Exhibit 3(1)
CERTIFICATE OF INCORPORATION
OF
THE PROMUS COMPANIES INCORPORATED
FIRST: The name of the Corporation is The Promus Companies
Incorporated.
SECOND: The address of the registered office of the Corporation in
the State of Delaware is The Corporation Trust Center, 1209 Orange Street,
in the City of Wilmington, County of New Castle. The name of its
registered agent at that address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of Delaware as set forth in Title 8 of the Delaware Code
(the "GCL").
FOURTH: A. The total number of shares of stock which the Corporation
shall have authority to issue is 125,150,000, consisting of 120,000,000
shares of Common Stock, par value $1.50 per share (the "Common Stock"),
150,000 shares of Preferred Stock, par value of $100.00 per share (the
"Preferred Stock"), and 5,000,000 shares of Special Stock, par value $1.12 1/2
per share (the "Special Stock").
B. Shares of Preferred Stock may be issued from time to time in one
or more series, as provided for herein or as provided for by the Board of
Directors as permitted hereby. All shares of Preferred Stock shall be of
equal rank and shall be identical, except in respect of the terms fixed
herein for the series provided for herein or fixed by the Board of
Directors for series provided for by the Board of Directors as permitted
hereby. All shares of any one series shall be identical in all respects
with all the other shares of such series, except the shares of any one
series issued at different times may differ as to the dates from which
dividends thereon may be cumulative.
The Board of Directors is hereby authorized, by resolution or
resolutions, to establish, out of the unissued shares of Preferred Stock
not then allocated to any series of Preferred Stock, additional series of
Preferred Stock. Before any shares of any such additional series are
issued, the Board of Directors shall fix and determine, and is hereby
expressly empowered to fix and determine, by resolution or resolutions, the
distinguishing characteristics and the relative rights, preferences,
privileges and immunities of the shares thereof, so far as not inconsistent
with the provisions of this Article
FOURTH. Without limiting the generality of the foregoing, the Board of
Directors may fix and determine:
1. The designation of such series, the number of shares which
shall constitute such series and the par value, if any, of such
shares;
2. The rate of dividend, if any, payable on shares of such
series;
3. Whether the shares of such series shall be cumulative,
non-cumulative or partially cumulative as to dividends, and the dates
from which any cumulative dividends are to accumulate;
4. Whether the shares of such series may be redeemed, and, if
so, the price or prices at which and the terms and conditions on which
shares of such series may be redeemed;
5. The amount payable upon shares of such series in the event
of the voluntary or involuntary dissolution, liquidation on winding up
of the affairs of the Corporation;
6. The sinking fund provisions, if any, for the redemption of
shares of such series;
7. The voting rights, if any, of the shares of such series;
8. The terms and conditions, if any, on which shares of such
series may be converted into shares of capital stock of the
Corporation of any other class or series;
9. Whether the shares of such series are to be preferred over
shares of capital stock of the Corporation of any other class or
series as to dividends, or upon the voluntary or involuntary
dissolution, liquidation, or winding up of the affairs of the
Corporation, or otherwise; and
10. Any other characteristics, preferences, limitations,
rights, privileges, immunities or terms not inconsistent with the
provisions of this Article FOURTH.
C. Shares of Special Stock may be issued from time to time in one or
more classes or series as provided in this Section C of Article FOURTH.
Subpart I of this Section C sets forth provisions respecting the
Special Stock as a class. Subpart II vests in the Board of Directors
authority to designate series of Special
2
Stock and to determine and fix the distinguishing characteristics and
rights, privileges and immunities thereof.
SUBPART I. The Special Stock as a Class
----------------------------
1. General. Shares of Special Stock may be issued from time to time
-------
in one or more series, as provided for by the Board of Directors as
permitted hereby. All shares of Special Stock shall be of equal rank and
shall be identical, except in respect of the terms fixed by the Board of
Directors for series provided for by the Board of Directors as permitted
hereby. All shares of any one series shall be identical in all respects
with all the other shares of such series, except the shares of any one
series issued at different times may differ as to the dates from which
dividends thereon may be cumulative.
2. Status of Reacquired Shares. Shares of any series of Special
---------------------------
Stock which have been redeemed, purchased or otherwise acquired by the
Corporation, or which are no longer deemed to be outstanding by virtue of
funds or securities necessary for redemption or payment having been set
aside or deposited in trust or otherwise, or which, if convertible, have
been converted into shares of stock of the Corporation of any other class
or series, shall, upon appropriate filing and recording to the extent
required by law, have the status of authorized and unissued shares of
Special Stock and may be reissued as part of any series of Special Stock
provided for by the Board of Directors as permitted hereby.
SUBPART II. Series of Special Stock
-----------------------
The Board of Directors is hereby authorized, by resolution or
resolutions, to establish, out of the unissued shares of Special Stock not
then allocated to any series of Special Stock, additional series of Special
Stock. Before any shares of any such additional series are issued, the
Board of Directors shall fix and determine, and is hereby expressly
empowered to fix and determine, by resolution or resolutions, the
distinguishing characteristics and the relative rights, preferences,
privileges and immunities of the shares thereof, so far as not inconsistent
with the provisions of this Article FOURTH. Without limiting the
generality of the foregoing, the Board of Directors may fix and determine:
1. The designation of such series, the number of shares which
shall constitute such series and the par value, if any, of such
shares;
2. The rate of dividend, if any, payable on shares of such
series;
3. Whether the shares of such series shall be cumulative,
non-cumulative or partially cumulative as to
3
dividends, and the dates from which any cumulative dividends are to
accumulate;
4. Whether the shares of such series may be redeemed, and, if
so, the price or prices at which and the terms and conditions on which
shares of such series may be redeemed;
5. The amount payable upon shares of such series in the event
of the voluntary or involuntary dissolution, liquidation or winding up
of the affairs of the Corporation;
6. The sinking fund provisions, if any, for the redemption of
shares of such series;
7. The voting rights, if any, of the shares of such series;
8. The terms and conditions, if any, on which shares of such
series may be converted into shares of capital stock of the
Corporation of any other class or series;
9. Whether the shares of such series are to be preferred over
shares of capital stock of the Corporation of any other class or
series as to dividends, or upon the voluntary or involuntary
dissolution, liquidation, or winding up of the affairs of the
Corporation, or otherwise; and
10. Any other characteristics, preferences, limitations,
rights, privileges, immunities or terms not inconsistent with the
provisions of this Article FOURTH.
D. Except as otherwise provided in this Certificate of Incorporation
(including this Section D of Article FOURTH and including the resolutions
adopted by the Board of Directors pursuant to Section B or C of this
Article FOURTH), each holder of Common Stock shall be entitled to one vote
for each share of Common Stock held by him on all matters submitted to
stockholders for a vote and each holder of Preferred Stock or Special Stock
of any series that is Voting Stock shall be entitled to such number of
votes for each share held by him as may be specified in the resolutions
providing for the issuance of such series.
(a) Definitions. The following definitions shall apply to this
-----------
Section D of Article FOURTH:
"Affiliate" and "Associate" shall have the meanings given to such
terms in Article NINTH.
4
A person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "Beneficially Own," shares of Capital Stock:
(i) which such person or any of such person's Affiliates or
Associates, directly or indirectly, has the sole or shared right to
vote or dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided that a person shall
--------
not be deemed the "Beneficial Owner" of, or to "Beneficially Own," any
security under this subparagraph (i) as a result of an agreement,
arrangement or understanding to vote such security that: (A) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not reportable by such person on Schedule 13D
under the Exchange Act (or any comparable or successor report) without
giving effect to any applicable waiting period; or
(ii) which are Beneficially Owned, directly or indirectly, by
any other person (or any Affiliate or Associate thereof) with which
such person (or any of such person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to subparagraph (i) above)
or disposing of any Capital Stock;
provided further that: (x) no director or officer of the Corporation (nor
- -------- -------
any Affiliate or Associate of any such director or officer) shall, solely
by reason of any or all of such directors or officers acting in their
capacities as such, be deemed the "Beneficial Owner" of or to "Beneficially
Own" any shares of Capital Stock that are Beneficially Owned by any other
such director or officer; (y) in the case of any employee stock ownership
or similar plan of the Corporation or of any Subsidiary in which the
beneficiaries thereof possess the right to vote the shares of Voting Stock
held by such plan, no such plan nor any trustee with respect thereto (nor
any Affiliate or Associate of such trustee), solely by reason of such
capacity of such trustee, shall be deemed the "Beneficial Owner" of or to
"Beneficially Own" the shares of Voting Stock held under such plan; and (z)
no person shall be deemed the "Beneficial Owner" of or to "Beneficially
Own" any shares of Voting Stock held in any voting trust, employee stock
ownership plan or any similar plan or trust
5
if such person does not possess the right to vote such shares.
"Capital Stock" shall have the meaning given to such term in Article
NINTH.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
The term "person" shall mean any individual, firm, company or other
entity.
"Subsidiary" shall have the meaning given to such term in Article
NINTH.
"Substantial Stockholder" shall mean any person (other than any
Subsidiary, any employee benefit plan of the Corporation or any Subsidiary,
or any person organized, appointed or established by the Corporation or any
Subsidiary for or pursuant to the terms of any such plan) who Beneficially
Owns shares of Voting Stock that would, before giving effect to the
reduction in votes prescribed in paragraph (b), represent more than the
Threshold Percentage of the total number of votes entitled to be cast by
the holders of all outstanding shares of Voting Stock.
"Threshold Percentage" for any person shall equal 10%, except that it
shall be adjusted as follows:
(i) If the percentage of the votes entitled to be cast in
respect of all outstanding shares of Voting Stock represented by the
votes entitled to be cast in respect of the shares of Voting Stock
that are Beneficially Owned by any person, before giving effect to the
reduction in votes prescribed in paragraph (b), is increased above the
Threshold Percentage previously applicable to such person solely as a
result of any decrease in the number of outstanding shares of Voting
Stock, then the Threshold Percentage for such person shall be adjusted
upward to reflect the percentage increase in the votes that may be
cast in respect of the shares of Voting Stock that are Beneficially
owned by such person, before giving effect to the reduction in votes
prescribed in paragraph (b), caused by such decrease in the number of
outstanding shares of Voting Stock.
(ii) If the Threshold Percentage for any person is greater than
10% and the percentage of the votes entitled to be cast in respect of
all shares of Voting Stock represented by the votes entitled to be
cast in respect of the shares of Voting Stock that
6
are Beneficially Owned by such person, before giving effect to the
reduction in votes prescribed in paragraph (b), decreases for any
reason (including as a result of a sale or other disposition by such
person of any shares of Voting Stock or any increase in the number of
outstanding shares of Voting Stock), then such person's Threshold
Percentage shall be adjusted downward so as to equal the greater of:
(x) 10%; or (y) the percentage of the votes entitled to be cast in
respect of all outstanding shares of Voting Stock represented by the
votes entitled to be cast in respect of the shares of Voting Stock
that are Beneficially Owned by such person before giving effect to the
reduction in votes prescribed in paragraph (b).
"Voting Stock" shall have the meaning given to such term in Article
NINTH.
(b) Limitation of Votinq Riqhts.
---------------------------
(i) So long as a Substantial Stockholder Beneficially Owns shares of
Voting Stock that would, before giving effect to the reduction of votes
prescribed by this paragraph (b), carry votes in excess of his Threshold
Percentage of the votes entitled to be cast in respect of all outstanding
shares of Voting Stock, and any other provision of this Certificate of
Incorporation notwithstanding, the record holders of the shares of Voting
Stock that are Beneficially Owned by the Substantial Stockholder shall have
limited voting rights on any matter requiring their vote or consent as set
forth in this paragraph (b). As to any shares of Voting Stock Beneficially
Owned by a Substantial Stockholder that would, before giving effect to the
reduction of votes prescribed by this paragraph (b), carry votes in excess
of his Threshold Percentage of the votes entitled to be cast in respect of
all outstanding shares of Voting Stock, the record holders thereof shall be
entitled to cast one one-hundredth (1/100) of the votes which the holders
of such shares would, but for the provisions of this paragraph (b), be
entitled to cast. The aggregate voting power, so limited, of the record
holders of the shares of Voting Stock that are Beneficially Owned by the
Substantial Stockholder shall be allocated proportionately among such
record holding as follows: Each such record holder shall be entitled, with
respect to the shares of Voting Stock that are Beneficially Owned by the
Substantial Stockholder and held of record by such record holder, to a
number of votes equal to the product of (x) the aggregate number of votes
that would have been carried by such shares before giving effect to the
reduction in votes prescribed by this paragraph (b), multiplied by (y) the
fraction obtained by dividing (A) the number of votes carried by the shares
of Voting Stock that are Beneficially Owned by the Substantial Stockholder
after giving effect to the reduction in votes prescribed by this paragraph
(b), by (B) the
7
number of votes carried by the shares of Voting Stock that are Beneficially
Owned by the Substantial Stockholder before giving effect to the reduction
in votes prescribed by this paragraph (b).
(ii) Notwithstanding the foregoing subparagraph (b)(i), so long as
there are seven or more persons who Beneficially Own shares of Voting
Stock, the record holders of the shares of Voting Stock that are
Beneficially Owned by a Substantial Stockholder collectively shall not be
entitled to cast in respect of such shares, on any matter submitted to
stockholders for vote or consent, a number of votes in excess of the sum of
(x) the applicable Threshold Percentage plus (y) 5%, of the number of votes
entitled to be cast in respect of all outstanding shares of Voting Stock
(with the number of votes being determined in each case after giving effect
to the reduction in votes prescribed by paragraph (b)). If the preceding
sentence reduces the total number of votes that the record holders of the
shares of Voting Stock that are Beneficially Owned by a Substantial
Stockholder are entitled to cast in respect of such shares, such reduction
shall be effected, and the number of votes that each such record holder is
entitled to cast in respect of such shares shall be determined, in
accordance with the allocation provisions of subparagraph (b)(i).
(c) Factual Determinations.
----------------------
(i) The Board of Directors shall have the power and duty to construe
and apply the provisions of this Section D of Article FOURTH and to make
all determinations necessary or desirable to implement such provisions,
including but not limited to determining: (v) the number of shares of
Voting Stock that are Beneficially Owned by any person; (w) whether a
person is an Affiliate or Associate of another person; (x) whether a person
has an agreement, arrangement, or understanding with another person as to
the matters referred to in the definition of Beneficial Ownership; (y) the
application of any other definition of operative provision of this Section
D of Article FOURTH to the given facts; and (z) any other matter relating
to the applicability or effect of this Section D of Article FOURTH.
(ii) The Board of Directors shall have the right to demand that any
person who it believes is or may be a Substantial Stockholder (or who holds
of record shares of Capital Stock that are Beneficially Owned by any person
that the Board of Directors believes is or may be a Substantial
Stockholder) supply the Corporation with complete information as to: (x)
the record holders of all shares of Capital Stock that are Beneficially
Owned by such person; (y) the number of shares of each class or series of
Capital Stock that are Beneficially Owned by such person and held of record
by each such record holder and the numbers of the stock certificates
evidencing
8
such shares; and (z) any other matter relating to the applicability or
effect of this Section D of Article FOURTH as the Board of Directors may
reasonably request. Each such person shall furnish such information within
10 days after the receipt of such demand.
(iii) Any construction, application or determination made by the
Board of Directors pursuant to this Section D of Article FOURTH in good
faith and on the basis of such information and assistance as was then
reasonably available for such purpose shall be conclusive and binding upon
the Corporation and its stockholders, including any Substantial
Stockholder.
(d) Ouorum. Except as otherwise provided by law, the presence, in
------
person or by proxy, of the holders of record of shares of Capital Stock
entitling the holders thereof to cast a majority of the votes entitled to
be cast by the holders of shares of Capital Stock entitled to vote (after
giving effect to the reduction in votes prescribed in paragraph (b)) shall
constitute a quorum at all meetings of the stockholders, and any quorum
requirement or any requirement for stockholder consent or approval shall be
determined after giving effect to the reduction in votes prescribed in
paragraph (b).
(e) No Derogation of Fiduciary Obliqations. Nothing contained in
--------------------------------------
this Section D of Article FOURTH shall be construed to relieve any
Substantial Stockholder from any fiduciary obligation imposed by law.
(f) Severability. If any provision of this Section D of Article
------------
FOURTH is determined to be invalid, void, illegal or unenforceable, the
remaining provisions of this Section D of Article FOURTH shall continue to
be valid and enforceable and shall in no way be affected, impaired or
invalidated.
(g) Termination. The limitation on voting rights prescribed by this
-----------
Section D of Article FOURTH shall terminate and be of no force and effect
as of the earliest to occur of
(i) the close of business on April 16, 1992; or
(ii) the date that any person other than Holiday Inns, Inc. or
Holiday Corporation becomes the Beneficial Owner of shares of Voting
Stock representing at least 75% of the total number of votes entitled
to be cast in respect of all outstanding shares of Voting Stock,
before giving effect to the reduction in votes prescribed by paragraph
(b); or
(iii) the date (the "Reference Date") one day prior to the date
on which, as a result of such limitation of voting rights, the Common
Stock will be delisted from (including by ceasing to be temporarily or
provisionally authorized for listing with) the New York Stock Exchange
9
(the "NYSE") or the American Stock Exchange (the "AMEX"), or be no
longer authorized for inclusion (including by ceasing to be
provisionally or temporarily authorized for inclusion) on the National
Association of Securities Dealers, Inc. Automated Quotation
System/National Market System ("NASDAQ/NMS"); provided, however, that
-------- -------
(a) such termination shall not occur until the earlier of (x) the 90th
day after the Reference Date or (y) the first day on or after a
Reference Date that there is not pending a proceeding under the rules
of the NYSE, the AMEX or the NASDAQ/NMS or any other administrative or
judicial proceeding challenging such delisting or removal of
authorization of the Common Stock, an application for listing of the
Common Stock with the NYSE or the AMEX or for authorization for the
Common Stock to be included on the NASDAQ/NMS, or an appeal with
respect to any such application, and (b) such termination shall not
occur by virtue of such delisting or lack of authorization if on or
prior to the earlier of the 90th day after the Reference Date or the
day on which no proceeding, application or appeal of the type
described in (y) above is pending, the Common Stock is approved for
listing or continued listing on the NYSE or the AMEX or authorized for
inclusion or continued inclusion on the NASDAQ/NMS (including any such
approval or authorization which is temporary or provisional). Nothing
contained herein shall be construed so as to prevent the Common Stock
from continuing to be listed with the NYSE or AMEX or continuing to be
authorized for inclusion on the NASDAQ/NMS in the event that the NYSE,
AMEX or NASDAQ/NMS, as the case may be, adopts a rule or is governed
by an order, decree, ruling or regulation of the Securities and
Exchange Commission which provides in whole or in part that companies
having common stock with differential voting rights listed on the NYSE
or the AMEX or authorized for inclusion on the NASDAQ/NMS may continue
to be so listed or included.
E. Notwithstanding any other provision of this Certificate of
Incorporation to the contrary, but subject to the provisions of any
resolutions of the Board of Directors adopted pursuant to this Article
FOURTH creating any series of Preferred Stock, Special Stock or any other
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, outstanding shares of Common Stock,
Preferred Stock, Special Stock or any other class or series of stock of the
Corporation shall always be subject to redemption by the Corporation, by
action of the Board of Directors, if in the judgment of the Board of
Directors such action should be taken, pursuant to Section 151(b) of the
GCL or any other applicable provision of law, to the extent necessary to
prevent the loss or secure the reinstatement of any license or franchise
from any governmental agency held by the Corporation or any Subsidiary to
conduct any portion of the business of the Corporation or any Subsidiary,
which license or franchise is
10
conditioned upon some or all of the holders of the Corporation's stock of
any class or series possessing prescribed qualifications. The terms and
conditions of such redemption shall be as follows:
(a) the redemption price of the shares to be redeemed pursuant
to this Section E of Article FOURTH shall be equal to the Fair Market
Value of such shares or such other redemption price as required by
pertinent state or federal law pursuant to which the redemption is
required;
(b) the redemption price of such shares may be paid in cash,
Redemption Securities or any combination thereof;
(c) if less than all the shares held by Disqualified Holders are
to be redeemed, the shares to be redeemed shall be selected in such
manner as shall be determined by the Board of Directors, which may
include selection first of the most recently purchased shares thereof,
selection by lot or selection in any other manner determined by the
Board of Directors;
(d) at least 30 days' written notice of the Redemption Date
shall be given to the record holders of the shares selected to be
redeemed (unless waived in writing by any such holder), provided that
the Redemption Date may be the date on which written notice shall be
given to record holders if the cash or Redemption Securities necessary
to effect the redemption shall have been deposited in trust for the
benefit of such record holders and subject to immediate withdrawal by
them upon surrender of the stock certificates for their shares to be
redeemed;
(e) from and after the Redemption Date or such earlier date as
mandated by pertinent state or federal law, any and all rights of
whatever nature, which may be held by the owners of shares selected
for redemption (including without limitation any rights to vote or
participate in dividends declared on stock of the same class or series
as such shares), shall cease and terminate and they shall thenceforth
be entitled only to receive the cash or Redemption Securities payable
upon redemption; and
(f) such other terms and conditions as the Board of Directors
shall determine.
For purposes of this Section E of Article FOURTH:
(i) "Disqualified Holder" shall mean any holder of shares of stock of
the Corporation of any class (or classes) or series whose holding of such
stock, either individually or when taken together with the holding of
shares of stock of the
11
Corporation of any class (or classes) or series by any other holders, may
result, in the judgment of the Board of Directors, in the loss of, or the
failure to secure the reinstatement of, any license or franchise from any
governmental agency held by the Corporation or any Subsidiary to conduct
any portion of the business of the Corporation or any Subsidiary.
(ii) "Fair Market Value" of a share of the Corporation's stock of any
class or series shall mean the average Closing Price for such as share for
each of the 45 most recent days of which shares of stock of such class or
series shall have been traded preceding the day on which notice of
redemption shall be given pursuant to paragraph (d) of this Section E of
Article FOURTH; provided, however, that if shares of stock of such class or
-------- -------
series are not traded on any securities exchange or in the over-the-counter
market, "Fair Market Value" shall be determined by the Board of Directors
in good faith; and provided further, however, that "Fair Market Value" as
-------- ------- -------
to any stockholder who purchased any stock of the class (or classes) or
series subject to redemption within 120 days of a Redemption Date need not
(unless otherwise determined by the Board of Directors) exceed the purchase
price paid by him for any stock of such class (or classes) or series of the
Corporation. "Closing Price" on any day means the reported closing sales
price or, in case no such sale takes place, the average of the reported
closing bid and asked prices on the Composite Tape for the New York Stock
Exchange-Listed Stocks, or, if stock of the class or series in question is
not quoted on such Composite Tape, on the New York Stock Exchange, or, if
such stock is not listed on such Exchange, on the principal United States
securities exchange registered under the Securities Exchange Act of 1934 on
which such stock is listed, or, if such stock is not listed on any such
exchange, the highest closing sales price or bid quotation for such stock
on the National Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use, or if no such prices or
quotations are available, the fair market value on the day in question as
determined by the Board of Directors in good faith.
(iii) "Redemption Date" shall mean the date fixed by the Board of
Directors for the redemption of any shares of stock of the Corporation
pursuant to this Section E of Article FOURTH.
(iv) "Redemption Securities" shall mean any debt or equity securities
of the Corporation, any Subsidiary or any other corporation, or any
combination thereof, having such terms and conditions as shall be approved
by the Board of Directors and which, together with any cash to be paid as
part of the redemption price, in the opinion of any nationally recognized
investment banking firm selected by the Board of Directors (which may be a
firm which provides other investment banking, brokerage or other services
to the Corporation), has a value, at the time notice of redemption is given
pursuant to paragraph (d) of this Section E of Article FOURTH, at least
equal to the
12
Fair Market Value of the shares to be redeemed pursuant to this Section E
of Article FOURTH (assuming, in the case of Redemption Securities to be
publicly traded, such Redemption Securities were fully distributed and
subject only to normal trading activity).
(v) "Subsidiary" shall mean any corporation more than 50% of whose
outstanding stock entitled to vote generally in the election of directors
is owned by the Corporation, by one or more Subsidiaries or by the
Corporation and one or more Subsidiaries.
FIFTH: A. The Board of Directors shall have the power to make,
adopt, alter, amend, change or repeal the Bylaws of the Corporation by
resolution adopted by the affirmative vote of a majority of the entire
Board of Directors.
B. Stockholders may not make, adopt, alter, amend, change or repeal
the Bylaws of the Corporation except upon the affirmative vote of at least
75% of the votes entitled to be cast by the holders of all outstanding
shares then entitled to vote generally in the election of directors, voting
together as a single class.
SIXTH: The business and affairs of the Corporation shall be managed
by or under the direction of the Board of Directors, which shall consist of
not less than three or more than seventeen directors, the exact number of
directors to be determined from time to time by resolution adopted by
affirmative vote of a majority of the entire Board of Directors. The Board
of Directors shall be divided into three classes, designated Class I, Class
II and Class III. Each class shall consist, as nearly as may be possible,
of one-third of the total number of directors constituting the entire Board
of Directors. At the 1990 annual meeting of stockholders, Class I
directors shall be elected for a one-year term, Class II directors for a
two-year term and Class III directors for a three-year term. At each
succeeding annual meeting of stockholders, beginning in 1991, successors to
the class of directors whose term expires at that annual meeting shall be
elected for a three-year term. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as possible,
and any additional director of any class elected to fill a vacancy
resulting from an increase in such class shall hold office for a term that
shall coincide with the remaining term of that class, but in no case will a
decrease in the number of directors shorten the term of any incumbent
director. A director shall hold office until the annual meeting for the
year in which his term expires and until his successor shall be elected and
shall qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office. Any vacancy on the Board of
Directors that results from an increase in the number of
13
directors may be filled by a majority of the Board of Directors then in
office, provided that a quorum is present, and any other vacancy occurring
in the Board of Directors may be filled by a majority of the directors then
in office, even if less than a quorum, or by a sole remaining director.
Any director elected to fill a vacancy not resulting from an increase in
the number of directors shall have the same remaining term as that of his
predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock or Special Stock issued by the
Corporation shall have the right, voting separately by class or series, to
elect directors at an annual or special meeting of stockholders, the
election, term of office, filling of vacancies and other features of such
directorships shall be governed by the terms of this Certificate of
Incorporation applicable thereto (including the resolutions of the Board of
Directors pursuant to Article FOURTH), and such Directors so elected shall
not be divided into classes pursuant to this Article SIXTH unless expressly
provided by such terms.
SEVENTH: Special meetings of the stockholders of the Corporation, for
any purpose or purposes, may only be called at any time by a majority of
the entire Board of Directors or by either the Chairman or the President of
the Corporation.
EIGHTH: No stockholder action may be taken except at an annual or
special meeting of stockholders of the Corporation and stockholders may not
take any action by written consent in lieu of a meeting.
NINTH: A. In addition to any affirmative vote required by law or
this Certificate of Incorporation (including any resolutions of the Board
of Directors pursuant to Article FOURTH hereof) or the Bylaws of the
Corporation, and except as otherwise expressly provided in Section B of
this Article NINTH, a Business Combination (as hereinafter defined) with,
or proposed by or on behalf of, any Interested Stockholder (as hereinafter
defined) or any Affiliate or Associate (as hereinafter defined) of any
Interested Stockholder or any person who thereafter would be an Affiliate
or Associate of such Interested Stockholder shall require the affirmative
vote of (i) not less than 75% of the votes entitled to be cast by the
holders of all the then outstanding shares of Voting Stock (as hereinafter
defined), voting together as a single class and (ii) not less than a
majority of the votes entitled to be cast by holders of all the then
outstanding Voting Stock, voting together as a single class, excluding
Voting Stock beneficially owned by such Interested Stockholder. Such
affirmative vote shall be required notwithstanding the fact that no vote
may be required, or that a lesser percentage or separate class vote may be
specified, by law or in any agreement with any national securities exchange
or otherwise;
14
B. The provisions of Section A of this Article NINTH shall not be
applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote, if any, as is
required by law or by any other provision of this Certificate of
Incorporation (including any resolutions of the Board of Directors pursuant
to Article FOURTH hereof) or the Bylaws of the Corporation, or any
agreement with any national securities exchange, if all the conditions
specified in either of the following Paragraphs 1 or 2 are met or, in the
case of Business Combination not involving the payment of consideration to
the holders of the Corporation's outstanding Capital Stock (as hereinafter
defined), if the condition specified in the following Paragraph 1 is met:
1. The Business Combinations shall have been approved, either
specifically or as a transaction which is in an approved category of
transactions, by a majority (whether such approval is made prior to or
subsequent to the acquisition of, or announcement or public disclosure
of the intention to acquire, beneficial ownership of the Voting Stock
that caused the Interested Stockholder to become an Interested
Stockholder) of the Continuing Directors (as hereinafter defined).
2. All of the following conditions shall have been met:
a. The aggregate amount of cash and the Fair Market Value
(as hereinafter defined), as of the date of the consummation of
the Business Combination of consideration other than cash to be
received per share by holders of Common Stock in such Business
Combination shall be at least equal to the highest amount
determined under clauses (i) and (ii) below:
(i) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the
Interested Stockholder for any share of Common Stock in
connection with the acquisition by the Interested
Stockholder of beneficial ownership of shares of Common
Stock (x) within the two-year period immediately prior to
the first public announcement of the proposed Business
Combination (the "Announcement Date") or (y) in the
transaction in which it became an Interested Stockholder,
whichever is higher, in either case as adjusted for any
subsequent stock split, stock dividend, subdivision or
reclassification with respect to Common Stock; and
(ii) the Fair Market Value per share of
15
Common Stock on the Announcement Date or on the date on
which the Interested Stockholder became an Interested
Stockholder (the "Determination Date"), whichever is higher,
as adjusted for any subsequent stock split, stock dividend,
subdivision or reclassification with respect to Common
Stock.
b. The aggregate amount of cash and the Fair Market Value,
as of the date of the consummation of the Business Combination,
of consideration other than cash to be received per share by
holders of shares of each class or series of outstanding Capital
Stock, other than Common Stock, shall be at least equal to the
highest amount determined under clauses (i), (ii) and (iii)
below:
(i) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the
Interested Stockholder for any share of such class or series
of Capital Stock in connection with the acquisition by the
Interested Stockholder of beneficial ownership of shares of
such class or series of Capital Stock (x) within the
two-year period immediately prior to the Announcement Date
or (y) in the transaction in which it became an Interested
Stockholder, whichever is higher, in either case as adjusted
for any subsequent stock split, stock dividend, subdivision
or reclassification with respect to such class or series of
Capital Stock;
(ii) the Fair Market Value per share of such class or
series of Capital Stock on the Announcement Date or on the
Determination Date, whichever is higher, as adjusted for any
subsequent stock split, stock dividend, subdivision or
reclassification with respect to such class or series of
Capital Stock; and
(iii) (if applicable) the highest preferential amount
per share to which the holders of shares of such class or
series of Capital Stock would be entitled in the event of
any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation regardless of
whether the Business Combination to be consummated
constitutes such an event.
The provisions of this Paragraph 2(b) shall be required to be met
with respect to every class or
16
series of outstanding Capital Stock, whether or not the
Interested Stockholder has previously acquired beneficial
ownership of any shares of a particular class or series of
Capital Stock.
c. The consideration to be received by holders of a
particular class or series of outstanding Capital Stock shall be
in cash or in the same form as previously has been paid by or on
behalf of the Interested Stockholder in connection with its
direct or indirect acquisition of beneficial ownership of shares
of such class or series of Capital Stock. If the consideration
so paid for shares of any class or series of Capital Stock varied
as to form, the form of consideration for such class or series of
Capital Stock shall be either cash or the form used to acquire
beneficial ownership of the largest number of shares of such
class or series of Capital Stock previously acquired by the
Interested Stockholder.
d. After the Determination Date and prior to the
consummation of such Business Combination: (i) except as
approved by a majority of the Continuing Directors, there shall
have been no failure to declare and pay at the regular date
therefor any full periodic dividends (whether or not cumulative)
payable in accordance with the terms of any outstanding Capital
Stock; (ii) there shall have been no reduction in the annual rate
of dividends paid on the Common Stock (except as necessary to
reflect any stock split, stock dividend or subdivision of the
Common Stock), except as approved by a majority of the Continuing
Directors; (iii) there shall have been an increase in the annual
rate of dividends paid on the Common Stock as necessary to
reflect any reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction that
has the effect of reducing the number of outstanding shares of
Common Stock, unless the failure so to increase such annual rate
is approved by a majority of the Continuing Directors; and (iv)
such Interested Stockholders shall not have become the beneficial
owner of any additional shares of Capital Stock except as part of
the transaction that results in such Interested Stockholder
becoming an Interested Stockholder and except in a transaction
that, after giving effect thereto, would not result in any
increase in the Interested Stockholder's percentage beneficial
ownership of any class or series of Capital Stock.
e. A proxy or information statement describing the
proposed Business Combination and complying with the requirements
of the Securities Exchange Act of
17
1934 and the rules and regulations thereunder (the "Act") (or any
subsequent provisions replacing such Act, rules or regulations)
shall be mailed to all stockholders of the Corporation at least
30 days prior to the consummation of such Business Combination
(whether or not such proxy or information statement is required
to be mailed pursuant to such Act or subsequent provisions). The
proxy or information statement shall contain on the first page
thereof, in a prominent place, any statement as to the
advisability (or inadvisability) of the Business Combination that
the Continuing Directors, or any of them, may choose to make and,
if deemed advisable by a majority of the Continuing Directors,
the opinion of an investment banking firm selected by a majority
of the Continuing Directors as to the fairness (or not) of the
terms of the Business Combination from a financial point of view
to the holders of the outstanding shares of Capital Stock other
than the Interested Stockholder and its Affiliates or Associates,
such investment banking firm to be paid a reasonable fee for its
services by the Corporation.
f. Such Interested Stockholder shall not have made any
major change in the Corporation's business or equity capital
structure without the approval of a majority of the Continuing
Directors.
C. The following definitions shall apply with respect to this
article NINTH:
1. The term "Business Combination" shall mean:
a. any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (i) any Interested
Stockholder or (ii) any other company (whether or not itself an
Interested Stockholder) which is, or after such merger or
consolidation would be, an Affiliate or Associate of an
Interested Stockholder; or
b. any sale, lease, exchange, mortgage, pledge, transfer
or other disposition or security arrangement, investment, loan,
advance, guarantee, agreement to purchase or sell, agreement to
pay, extension of credit, joint venture participation or other
arrangement (in one transaction or a series of transactions) with
or for the benefit of any Interested Stockholder or any Affiliate
or Associate of any Interested Stockholder involving any assets,
securities or commitments of the Corporation, any Subsidiary or
any Interested Stockholder or any Affiliate or Associate of any
Interested Stockholder which (except for any arrangement, whether
as
18
employee or consultant or otherwise, other than as director,
pursuant to which any Interested Stockholder or any Affiliate or
Associate thereof shall, directly or indirectly, have any control
over or responsibility for the management of any aspect of the
business or affairs of the Corporation, with respect to which
arrangement the value test set forth below shall not apply),
together with all other such arrangements (including all
contemplated future events), has an aggregate Fair Market Value
and/or involves aggregate commitments of $100,000,000 or more or
constitutes more than 5 percent of the book value of the total
assets (in the case of transactions involving assets or
commitments other than capital stock) or 5 percent of the
stockholders' equity (in the case of transactions in capital
stock) of the entity in question (the "Substantial Part"), as
reflected in the most recent fiscal year-end consolidated balance
sheet of such entity existing at the time the stockholders of the
Corporation would be required to approve or authorize the
Business Combination involving the assets, securities and/or
commitments constituting any Substantial Part; provided, that if
--------
stockholders' equity is negative, the fair market value of the
outstanding Capital Stock at the date of such balance sheet shall
be used in lieu thereof in determining if a transaction involves
a Substantial Part; or
c. the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation or for any
amendment to the Corporation's Bylaws; or
d. any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation, or
any merger or consolidation of the Corporation with any of its
Subsidiaries or any other transaction (whether or not with or
otherwise involving an Interested Stockholder) that has the
effect, directly or indirectly, of increasing the proportionate
share of any class or series of Capital Stock, or any securities
convertible into Capital Stock or into equity securities of any
Subsidiary, that is beneficially owned by any Interested
Stockholder or any affiliate or Associate of any Interested
Stockholder; or
e. any agreement, contract or other arrangement providing
for any one or more of the actions specified in the foregoing
clauses (a) to (d).
2. The term "Capital Stock" shall mean all capital stock of the
Corporation authorized to be issued from time to time under Article
FOURTH of this Certificate of
19
Incorporation, and the term "Voting Stock" shall mean all Capital
Stock which by its terms may be voted on all matters submitted to
stockholders of the Corporation generally.
3. The term "person" shall mean any individual, firm, company
or other entity and shall include any group comprised of any person
and any other person with whom such person or any Affiliate or
Associate of such person has any agreement, arrangement or
understanding, directly or indirectly, for the purpose of acquiring,
holding, voting or disposing of Capital Stock.
4. The term "Interested Stockholder" shall mean any person
(other than the Corporation or any Subsidiary and other than any
profit-sharing, employee stock ownership or other employee benefit
plan of the Corporation or any Subsidiary or any trustee of or
fiduciary with respect to any such plan when acting in such capacity)
who (a) is, or has announced or publicly disclosed a plan or intention
to become, the beneficial owner of Voting Stock representing ten
percent or more of the votes entitled to be cast by the holders of all
the then outstanding shares of Voting Stock (without giving effect to
the reduction in votes prescribed by Section D of Article FOURTH); or
(b) is an Affiliate or Associate of the Corporation and at any time
within the two-year period immediately prior to the date in question
was the beneficial owner of Voting Stock representing ten percent or
more of the votes entitled to be cast by the holders of all the then
outstanding shares of Voting Stock (without giving effect to the
reduction in votes prescribed by Section D of Article FOURTH).
5. A person shall be a "beneficial owner" of any Capital Stock
(a) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; (b) which such person or
any of its Affiliates or Associates has, directly or indirectly, (i)
the right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding; or (c) which is beneficially owned, directly or
indirectly, by any other person with which such person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Capital Stock; provided that: (x) no
--------
director or officer of the Corporation (nor any Affiliate or Associate
of any such director or officer) shall, solely by reason of any or
all of such directors or officers acting in their capacities as such,
be deemed the "beneficial owner" of any shares of
20
Capital Stock that are beneficially owned by any other such director
or officer; (y) in the case of any employee stock ownership or similar
plan of the Corporation or of any Subsidiary in which the
beneficiaries thereof possess the right to vote the shares of Voting
Stock held by such plan, no such plan nor any trustee with respect
thereto (nor any Affiliate or Associate of such trustee), solely by
reason of such capacity of such trustee, shall be deemed the
"beneficial owner" of the shares of Voting Stock held under such plan;
and (z) no person shall be deemed the "beneficial owner" of any shares
of Voting Stock held in any voting trust, employee stock ownership
plan or any similar plan or trust if such person does not possess the
right to vote such shares. For the purposes of determining whether a
person is an Interested Stockholder pursuant to Paragraph 4 of this
section C, the number of shares of Capital Stock deemed to be
outstanding shall include shares deemed beneficially owned by such
person through application of this Paragraph 5 of Section C, but shall
not include any other shares of Capital Stock that may be issuable
pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
6. The terms "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 under the Act
as in effect on the date that Article NINTH is approved by the Board
(the term "registrant" in said Rule 12b-2 meaning in this case the
Corporation).
7. The term "Subsidiary" means any company of which a majority
of any class of equity security is beneficially owned by the
Corporation; provided, however, that for the purposes of the
-------- -------
definition of Interested Stockholder set forth in Paragraph 4 of this
Section C, the term "Subsidiary" shall mean only a company of which a
majority of each class of equity security is beneficially owned by the
Corporation.
8. The term "Continuing Director" means any member of the Board
of Directors of the Corporation (the "Board of Directors"), while such
person is a member of the Board of Directors, who is not an Affiliate
or Associate or representative of the Interested Stockholder and was a
member of the Board of Directors prior to the time that the Interested
Stockholder became an Interested Stockholder, and any successor of a
Continuing Director while such successor is a member of the Board of
Directors, who is not an affiliate or associate or representative of
the Interested Stockholder and is recommended or elected to succeed
the Continuing director by a majority of the Continuing Directors.
9. The term "Fair Market Value" means (a) in the
21
case of cash, the amount of such cash; (b) in the case of stock the
highest closing sales price during the 30-day period immediately
preceding the date in question of a share of such stock on the
Composite Tape for New York Stock Exchange - Listed Stocks, or, if
such stock is not quoted on the Composite Tape, on the New York Stock
Exchange, or, if such stock is not listed on such Exchange, on the
principal United States securities exchange registered under the Act
on which such stock is listed, or, if such stock is not listed on any
such exchange, the highest closing sales price or bid quotation with
respect to a share of such stock during the 30-day period preceding
the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any similar system then
in use, or if no such quotations are available, the fair market value
on the date in question of a share of such stock as determined by a
majority of the Continuing Directors in good faith; and (c) in the
case of property other than cash or stock, the fair market value of
such property on the date in question as determined in good faith by a
majority of the Continuing Directors.
10. In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to be
received" as used in Paragraphs 2.a and 2.b of Section B of this
Article NINTH shall include the shares of Common Stock and/or the
shares of any other class or series of Capital Stock retained by the
holders of such shares.
D. A majority of the Continuing Directors shall have the power and
duty to determine for the purposes of this Article NINTH, on the basis of
information known to them after reasonable inquiry, all questions arising
under this Article NINTH including, without limitation, (a) whether a
person is an Interested Stockholder, (b) the number of shares of Capital
Stock or other securities beneficially owned by any person, (c) whether a
person is an Affiliate or Associate of another, (d) whether a Proposed
Action (as hereinafter defined) is with, or proposed by, or on behalf of,
an Interested Stockholder or an Affiliate or Associate of an Interested
Stockholder, (e) whether the assets that are the subject of any Business
Combination have, or the consideration to be received for the issuance or
transfer of securities by the Corporation or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of $100,000,000 or more,
and (f) whether the assets or securities that are the subject of any
Business Combination constitute a Substantial Part. Any such determination
made in good faith shall be binding and conclusive on all parties.
22
E. Nothing contained in this Article NINTH shall be construed to
relieve any Interested Stockholder from any fiduciary obligation imposed by
law.
F. The fact that any Business Combination complies with the
provisions of Section B of this Article NINTH shall not be construed to
impose any fiduciary duty, obligation or responsibility on the Board of
Directors, or any member thereof, to approve such Business Combination or
recommend its adoption or approval to the stockholders of the Corporation,
nor shall such compliance limit, prohibit or otherwise restrict in any
manner the Board of Directors, or any member thereof, with respect to
evaluations of or actions and responses taken with respect to such Business
Combination.
G. For the purpose of this Article NINTH, a Business Combination or
any proposal to amend, repeal or adopt any provision of this Certificate of
Incorporation inconsistent with this Article NINTH (collectively, "Proposed
Action") is presumed to have been proposed by, or on behalf of, an
Interested Stockholder or a person who thereafter would become such if (1)
after the Interested Stockholder became such, the Proposed Action is
proposed following the election of any director of the Corporation who with
respect to such Interested Stockholder, would not qualify to serve as a
Continuing Director or (2) such Interested Stockholder, Affiliate,
Associate or person votes for or consents to the adoption of any such
Proposed Action, unless as to such Interested Stockholder, Affiliate,
Associate or person, a majority of the Continuing Directors makes a good
faith determination that such Proposed Action is not proposed by or on
behalf of such Interested Stockholder, Affiliate, Associate or person,
based on information known to them after reasonable inquiry.
H. Notwithstanding any other provisions of this Certificate of
Incorporation or the Bylaws of the Corporation (and notwithstanding the
fact that a lesser percentage or separate class vote may be specified by
law, this Certificate of Incorporation or the Bylaws of the Corporation),
any proposal to amend, repeal or adopt any provision of this Certificate of
Incorporation inconsistent with this Article NINTH which is proposed by or
on behalf of an Interested Stockholder or an Affiliate or Associate of an
Interested Stockholder shall require the affirmative vote of (i) the
holders of not less than 75% of the votes entitled to be cast by the
holders of all the then outstanding shares of Voting Stock, voting together
as a single class, and (ii) the holders of not less than a majority of the
votes entitled to be cast by the holders of all the then outstanding shares
of Voting Stock, voting together as a single class, excluding Voting Stock
beneficially owned by such Interested Stockholder, provided, however, that
-------- -------
this Section H shall not apply to, and such vote shall not be required for,
any amendment, repeal or adoption
23
unanimously recommended by the Board of Directors if all of such directors
are persons who would be eligible to serve as Continuing Directors within
the meaning of Section C, Paragraph 8 of this Article NINTH.
TENTH: A. Subject to Section C of this Article TENTH, the
Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
---- ----------
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interest of the Corporation, or, with respect to any criminal action or
proceeding, had reasonable cause to believe his conduct was unlawful.
B. Subject to Section C of this Article TENTH, the Corporation shall
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interest of the Corporation; except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless and only to the extent
that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and
24
reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
C. Any indemnification under this Article TENTH (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section A or Section B of this
Article TENTH, as the case may be. Such determination shall be made (i) by
the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (ii)
if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion, or (iii) by the stockholders. To the extent, however,
that a director, officer, employee or agent of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding described in Section A or Section B of this Article TENTH, or in
defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith, without the necessity of
authorization in the specific case.
D. For purposes of any determination under Section C of this Article
TENTH, a person shall be deemed to have acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interest of the
Corporation, and, with respect to any criminal action or proceeding, to
have had no reasonable cause to believe his conduct was unlawful, if his
action is based on the records or books of account of the Corporation or
another enterprise, or on information supplied to him by the officers of
the Corporation or another enterprise in the course of their duties, or on
the advice of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the Corporation or another
enterprise by an independent certified public accountant or by an appraiser
or other expert selected with reasonable care by the Corporation or another
enterprise. The term "another enterprise" as used in this Section D of
Article TENTH shall mean any other corporation or any partnership, joint
venture, trust or other enterprise of which such person is or was serving
at the request of the Corporation as a director, officer, employee or
agent. The provisions of this Section D shall not be deemed to be
exclusive or to limit in any way the circumstances in which a person may be
deemed to have met the applicable standard of conduct set forth in Sections
A or B of this Article TENTH as the case may be.
E. Notwithstanding any contrary determination in the specific case
under Section C of this Article TENTH, and notwithstanding the absence of
any determination thereunder, any director, officer, employee or agent may
apply to any court
25
of competent jurisdiction in the State of Delaware for indemnification to
the extent otherwise permissible under Sections A and B of this Article
TENTH. The basis of such indemnification by a court shall be a
determination by such court that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standards of conduct set forth in Sections A or B of this
Article TENTH, as the case may be. Notice of any application for
indemnification pursuant to this Section E of Article TENTH shall be given
to the Corporation promptly upon the filing of such application.
F. Expenses incurred in defending or investigating a threatened or
pending action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of the director, officer,
employee or agent to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Corporation as authorized
in this Article TENTH.
G. The indemnification and advancement of expenses provided by this
Article TENTH shall not be deemed exclusive of any other rights to which
any person seeking indemnification or advancement of expenses may be
entitled under any Bylaw, agreement, contract, vote of stockholders or
disinterested directors or pursuant to the direction (howsoever embodied)
of any court of competent jurisdiction or otherwise, both as to action in
his official capacity and as to action in another capacity while holding
such office, it being the policy of the Corporation that indemnification
of, and advancement of expenses to, the persons specified in Sections A and
B of this Article TENTH shall be made to the fullest extent permitted by
law. The provisions of this Article TENTH shall not be deemed to preclude
the indemnification of, and advancement of expenses to, any person who is
not specified in Sections A or B of this Article TENTH but whom the
Corporation has the power or obligation to indemnify under the provisions
of the General Corporation Law of the State of Delaware, or otherwise. The
indemnification provided by this Article TENTH shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of
such person.
H. The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power or the
obligation to indemnify him
26
against such liability under the provisions of this Article TENTH.
I. For purposes of this Article TENTH, reference to "the Corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at
the request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, shall stand in the same position under the provisions
of this Article TENTH with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation
if its separate existence had continued.
ELEVENTH: Whenever a compromise or arrangement is proposed between
this Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application
in a summary way of this Corporation or of any creditor or stockholder
thereof or on the application of any receiver or receivers appointed for
this Corporation under the provisions of Section 291 of the GCL or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of the
GCL, order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority
in number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and
to any reorganization of this Corporation as a consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of this
Corporation, as the case may be, and also on this Corporation.
TWELFTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of Incorporation, in
the manner now or thereafter prescribed by statute, and all rights
conferred upon stockholders herein are granted subject to this reservation.
27
THIRTEENTH: No director of this Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law, (iii) under
Section 174 of the GCL, or (iv) for any transaction from which the director
derived an improper personal benefit. If the GCL is hereafter amended to
authorize corporate action further limiting or eliminating the personal
liability of directors, then the liability of each director of the
Corporation shall be limited or eliminated to the fullest extent permitted
by the GCL as so amended from time to time.
FOURTEENTH: The name and mailing address of the incorporator is:
E. O. Robinson, Jr.
The Promus Companies Incorporated
1023 Cherry Road
Memphis, Tennessee 38117
28
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, do make this certificate, herein
declaring and certifying that this is my act and deed and the facts herein
stated are true, and accordingly have hereunto set my hand this 31st day of
October, 1989.
/s/ E. O. Robinson, Jr.
------------------------
E. O. Robinson, Jr.
29
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
The Promus Companies Incorporated, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of The Promus
Companies Incorporated, resolutions were duly adopted setting forth a
proposed amendment of the Certificate of Incorporation of said corporation,
declaring said amendment to be advisable and in the best interest of the
corporation and its stockholders, and directing that the proposed amendment
be considered at the next annual meeting of the stockholders of said
corporation. The resolutions setting forth the proposed amendment are as
follows:
RESOLVED, that the Board of Directors of the Company hereby approves
and sets forth the following proposed amendment (the "Proposed Amendment")
to Article FOURTH of the Company's Certificate of Incorporation:
(1) That paragraph A of Article FOURTH of the Certificate of
Incorporation of the Company be amended to read in its entirety as follows:
"A. The total number of shares which the Corporation shall have
authority to issue is 365,150,000, consisting of 360,000,000 shares of
Common Stock, par value $.10 per share (the "Common Stock"), 150,000
shares of Preferred Stock, par value of $100.00 per share (the
"Preferred Stock"), and 5,000,000 shares of Special Stock, par value
$1.12 1/2 per share (the "Special Stock")."
(2) That the following additional paragraph be inserted immediately
after paragraph A of Article FOURTH of the Company's Certificate of
Incorporation:
"Simultaneously with the effective date of the amendment of paragraph
A of Article FOURTH to read as set forth above (the "Effective Date"),
each share of the Common Stock, par value $1.50 per share, of the
Corporation issued and outstanding or held as treasury shares
immediately prior to the Effective Date shall, automatically and
without further action on the part of the holder thereof, have a par
value of $.10 per share and each existing certificate representing
such shares shall represent the same number of shares of Common Stock,
with a par value of $.10 per share."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, an annual meeting of the stockholders of said corporation was
held upon notice in accordance with Section 222 of the General Corporation
Law of the State of Delaware, at which meeting the necessary number of
shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by E. O. Robinson, Jr., its Senior Vice President and attested by
Vincent G. De Young, its Assistant Secretary, the 29th day of April, 1994.
By: /s/ E. O. ROBINSON, JR.
--------------------------
E. O. Robinson, Jr.
Senior Vice President
ATTEST:
/s/ VINCENT G. DE YOUNG
- ----------------------
Vincent G. De Young
Assistant Secretary
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
The Promus Companies Incorporated, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of The Promus
Companies Incorporated, resolutions were duly adopted setting forth a
proposed amendment of the Certificate of Incorporation of said corporation,
declaring said amendment to be advisable and in the best interest of the
corporation and its stockholders, and directing that the proposed amendment
be considered at the next annual meeting of the stockholders of said
corporation. The resolutions setting forth the proposed amendment are as
follows:
RESOLVED, that the Board of Directors of the Company hereby approves
and sets forth the following proposed amendment (the "Proposed Amendment")
to Section E of Article FOURTH of the Company's Certificate of
Incorporation:
That Section E of Article FOURTH of the Certificate of Incorporation
of the Company be amended to read in its entirety as follows:
Notwithstanding any other provision of this Certificate of
Incorporation to the contrary, but subject to the provisions of any
resolutions of the Board of Directors adopted pursuant to this Article
FOURTH creating any series of Preferred Stock, Special Stock or any other
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, outstanding shares of Common Stock,
Preferred Stock, Special Stock or any other class or series of stock of the
Corporation shall always be subject to redemption by the Corporation, by
action of the Board of Directors, if, in the judgment of the Board of
Directors, any holder of such stock is determined by any gaming regulatory
agency to be unsuitable, has an application for a license or permit
rejected, or has a previously issued license or permit rescinded,
suspended, revoked or not renewed, as the case may be, whether or not any
of the foregoing is final and nonappealable, or if such action otherwise
should be taken, pursuant to Section 151(b) of the GCL or any other
applicable provision of law, to the extent necessary to avoid any
regulatory sanctions against, or to prevent the loss of or secure the
reinstatement of any license, franchise or entitlement from any
governmental agency held by, the Corporation, any Affiliate of the
Corporation or any entity in which the Corporation or such Affiliate is an
owner, which license, franchise or entitlement is (i) conditioned upon some
or all of the holders of the Corporation's stock of any class or series
possessing prescribed qualifications, or (ii) needed to allow the conduct
of any portion of the business of the Corporation or any such Affiliate or
other entity. The terms and conditions of such redemption shall be as
follows:
(a) the redemption price of the shares to be redeemed pursuant
to this Section E of Article FOURTH shall be equal to the Fair Market
Value of such shares (excluding any dividends thereon not entitled to
be received pursuant to paragraph (e) of this Section E of Article
FOURTH) or such other redemption price as required by any applicable
law, regulation or rule;
(b) the redemption price of such shares may be paid in cash,
Redemption Securities or any combination thereof;
(c) if less than all the shares held by Disqualified Holders are
to be redeemed, the shares to be redeemed shall be selected in such
manner as shall be determined by the Board of Directors, which may
include selection first of the most recently purchased shares thereof,
selection by lot or selection in any other manner determined by the
Board of Directors;
(d) at least 30 days' written notice of the Redemption Date
shall be given to the record holders of the shares selected to be
redeemed (unless waived in writing by any such holder), provided that
the Redemption Date may be the date on which written notice shall be
given to record holders if the cash or Redemption Securities necessary
to effect the redemption shall have been deposited in trust for the
benefit of such record holders and subject to immediate withdrawal by
them upon surrender of the stock certificates for their shares to be
redeemed;
(e) from and after the Redemption Date or such earlier date as
mandated by any applicable law, regulation or rule, any and all rights
of whatever nature, which may be held by the owners of shares selected
for redemption (including without limitation any rights to vote or
participate in dividends declared on stock of the same class or series
as such shares), shall cease and terminate and they shall thenceforth
be entitled only to receive the cash or Redemption Securities payable
upon redemption; and
(f) such other terms and conditions as the Board of Directors
shall determine.
For purposes of this Section E of Article FOURTH:
(i) "Disqualified Holder" shall mean any holder of shares of
stock of the Corporation of any class (or classes) or series who,
either individually or when taken together with any other holders of
shares of stock of the Corporation of any class (or classes) or
series, in the judgment of the Board of Directors, is determined by
any gaming regulatory agency to be unsuitable, or has an application
for a license or permit rejected, or has a previously issued license
or permit rescinded, suspended, revoked or not renewed, as the case
may be, whether or not any of the foregoing is final and
nonappealable, or whose holding
2
of such stock, either individually or when taken together with the
holding of shares of stock of the Corporation of any class (or
classes) or series by any other holders, may result, in the judgment
of the Board of Directors, in any regulatory sanctions against, or the
loss of or the failure to secure the reinstatement of any license,
franchise or entitlement from any governmental agency held by, the
Corporation, any Affiliate of the Corporation or any entity in which
the Corporation or such Affiliate is an owner.
(ii) "Fair Market Value" of a share of the Corporation's
stock of any class or series shall mean the average Closing Price for
such share for each of the 45 most recent days of which shares of
stock of such class or series shall have been traded preceding the day
on which notice of redemption shall be given pursuant to paragraph (d)
of this Section E of Article FOURTH; provided, however, that if shares
-------- -------
of stock of such class or series are not traded on any securities
exchange or in the over-the-counter market, "Fair Market Value" shall
be determined by the Board of Directors in good faith; and provided
--------
further, however, that "Fair Market Value" as to any stockholder who
------- -------
purchased any stock of the class (or classes) or series subject to
redemption within 120 days of a Redemption Date need not (unless
otherwise determined by the Board of Directors) exceed the purchase
price paid by him for any stock of such class (or classes) or series
of the Corporation. "Closing Price" on any day means the reported
closing sales price or, in case no such sale takes place, the average
of the reported closing bid and asked prices on the Composite Tape for
the New York Stock Exchange-Listed Stocks, or, if such stock is not listed
on such Exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934 on which such
stock is listed, or, if such stock is not listed on any such exchange,
the highest closing sales price or bid quotation for such stock on the
National Association of Securities Dealers, Inc. Automated Quotations
System or any system then in use, or if no such prices or quotations
are available, the fair market value on the day in question as
determined by the Board of Directors in good faith.
(iii) "Redemption Date" shall mean the date fixed by the
Board of Directors for the redemption of any shares of stock of the
Corporation pursuant to this Section E of Article FOURTH.
(iv) "Redemption Securities" shall mean any debt or equity
securities of the Corporation, any Subsidiary or any other
corporation, or any combination thereof, having such terms and
conditions as shall be approved by the Board of Directors and which,
together with any cash to be paid as part of the redemption price, in
the opinion of any nationally recognized investment banking firm
selected by the Board of Directors (which may be a firm which provides
other investment banking, brokerage or other services to the
Corporation), has a value, at the time notice of redemption is given
pursuant to paragraph (d) of this Section E of Article FOURTH, at
least equal to the Fair Market Value of the shares to be redeemed
3
pursuant to this Section E of Article FOURTH (assuming, in the case of
Redemption Securities to be publicly traded, such Redemption
Securities were fully distributed and subject only to normal trading
activity).
(v) "Subsidiary" shall mean any corporation more than 50% of
whose outstanding stock entitled to vote generally in the election of
directors is owned by the Corporation, by one or more Subsidiaries or
by the Corporation and one or more Subsidiaries.
(vi) "Affiliate" shall have the meaning ascribed to such
term in Rule 12b-2 under the Act as in effect on the date that Article
FOURTH is approved by the Board (the term "registrant" in said Rule
12b-2 meaning in this case the Corporation).
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, an annual meeting of the stockholders of said corporation was
held upon notice in accordance with Section 222 of the General Corporation
Law of the State of Delaware, at which meeting the necessary number of
shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by E. O. Robinson, Jr., its Senior Vice President and attested by
Stephen H. Brammell, its Assistant Secretary, the 26th day of May 1995.
By: /s/ E. O. Robinson, Jr.
__________________________
E. O. Robinson, Jr.
Senior Vice President
ATTEST:
/s/ Stephen H. Brammell
________________________
Stephen H. Brammell
Assistant Secretary
4
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
THE PROMUS COMPANIES INCORPORATED
The Promus Companies Incorporated, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of The Promus
Companies Incorporated, resolutions were duly adopted setting forth a
proposed amendment of the Certificate of Incorporation of said corporation,
declaring said amendment to be advisable and in the best interest of the
corporation and its stockholders, and directing that the proposed amendment
be considered at the next annual meeting of the stockholders of said
corporation. The resolutions setting forth the proposed amendment are as
follows:
RESOLVED, that the Board of Directors of the Company hereby approves
and sets forth the following proposed amendment (the "Proposed Amendment")
to Article FIRST of the Company's Certificate of Incorporation:
That Article FIRST of the Certificate of Incorporation of the Company
be amended to read in its entirety as follows:
"FIRST: The name of the Corporation is Harrah's Entertainment, Inc."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, an annual meeting of the stockholders of said corporation was
held upon notice in accordance with Section 222 of the General Corporation
Law of the State of Delaware, at which meeting the necessary number of
shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by E. O. Robinson, Jr., its Senior Vice President and attested by
Stephen H. Brammell, its Assistant Secretary, the 30th day of June, 1995.
By: /s/ E. O. Robinson, Jr.
__________________________
E. O. Robinson, Jr.
Senior Vice President
ATTEST:
/s/ Stephen H. Brammell
________________________
Stephen H. Brammell
Assistant Secretary
2