to issue or transfer Common Shares to the Participant
in the future in consideration of the performance of services, subject
to the fulfillment during the Deferral Period of such conditions as
the Committee may specify.
(b) Each grant or sale may be made without additional
consideration from the Participant or in consideration of a payment by
the Participant that is less than the Market Value per Share on the
Date of Grant.
(c) Each grant or sale shall provide that the Deferred
Shares covered thereby shall be subject to a Deferral Period, which
shall be fixed by the Committee on the Date of Grant, and any grant or
sale may provide for the earlier termination of the Deferral Period in
the event of a change in control of the Corporation or other similar
transaction or event.
(d) During the Deferral Period, the Participant shall not
have any right to transfer any rights under the subject award, shall
not have any rights of ownership in the Deferred Shares and shall not
have any right to vote the Deferred Shares, but the Committee may on
or after the Date of Grant authorize the payment of dividend
equivalents on the Deferred Shares in cash or additional Common Shares
on a current, deferred or contingent basis.
(e) Each grant or sale shall be evidenced by an
agreement, which shall be executed on behalf of the Corporation by any
officer thereof and delivered to and accepted by the Participant and
shall contain such terms and provisions as the Committee may determine
consistent with this Plan.
8. PERFORMANCE SHARES AND PERFORMANCE UNITS. The Committee may
also authorize grants of Performance Shares and Performance Units, which shall
become payable to the Participant
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<PAGE> 10
upon the achievement of specified Management Objectives, upon such terms and
conditions as the Committee may determine in accordance with the following
provisions:
(a) Each grant shall specify the number of Performance
Shares or Performance Units to which it pertains, which may be subject
to adjustment to reflect changes in compensation or other factors.
(b) The Performance Period with respect to each
Performance Share or Performance Unit shall be determined by the
Committee on the Date of Grant and may be subject to earlier
termination in the event of a change in control of the Corporation or
other similar transaction or event.
(c) Each grant shall specify the Management Objectives
that are to be achieved by the Participant, which may be described in
terms of Corporation-wide objectives or objectives that are related to
the performance of the individual Participant or the Subsidiary,
division, department or function within the Corporation or Subsidiary
in which the Participant is employed or with respect to which the
Participant provides consulting services.
(d) Each grant shall specify in respect of the specified
Management Objectives a minimum acceptable level of achievement below
which no payment will be made and shall set forth a formula for
determining the amount of any payment to be made if performance is at
or above the minimum acceptable level but falls short of full
achievement of the specified Management Objectives.
(e) Each grant shall specify the time and manner of
payment of Performance Shares or Performance Units that shall have
been earned, and any grant may specify that any such amount may be
paid by the Corporation in cash, Common Shares or any combination
thereof and may either grant to the Participant or reserve to the
Committee the right to elect among those alternatives.
(f) Any grant of Performance Shares may specify that the
amount payable with respect thereto may not exceed a maximum specified
by the Committee on the Date of Grant. Any grant of Performance Units
may specify that the amount payable, or the number of Common Shares
issued, with respect thereto may not exceed maximums specified by the
Committee on the Date of Grant.
(g) On or after the Date of Grant of Performance Shares,
the Committee may provide for the payment to the Participant of
dividend equivalents thereon in cash or additional Common Shares on a
current, deferred or contingent basis.
(h) The Committee may adjust Management Objectives and
the related minimum acceptable level of achievement if, in the sole
judgment of the Committee, events or transactions have occurred after
the Date of Grant that are unrelated to the performance of the
Participant and result in distortion of the Management Objectives or
the related minimum acceptable level of achievement.
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(i) Each grant shall be evidence by an agreement, which
shall be executed on behalf of the Corporation by any officer thereof
and delivered to and accepted by the Participant and shall contain
such terms and provisions as the Committee may determine consistent
with this Plan.
9. TRANSFERABILITY. (a) No Option Right, Appreciation Right or
other derivative security (as that term is used in Rule 16b-3) granted under
this Plan may be transferred by a Participant except by will or the laws of
descent and distribution. Option Rights and Appreciation Rights granted under
this Plan may not be exercised during a Participant's lifetime except by the
Participant or, in the event of the Participant's legal incapacity, by his
guardian or legal representative acting in a fiduciary capacity on behalf of
the Participant under state law and court supervision. Notwithstanding the
foregoing, the Committee, in its sole discretion, may provide for the
transferability of particular awards under this Plan so long as such provisions
will not disqualify the exemption for other awards under Rule 16b-3 under the
Securities Exchange Act of 1934, if such Rule is then applicable to awards
under the Plan.
(b) Any grant made under this Plan may provide that all or any
part of the Common Shares that are to be issued or transferred by the
Corporation upon the exercise of Option Rights or Appreciation Rights or upon
the termination of the Deferral Period applicable to Deferred Shares or in
payment of Performance Shares or Performance Units, or are no longer subject to
the substantial risk of forfeiture and restrictions on transfer referred to in
Section 6 of this Plan, shall be subject to further restrictions upon transfer.
10. ADJUSTMENTS. (a) The Committee may make or provide for such
adjustments in the number of Common Shares covered by outstanding Option
Rights, Appreciation Rights, Deferred Shares and Performance Shares granted
hereunder, the Option Prices per Common Share or Base Prices per Common Share
applicable to any such Option Rights and Appreciation Rights, and the kind of
shares (including shares of another issuer) covered thereby, as the Committee
may in good faith determine to be equitably required in order to prevent
dilution or expansion of the rights of Participants that otherwise would result
from (i) any stock dividend, stock split, combination of shares,
recapitalization or similar change in the capital structure of the Corporation
or (ii) any merger, consolidation, spin-off, spin-out, split-off, split-up,
reorganization, partial or complete liquidation or other distribution of
assets, issuance of warrants or other rights to purchase securities or any
other corporate transaction or event having an effect similar to any of the
foregoing. In the event of any such transaction or event, the Committee may
provide in substitution for any or all outstanding awards under this Plan such
alternative consideration as it may in good faith determine to be equitable
under the circumstances and may require in connection therewith the surrender
of all awards so replaced. Moreover, the Committee may on or after the Date of
Grant provide in the agreement evidencing any award under this Plan that the
holder of the award may elect to receive an equivalent award in respect of
securities of the surviving entity of any merger, consolidation or other
transaction or event having a similar effect, or the Committee may provide that
the holder will automatically be entitled to receive such an equivalent award.
The Committee may also make or provide for such adjustments in the maximum
numbers of Common Shares specified in Section 3 of this Plan as the Committee
may in good faith determine to be appropriate in order to reflect any
transaction or event described in this Section 10.
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<PAGE> 12
(b) If another corporation is merged into the Corporation or the
Corporation otherwise acquires another corporation, the Committee may elect to
assume under this Plan any or all outstanding stock options or other awards
granted by such corporation under any stock option or other plan adopted by it
prior to such acquisition. Such assumptions shall be on such terms and
conditions as the Committee may determine; provided, however, that the awards
as so assumed do not contain any terms, conditions or rights that are
inconsistent with the terms of this Plan. Unless otherwise determined by the
Committee, such awards shall not be taken into account for purposes of the
limitations contained in Section 3 of this Plan.
11. FRACTIONAL SHARES. Neither the Corporation nor BHR shall be
required to issue fractional Common Shares pursuant to this Plan, provided they
settle such fractional Common Shares in cash.
12. WITHHOLDING TAXES. To the extent that withholding of federal,
state, local or foreign taxes is required in connection with the exercise of an
Option Right or otherwise in connection with any benefit realized by a
Participant or other person under this Plan, such amounts will be withheld by
the Employer employing the Participant at the time of reference; and provided,
further, that to the extent the amounts readily available to such Employer are
insufficient, it shall be a condition to the receipt of any such payment or the
realization of any such benefit that the Participant or such other person make
arrangements satisfactory to such Employer for payment of the balance of any
taxes required to be withheld. At the discretion of such Employer, any such
arrangements may without limitation include voluntary or mandatory
relinquishment of a portion of any such payment or benefit or the surrender of
outstanding Common Shares. Such Employer and any Participant or such other
person may also make similar arrangements with respect to the payment of any
taxes with respect to which withholding is not required.
13. CERTAIN TERMINATIONS OF EMPLOYMENT OR CONSULTING SERVICES,
HARDSHIP, AND APPROVED LEAVES OF ABSENCE. Notwithstanding any other provision
of this Plan to the contrary, in the event of termination of employment or
consulting services by reason of death, disability, normal retirement, early
retirement with the consent of the Corporation, termination of employment or
consulting services to enter public or military service with the consent of the
Corporation or leave of absence approved by the Corporation, or in the event of
hardship or other special circumstances, of a Participant who holds an Option
Right or Appreciation Right that is not immediately and fully exercisable, any
Restricted Shares as to which the substantial risk of forfeiture or the
prohibition or restriction on transfer has not lapsed, any Deferred Shares as
to which the Deferral Period is not complete, any Performance Shares or
Performance Units that have not been fully earned, or any Common Shares that
are subject to any transfer restriction pursuant to Section 9(b) of this Plan,
the Committee may take any action that it deems to be equitable under the
circumstances or in the best interests of the Corporation, including without
limitation waiving or modifying any limitation or requirement with respect to
any award under this Plan.
14. ADMINISTRATION OF THE PLAN. (a) Except as provided in Section
14(c), this Plan shall be administered by the Compensation Committee of the
Board, which shall be composed of not less than two members of the Board, or,
in the absence of a Compensation Committee, by the full Board, each of whom
shall be a "disinterested person" within the meaning of Rule 16b-3 and an
"outside director" within the meaning of Section 162(m) of the Code. A
majority of the Committee shall
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<PAGE> 13
constitute a quorum, and the acts of the members of the Committee who are
present at any meeting thereof at which a quorum is present, or acts
unanimously approved by the members of the Committee in writing, shall be the
acts of the Committee.
(b) Except as provided in Section 14(c), the interpretation and
construction by the Committee of any provision of this Plan or any agreement,
notification or document evidencing the grant of Option Rights, Appreciation
Rights, Restricted Shares, Deferred Shares, Performance Shares or Performance
Units, and any determination by the Committee pursuant to any provision of this
Plan or any such agreement, notification or document, shall be final and
conclusive. No member of the Committee shall be liable for any such action
taken or determination made in good faith.
(c) Notwithstanding any provision of the Plan to the contrary, all
references in the preceding Sections 14(a) and 14(b) to the Board and the
Committee shall be deemed references to the board of directors, and the
compensation committee, respectively of BHR to the extent, as reasonably
determined by the Committee, such provisions shall relate to Option Rights
outstanding on the date of the Merger with respect to BHR Common Stock of (i)
Participants employed by BHR at the time of reference, or (ii) former employees
of BHR (or Bristol Hotel Company) who have not been employed by the
Corporation; provided, however, that such authority may not be exercised in a
manner which the Committee reasonably determines to be contrary to the terms of
the Plan or of the Option Right(s) of reference.
15. AMENDMENTS AND OTHER MATTERS. (a) Except as provided in
Section 14(c), this Plan may be amended from time to time by the Committee; and
provided, however, except as expressly authorized by this Plan, no such
amendment shall (i) increase the maximum number of Common Shares or Restricted
Shares specified in Section 3(a) hereof, (ii) increase the maximum number of
Performance Units specified in Section 3(c) hereof, (iii) increase the numbers
of Common Shares specified in Sections 3(d) and 3(e) hereof, (v) otherwise
cause this Plan to cease to satisfy any applicable condition of Rule 16b-3, or
(vi) otherwise cause any award under the Plan to cease to qualify for the
performance-based exception to Section 162(m) of the Code, without the further
approval of the stockholders of the Corporation. Notwithstanding any provision
of this Plan to the contrary, this Plan shall not be amended so as to directly
or indirectly limit the scope of Sections 14(b) and (c) without the express
consent of board of directors, or the compensation committee, of BHR.
(b) With the concurrence of the affected Participant, the
Committee may cancel any agreement evidencing Option Rights or any other award
granted under this Plan. In the event of any such cancellation, the Committee
may authorize the granting of new Option Rights or other awards hereunder,
which may or may not cover the same number of Common Shares as had been covered
by the canceled Option Rights or other award, at such Option Price, in such
manner and subject to such other terms, conditions and discretion as would have
been permitted under this Plan had the canceled Option Rights or other award
not been granted.
(c) The Committee may condition the grant of any award or
combination of awards authorized under this Plan on the surrender or deferral
by the Participant of his or her right to receive a cash bonus or other
compensation otherwise payable by the Employer to the Participant.
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(d) This Plan shall not confer upon any Participant any right with
respect to continuance of employment or other service with the Employer and
shall not interfere in any way with any right that the Employer would otherwise
have to terminate any Participant's employment or other service at any time.
(e) To the extent that any provision of this Plan would prevent
any Option Right that was intended to qualify as a Tax-qualified Option from so
qualifying, any such provision shall be null and void with respect to any such
Option Right; provided, however, that any such provision shall remain in effect
with respect to other Option Rights, and there shall be no further effect on
any provision of this Plan.
(f) Any award that may be made pursuant to an amendment to this
Plan that shall have been adopted without the approval of the stockholders of
the Corporation shall be null and void if it is subsequently determined that
such approval was required in order for this Plan to continue to satisfy the
applicable conditions of Rule 16b-3.
(g) Unless otherwise determined by the Committee, this Plan is
intended to comply with and be subject to Rule 16b-3 as in effect on and after
May 1, 1991.
16. OPTION AMENDMENTS TO REFLECT SPIN-OFF AND MERGER. (a)
Effective on the date of the Spin-Off each then outstanding Option Right will
be deemed to have been amended to the extent necessary, in the sole judgment of
the Committee, so as to redenominate such Option Right into two Option Rights
(each of which are continuations of such Option Right), one to acquire Common
Stock of Bristol Hotel Company (the Corporation on such date), and the other
to acquire BHR Common Stock, in each case at a price, and in an amount, set
forth in the documents relating to the Spin-Off and otherwise in accordance
with the provisions of Section 10.
(b) Effective on the date of the Merger, each then outstanding
Option Right will be amended in writing, to the extent deemed necessary in the
sole discretion of the Committee, (i) to reflect the matters described in (a)
above, (ii) to reflect the right to acquire FelCor Common Stock in lieu of the
common stock of Bristol Hotel Company at a price, and in an amount, set forth
in the documents evidencing the Merger and otherwise in accordance with the
provisions of Section 10, and (iii) to reflect other matters affected by the
amendment and restatement of this Plan and the requirements set forth in the
documents relating to the Spin-Off and Merger.
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EXHIBIT 99.3
No. of Shares_________________ Date of Grant______________
1995 EQUITY INCENTIVE PLAN
Nonqualified Stock Option Agreement to Acquire FelCor Shares
WHEREAS, [INSERT OPTIONEE'S NAME] (the "Optionee") was issued an option
nder the Bristol Hotel Company Amended and Restated 1995 Equity Incentive Plan
("Prior Plan") prior to July 27, 1998 ("Prior Option") to acquire shares of
common stock of Bristol Hotel Company ("Prior Shares"); and
WHEREAS, this nonqualified stock option ("Option") has been issued,
effective July 28, 1998, under the second amendment and restatement of the Prior
Plan as the FelCor Lodging Trust Incorporated Second Amended and Restated 1995
Equity Incentive Plan ("Plan"), which amendment and restatement was effective
July 27, 1998 and was effected primarily to reflect and to take into account the
Spin-Off of Bristol Hotels & Resorts ("BHR"), and the Merger of Bristol Hotel
Company into FelCor Lodging Trust Incorporated (the "Corporation") (BHR or the
Corporation being sometimes referred to herein as the "Employer") and the
resulting conversion of Prior Shares into BHR Common Stock and FelCor Common
Stock; and
WHEREAS, this Option is subject to the terms and conditions of the Plan
(including, without limitation, all definitions), all of which terms and
conditions are incorporated herein by reference; and
WHEREAS, this Option is a continuation and replacement of the Prior
Option with respect to the portion of the Prior Option which related to the
acquisition of FelCor Common Stock and, to that extent, the Prior Option is null
and void as of July 28, 1998; and
WHEREAS, although this Option is a replacement and continuation of a
portion of the Prior Option, for convenience, and in order to simplify the
provisions of this Option, it is prepared in the form of a new option issued
under the Plan; and
WHEREAS, this Option is intended to be a nonqualified stock option.
NOW, THEREFORE, the Corporation hereby grants to the Optionee this
nonqualified stock option (the "Option") to purchase _______ shares of the
FelCor Common Stock, par value $0.01 per share ("Common Stock"), at the exercise
price of $_______ per whole share of Common Stock (the "Exercise Price"), and
agrees to cause certificates for any shares of Common Stock or fractions thereof
purchased hereunder to be delivered to the Optionee upon full payment of the
Exercise Price, subject to the terms and conditions hereinafter set forth.
1. Vesting of Option. (a) Unless terminated as hereinafter provided,
the Option will become cumulatively exercisable to the extent of 25% of the
shares of Common Stock covered thereby on _______ of 20___, 20___, 20___ and
20__, so long as the Optionee remains in the continuous full-time employ of the
Employer. For the purposes of this Agreement, the continuous
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<PAGE> 2
employment of the Optionee with the Employer will not be deemed to have been
interrupted by a leave of absence specifically approved by the Board.
(b) Notwithstanding the provisions of Section 1(a) hereof, the Option
will, upon the death or disability of the Optionee, become vested and
exercisable to the extent of 1.967% of the shares of Common Stock covered
thereby for each full calendar month since the Date of Grant prior to the
Optionee's death or disability. For purposes of this Agreement, "disability"
means the Optionee's incapacity due to physical or mental illness substantially
to perform his duties on a full-time basis for six consecutive months and within
30 calendar days after a notice of termination is thereafter given by the
Employer the Optionee shall not have returned to the full-time performance of
the Optionee's duties.
(c) To the extent that the Option shall have become exercisable in
accordance with the terms of this Section 1, it may be exercised in whole or in
part from time to time thereafter and may be exercised for fractional shares of
Common Stock.
2. Payment of Exercise Price. The Exercise Price will be payable (i) in
cash in the form of currency or check or other cash equivalent acceptable to the
Corporation, (ii) by actual or constructive transfer to the Corporation of
nonforfeitable, nonrestricted shares of Common Stock that have been owned by the
Optionee for at least six months prior to the date of exercise, or (iii) by any
combination of the foregoing methods of payment. Nonforfeitable, nonrestricted
shares of Common Stock that are transferred by the Optionee in payment of all or
any part of the Exercise Price shall be valued on the basis of their fair market
value (as defined below) on the date of exercise. The requirement of payment in
cash shall be deemed satisfied if the Optionee makes arrangements satisfactory
to the Corporation with a broker that is a member of the National Association of
Securities Dealers, Inc. to sell a sufficient number of the shares of Common
Stock, which are being purchased pursuant to the exercise, so that the net
proceeds of the sale transaction will at least equal the amount of the aggregate
Exercise Price and pursuant to which the broker undertakes to deliver to the
Corporation the amount of the aggregate Exercise Price not later than the date
on which the sale transaction will settle in the ordinary course of business.
For purposes of this Agreement, fair market value as of a given date means the
greater of (A) the stated par value of the Common Stock or (B) the closing sale
price per share of Common Stock as reported on the Composite Tape of the New
York Stock Exchange on such date. If there are no transactions in shares of
Common Stock on such date, the Market Value shall be determined as of the
immediately preceding date on which there were transactions in Common Stock.
3. Termination of Option. The Option will terminate automatically and
without further notice on the earliest of the following dates:
(a) 30 calendar days after the Optionee ceases to be an employee of the
Employer for any reason other than death or disability or as described in
Section 3(b);
(b) 90 calendar days after the Optionee ceases to be an employee of the
Employer by reason of (i) termination of employment under circumstances
determined by the Board to be for the
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<PAGE> 3
convenience of the Employer as communicated to the Optionee in writing, or (ii)
retirement under a retirement plan of Employer (at the time of reference) at or
after the earliest voluntary retirement age provided for in such retirement plan
or retirement at an earlier age with the consent of the Board;
(c) One year after the Optionee's death or disability if the Optionee
dies or becomes disabled (i) while in the employ of the Employer, or (ii) within
the period of 90 calendar days referred to in Section 3(b); or
(d) Ten years from the Date of Grant.
In the event that the Optionee commits an act (i) of gross misconduct as set
forth in the Employer's (at the time of reference) Employee Guidelines Manual or
related publications or announcements (collectively the "Guidelines"), or (ii)
that the Board has determined in good faith, by an affirmative vote of no less
than 75% of the Board, that the Optionee has intentionally committed an act
which is materially adverse to the Employer's (at the time of reference) or its
subsidiaries' interests (collectively the "Cause"), the Option will terminate at
the time such determination is made or, if later, upon delivery of written
notice of such determination to the Optionee, notwithstanding any other
provision of this Agreement or any other agreement or instrument to which the
Employer (at the time of reference) is a party.
4. Compliance with Law. The Corporation will make reasonable efforts to
comply with all applicable federal and state securities laws; provided, however,
notwithstanding any other provision of this Agreement, the Option will not be
exercisable if the exercise thereof would result in a violation of any such law.
5. Transferability and Exercisability. Neither the Option nor any
interest therein may be transferred by the Optionee except by will or the laws
of descent and distribution, and the Option may not be exercised during the
lifetime of the Optionee except by the Optionee or, in the event of his legal
incapacity, by his guardian or legal representative acting on behalf of the
Optionee in a fiduciary capacity under state law and court supervision.
6. Adjustments. The Board may make such adjustments in the Exercise
Price and the number or kind of shares of stock or other securities covered by
the Option that the Board determines to be required to prevent any dilution or
expansion of the Optionee's rights under this Agreement that otherwise would
result from any (a) stock dividend, stock split, combination of shares,
recapitalization or similar change in the capital structure of the Corporation,
(b) merger, consolidation, separation, reorganization or partial or complete
liquidation involving the Corporation, (c) extraordinary dividend or
distribution to holders of Common Stock or (d) other transaction or event having
an effect similar to any of foregoing. Furthermore, in the event that any
transaction or event described or referred to in the immediately preceding
sentence occurs, the Board may provide in substitution of any or all of the
Optionee's rights under this Agreement such alternative consideration as the
Board may determine to be equitable under the circumstances.
3
<PAGE> 4
7. Withholding Taxes. If the Employer is required to withhold any
federal, state, local or foreign tax in connection with any exercise of the
Option or other event contemplated hereby, the Optionee will pay the tax or make
provisions that are satisfactory to the Employer for the payment thereof. The
Optionee may elect to satisfy all or any part of any such withholding obligation
by surrendering to the Employer a portion of the Common Stock that is issued or
transferred to the Optionee upon the exercise of the Option, and the Common
Stock so surrendered by the Optionee will be credited against any such
withholding obligation at the fair market value of such shares on the date of
such surrender as determined by the Board; provided, however, if the Optionee is
subject to Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), such election will be subject to approval by the Board and all
of the other applicable conditions of Rule 16b-3 promulgated by the Securities
and Exchange Commission under Section 16(b) of the Exchange Act.
8. Right to Terminate Employment and to Adjust Compensation. No
provision of this Agreement will limit in any way whatsoever any right that the
Employer (at the time of reference) may otherwise have to terminate the
employment or adjust the compensation of the Optionee at any time.
9. Relation to Other Benefits. Any economic or other benefit to the
Optionee under this Agreement or the Plan will not be taken into account in
determining any benefits to which the Optionee may be entitled under any
profit-sharing, retirement or similar benefit or compensation plan maintained by
the Employer and will not affect the amount of any life insurance coverage
available to any beneficiary under any life insurance plan covering employees of
the Employer.
10. Employment with a Subsidiary. For purposes of this Agreement,
employment with any corporation, partnership, joint venture, unincorporated
association or other entity which is a subsidiary of the Employer will be deemed
to be employment with the Employer.
11. Amendment to Plan. Any amendment to the Plan will be deemed to be
an amendment to this Agreement to the extent that the amendment is applicable
hereto; provided, however, that no amendment may adversely affect the number of
shares of Common Stock to which this Option relates, the Exercise Price, the
vesting schedule hereunder or the term of the Option without the Optionee's
consent.
12. Severability. In the event that one or more of the provisions of
this Agreement is invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated will be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof will continue
to be valid and fully enforceable.
13. Entire Agreement. This Agreement (including any addendum hereto)
supersedes any and all other agreements, either oral or in writing, between the
parties hereto with respect to the subject matter hereof and contains all of the
covenants and agreements between the parties with respect to such subject
matter. This Agreement shall consist of this Agreement (and the Plan which is
incorporated by reference), Addendum, if any, attached hereto, and Memorandum of
Employment,
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<PAGE> 5
if any, which is executed by both a duly qualified and authorized
officer of the Employer, and the Optionee.
14. Governing Law. This Agreement is made under, and will be construed
in accordance with, the laws of the State of Delaware, without giving effect to
the principles of conflict of laws of such State.
This Agreement is executed as of this ___ day of _________, 1998, to be
effective as of the Date of Grant as a replacement and continuation of the
portion of the Prior Option which, as redenominated, related to Common Stock.
FELCOR LODGING TRUST INCORPORATED,
------------------------------------
Thomas J. Corcoran, Jr.
President and C.E.O.
The undersigned Optionee hereby acknowledges receipt of an executed original of
this Agreement, and accepts the Option granted hereunder subject to the terms
and conditions hereinabove set forth and, without limitation, acknowledges and
agrees that the portion of the Prior Option which related to FelCor Common Stock
is null, void and of no effect as of July 28, 1998.
------------------------------------
[INSERT OPTIONEE'S NAME]
5
<PAGE> 1
EXHIBIT 99.4
No. of Shares_________________ Date of Grant______________
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
Nonqualified Stock Option Agreement to Acquire FelCor Shares
WHEREAS, [INSERT OPTIONEE'S NAME] (the "Optionee") was issued an option
under the Bristol Hotel Company Stock Option Plan For Non-Employee Directors
("Prior Plan") prior to July 27, 1998 ("Prior Option") to acquire shares of
common stock of Bristol Hotel Company ("Prior Shares"); and
WHEREAS, this nonqualified stock option ("Option") has been issued,
effective July 28, 1998, under the second amendment and restatement of the Prior
Plan as the FelCor Lodging Trust Incorporated Amended and Restated Stock Option
Plan for Non-Employee Directors ("Plan"), which amendment and restatement was
effective July 27, 1998 and was effected primarily to reflect and to take into
account the Spin-Off of Bristol Hotels & Resorts ("BHR"), and the Merger of
Bristol Hotel Company ("Bristol") into FelCor Lodging Trust Incorporated (the
"Corporation") (BHR or the Corporation being sometimes referred to herein as the
"Successor", and Bristol, BHR and the Corporation sometimes, collectively,
referred as the "Group" ) and the resulting conversion of Prior Shares into BHR
Common Stock and FelCor Common Stock; and
WHEREAS, all references hereunder which relate to the Optionee's
current status (or cessation of such status) as a director shall be references
to his current status (or cessation) as a director of whichever of the Group on
whose board he serves (or last served) at the time of reference.
WHEREAS, this Option is subject to the terms and conditions of the Plan
(including, without limitation, all definitions), all of which terms and
conditions are incorporated herein by reference; and
WHEREAS, this Option is a continuation and replacement of the Prior
Option with respect to the portion of the Prior Option which related to the
acquisition of FelCor Common Stock ("Common Stock") and, to that extent, the
Prior Option is null and void as of July 28, 1998; and
WHEREAS, although this Option is a replacement and continuation of a
portion of the Prior Option, for convenience, and in order to simplify the
provisions of this Option, it is prepared in the form of a new option issued
under the Plan; and
WHEREAS, this Option is intended to be a nonqualified stock option.
NOW, THEREFORE, pursuant to the Plan and subject to the terms and
conditions thereof and the terms and conditions hereinafter set forth, the
Corporation hereby grants to the Optionee this nonqualified stock option (the
"Option") to purchase _______ shares of Common Stock, par value $0.01 per share
("Common Stock"), of the Corporation at a price equal to $______ per share (the
"Option Price"), payable upon exercise of the Option, and agrees to cause
certificates representing any shares of Common Stock purchased hereunder to be
delivered to the Optionee upon full payment of the Option Price, subject to the
terms and conditions hereinafter set forth.
<PAGE> 2
1. Vesting of Option. The Option will vest and become exercisable as
follows:
(a) Subject to subsection (b) of this Section 1, the Option,
until terminated as provided in Section 3 hereof, shall become
exercisable to the extent of 100% of the shares of Common Stock subject
thereto after the Optionee has continuously served as a director of the
Group through the date of the first annual meeting of the stockholders
of the applicable member of the Group following the Date of Grant.
(b) If the Optionee ceases to be a director of the Group by
reason of death or Disability (as defined below), the portion of the
Option that would have otherwise become exercisable had the Optionee
continuously served as a director through the date of the applicable
Group member's annual meeting of stockholders immediately following
such death or Disability shall, notwithstanding subsection (a) of this
Section 1, become immediately exercisable in full. For purposes of this
Agreement, "Disability" means the inability to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death
or which has lasted or can be expected to last for a continuous period
of not less than 12 months. The Optionee shall not be considered to be
subject to a Disability until he furnishes a certification from a
practicing physician in good standing to the effect that he meets the
criteria described in this definition of "Disability."
2. Payment of Option Price. The Option Price will be payable (i) in
cash or by check acceptable to the Corporation, (ii) by transfer to the
Corporation of shares of Common Stock which have been owned by the Optionee for
more than six months prior to the date of exercise and which have a Market Value
(as defined below) on the date of exercise equal to the Option Price, or (iii)
by a combination of such methods of payment. The requirement of payment in cash
shall be deemed satisfied if the Optionee shall have made arrangements
satisfactory to the Corporation with a broker who is a member of the National
Association of Securities Dealers, Inc. to sell on the exercise date a
sufficient number of shares of Common Stock being purchased so that the net
proceeds of the sale transaction will at least equal the Option Price of the
Common Stock being purchased, and pursuant to which the broker undertakes to
deliver the full Option Price of the Common Stock being purchased to the
Corporation not later than the date on which the sale transaction will settle in
the ordinary course of business. For purposes of this Agreement, "Market Value"
as of a given date means the greater of (A) the stated par value of the Common
Stock or (B) the closing sale price per share of Common Stock as reported on the
Composite Tape of the New York Stock Exchange on such date. If there are no
transactions in shares of Common Stock on such date, the Market Value shall be
determined as of the immediately preceding date on which there were transactions
in Common Stock.
3. Termination of Option. The Option will terminate on the earliest to
occur of:
(a) Three months following the effective date of the
Optionee's Termination of Service (as defined below), if such
Termination of Service results other than from the Optionee's death or
Disability;
(b) One year following the effective date of the Optionee's
Termination of Service, if such Termination of Service results from the
Optionee's death or Disability; or
2
<PAGE> 3
(c) [INSERT DATE OF EXPIRATION].For purposes of this
Agreement, "Termination of Service" means the time at which the
Optionee ceases to serve as a director of the Successor for any reason,
with or without cause, which includes termination by resignation,
removal, death or retirement.
4. Transferability and Exercisability. The Option is not transferable
by the Optionee otherwise than by will or the laws of descent and distribution.
During the Optionee's lifetime, the Option will be exercisable only by the
Optionee or, in the event of the Optionee's incapacity, including incapacity
arising from a Disability, by the Optionee's guardian or legal representative
acting in a fiduciary capacity.
5. Compliance with Law. The Option will not be exercisable if such
exercise would involve a violation of any applicable federal or state securities
law, and the Corporation will use reasonable efforts to comply with all such
securities laws.
6. Adjustments. The Committee (as defined in the Plan) may make or
provide for such adjustments in the number of shares of Common Stock covered by
the Option, the Option Price and the kind of shares (including shares of another
issuer) covered thereby as the Committee in good faith determines to be
equitably required to prevent dilution or expansion of the rights of the
Optionee that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Corporation, (b) any merger, consolidation, spin-off, spin-out,
split-off, split-up, reorganization, partial or complete liquidation, or other
distribution of assets or issuance of warrants or other rights to purchase
securities or any other corporate transaction or event having an effect similar
to any of the foregoing.
7. Withholding Taxes. If the Corporation is required to withhold any
federal, state, local or foreign tax in connection with any exercise of the
Option or other event contemplated hereby, the Optionee will pay the tax or make
provisions that are satisfactory to the Corporation for the payment therefor.
The Optionee may elect to satisfy all or any part of any such withholding
obligation by surrendering to the Corporation a portion of the Common Stock that
is issued or transferred to the Optionee upon the exercise of the Option, and
the Common Stock so surrendered by the Optionee will be credited against any
such withholding obligation at the Market Value of such shares on the date of
such surrender; provided, however, that such election will be subject to
approval by the Committee and all of the applicable conditions of Rule 16b-3
promulgated by the Securities and Exchange Commission under Section 16(b) of the
Securities Exchange Act of 1934, as amended.
8. Amendment. Any amendment to the Plan will be deemed to be an
amendment to this Agreement to the extent that the amendment is applicable
hereto; provided, however, that no amendment may adversely affect the number of
shares of Common Stock to which the Option relates, the Option Price, the
vesting schedule hereunder or the term of the Option without the Optionee's
consent.
9. Severability. In the event that one or more of the provisions of
this Agreement is invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated will be deemed to be separable from
the other provisions hereof, and the remaining provision hereof will continue to
be valid and fully enforceable.
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<PAGE> 4
10. Governing Law. This Agreement is made under, and will be construed
in accordance with, the laws of the State of Delaware, without giving effect to
the principles of conflict of laws of such State.
This Agreement is executed as of this ___ day of _________, 1998, to be
effective as of the Date of Grant as a replacement and continuation of the
portion of the Prior Option which, as redenominated, related to Common Stock.
FELCOR LODGING TRUST INCORPORATED,
------------------------------------
Thomas J. Corcoran, Jr.
President and C.E.O.
The undersigned Optionee hereby acknowledges receipt of an executed
original of this Agreement, and accepts the Option granted hereunder subject to
the terms and conditions hereinabove, and hereafter, set forth and, without
limitation, acknowledges and agrees that the portion of the Prior Option which
related to FelCor Common Stock is null, void and of no effect as of July 28,
1998.
The undersigned Optionee further (a) represents that it is his
intention that all shares of Common Stock or other securities purchased by him
hereunder will be acquired for investment and not with a view to distribution,
and (b) agrees that each time such Optionee makes any purchase of shares of
Common Stock or other securities pursuant hereto he will, unless and to the
extent waived by the Board of Directors, agree with and represent to the
Corporation that such shares and securities are then being acquired for
investment and not with a view to distribution. The provisions of this paragraph
shall not be applicable to an offer for sale or sale of any shares of Common
Stock or other securities which at the time of such offer or sale are registered
under the Securities Act of 1933, as amended, or which without such registration
and apart from the provisions of this paragraph could be offered for sale or
sold without violation of such Act. For purposes of this paragraph, the term
"Optionee" includes his legatee(s), executor(s) and administrator(s).
------------------------------------
[INSERT DIRECTOR'S NAME]
4
