<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
JCC HOLDING COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
JCC HOLDING COMPANY
512 SOUTH PETERS STREET
NEW ORLEANS, LOUISIANA 70130
April 15, 1999
Dear Stockholder:
On behalf of the Board of Directors and management of JCC Holding Company,
I cordially invite you to the Annual Meeting of Stockholders to be held on
Thursday, May 13, 1999 at 10:00 a.m. at the Hotel Inter-Continental, 111 East
48th Street, New York, New York.
At the Annual Meeting, stockholders will be asked to (a) approve a new
long-term incentive plan, (b) approve a new non-employee director stock option
plan, (c) elect two directors for a three year term and (d) ratify the
appointment of independent accountants. These matters are described in the
accompanying Notice of Annual Meeting and Proxy Statement.
It is important that your stock be represented at the meeting regardless of
the number of shares you hold. You are encouraged to specify your voting
preferences by so marking the enclosed proxy card. Please then sign and date the
proxy card and return it in the enclosed envelope whether or not you plan to
attend the meeting. If you do attend and wish to vote in person, you may revoke
your proxy at the meeting.
If you plan to attend the meeting, please check the card in the space
provided. This will assist us with meeting preparations and will enable us to
expedite your admittance. If your shares are not registered in your own name and
you would like to attend the meeting, please ask the broker, trust, bank or
other nominee which holds the shares to provide you with evidence of your share
ownership, which will enable you to gain admission to the meeting.
Sincerely,
/S/ FREDERICK W. BURFORD
Frederick W. Burford
President
<PAGE> 3
JCC HOLDING COMPANY
512 SOUTH PETERS STREET
NEW ORLEANS, LOUISIANA 70130
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1999
---------------------
NOTICE HEREBY IS GIVEN that the 1999 Annual Meeting of Stockholders of JCC
Holding Company (the "Company") will be held at the Hotel Inter-Continental, 111
East 48th Street, New York, New York, on Thursday, May 13, 1999 at 10:00 a.m.
for the purposes of:
1. Approving the Company's 1998 Long-Term Incentive Plan;
2. Approving the Company's 1999 Non-Employee Director Stock Option
Plan;
3. Electing two directors to serve until the 2002 Annual Meeting of
Stockholders;
4. Ratifying the appointment of Deloitte & Touche LLP as independent
accountants of the Company for the fiscal year ending December 31, 1999;
and
5. Transacting such other business as properly may come before the
Annual Meeting or any adjournments thereof.
Information relating to the foregoing matters is set forth in the attached
Proxy Statement. Stockholders of record at the close of business on Thursday,
March 25, 1999 are entitled to receive notice of and to vote at the Annual
Meeting and any adjournments thereof.
By Order of the Board of Directors.
/S/ L. CAMILLE FOWLER
L. Camille Fowler
Vice President -- Finance,
Treasurer and Secretary
New Orleans, Louisiana
April 15, 1999
PLEASE READ THE ATTACHED PROXY STATEMENT AND PROMPTLY COMPLETE, EXECUTE AND
RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. YOU
CAN SPARE YOUR COMPANY THE EXPENSE OF FURTHER PROXY SOLICITATION BY RETURNING
YOUR PROXY CARD PROMPTLY. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE THE
PROXY AND VOTE IN PERSON IF YOU SO DESIRE.
<PAGE> 4
JCC HOLDING COMPANY
---------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1999
---------------------
JCC Holding Company, a Delaware corporation (the "Company"), is the
successor to the operations of Harrah's Jazz Company, a Louisiana general
partnership ("HJC"). Prior to October 30, 1998 (the "Effective Date"), HJC was
comprised of (1) Harrah's New Orleans Investment Company ("HNOIC"), an indirect
wholly-owned subsidiary of Harrah's Entertainment, Inc. ("HET"), (2) New
Orleans/Louisiana Development Corporation and (3) Grand Palais Casino, Inc. On
October 13, 1998, the United States Bankruptcy Court for the Eastern District of
Louisiana confirmed a Third Amended Joint Plan of Reorganization Under Chapter
11 of Title 11 of the United States Code As Modified Through October 13, 1998
(the "Plan of Reorganization") of HJC, Harrah's Jazz Finance Corp. ("Finance
Corp.") and HNOIC. On the Effective Date, the transactions contemplated by the
Plan of Reorganization were consummated, including the transfer of all of the
partnership interests of HJC to Jazz Casino Company, L.L.C., a wholly-owned
subsidiary of the Company ("JCC"). Through JCC, the Company is constructing a
land-based casino (the "Casino") in downtown New Orleans, Louisiana (the "City")
at the foot of Canal and Poydras Streets on the site of New Orleans' former
convention center. Pursuant to an agreement between JCC and an agency of the
State of Louisiana (the "State"), JCC has the exclusive right to operate a
land-based casino in the City.
This Proxy Statement is furnished to the stockholders of the Company in
connection with the solicitation of proxies by the Board of Directors of the
Company for use at the 1999 Annual Meeting of Stockholders of the Company and at
any adjournments thereof (the "Annual Meeting"). The Annual Meeting will be held
on Thursday, May 13, 1999 at 10:00 a.m. at the Hotel Inter-Continental, 111 East
48th Street, New York, New York.
The approximate date on which the Company is first mailing this Proxy
Statement and the accompanying proxy card to stockholders is April 15, 1999.
VOTING
GENERAL
The Company's authorized capital stock consists of Class A common stock,
par value $.01 per share ("Class A Common Stock"), Class B common stock, par
value $.01 per share ("Class B Common Stock;" together with Class A Common
Stock, "Common Stock"), and unclassified common stock, par value $.01 per share
("Unclassified Common Stock"). Prior to the Transition Date (as defined below),
the Company may not issue shares of Unclassified Common Stock, and on and after
the Transition Date, the Company may not issue shares of Common Stock. Each
share of Common Stock outstanding on the Transition Date will automatically
convert into a share of Unclassified Common Stock. "Transition Date" means the
date upon which the earliest of the following events occurs: (1) the third
anniversary of the date on which the Casino is open to customers, (2) the end of
two consecutive 12-month periods in each of which contingent payments under
JCC's Senior Subordinated Notes due 2009 With Contingent Payments (the "Notes")
and Senior Subordinated Contingent Notes due 2009 (the "Contingent Notes")
equals or exceeds $15 million and (3) the end of a 30-day period during which
the average daily closing Minimum Market Value (as defined below) equals or
exceeds $435 million (as adjusted to account for purchases of Common Stock by
the Company or the Company's issuance of additional shares of Common Stock).
"Minimum Market Value" means, for any trading day, the sum of (a) the closing
price of Class A Common Stock multiplied by the number of shares of Class A
Common Stock that were issued to holders of HJC's and Finance Corp.'s 14 1/4%
First Mortgage Notes due 2001 with Contingent Interest (the "Old Bonds") on the
Effective Date pursuant to the Plan of Reorganization and (b) the closing price
for $1,000 of Notes and Contingent Notes divided by
<PAGE> 5
$1,000, and then multiplied by the aggregate principal amount of the Notes and
Contingent Notes outstanding.
SECURITIES THAT CAN BE VOTED AT THE ANNUAL MEETING
The securities that can be voted at the Annual Meeting consist of the Class
A Common Stock and Class B Common Stock. Except in the election of directors,
holders of Common Stock are entitled to cast one vote for each share held on the
record date on each matter submitted to the stockholders at the Annual Meeting.
In the election of directors, (1) holders of Class A Common Stock are entitled
to cast one vote for each share of Class A Common Stock held on the record date
for any person chosen to stand for election by the Class A Director Nomination
Committee of the Board of Directors or nominated by such a holder in accordance
with the Company's Bylaws (the "Class A Nominees") and (2) holders of Class B
Common Stock are entitled to cast one vote for each share of Class B Common
Stock held on the record date for any person chosen to stand for election by the
Class B Director Nomination Committee of the Board of Directors or nominated by
such a holder in accordance with the Company's Bylaws (the "Class B Nominees").
The record date for determining stockholders who are entitled to receive
notice of, and to vote at, the Annual Meeting has been fixed by the Board of
Directors as the close of business on March 25, 1999. On the record date,
5,547,377 shares of Class A Common Stock held of record by 557 stockholders and
4,452,623 shares of Class B Common Stock held of record by two stockholders were
outstanding and eligible to be voted at the Annual Meeting. Harrah's Crescent
City Investment Company ("HCCIC"), a wholly-owned subsidiary of HET, was the
record holder of approximately 96.6% of the issued and outstanding shares of
Class B Common Stock, or approximately 43.0% of the issued and outstanding
shares of Common Stock, on the record date.
QUORUM AND VOTE REQUIRED
At the Annual Meeting, the presence, in person or by proxy, of (1) the
holders of a majority of the issued and outstanding shares of Class A Common
Stock entitled to vote thereat and (2) the holders of a majority of the issued
and outstanding shares of Class B Common Stock entitled to vote thereat, will
constitute a quorum for the transaction of business. Abstentions, votes withheld
from any nominee and broker non-votes will be counted as present for purposes of
determining the presence or absence of a quorum at the Annual Meeting. Broker
non-votes are votes that brokers holding shares of record for their customers
are not permitted to cast under applicable stock exchange rules because the
brokers have not received specific instructions from their customers as to
certain proposals and as to which the brokers have advised the Company that they
lack voting authority.
The following stockholder votes will be required to approve the four
proposals to be submitted by management at the Annual Meeting:
- The proposal to approve the Company's 1998 Long-Term Incentive Plan
(Proposal 1) and the proposal to approve the Company's 1999 Non-Employee
Director Stock Option Plan (Proposal 2) must each be approved by a
majority of the votes cast thereon in person or by proxy at the Annual
Meeting. As a result, abstentions cast for either proposal will have the
same effect as a vote against such proposal, but broker non-votes will
have no effect.
- With regard to the proposal to elect two directors to serve until the
2002 Annual Meeting of Stockholders (Proposal 3), (1) the Class A Nominee
must be elected by the affirmative vote of a plurality of the issued and
outstanding shares of Class A Common Stock present in person or by proxy
at the Annual Meeting and entitled to vote in such election and (2) the
Class B Nominee must be elected by the affirmative vote of a plurality of
the issued and outstanding shares of Class B Common Stock present in
person or by proxy at the Annual Meeting and entitled to vote in such
election. As a result, shares that are withheld from voting as to any
nominee will have the same effect as a vote against the nominee, but
broker non-votes will have no effect.
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<PAGE> 6
- The proposal to ratify the appointment of independent accountants
(Proposal 4) must be approved by the holders of a majority of the shares
of Common Stock present in person or by proxy at the Annual Meeting and
entitled to vote thereat. As a result, abstentions will have the same
effect as a vote against the proposal, but broker non-votes will have no
effect.
PROXIES; OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The accompanying proxy card is for use at the Annual Meeting if a
stockholder is unable to attend in person or is able to attend but does not wish
to vote in person. Stockholders should specify their choices with regard to each
proposal on the enclosed proxy card. All properly executed and dated proxy cards
delivered by stockholders to the Company in time to be voted at the Annual
Meeting and not revoked will be voted at the Annual Meeting in accordance with
the instructions given. If no specific instructions are given, the shares
represented by a signed and dated proxy card will be voted "FOR" the election of
the two director nominees named in Proposal 3 and "FOR" each of Proposals 1, 2
and 4.
The Board of Directors is not aware of any other business to be presented
to a vote of the stockholders at the Annual Meeting. As permitted by Rule
14a-4(c) of the Securities and Exchange Commission, the persons named as proxies
on the proxy cards will have discretionary authority to vote in their judgment
on any proposals presented by stockholders for consideration at the Annual
Meeting that are submitted to the Company after February 17, 1999. Such proxies
also will have discretionary authority to vote in their judgment upon the
election of any person selected in accordance with the Company's Restated
Certificate of Incorporation as a director nominee in place of a nominee named
in Proposal 3 who is unable to serve or for good cause will not serve as a
director, and upon matters incident to the conduct of the Annual Meeting.
The giving of a proxy does not affect the right to vote in person should
the stockholder attend the Annual Meeting. Any stockholder who has given a proxy
has the power to revoke it at any time before it is voted by giving written
notice of revocation to JCC Holding Company, 512 South Peters Street, New
Orleans, Louisiana 70130, Attention: L. Camille Fowler, Vice
President -- Finance, Treasurer and Secretary, by executing and delivering a
proxy card bearing a later date to Ms. Fowler, or by voting in person at the
Annual Meeting. If a stockholder will not be attending the Annual Meeting, any
proxy or notice should be returned in time for receipt no later than the close
of business on the day preceding the Annual Meeting.
In addition to soliciting proxies directly, the Company has requested
brokerage firms, nominees, custodians and fiduciaries to forward proxy materials
to the beneficial owners of shares held of record by them. The Company also may
solicit proxies through its directors, officers and employees in person and by
telephone and facsimile, without payment of additional compensation to such
persons. All expenses incurred in connection with the solicitation of proxies
will be borne by the Company.
3
<PAGE> 7
STOCK OWNERSHIP
The following table sets forth certain information as of February 1, 1999
(unless otherwise indicated) regarding the beneficial ownership of Class A
Common Stock and Class B Common Stock by (a) each person who is known by the
Company to own more than 5% of either the Class A Common Stock or the Class B
Common Stock, (b) each director and nominee for director, (c) each executive
officer named in the Summary Compensation Table herein and (d) all directors and
executive officers as a group.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
----------------------------- -----------------------------
SHARES SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT OF BENEFICIALLY PERCENT OF
OF BENEFICIAL OWNER OWNED(1) CLASS OWNED(1) OWNED(1) CLASS OWNED(1)
- ------------------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Harrah's Entertainment, Inc.(2).............. -- -- 4,302,623 96.6 %
Merrill Lynch & Co., Inc.(3)................. 1,042,653 18.8 % -- --
Contrarian Capital
Management, L.L.C
Contrarian Capital
Advisors, L.L.C.(4)........................ 664,118 12.0 % -- --
Colin V. Reed................................ -- -- -- --
Seth E. Lemler............................... -- -- -- --
Eddie N. Williams............................ -- -- -- --
Edwin Jacobson............................... -- -- -- --
John M. Boushy............................... -- -- -- --
Rudy J. Cerone............................... -- -- -- --
Frederick W. Burford(5)...................... -- -- -- --
L. Camille Fowler(5)......................... -- -- -- --
All directors and executive officers as a
group (eight persons)(5)................... -- -- -- --
</TABLE>
- ---------------
(1) The named persons have sole voting and investment power with regard to all
shares shown as beneficially owned by them, except as noted below. Pursuant
to the rules of the Securities and Exchange Commission, the number of shares
of Common Stock beneficially owned by a specified person or group includes
shares issuable pursuant to convertible securities, warrants and options
held by such person or group which may be converted or exercised within 60
days after February 1, 1999. Such shares are deemed to be outstanding for
the purpose of computing the percentage of the class beneficially owned by
such person or group but are not deemed to be outstanding for the purpose of
computing the percentage of the class beneficially owned by any other person
or group.
(2) Shares are held of record by HET's indirect wholly-owned subsidiary, HCCIC.
Does not include shares of Unclassified Common Stock issuable upon the
exercise of warrants held by HCCIC (the "HET Warrant"). The HET Warrant
entitles HCCIC to purchase shares of Unclassified Common Stock such that
upon the exercise of the HET Warrant in its entirety, HET and its
subsidiaries will own in the aggregate 50% of the then outstanding shares of
Unclassified Common Stock, subject to certain adjustments. The HET Warrant
is exercisable at any time from the Transition Date until October 30, 2005.
The address of HET and HCCIC is 1023 Cherry Road, Memphis, Tennessee 38117.
(3) According to Schedule 13G dated January 29, 1999. Merrill Lynch & Co., Inc.
("Merrill Lynch"), a parent holding company, holds shares of Class A Common
through its (a) indirectly-owned asset management subsidiaries, Merrill
Lynch Asset Management, L.P. ("MLAM") and Fund Asset Management, L.P.
("FAM") and (b) indirectly-owned subsidiary, Merrill Lynch Corporate Bond
Fund, Inc. ("MLBF"). MLAM and FAM are investment advisers registered under
Section 203 of the Investment Advisors Act of 1940, and act as investment
advisors for certain investment companies registered under Section 8 of the
Investment Company Act of 1940. Merrill Lynch, through MLAM, FAM and MLBF,
shares voting and dispositive power with respect to 1,042,653 shares of
Class A Common Stock, or 18.8% of the issued and outstanding shares of Class
A Common Stock. The address of Merrill Lynch is World Financial Center,
North Tower, 250 Vesey Street, New York, New York 10381.
(4) According to Schedule 13G dated January 11, 1999. Contrarian Capital
Management, L.L.C. ("CCM") and Contrarian Capital Advisors, L.L.C. ("CCA"),
registered investment advisors that are under
4
<PAGE> 8
common control, are deemed to be the beneficial owners within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended, of 664,118
shares of Class A Common Stock. Of such shares, 492,852 shares, or 8.9% of
the issued and outstanding shares of Class A Common Stock, are held by
various investment entities managed by CCM and investment management clients
of CCM, and 171,266 of such shares, or 3.1% of the issued and outstanding
shares of Class A Common Stock, are held by investment management clients of
CCA. The address of CCM and CCA is 411 West Putnam Avenue, Suite 225,
Greenwich, Connecticut 06830.
(5) For a description of options to purchase shares of Class A Common Stock and
restricted shares of Class A Common Stock granted or approved for grant to
Mr. Burford and Ms. Fowler after February 1, 1999, see "Proposal
1 -- Approval of Long-Term Incentive Plan -- Benefits to Named Executive
Officers and Others."
PROPOSAL 1
APPROVAL OF THE 1998 LONG-TERM INCENTIVE PLAN
On October 29, 1998, the Company's Board of Directors adopted the JCC
Holding Company 1998 Long-Term Incentive Plan (the "LTIP"), subject to approval
of the LTIP by the stockholders at the Annual Meeting. The Company has reserved
for issuance upon the grant or exercise of awards pursuant to the LTIP 750,000
shares of the authorized but unissued shares of Class A Common Stock, and after
the Transition Date, Unclassified Common Stock. The LTIP was effective as of
October 29, 1998, the date of its adoption by the Company's Board of Directors.
A summary of the LTIP is set forth below. The summary is qualified in its
entirety by the full text of the LTIP. The Company will provide, upon request
and without charge, a copy of the full text of the LTIP to each person to whom a
copy of this Proxy Statement is delivered. Requests should be directed to: JCC
Holding Company, 512 South Peters Street, New Orleans, Louisiana 70130,
Attention: L. Camille Fowler, Vice President -- Finance, Treasurer and
Secretary.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE PROPOSAL TO APPROVE THE LTIP.
GENERAL
The purpose of the LTIP is to promote the success, and enhance the value,
of the Company by linking the personal interests of employees, officers,
consultants and directors to those of the stockholders, and by providing such
employees, officer, consultants and directors with an incentive for outstanding
performance. As of March 25, 1999, there were approximately ten persons eligible
to participate in the LTIP.
The LTIP authorizes the granting of awards ("Awards") to employees,
officers, consultants and directors of the Company or its subsidiaries in the
following forms: (1) options to purchase shares of Class A Common Stock or,
after the Transition Date, the Unclassified Common Stock, as the case may be
("Options"), which may be incentive stock options or non-qualified, (2) stock
appreciation rights ("SARs"); (3) performance units ("Performance Units"); (4)
restricted stock ("Restricted Stock"); (5) dividend equivalents ("Dividend
Equivalents"); (6) other stock-based awards; or (7) any other right or interest
relating to Class A Common Stock or, after the Transition Date, Unclassified
Common Stock, as the case may be, or cash.
Pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), the Company may not deduct compensation in excess of $1 million
paid to the President and the four next most highly compensated executive
officers of the Company. The deduction limits of Code Section 162(m) and the
regulations thereunder do not apply to compensation payable under the LTIP until
the expiration of the reliance period described in Treasury Regulation
1.162-27(f) or any successor regulation. The LTIP is designed to comply with
Code Section 162(m) so that the grant of Options and SARs under the LTIP, and
other Awards, such as Performance Units, that are conditioned on the performance
goals described in Section 13.13 of the LTIP, will be excluded from the
calculation of annual compensation for purposes of Code Section 162(m) and will
be fully deductible by the Company.
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ADMINISTRATION
The LTIP will be administered by the Compensation Committee of the
Company's Board of Directors, or at the discretion of the Board from time to
time, by the Board. The Compensation Committee has the power, authority and
discretion to designate participants; determine the type or types of Awards to
be granted to each participant and the number, terms and conditions thereof;
establish, adopt or revise any rules and regulations as it may deem necessary or
advisable to administer the LTIP; and make all other decisions and
determinations that may be required under, or as the Compensation Committee
deems necessary or advisable to administer, the LTIP. During any time that the
board is acting as administrator of the LTIP, it shall have all the powers of
the Compensation Committee thereunder.
AWARDS
Stock Options. The Compensation Committee is authorized to grant Options,
which may be incentive stock options ("ISOs") or nonqualified stock options
("NSOs"), to participants. All Options will be evidenced by a written Award
Agreement between the Company and the participant, which will include such
provisions as may be specified by the Compensation Committee. The terms of any
ISO must meet the requirements of Section 422 of the Code, including stockholder
approval requirements.
Stock Appreciation Rights. The Compensation Committee may grant SARs to
participants. Upon the exercise of a SAR, the participant has the right to
receive the excess, if any, of: the fair market value of one share of Class A
Common Stock or, after the Transition Date, Unclassified Common Stock, as the
case may be, on the date of exercise, over the grant price of the SAR as
determined by the Compensation Committee, which will not be less than the fair
market value of one share of Class A Common Stock or, after the transition Date,
Unclassified Common Stock, as the case may be, on the date of grant. All awards
of SARs will be evidenced by an Award Agreement, reflecting the terms, methods
of exercise, methods of settlement, form of consideration payable in settlement,
and any other terms and conditions of the SAR, as determined by the Compensation
Committee at the time of grant.
Performance Units. The Compensation Committee may grant Performance Units
to participants on such terms and conditions as may be selected by the
Compensation Committee. The Compensation Committee will have the complete
discretion to determine the number of Performance Units granted to each
participant and to set performance goals and other terms or conditions to
payment of the Performance Units in its discretion which, depending on the
extent to which they are met, will determine the number and value of Performance
Units that will be paid to the participant.
Restricted Stock Awards. The Compensation Committee may make awards of
Restricted Stock to participants, which will be subject to such restrictions on
transferability and other restrictions as the Compensation Committee may impose
(including, without limitation, limitations on the right to vote Restricted
Stock or the right to receive dividends, if any, on the Restricted Stock).
Dividend Equivalents. The Compensation Committee is authorized to grant
Dividend Equivalents to participants subject to such terms and conditions as may
be selected by the Compensation Committee. Dividend Equivalents entitle the
participant to receive payments equal to dividends with respect to all or a
portion of the number of shares of Class A Common Stock or, after the Transition
Date, Unclassified Common Stock, as the case may be, subject to an Option Award
or SAR Award, as determined by the Compensation Committee. The Compensation
Committee may provide that Dividend Equivalents be paid or distributed when
accrued or be deemed to have been reinvested in additional shares of Class A
Common Stock or, after the Transition Date, Unclassified Common Stock, as the
case may be, or otherwise reinvested.
Other Stock-Based Awards. The Compensation Committee may, subject to
limitations under applicable law, grant to participants such other Awards that
are payable in, valued in whole or in part by reference to, or otherwise based
on or related to shares of Class A Common Stock or, after the Transition Date,
Unclassified Common Stock, as the case may be, as deemed by the Compensation
Committee to be consistent with the purposes of the LTIP, including without
limitation shares of Class A Common Stock or, after the Transition Date,
Unclassified Common Stock, as the case may be, awarded purely as a "bonus" and
not subject to any
6
<PAGE> 10
restrictions or conditions, convertible or exchangeable debt securities, other
rights convertible or exchangeable into shares of Class A Common Stock or, after
the Transition Date, Unclassified Common Stock, as the case may be, and Awards
valued by reference to book value of shares of Class A Common Stock, or after
the Transition Date, Unclassified Common Stock, as the case may be, or the value
of securities of or the performance of specified patents or subsidiaries of the
Company. The Compensation Committee will determine the terms and conditions of
any such Awards.
Performance Goals. The Compensation Committee may determine that any Award
will be determined solely on the basis of (1) the achievement by the Company or
a parent or subsidiary of a specified target return, or target growth in return,
on equity or assets, (2) the Company's, parent's or subsidiary's stock price,
(3) the achievement by an individual or a business unit of the Company, parent
or subsidiary of a specified target, or target growth in, revenues, net income
or earnings per share, (4) the achievement of objectively determinable goals
with respect to service or product delivery, service or product quality,
customer satisfaction, meeting budgets and/or retention of employees or (5) any
combination of the goals set forth in (1) through (4) above. Furthermore, the
Compensation Committee reserves the right for any reason to reduce (but not
increase) any such Award, notwithstanding the achievement of a specified goal.
If an Award is made on such basis, the Compensation Committee must establish
goals prior to the beginning of the period for which such performance goal
relates (or such later date as may be permitted under Code Section 162(m)). Any
payment of an Award granted with performance goals will be conditioned on the
written certification of the Compensation Committee in each case that the
performance goals and any other material conditions were satisfied.
Limitations on Transfer; Beneficiaries. No Award will be assignable or
transferable by a participant other than by will or the laws of descent and
distribution or, except in the case of an ISO, pursuant to a qualified domestic
relations order; provided, however, that the Compensation Committee may (but
need not) permit other transfers where the Compensation Committee concludes that
such transferability (1) does not cause any Option intended to be an incentive
stock option to fail to be described in Code Section 422(b) and (2) is otherwise
appropriate and desirable, taking into account any factors deemed relevant,
including without limitation, any state or federal tax or securities laws or
regulations applicable to transferable Awards. A participant may, in the manner
determined by the Compensation Committee, designate a beneficiary to exercise
the rights of the participant and to receive any distribution with respect to
any Award upon the participant's death.
Acceleration Upon Certain Events. Upon the participant's death or
disability, all outstanding Options, SARs, and other Awards in the nature of
rights that may be exercised will become fully exercisable and all restrictions
on outstanding Awards will lapse. Any Options or SARs will thereafter continue
or lapse in accordance with the other provisions of the LTIP and the Award
Agreement. In the event of a Change in Control of the Company (as defined in the
LTIP), all outstanding Options, SARs, and other Awards in the nature of rights
that may be exercised will become fully vested and all restrictions on all
outstanding Awards will lapse; provided, however, that such acceleration will
not occur if, in the opinion of the Company's accountants, such acceleration
would preclude the use of "pooling of interest" accounting treatment for a
Change in Control transaction that would otherwise qualify for such accounting
treatment and is contingent upon qualifying for such accounting treatment.
Regardless of whether an event described above shall have occurred, the
Compensation Committee may in its sole discretion declare all outstanding
Options, SARs, and other Awards in the nature of rights that may be exercised to
become fully vested, and/or all restrictions on all outstanding Awards to lapse,
in each case as of such date as the Compensation Committee may, in its sole
discretion, declare. The Compensation Committee may discriminate among
participants or among Awards in exercising such discretion.
TERMINATION AND AMENDMENT
The Board of Directors or the Compensation Committee may, at any time and
from time to time, terminate, amend or modify the LTIP without stockholder
approval; provided, however, that the Compensation Committee may condition any
amendment on the approval of stockholders of the Company if such approval is
necessary or deemed advisable with respect to tax, securities or other
applicable laws, policies or
7
<PAGE> 11
regulations. No termination, amendment, or modification of the LTIP may
adversely affect any Award previously granted under the LTIP, without the
written consent of the participant.
CERTAIN FEDERAL INCOME TAX EFFECTS
Nonqualified Stock Options. Under present federal income tax regulations,
there will be no federal income tax consequences to either the Company or the
participant upon the grant of a non-discounted NSO. However, the participant
will realize ordinary income on the exercise of the NSO in an amount equal to
the excess of the fair market value of the Class A Common Stock or, after the
Transition Date, Unclassified Common Stock, as the case may be, acquired upon
the exercise of such option over the exercise price, and the Company will
receive a corresponding deduction (subject to Code Section 162(m) limitations).
The gain if any, realized upon the subsequent disposition by the participant of
the Class A Common Stock or, after the Transition Date, Unclassified Common
Stock, as the case may be, will constitute short-term or long-term capital gain,
depending on the participant's holding period.
Incentive Stock Options. Under present federal income tax regulations,
there will be no federal income tax consequences to either the Company or the
participant upon the grant of an ISO or the exercise thereof by the participant.
If the participant holds the shares of Class A Common Stock or, after the
Transition Date, Unclassified Common Stock, as the case may be, for the greater
of two years after the date the Option was granted or one year after the
acquisition of such shares of Class A Common Stock or, after the Transition
Date, Unclassified Common Stock, as the case may be (the "required holding
period"), the difference between the aggregate option price and the amount
realized upon disposition of the shares of Class A Common Stock or, after the
Transition Date, Unclassified Common Stock, as the case may be, will constitute
long-term capital gain or loss, and the Company will not be entitled to a
federal income tax deduction. If the shares of Class A Common Stock or, after
the Transition Date, Unclassified Common Stock, as the case may be, are disposed
of in a sale, exchange or other "disqualifying disposition" during the required
holding period, the participant will realize taxable ordinary income in an
amount equal to the excess of the fair market value of the Class A Common Stock
or, after the Transition Date, Unclassified Common Stock, as the case may be,
purchased at the time of exercise over the aggregate option price, and the
Company will be entitled to a federal income tax deduction equal to such amount
(subject to Code Section 162(m) limitations).
SARs. Under present federal income tax regulations, a participant
receiving a SAR will not recognize income, and the Company will not be allowed a
tax deduction, at the time the Award is granted. When a participant exercises
the SAR, the amount of cash and the fair market value of any shares of Class A
Common Stock or, after the Transition date, Unclassified Common Stock, as the
case may be, received will be ordinary income to the participant and will be
allowed as a deduction for federal income tax purposes to the Company (subject
to Code Section 162(m) limitations).
Restricted Stock. Under present federal income tax regulations, and unless
the participant makes an election to accelerate recognition of the income to the
date of grant, a participant receiving a Restricted Stock Award will not
recognize income, and the Company will not be allowed a tax deduction, at the
time the Award is granted. When the restrictions lapse, the participant will
recognize ordinary income equal to the fair market value of the Class A Common
Stock or, after the Transition Date, Unclassified Common Stock, as the case may
be, and the Company will be entitled to a corresponding tax deduction at that
time (subject to Code Section 162(m) limitations).
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
As of March 25, 1999, options to purchase Class A Common Stock and
Restricted Stock (which includes restricted shares of Class A Common Stock) had
been granted or approved for grant under the LTIP to the following persons and
groups. Any future awards under the LTIP will be made at the discretion of the
Compensation Committee or the Board, as the case may be. Therefore, it is not
presently possible to determine the benefits or amounts that will be received by
such persons or groups pursuant to the LTIP in the future.
8
<PAGE> 12
AWARDS UNDER THE LTIP
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
RESTRICTED STOCK AND SECURITIES
NAME AND POSITION DOLLAR VALUE UNDERLYING OPTIONS
- ----------------- ------------ -------------------------------------
<S> <C> <C>
Frederick W. Burford....................... (1)(2) 55,000 shares of Restricted Stock (3)
President 115,000 options (4)
L. Camille Fowler.......................... (1)(2) 15,000 shares of Restricted Stock (3)
Vice President -- Finance, Treasurer 31,500 options (4)
and Secretary
All Executive Officers as a Group
(including the executive officers named
above)................................... (1)(2) 70,000 shares of Restricted Stock (3)
146,500 options (4)
Colin V. Reed.............................. -- --
Class B Director Nominee
Seth E. Lemler............................. -- --
Class A Director Nominee
All Non-Executive Directors as a Group
(including the above).................... -- --
All Non-Executive Employees as a Group..... (1)(2) 9,000 shares of Restricted Stock (3)
19,000 options (4)
</TABLE>
- ---------------
(1) On a per share basis, the dollar value of the options will be equal to the
excess of the fair market value of the Class A Common Stock or, after the
Transition Date, Unclassified Common Stock, on the date of exercise of the
option over the exercise price. The closing price of the Class A Common
Stock on the American Stock Exchange was $3 1/8 per share on March 25, 1999
and the exercise price of each option is $3 1/2 per share.
(2) The dollar value of each share of Restricted Stock will vary based on the
fair market value of the Class A Common Stock or, after the Transition Date,
Unclassified Common Stock on the vesting date for such share of Restricted
Stock. The closing price of the Company's Class A Common Stock on the
American Stock Exchange was $3 1/8 per share on March 25, 1999.
(3) The shares of Restricted Stock vest, and the restrictions thereon expire, in
full on January 1, 2003, or earlier with respect to the following
percentages of the shares upon the Company obtaining the following
performance goals: (a) 33% of the shares if the Casino and its parking
garage construction are completed by October 30, 1999 within the Company's
budget; (b) 33% of the shares if by November, 2000 (i) the master plan for
the initial build-out and leasing of the second floor of the Casino for
non-gaming uses has been approved by the State, the City and the Company and
(ii) certain minimum non-gaming entertainment activities are available on
the second floor of the Casino; and (c) 34% of the shares if construction
and leasing of the facilities to be built on the Company's real property
located on Fulton and Poydras Streets in the City is substantially complete
by November, 2001.
(4) The options expire ten years from the date of grant. The options become
exercisable in full on January 1, 2003, or earlier if the average trading
price of the Class A Common Stock or, after the Transition Date, the
Unclassified Common Stock, over 20 trading days in any 30 consecutive
trading days (the "Average Trading Price") reaches certain levels prior to
January 1, 2003. Options become exercisable with respect to 20%, 40%, 60%,
80% and 100% of the Class A Common Stock or the Unclassified Common Stock,
as the case may be, at such time as the Average Trading Price reaches $5.00,
$6.00, $7.00, $8.00 and $9.00, respectively, prior to January 1, 2003.
9
<PAGE> 13
PROPOSAL 2
APPROVAL OF THE 1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
On March 4, 1999, the Company's Board of Directors adopted the JCC Holding
Company 1999 Non-Employee Director Stock Option Plan (the "DSOP"), subject to
approval of the DSOP by the stockholders at the Annual Meeting. The Company has
reserved for issuance upon the exercise of options granted under the DSOP
150,000 shares of the authorized but unissued shares of Class A Common Stock
and, after the Transition Date, Unclassified Common Stock. If approved by the
stockholders at the Annual Meeting, the DSOP will be effective as of its
adoption by the stockholders.
A summary of the DSOP is set forth below. The summary is qualified in its
entirety by the full text of the DSOP. The Company will provide, upon request
and without charge, a copy of the full text of the DSOP to each person to whom a
copy of this Proxy Statement is delivered. Requests should be directed to: JCC
Holding Company, 512 South Peters Street, New Orleans, Louisiana 70130,
Attention: L. Camille Fowler, Vice President -- Finance, Treasurer and
Secretary.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE PROPOSAL TO APPROVE THE DSOP.
GENERAL
The Board of Directors believes that stock ownership is an important
incentive for its non-employee directors. The purpose of the DSOP is to advance
the interests of the Company by encouraging ownership of the Class A Common
Stock or, after the Transition Date, Unclassified Common Stock by certain non-
employee directors of the Company, thereby giving such directors an increased
incentive to devote their efforts to the Company's success. The Company also
believes that the DSOP will provide it with a means of attracting persons of
outstanding quality to serve on the Board. Awards are granted under the DSOP in
addition to cash fees to the Company's non-employee directors.
ELIGIBILITY
Each member of the Company's Board of Directors who is a Non-Employee
Director (as defined below) will be a participant in the DSOP. For purposes of
the DSOP, prior to the Transition Date, the term "Non-Employee Director" means
any director of the Company who is not an employee of (1) the Company, (2) HET
or (3) a Controlled Affiliate (as defined in the Company's Restated Certificate
of Incorporation) of HET. Upon and after the Transition Date, the term
"Non-Employee Director" will mean each member of the Company's Board of
Directors who is not an employee of the Company or HET.
ADMINISTRATION
Grants of awards under the DSOP are automatic. The DSOP is intended to be a
"formula plan" for purposes of Section 16(b) of the Securities Exchange Act of
1934, as amended. However, the DSOP will be administered and interpreted by the
Company's Board of Directors.
SHARES SUBJECT TO PLAN
Shares subject to the DSOP may be authorized but unissued shares or shares
that were once issued and subsequently reacquired by the Company. The total
number of shares of Class A Common Stock and, after the Transition Date,
Unclassified Common Stock for which options may be granted under the DSOP is
150,000 shares, subject to adjustment in accordance with the DSOP. In the event
that any outstanding option expires for any reason or is terminated prior to the
end of the period during which options may be granted under the DSOP, the shares
of Class A Common Stock or Unclassified Common Stock, as the case may be,
allocable to the unexercised portion of such option may again be subject in
whole or in part to an award of options under the DSOP.
10
<PAGE> 14
TERMS AND CONDITIONS OF AWARDS
Awards granted pursuant to the DSOP will be subject to the following terms
and conditions:
Initial Grants. Each Non-Employee Director shall be granted an option to
purchase 5,000 shares of Class A Common Stock or, after the Transition Date,
Unclassified Common Stock on the later of (1) the date of approval of the DSOP
by the Company's stockholders or (2) the date such person first becomes a Non-
Employee Director.
Annual Grants. In addition, as of the day following the first Annual
Meeting of the Company's stockholders that occurs more than one year after the
person first becomes a Non-Employee Director and on the day following each
subsequent Annual Meeting of the Company's stockholders, if such person is
serving as a Non-Employee Director as of such date, he or she shall be granted
an option to purchase 5,000 shares of Class A Common Stock or, after the
Transition Date, Unclassified Common Stock, subject to adjustment as provided in
the DSOP.
Vesting Schedule. All options granted under the DSOP will be fully vested
and exercisable on the date of grant.
Exercise Price. The exercise price for each option granted under the DSOP
will be the fair market value of the shares of Class A Common Stock or, after
the Transition Date, Unclassified Common Stock subject to the option on the date
of grant.
Payment. An option may be exercised by giving written notice to the
Company stating the number of shares with respect to which the option is being
exercised. The exercise price shall be payable in full upon the exercise of an
option in cash. To the extent permitted under Regulation T of the Federal
Reserve Board, and subject to applicable securities laws, options may be
exercised through a broker in a so-called "cashless exercise" whereby the broker
sells the option shares and delivers cash sales proceeds to the Company in
payment of the exercise price.
Term. Each option granted under the DSOP will, to the extent not
previously exercised, terminate and expire on the date 10 years after the date
of grant of the option, unless earlier terminated as provided in the DSOP.
Assignment of Options. Options granted under the DSOP will be assignable
by will, by the laws of descent and distribution, or pursuant to a qualified
domestic relations order. In addition, options granted under the DSOP will be
transferable by the director to certain designated family members or to a trust,
foundation or other entity in which such persons own more than fifty percent of
the beneficial or voting interests or control more than 50% of the assets.
Effect of Termination of Directorship or Death. In the event an optionee
ceases to be a member of the Board for any reason other than death, any options
then held by the director will remain exercisable until the earlier of (1) the
scheduled expiration date of the option, (2) 90 days after the date of the
optionee's termination as a director or (3) the date of notice of termination
given to the optionee if such termination was for cause. In the event that an
optionee ceases to be a member of the Board by reason of death, any options held
by the director at the date of death will remain exercisable until the earlier
of (1) the scheduled expiration date of the option or (2) one year after the
date of the optionee's death.
Adjustments. In the event of a stock dividend on the Class A Common Stock
or, after the Transition Date, Unclassified Common Stock, the shares of Class A
Common Stock or Unclassified Common Stock then subject to each option under the
DSOP will be increased proportionately without any change in the aggregate
purchase price. In the event of certain recapitalizations of the Company, there
shall be substituted for each such share of Class A Common Stock or Unclassified
Common Stock then subject to each option the number and class of shares into
which each outstanding share of Class A Common Stock or Unclassified Common
Stock, as the case may be, shall be so exchanged, all without any change in the
aggregate purchase price for the shares then subject to each option, or there
shall be made such other equitable adjustment as the Board shall approve.
11
<PAGE> 15
TERMINATION AND AMENDMENT
The DSOP will terminate on the second day following the 2008 Annual Meeting
of Stockholders, but the Board of Directors may terminate the DSOP at any time
prior to such date. The Board may at any time amend or modify the DSOP without
stockholder approval; but the Board may condition any amendment or modification
on the approval of stockholders of the Company if such approval is necessary or
deemed advisable with respect to tax, securities or other applicable laws,
policies or regulations. No amendment modification or termination of the DSOP
shall adversely affect the rights of the grantees who have outstanding options
without the consent of such grantees.
NO RIGHTS AS STOCKHOLDER
The holder of an option will not have any rights of a stockholder with
respect to the shares covered by the option, until such person has become the
holder of record of such shares upon exercise of the option.
CERTAIN FEDERAL INCOME TAX EFFECTS
The options granted under the DSOP will be non-qualified stock options
("NSOs"). Under present federal income tax regulations, there will be no federal
income tax consequences to either the Company or the participant upon the grant
of a non-discounted NSO. However, the participant will realize ordinary income
on the exercise of the NSO in an amount equal to the excess of the fair market
value of the Class A Common Stock or, after the Transition Date, Unclassified
Common Stock acquired upon the exercise of such option over the exercise price,
and the Company will receive a corresponding deduction. The gain, if any,
realized upon the subsequent disposition by the participant of the Class A
Common Stock or Unclassified Common Stock, as the case may be, will constitute
short-term or long-term capital gain, depending on the participant's holding
period.
BENEFITS TO NON-EMPLOYEE DIRECTORS
Only Non-Employee Directors are entitled to participate in the DSOP
(currently, Seth E. Lemler, Eddie N. Williams, Edwin Jacobson and Rudy J.
Cerone). The following table shows the benefits that will accrue under the DSOP,
for each year that it is in effect, to the group indicated.
<TABLE>
<CAPTION>
DOLLAR VALUE($) NUMBER OF OPTIONS
--------------- -----------------
<S> <C> <C>
All Non-Employee Directors as a Group....................... (1) 20,000(2)
</TABLE>
- ---------------
(1) On a per share basis, this amount will be equal to the excess of the fair
market value of the Class A Common Stock or, after the Transition Date,
Unclassified Common Stock on the date of exercise of the option over the
fair market value of the Class A Common Stock or the Unclassified Common
Stock, as the case may be, on the date of grant. The closing price of the
Class A Common Stock on the American Stock Exchange was $3 1/8 per share on
March 25, 1999.
(2) Represents the number of options to be granted each year while the DSOP is
in effect, assuming there are four Non-Employee Directors serving in such
year.
12
<PAGE> 16
PROPOSAL 3
ELECTION OF DIRECTORS
NOMINEES
The Company's Restated Certificate of Incorporation provides that, prior to
the Transition Date, the maximum number of authorized directors of the Company
is six, three of which are to be elected by the holders of the Class A Common
Stock (each, a "Class A Director") and three of which are to be elected by the
holders of the Class B Common Stock (each, a "Class B Director"). Currently, the
Board is comprised of three Class A Directors and three Class B Directors.
Notwithstanding the foregoing, upon the occurrence of an Extraordinary Flip
Event (as defined in the Company's Restated Certificate of Incorporation), a
majority of Class A Directors then in office will elect an additional Class A
Director whose term will immediately expire if such Extraordinary Flip Event is
cured in accordance with the Company's Restated Certificate of Incorporation.
The Company expects that such additional Class A Director will be Timothy E.
Kelly (the "Alternate"). In addition, upon the acquisition by a Conflicted
Entity (as defined in the Company's Restated Certificate of Incorporation) of at
least 20% of the outstanding shares of Class A Common Stock (a "Change of
Control"), a majority of Class B Directors then in office will elect an
additional Class B Director, unless an Extraordinary Flip Event has occurred and
not been cured at such time. However, the term of any such additional Class B
Director will immediately expire if (1) an Extraordinary Flip Event occurs after
the Change of Control leading to such Class B Director's election or (2) the
number of shares of Class A Common Stock held by the Conflicted Entity which
caused such Change of Control is reduced so that the Conflicted Entity owns less
than 20% of the outstanding shares of Class A Common Stock.
The Board of Directors is divided into three groups, designated as Group I,
Group II and Group III. Each group consists of one Class A Director and one
Class B Director. The directors in each group are elected for a term of three
years and until their successors are elected and qualified. The term of office
of one of the groups of directors expires each year at the Company's Annual
Meeting of Stockholders, and a new group of directors is elected by the
stockholders each year at that time.
In connection with the consummation of the Plan of Reorganization, Seth E.
Lemler and Colin V. Reed were designated as the initial Group I directors, with
Mr. Lemler serving as a Class A Director and Mr. Reed serving as a Class B
Director. Thereafter, the other individuals identified as Group II and Group III
directors below were elected by the Board to serve as directors. Pursuant to the
terms of the Plan of Reorganization, Seth E. Lemler, Edwin Jacobson and Rudy J.
Cerone, each a Class A director, were nominated to serve on the Board by a
committee which represented the holders of the Old Bonds (the "Bondholders
Committee").
At the Annual Meeting, the terms of the two Group I directors, Messrs.
Lemler and Reed, will expire. Mr. Lemler has been designated as the Class A
Nominee by the Class A Nominating Committee of the Board and will thus stand for
re-election as a Class A Director at the Annual Meeting. Mr. Reed has been
designated as the Class B Nominee by the Class B Nominating Committee of the
Board and will thus stand for re-election as a Class B Director at the Annual
Meeting. If elected by the stockholders, each of the nominees will serve a
three-year term which will expire at the 2002 Annual Meeting of Stockholders. If
either of the nominees should be unavailable to serve for any reason (which is
not anticipated), then the Class A Nominating Committee, in the case of Mr.
Lemler, or the Class B Nominating Committee, in the case of Mr. Reed, may
designate a substitute nominee in accordance with the Company's Restated
Certificate of Incorporation (in which case the persons named as proxies on the
enclosed proxy card will vote the shares represented by all valid proxy cards
for the election of such substitute nominee) or the Class A Nominating Committee
or the Class B Nominating Committee, as the case may be, may allow the vacancy
or vacancies to remain open until a suitable candidate or candidates are located
and nominated.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT (1) HOLDERS OF CLASS A
COMMON STOCK VOTE "FOR" THE PROPOSAL TO RE-ELECT SETH E. LEMLER AS A CLASS A
DIRECTOR AND (2) HOLDERS OF CLASS B COMMON STOCK VOTE "FOR" THE PROPOSAL TO
RE-ELECT COLIN V. REED AS A CLASS B DIRECTOR, IN EACH CASE FOR A THREE-YEAR TERM
EXPIRING AT THE 2002 ANNUAL MEETING OF STOCKHOLDERS AND UNTIL HIS SUCCESSOR HAS
BEEN DULY ELECTED AND QUALIFIED.
13
<PAGE> 17
INFORMATION REGARDING NOMINEES AND CONTINUING DIRECTORS
The following table sets forth certain information regarding the two
nominees for director and the four incumbent directors whose terms as directors
will continue following the Annual Meeting.
GROUP I DIRECTORS NOMINATED TO SERVE UNTIL THE 2002 ANNUAL MEETING OF
STOCKHOLDERS
Colin V. Reed Mr. Reed, age 51, has been a Class B Director and
Chairman of the Board of Directors since April
1998. Mr. Reed has also been a member of HET's
three-executive Office of the President since
December 1998, Executive Vice President of HET
since September 1995 and Chief Financial Officer of
HET since April 1997. Prior thereto, he was Senior
Vice President, Corporate Development of HET from
May 1992 to September 1995. He has also been Senior
Vice President of Harrah's New Orleans Management
Company, an indirect wholly-owned subsidiary of HET
(the "Manager"), since May 1996. Mr. Reed was a
member of the Executive Committee of HJC and a
director, Senior Vice President and Secretary of
Finance Corp., both of which filed petitions under
Chapter 11 of the United States Bankruptcy Code in
November 1995. He was also a director and Senior
Vice President of HNOIC, which filed a petition
under Chapter 11 of the United States Bankruptcy
Code in December 1995. Mr. Reed served as Chief
Executive Officer and President of the Company from
August 1996 to April 1998 and as President of JCC
from May 1997 to March 1998. Mr. Reed is also a
director of Sodak Gaming, Inc., National Airlines,
Inc. and HET.
Seth E. Lemler Mr. Lemler, age 40, has been a Class A Director
since October 1998. Mr. Lemler has served as a
Managing Director in the Investment Banking
Department of Ladenburg Thalmann & Co. Inc. since
May 1996. Prior to joining Ladenburg Thalmann & Co.
Inc., Mr. Lemler served as a consultant at New
Valley Corporation from January 1996 to May 1996.
From February 1987 to December 1995, Mr. Lemler
served in various capacities with Deloitte & Touche
LLP, including, most recently, as a senior manager
in the Reorganization Advisory Services Consulting
Group.
GROUP II DIRECTORS TO SERVE UNTIL THE 2000 ANNUAL MEETING OF STOCKHOLDERS
Eddie N. Williams Mr. Williams, age 66, has been a Class B Director
since March 4, 1999. Mr. Williams has served as
President, Chief Executive Officer and Director of
the Joint Center for Political and Economic
Studies, a national non-profit research
institution, since July 1972. Mr. Williams also
serves as a director of each of HET, Riggs National
Corporation and CareFirst, Inc. (formerly Blue
Cross/Blue Shield). Mr. Williams was a member of
the Executive Committee of HJC and a director of
Finance Corp. from January 1995 to October 1998,
both of which filed petitions under Chapter 11 of
the United States Bankruptcy Code in November 1995.
Edwin Jacobson Mr. Jacobson, age 69, has been a Class A Director
since March 4, 1999. Since September 1990, Mr.
Jacobson has served as the President and Chief
Executive Officer of Heartland Partners LP, a
limited partnership organized to engage in the
ownership, development, leasing and sale of real
estate, and as a director and the President and
Chief Executive Officer of Heartland Technology,
Inc., an electronics manufacturer primarily for the
computer and computer printer industries. Mr.
Jacobson also serves as a director of Avatar
Properties.
14
<PAGE> 18
GROUP III DIRECTORS TO SERVE UNTIL THE 2001 ANNUAL MEETING OF STOCKHOLDERS
John M. Boushy Mr. Boushy, age 44, has been a Class B Director
since March 4, 1999. Mr. Boushy has served as the
Senior Vice President, Information Technology and
Marketing Services of HET since June 1993. From
April 1989 to June 1993, Mr. Boushy was the Vice
President, Strategic Marketing of HET. Mr. Boushy
also serves as a director of Interactive
Entertainment Limited.
Rudy J. Cerone Mr. Cerone, age 46, has been a Class A Director
since March 4, 1999. Since December 1987, Mr.
Cerone has been a partner in McGlinchey Stafford,
PLLC, a law firm located in New Orleans, Louisiana
("McGlinchey Stafford").
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company conducts its business through
meetings of the full Board and through committees of the Board. Prior to the
Transition Date, the Company's Bylaws require that the Company maintain the
following committees: the Audit Committee, Gaming Committee, Compensation
Committee, Class A Director Nominating Committee, Class B Director Nominating
Committee and Capital Committee. The Company may form or maintain additional
committees upon the affirmative vote of (1) a majority of the Class A Directors
then in office and (2) a majority of the Class B Directors then in office.
Pursuant to this authority, the Board of Directors has established a Counsel
Retention Committee. During the year ended December 31, 1998 ("fiscal 1998"),
the Board of Directors held two meetings, and each director of the Company who
was serving on the Board at the time of such meetings attended at least 75% of
all meetings of the full Board of Directors. The Alternate generally attends
Board meetings as an observer, but does not vote with the Board. None of the
committees of the Board of Directors met during fiscal 1998.
Audit Committee. The Audit Committee consists of the Class A Directors and
is empowered to undertake and complete an audit or investigation, at any time,
into the business affairs of the Company or any of its subsidiaries. The Audit
Committee is comprised of Edwin Jacobson (Chairman), Seth E. Lemler and Rudy J.
Cerone.
Gaming Committee. The Gaming Committee supervises the day-to-day
activities of the Company and, except with respect to Significant Transactions
(as defined in the Company's Restated Certificate of Incorporation), has and may
exercise, in such manner as it deems to be in the best interests of the Company,
all of the powers of the Board of Directors in the management or direction of
the business and affairs of the Company, not inconsistent, however, with any
specific direction as to the conduct of the business and affairs of the Company
as the Board of Directors may give. The Gaming Committee consists of two Class B
Directors (or, if there is only one Class B Director, such director); provided,
however, that upon the occurrence of a Flip Event (as defined in the Company's
Restated Certificate of Incorporation), the Class B Directors will be replaced
on the Gaming Committee by two Class A Directors (or, if there is only one Class
A Director at such time, such director). The Gaming Committee is comprised of
John M. Boushy (Chairman) and Colin V. Reed.
Compensation Committee. The Compensation Committee consists of the Class A
Directors and is empowered to act on behalf of the Company in all matters
regarding the compensation of officers and directors of the Company and its
subsidiaries. The Compensation Committee is comprised of Seth E. Lemler
(Chairman), Edwin Jacobson and Rudy J. Cerone.
Nomination Committees. The Class A Director Nomination Committee consists
of the Class A Directors whose terms do not expire at the next annual meeting of
stockholders. It selects the person(s) to stand for election as Class A
Directors at each meeting of stockholders, and is comprised of Rudy J. Cerone
15
<PAGE> 19
and Edwin Jacobson. The Class B Director Nomination Committee consists of the
Class B Directors whose terms do not expire at the next annual meeting of
stockholders. It selects the person(s) to stand for election as Class B
Directors at each meeting of stockholders, and is comprised of John M. Boushy
and Eddie N. Williams. The Board of Directors will also consider nominees
recommended by stockholders. For a description of the requirements for
stockholder nominations and other proposals, see "Stockholders' Proposals for
2000 Annual Meeting" and "Voting -- Proxies; Other Matters That May Come Before
the Annual Meeting."
Capital Committee. The Capital Committee consists of one Class A Director
and one Class B Director. After the date on which the Completion Guarantees (as
defined below) have been terminated, the Capital Committee is empowered to act
on behalf of the Company with respect to all changes to the capital budgets of
the Company and JCC between $250,000 and $2 million. "Completion Guarantees"
means (1) the Notes Completion Guarantee dated as of October 30, 1998 by
Harrah's Operating Company, Inc. ("HOCI") and HET to Norwest Bank Minnesota,
National Association, as trustee, (2) the Bank Completion Guarantee dated as of
October 29, 1998 by HOCI and HET to Bankers Trust Company, as administrative
agent for the lenders under the bank credit agreement of the Company and JCC,
(3) the LGCB Completion Guarantee dated as of October 30, 1998 by HOCI and HET
to the State and the Louisiana Gaming Control Board (the "LGCB") and (4) the
RDC/City Completion Guaranty dated as of October 29, 1998 by HOCI and HET to
Rivergate Development Corporation (the "RDC") and the City. The Capital
Committee is comprised of Seth E. Lemler (Chairman) and John M. Boushy.
Counsel Retention Committee. The Counsel Retention Committee consists of
one Class A Director and one Class B Director and is empowered to approve the
selection of legal counsel by the Company or its subsidiaries in connection with
any matters, transactions or transactions with affiliates of the Company which
were not approved by the Company prior to or concurrently with the Effective
Date, and otherwise to consider any issues relating to the retention of legal
counsel that the Counsel Retention Committee deems appropriate. The Counsel
Retention Committee is comprised of Colin V. Reed and Seth E. Lemler.
DIRECTOR COMPENSATION
The Board of Directors has authorized the payment to each director of an
annual retainer of $40,000, a fee of $2,000 for each meeting of the Board
attended by such director and a fee of $1,000 for each meeting of any committee
thereof attended by such director. The Company also intends to pay these fees to
the Alternate. The Board of Directors has also authorized the payment to each
director of reasonable out-of-pocket expenses for attending Board and committee
meetings. The Company also intends to pay similar expenses of the Alternate.
Pursuant to the Company's Bylaws, directors who are employees of HET or certain
affiliates of HET (including Messrs. Reed and Boushy), receive no directors'
fees. In addition, if the DSOP is approved by the stockholders at the Annual
Meeting, each Non-Employee Director will be granted (1) an option to purchase
5,000 shares of Class A Common Stock or, after the Transition Date, Unclassified
Common Stock on the later of the date of the approval of the DSOP by the
Company's stockholders or the date such person first becomes a Non-Employee
Director and (2) an option to purchase 5,000 of such shares (a) as of the date
following the first Annual Meeting of the Company's stockholders that occurs
more than one year after the person first becomes a Non-Employee Director and
(b) on the day following each subsequent Annual Meeting, if such person is
serving as a Non-Employee Director as of such date. The Company paid fees of
$8,667 to Seth E. Lemler for his service as a director during fiscal 1998.
16
<PAGE> 20
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The following table sets forth the compensation earned by (1) each person
who served as the chief executive officer of the Company during any part of
fiscal 1998, (2) each other executive officer of the Company who served as an
executive officer at December 31, 1998 and whose annual compensation and bonus
was $100,000 or more during fiscal 1998 (or is expected to be $100,000 or more
during the year ended December 31, 1999) and (3) any person for whom disclosure
would have been provided pursuant to clause (2) but for the fact that the person
did not serve as an executive officer on December 31, 1998 (collectively, the
"Named Executive Officers"). Other than as set forth in such table, during the
last three fiscal years, the Named Executive Officers earned no compensation
from the Company and were granted no stock options, stock appreciation rights or
any other form of remuneration.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) LONG-TERM COMPENSATION AWARDS
-------------------------------------- -------------------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP
NAME AND PRINCIPAL POSITION(2) YEAR SALARY($) BONUS($) COMPENSATION($) AWARD(S)($) OPTIONS(#) PAYOUTS($)
- ------------------------------ ---- --------- -------- --------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Frederick W. Burford(3)...... 1998 $39,000 $95,335 -- -- -- --
President
L. Camille Fowler(4)......... 1998 $21,750 $30,000 -- -- -- --
Vice President -- Finance,
Treasurer and Secretary
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL POSITION(2) COMPENSATION($)
- ------------------------------ ---------------
<S> <C>
Frederick W. Burford(3)...... --
President
L. Camille Fowler(4)......... --
Vice President -- Finance,
Treasurer and Secretary
</TABLE>
- ---------------
(1) The annual compensation data excludes perquisites, the aggregate annual
amount of which for each officer was less than 10% of such officer's total
reported salary and bonus.
(2) Colin V. Reed served as Chief Executive Officer and President of the Company
from August 1996 to April 1998. Mr. Reed did not receive any compensation
from the Company for such services.
(3) In connection with the consummation of the transactions contemplated by the
Plan of Reorganization, Mr. Burford served as a paid consultant to HET from
March 1998 until October 1998. Includes $229,047 paid by JCC to HOCI to
reimburse HOCI for amounts paid to Mr. Burford for such services as a
consultant.
(4) Ms. Fowler served as the Director of Finance, Vice President, Secretary and
Treasurer of the Manager until November 1998, when she was elected Vice
President -- Finance, Treasurer and Secretary of the Company.
EMPLOYMENT AGREEMENTS
The Company expects to enter into employment agreements during the year
ended December 31, 1999 with Mr. Burford and Ms. Fowler, and is currently in
discussions with these executives regarding these employment agreements.
17
<PAGE> 21
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
INTRODUCTION
The Compensation Committee is responsible for developing the Company's
executive compensation policies and advising the Board of Directors with respect
to such policies. The members of the Compensation Committee are Seth E. Lemler
(Chairman), Edwin Jacobson and Rudy J. Cerone. During fiscal 1998, the
Compensation Committee did not convene and all decisions concerning executive
compensation in that period were made by the full Board of Directors.
EXECUTIVE COMPENSATION PROGRAM
The Company's executive compensation program for fiscal 1998 was designed
primarily to attract and retain the Company's executive officers following the
consummation of the transactions contemplated by the Plan of Reorganization. The
fiscal 1998 program consisted of two elements: a salary (base pay) and variable
incentive pay (which was paid in the form of a cash bonus). This program applied
to the Company's key management personnel, including Frederick W. Burford, the
Company's President, and L. Camille Fowler, the Company's Vice President --
Finance, Treasurer and Secretary. All of the Company's executives were also
eligible for employee benefits offered to all the Company's employees, including
life, health, disability and dental insurance and the Company's 401(k) savings
plan. The Committee has engaged the services of professional compensation
consultants to assist with the design of a long-term compensation plan for its
senior executives for the year ended December 31, 1999 and future years which
the Company believes will (1) attract and retain a highly qualified and
motivated management team and (2) link the interests of the senior executives
directly with those of stockholders through the use of long-term equity
incentives, primarily in the form of stock options.
Salary. Base salary for the Company's executive officers in 1998 was
determined by the Board of Directors after consideration of salary levels in the
casino and gaming industry for various executive positions.
Annual Incentive Pay. For services rendered in fiscal 1998, the Company
paid Mr. Burford a cash bonus of $95,335 and Ms. Fowler a cash bonus of $30,000.
These bonuses were based on the Company's attainment of pre-determined
objectives, such as the consummation of the transactions contemplated by the
Plan of Reorganization and the resumption of the Casino's construction.
PRESIDENT'S COMPENSATION
Colin V. Reed, the Chairman of the Board of Directors, served as Chief
Executive Officer and President of the Company from August 1996 to April 1998.
Mr. Reed did not receive any compensation for his service as Chief Executive
Officer and President of the Company during such period. Frederick W. Burford
has served as President of the Company since April 1998. Mr. Burford's fiscal
1998 base salary was $260,000. In connection with the consummation of the
transactions contemplated by the Plan of Reorganization, Mr. Burford also served
as a paid consultant to HET from March 1998 until October 1998. During fiscal
1998, JCC paid HOCI $229,047 to reimburse HOCI for amounts paid to Mr. Burford
for such services as a consultant. The level of Mr. Burford's base salary was
based upon the comparative information reviewed by the Board of Directors as
described above. Mr. Burford's total compensation for fiscal 1998 is provided in
detail in the Summary Compensation Table set forth above.
POLICY WITH RESPECT TO DEDUCTIBILITY OF COMPENSATION EXPENSE
The Omnibus Budget Reconciliation Act of 1993 (OBRA) disallows the
deduction for certain annual compensation in excess of $1,000,000 paid to
certain executive officers of the Company, unless the compensation qualifies as
"performance-based" under Code Section 162(m). The LTIP will permit the grant of
stock options and other awards that are fully deductible under Code Section
162(m). For the year ended December 31, 1999 and future years, the Company
intends to maximize the deductibility of executive
18
<PAGE> 22
compensation while retaining the discretion necessary to compensate executive
officers in a manner commensurate with performance and the competitive market
for executive talent.
CONCLUSION
The Company's executive compensation program for fiscal 1998 was designed
primarily to attract and retain the Company's executive officers following the
consummation of the transactions contemplated by the Plan of Reorganization. The
Company anticipates that its executive compensation program for the year ended
December 31, 1999 will be designed by the Compensation Committee to closely link
pay with performance and the creation of stockholder value. Under such a
program, if the Company reaches targeted performance levels, the Company's
executives will be compensated at "median levels" for comparable companies. If
the Company's performance exceeds targeted levels, executive compensation will
exceed such "median levels." The Company believes that such a program will be
successful in supporting its financial, growth and other business objectives.
COMMITTEE MEMBERS:
Seth E. Lemler
Edwin Jacobson
Rudy J. Cerone
OTHER MEMBERS OF THE BOARD:
Colin V. Reed
Eddie N. Williams
John M. Boushy
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors was
established after the end of fiscal 1998 and is currently comprised of the Class
A Directors, including Seth E. Lemler (Chairman), Edwin Jacobson and Rudy J.
Cerone.
Mr. Lemler has served as a Managing Director of the Investment Banking
Department of Ladenburg Thalmann & Co. Inc. ("Ladenburg Thalmann") since May
1996. Ladenburg Thalmann acted as financial advisor to the Bondholders
Committee. As compensation for financial advisory services rendered to the
Bondholders Committee during the period from March 1996 until the consummation
of the transactions contemplated by the Plan of Reorganization in October 1998,
the Company paid Ladenburg Thalmann $640,000 in December 1998.
Mr. Cerone has been a partner in the law firm of McGlinchey Stafford since
December 1987. Under the Plan of Reorganization, McGlinchey Stafford served as
counsel to the Bondholders Committee. As compensation for legal services
rendered to the Bondholders Committee during the period from April 1998 until
November 1998, the Company paid McGlinchey Stafford an aggregate of $159,900 in
November and December 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of March 25, 1999, HET, through HCCIC, an indirect wholly-owned
subsidiary of HET, owned 4,302,623 shares of Class B Common Stock, or
approximately 96.6% of all of the issued and outstanding shares of Class B
Common Stock, and approximately 43.0% of all of the issued and outstanding
shares of Common Stock. Accordingly, through HCCIC, HET is able to elect all of
the Class B Directors, which, prior to the Transition Date, generally supervise
the day-to-day activities of the Company. Further, HCCIC was granted the HET
Warrant entitling it, upon and after the Transition Date, to purchase shares of
Unclassified Common Stock such that, upon exercise of the HET Warrant in its
entirety, HET and its subsidiaries will own in the aggregate 50% of the then
outstanding shares of Unclassified Common Stock. In addition, JCC and the
19
<PAGE> 23
Manager, an indirect wholly-owned subsidiary of HET, have entered into the
Second Amended and Restated Management Agreement dated as of October 29, 1998
(the "Management Agreement"), under which the Manager is exclusively responsible
for supervising and managing the Casino.
Under the terms of an amended casino operating contract between JCC and the
LGCB, JCC is required to obtain a guaranty in favor of the State by and through
the LGCB to assure payment of a $100 million minimum annual payment due to the
State by JCC under the contract. On the Effective Date, JCC entered into an
agreement with HET and HOCI under which HET and HOCI have agreed to provide such
a guaranty of the $100 million minimum payment obligation, which is subject to
renewal or early termination in accordance with the terms of such agreement. HET
and HOCI have also provided a payment guarantee or "put" agreement (the "HET
Loan Guaranty") for an aggregate principal amount of up to $166.5 million of
loans and/or stated amount of letters of credit of the Company and its
subsidiaries outstanding under the Credit Agreement dated as of October 29, 1998
(the "Senior Credit Agreement") among JCC, as borrower, the Company, as
guarantor, the banks parties thereto and Bankers Trust Company, as
administrative agent. In exchange for the HET Loan Guaranty, JCC has agreed to
pay HET an annual credit support fee equal to 0.75% of the average aggregate
principal amount of loans and/or stated amount of letters of credit guaranteed.
No such fees accrued or were paid during fiscal 1998.
In addition, pursuant to the Completion Guarantees, HET and HOCI have
agreed, among other things, to (1) fund JCC's working capital shortfalls until
the date on which, among other things, the Casino is equipped with the required
furniture, fixtures and equipment and ready to open for business, the Casino
construction is substantially completed and initial Casino operations have
opened for business and (2) to guarantee that, at such time, JCC will have
available for working capital $5 million of cash and an amount equal to $25
million (less up to $12 million for certain letters of credit issued under the
Senior Credit Agreement and borrowings thereunder to fund a bank account for the
Casino) available for immediate borrowing(s) under the working capital facility
provided pursuant to the Senior Credit Agreement.
HET and HOCI have also agreed to guarantee certain obligations of JCC
including, among others, the following: (a) the obligation to complete and
timely pay for the construction and equipping of the Casino in accordance with
the terms of (1) the Amended and Restated Lease Agreement dated October 29, 1998
(the "Amended Ground Lease") among JCC, the RDC and the City, as intervenor, (2)
the General Development Agreement dated October 29, 1998 among JCC, the RDC and
the City, as intervenor, (3) the indentures under which the Notes and the
Contingent Notes are issued (the "Indentures") and (4) any applicable
requirement of the LGCB; and (b) the obligation to maintain insurance coverage
for, and prevent deterioration and unauthorized access to, the Casino, and to
pay on a timely basis certain amounts owing by JCC. Any expenditures made by HET
or HOCI under this guarantee must be repaid by JCC pursuant to the Amended and
Restated Subordinated Completion Loan Agreement dated as of October 30, 1998
among JCC, HET and HOCI.
JCC has obtained a title insurance policy from First American Title
Insurance Company ("First American") for the premises underlying the Casino
leased by JCC pursuant to the Amended Ground Lease and certain related leased
property. Pursuant to the Amended and Restated Construction Lien Indemnity
Obligation Agreement between JCC and HOCI, any expenditures made by HOCI under a
construction lien indemnity agreement delivered by HET and HOCI to First
American regarding mechanic's liens claiming priority to loans and reimbursement
obligations for letters of credit under the Senior Credit Agreement, the Notes
or the Contingent Notes, will be deemed unsecured limited recourse indebtedness
of JCC to HOCI, due and payable on demand. In addition, HET and HOCI have agreed
to provide JCC with up to $22.5 million of subordinated financing under a junior
subordinated credit facility entered into on the Effective Date. As of March 25,
1999, JCC had borrowed $2 million under this junior subordinated credit facility
and the Company anticipates that JCC will draw the remaining amounts available
under this facility by June 30, 1999.
On the Effective Date, JCC reimbursed HET and HOCI a total of $3,696,474
for pre-Effective Date expenses incurred by HET, the Manager and HOCI on behalf
of JCC. Such expenses included over $3 million in legal fees and insurance
premiums relating to JCC, approximately $311,000 in consulting and
20
<PAGE> 24
relocation expenses incurred by senior management of the Manager and
approximately $289,000 in wages paid to certain individuals involved in the
reorganization process, such as Frederick W. Burford, the Company's President.
See "Executive Compensation."
In addition, prior to the opening of the Casino, the Company expects that
JCC will enter into an agreement with HET or one of its affiliates pursuant to
which HET or such affiliate will provide certain administrative systems and
services (including, among others, accounting, payroll and risk management
services, and human resources administration) to JCC and, in exchange therefor,
JCC will pay HET or such affiliate fees in the year ended December 31, 1999 of
approximately $1.45 million, which includes a one-time $487,000 implementation
charge. The Company's Board of Directors has also approved a slot machine
acquisition program pursuant to which JCC will acquire new or remodeled slot
machines for use at the Casino. Under this program, the Board authorized the
purchase of 198 slot machines from HET or its affiliates for approximately
$700,000. In addition, pursuant to the Executive Leasing Agreement dated as of
July 1, 1998 (the "Stroessner Lease") between HOCI and JCC, HOCI has agreed to
lease the services of Donald Stroessner, an employee of HOCI, to JCC. Under the
Stroessner Lease, Mr. Stroessner will oversee and manage the design and
construction of the Casino. In exchange for these services, JCC has agreed to
pay HOCI approximately (1) $32,000 for services rendered by Mr. Stroessner
during November and December 1998, (2) $221,000 for services to be rendered
during the year ending December 31, 1999 and (3) $250,000 for services to be
rendered during the year ending December 31, 2000. However, the Stroessner Lease
can be terminated by either JCC or HOCI at any time. If it is terminated in any
year prior to its scheduled expiration, JCC will not be obligated to pay HOCI
the full fee for such year, but instead will be required to pay HOCI a pro rata
portion of such fee. JCC has also agreed to pay additional amounts directly to
Mr. Stroessner for his services. Prior to the opening of the Casino, HET, the
Manager and their affiliates may from time to time agree to provide additional
services to the Company and/or its subsidiaries, including the leasing of the
services of additional employees to JCC.
Currently, the Chairman of the Board, Colin V. Reed, is also a member of
HET's board of directors, a member of HET's three-executive Office of the
President, Executive Vice President and Chief Financial Officer of HET and
Senior Vice President of the Manager. Mr. Reed is expected to continue to serve
as a Class B Director while also serving in these capacities with HET and the
Manager. Frederick W. Burford, the President of the Company and an officer of
each of the Company's subsidiaries, served as a paid consultant to HET from
March 1998 until September 1998. Effective upon consummation of the Plan of
Reorganization, Mr. Burford ceased serving as a paid consultant to HET. In
addition, L. Camille Fowler, the Vice President -- Finance, Treasurer and
Secretary of the Company and an officer of each of the Company's subsidiaries,
was the Director of Finance, Vice President, Secretary and Treasurer of the
Manager until November 1998. In addition, John M. Boushy, an officer of HET, and
Eddie N. Williams, a director of HET, have recently been elected as Class B
Directors. HET owns or controls (indirectly through one or more subsidiaries or
affiliates) dockside casinos in Vicksburg and Tunica, Mississippi and
Shreveport, Louisiana, and HET (or one or more of such subsidiaries or
affiliates) may develop other casinos that may compete with the Casino
(collectively, the "Competing Casinos"). As a result of HET's ownership of the
Competing Casinos, together with the positions held by Messrs. Reed, Boushy and
Williams as both Class B Directors and officers or directors of HET, a conflict
of interest may be deemed to exist by reason of such persons' access to the
Company's information and business opportunities, any or all of which could be
useful to one or more of the Competing Casinos. The Indentures, the Senior
Credit Agreement and the Management Agreement each impose restrictions on the
ability of the Company to enter into transactions with affiliates, including
HET. In addition, the Company's Board of Directors has implemented procedures
which require transactions with affiliates to be approved by disinterested
directors. The Company cannot assure, however, that the restrictions in such
agreements or these procedures will successfully resolve conflicts of interest
confronting, or which may confront, the Company.
For a description of certain transactions between the Company (or one or
more of its subsidiaries) and (1) Seth E. Lemler, a Class A Director, and his
affiliates, and (2) Rudy J. Cerone, a Class A Director, and his affiliates, see
"Compensation Committee Interlocks and Insider Participation."
21
<PAGE> 25
STOCK PERFORMANCE GRAPHS
The following performance graph and accompanying table compare the
stockholders' cumulative return on the Class A Common Stock with the cumulative
total return of the Standard & Poor's Small Cap 600 Stock Index (the "S&P
Smallcap 600 Index") and the Gaming, Lottery and Paramutual Companies Industry
Group of the S&P Small Cap 600 Index (the "S&P Smallcap 600 Gaming Index") from
December 9, 1998, the date the Class A Common Stock began trading on the
American Stock Exchange, and ending on December 31, 1998.(1)(2) The comparative
data assumes $100.00 was invested on December 9, 1998 in the Class A Common
Stock and in each of the indices referred to above and assumes that dividends,
if any, were reinvested.
<TABLE>
<CAPTION>
S & P
S & P Smallcap 600
Measurement Period JCC Holding Smallcap 600 Gaming
(Fiscal Year Covered) Company Index Index
<S> <C> <C> <C>
Dec. 9, 1998 100.00 100.00 100.00
Dec. 31, 1998 96.43 105.88 149.73
</TABLE>
- ---------------
(1) The stock price performance shown in the two tables set forth above is not
necessarily indicative of future stock price performance. Information used
in the tables was obtained from Zacks Investment Research, Inc., a source
believed to be reliable, but the Company is not responsible for any errors
or omissions in such information.
(2) The stock performance graph is not "soliciting material," is not deemed
filed with the Securities and Exchange Commission and is not to be
incorporated by reference in any filing of the Company under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended,
whether made before or after the date hereof and irrespective of any general
incorporation language in any such filing.
22
<PAGE> 26
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, and
regulations of the Securities and Exchange Commission thereunder require the
Company's directors and executive officers and any persons who beneficially own
more than 10% of the Common Stock, as well as certain affiliates of such
persons, to file initial reports of their ownership of the Common Stock and
subsequent reports of changes in such ownership with the Securities and Exchange
Commission and the American Stock Exchange, Inc. Directors, executive officers
and persons beneficially owning more than 10% of the Common Stock are required
by applicable regulations to furnish the Company with copies of all Section
16(a) reports they file. Based solely on its review of the copies of such
reports received by it and written representations that no other reports were
required of those persons, the Company believes that during fiscal 1998, all of
its directors, executive officers and beneficial owners of more than 10% of the
Common Stock complied with applicable Section 16(a) filing requirements.
23
<PAGE> 27
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed the firm of Deloitte & Touche LLP to
serve as independent accountants of the Company for the year ending December 31,
1999. The Board has directed that such appointment be submitted to the
stockholders of the Company for ratification at the Annual Meeting. Deloitte &
Touche LLP has served as independent accountants of the Company since the
Effective Date and is considered by management of the Company to be well
qualified. If the stockholders do not ratify the appointment of Deloitte &
Touche LLP, the Board of Directors will reconsider the appointment.
Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting. They will have an opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
ACCOUNTANTS OF THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 1999.
STOCKHOLDERS' PROPOSALS FOR 2000 ANNUAL MEETING
Nominations by stockholders for director elections and other proposals of
stockholders intended to be presented at the 2000 Annual Meeting of
Stockholders, together with certain related information specified in Rule 14a-8
of the Securities and Exchange Commission, must be submitted in writing to the
Company on or before December 16, 1999 in order for such matters to be included
in the Company's proxy materials for the 2000 Annual Meeting of Stockholders.
Nominations and other proposals of stockholders that are submitted to the
Company after such date may be excluded from the Company's proxy materials for
the 2000 Annual Meeting of Stockholders and will otherwise be subject to Rule
14a-4(c) of the Securities and Exchange Commission. See "Voting -- Proxies;
Other Matters That May Come Before the Annual Meeting."
As provided in the Company's Bylaws, to submit a nominee to stand for
election as a director at the 2000 Annual Meeting of Stockholders or a proposal
to be presented at such meeting, a stockholder must provide notice thereof to
the Company. Such notice must be received by the Company not less than sixty nor
more than ninety days, in the case of the submission of a nominee, and not less
than sixty nor more than one-hundred and twenty days, in the case of the
submission of a proposal, prior to May 13, 1999; provided, however, that if less
than seventy days notice or prior public disclosure of the date of such meeting
is given or made to stockholders, notice by the stockholder, to be timely, must
be received by the Company no later than the close of business on the tenth day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made, whichever first occurs. In addition, any such
notice must contain the information required by the Company's Bylaws.
All nominations, proposals and related information with regard to the 2000
Annual Meeting of Stockholders should be submitted by certified mail, return
receipt requested, to JCC Holding Company, 512 South Peters Street, New Orleans,
Louisiana 70130, Attention: L. Camille Fowler, Vice President -- Finance,
Treasurer and Secretary.
By Order of the Board of Directors.
/S/ L. CAMILLE FOWLER
L. Camille Fowler
Vice President -- Finance, Treasurer
and Secretary
New Orleans, Louisiana
April 15, 1999
---------------------
The Company's 1999 Annual Report and the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1999, which includes audited
financial statements, have been mailed to stockholders of the Company with these
proxy materials. Such materials do not form any part of the material for the
solicitation of proxies.
24
<PAGE> 28
JCC HOLDING COMPANY proxy
________________________________________________________________________________
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE 1999 ANNUAL MEETING OF
STOCKHOLDERS CLASS A COMMON STOCK
The undersigned hereby appoints Frederick W. Burford and L. Camille Fowler, and
each of them, proxies, with full power of substitution, to act for and in the
name of the undersigned to vote all shares of Class A Common Stock ("Common
Stock") of JCC Holding Company, a Delaware corporation (the "Company"), which
the undersigned is entitled to vote at the 1999 Annual Meeting of Stockholders
of the Company, to be held at the Hotel Inter-Continental, 111 East 48th Street,
New York, New York on Thursday, May 13, 1999 at 10:00 a.m. and at any
adjournments thereof, as indicated below and subject to the conditions specified
below.
THIS PROXY CARD WILL BE VOTED AS DIRECTED. IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY CARD WILL BE VOTED IN THE DISCRETION OF THE PROXIES "FOR" THE
ELECTION OF THE NOMINEE NAMED IN PROPOSAL 3 AND "FOR" PROPOSALS 1, 2 AND 4. At
the present time, the Board of Directors knows of no other business to be
presented to a vote of the stockholders at the Annual Meeting. However, the
proxies hereby are authorized to vote in their discretion on any stockholder
proposals subsequently presented for a vote of the stockholders at the Annual
Meeting, as well as on the election of any person selected in accordance with
the Company's Restated Certificate of Incorporation as a director nominee if the
director nominee named in Proposal 3 is unable to serve or for good cause will
not serve, and on matters incident to the conduct of the Annual Meeting.
If the undersigned notified the Secretary of the Company at or prior to the
Annual Meeting or any adjournments thereof of the decision of the undersigned to
withdraw this proxy card, then the power of said proxies shall be deemed
terminated and of no further force and effect. If the undersigned withdraws this
proxy card in the manner described above and prior to the Annual Meeting or any
adjournments thereof does not submit a duly executed and subsequently dated
proxy card to the Company, the undersigned may vote in person at the Annual
Meeting all shares of Common Stock owned by the undersigned as of the record
date, March 25, 1999.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE> 29
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
<TABLE>
<S> <C> <C> <C>
1. The approval of the Company's 1998 Long-Term Incentive Plan. [ ] For [ ] Against [ ] Abstain
2. The approval of the Company's 1999 Non-Employee Director Stock Option Plan. [ ] For [ ] Against [ ] Abstain
3. The election of Seth E. Lemler as a Class A Director of the Company to [ ] For [ ] Withheld
serve until the 2002 Annual Meeting of the Company's stockholders and until
his successor is duly elected and qualified.
4. The ratification of the appointment of Deloitte & Touche LLP as the Company's [ ] For [ ] Against [ ] Abstain
independent accountants for the fiscal year ending December 31, 1999.
MARK HERE FOR ADDRESS [ ] MARK HERE IF YOU PLAN TO [ ]
CHANGE AND NOTE BELOW ATTEND THE ANNUAL MEETING
[X] Please mark votes as in this example
Date ___________________________________
Signature(s) in Box
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS
PROXY CARD IN THE ENCLOSED PREPAID
ENVELOPE. Please sign exactly as your name
appears on this proxy card. When shares are
held jointly, both holders should sign. When
signing as attorney, executor, administrator,
trustee or guardian, please give your full
title. If the holder is a corporation or a
partnership, the full corporate or partnership
name should be signed by a duly authorized
officer.
</TABLE>
<PAGE> 30
JCC HOLDING COMPANY proxy
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE 1999 ANNUAL MEETING
OF STOCKHOLDERS CLASS B COMMON STOCK
The undersigned hereby appoints Frederick W. Burford and L. Camille Fowler,
and each of them, proxies, with full power of substitution, to act for and in
the name of the undersigned to vote all shares of Class B Common Stock ("Common
Stock") of JCC Holding Company, a Delaware corporation (the "Company"), which
the undersigned is entitled to vote at the 1999 Annual Meeting of Stockholders
of the Company, to be held at the Hotel Inter-Continental, 111 East 48th
Street, New York, New York on Thursday, May 13, 1999 at 10:00 a.m. and at any
adjournments thereof, as indicated below and subject to the conditions
specified below.
THIS PROXY CARD WILL BE VOTED AS DIRECTED. IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY CARD WILL BE VOTED IN THE DISCRETION OF THE PROXIES "FOR" THE
ELECTION OF THE NOMINEE NAMED IN PROPOSAL 3 AND "FOR" PROPOSALS 1, 2 AND 4. At
the present time, the Board of Directors knows of no other business to be
presented to a vote of the stockholders at the Annual Meeting. However, the
proxies hereby are authorized to vote in their discretion on any stockholder
proposals subsequently presented for a vote of the stockholders at the Annual
Meeting, as well as on the election of any person selected in accordance with
the Company's Restated Certificate of Incorporation as a director nominee if
the director nominee named in Proposal 3 is unable to serve or for good cause
will not serve, and on matters incident to the conduct of the Annual Meeting.
If the undersigned notified the Secretary of the Company at or prior to the
Annual Meeting or any adjournments thereof of the decision of the undersigned
to withdraw this proxy card, then the power of said proxies shall be deemed
terminated and of no further force and effect. If the undersigned withdraws
this proxy card in the manner described above and prior to the Annual Meeting
or any adjournments thereof does not submit a duly executed and subsequently
dated proxy card to the Company, the undersigned may vote in person at the
Annual Meeting all shares of Common Stock owned by the undersigned as of the
record date, March 25, 1999.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE> 31
<TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
<S> <C> <C> <C>
1. The approval of the Company's 1998 Long-Term Incentive Plan. [ ] For [ ] Against [ ] Abstain
2. The approval of the Company's 1999 Non-Employee Director Stock Option Plan. [ ] For [ ] Against [ ] Abstain
3. The election of Colin V. Reed as a Class B Director of the Company to serve [ ] For [ ] Withheld
until the 2002 Annual Meeting of the Company's stockholders and until his
successor is duly elected and qualified.
4. The ratification of the appointment of Deloitte & Touche LLP as the Company's [ ] For [ ] Against [ ] Abstain
independent accountants for the fiscal year ending December 31, 1999.
MARK HERE FOR ADDRESS [ ] MARK HERE IF YOU PLAN TO [ ]
CHANGE AND NOTE BELOW ATTEND THE ANNUAL MEETING
[X] Please mark votes as in this example
Date __________________________
Signature(s) in Box
PLEASE COMPLETE, DATE, SIGN AND MAIL
THIS PROXY CARD IN THE ENCLOSED PREPAID
ENVELOPE. Please sign exactly as your
name appears on this proxy card. When
shares are held jointly, both holders
should sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title.
If the holder is a corporation or a
partnership, the full corporate or
partnership name should be signed by
duly authorized officer.
</TABLE>
<PAGE> 32
JCC HOLDING COMPANY
1998 LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
1.1 GENERAL. The purpose of the JCC Holding Company 1998
Long-Term Incentive Plan (the "Plan") is to promote the success, and enhance
the value, of JCC Holding Company (the "Company"), by linking the personal
interests of its employees, officers, consultants and directors to those of
Company stockholders and by providing such persons with an incentive for
outstanding performance. The Plan is further intended to provide flexibility to
the Company in its ability to motivate, attract, and retain the services of
employees, officers, consultants and directors upon whose judgment, interest,
and special effort the successful conduct of the Company's operation is largely
dependent. Accordingly, the Plan permits the grant of incentive awards from
time to time to selected employees, officers, consultants and directors;
provided, however, to the extent necessary to preserve the employee benefits
plan exemption under applicable state blue sky laws, no non-employee director
or consultant of the Company will be eligible to receive Awards under the Plan
until such time, if any, as the Stock shall be traded on a national securities
exchange or on the Nasdaq National Market.
ARTICLE 2
EFFECTIVE DATE
2.1 EFFECTIVE DATE. The Plan shall be effective as of the date
upon which it shall be approved by the Board. However, the Plan shall be
submitted to the stockholders of the Company for approval within 12 months of
the Board's approval thereof. No Incentive Stock Options granted under the Plan
may be exercised prior to approval of the Plan by the stockholders and if the
stockholders fail to approve the Plan within 12 months of the Board's approval
thereof, any Incentive Stock Options previously granted hereunder shall be
automatically converted to Non-Qualified Stock Options without any further act.
In the discretion of the Committee, Awards may be made to Covered Employees
which are intended to constitute qualified performance-based compensation under
Code Section 162(m). Any such Awards shall be contingent upon the stockholders
having approved the Plan.
ARTICLE 3
DEFINITIONS
3.1 DEFINITIONS. When a word or phrase appears in this Plan with
the initial letter capitalized, and the word or phrase does not commence a
sentence, the word or phrase shall generally be given the meaning ascribed to
it in this Section or in Section 1.1 unless a clearly different meaning is
required by the context. The following words and phrases shall have the
following meanings:
<PAGE> 33
(a) "Award" means any Option, Stock Appreciation Right,
Restricted Stock Award, Performance Unit Award, Dividend Equivalent
Award, or Other Stock-Based Award, or any other right or interest
relating to Stock or cash, granted to a Participant under the Plan.
(b) "Award Agreement" means any written agreement,
contract, or other instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" means and includes each of the
following:
(1) The acquisition by any individual, entity
or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the 1934 Act) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the 1934 Act) of
40% or more of the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that for
purposes of this subsection (1), the following acquisitions
shall not constitute a Change of Control: (i) any acquisition
by a Person who is on the Effective Date the beneficial owner
of 40% or more of the Outstanding Company Voting Securities,
(ii) any acquisition directly from the Company, (iii) any
acquisition by the Company, (iv) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company, or (v) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (3) of this definition; or
(2) Individuals who, as of the Effective Date,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the Effective Date whose election, or
nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election
or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(3) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such
- 2 -
<PAGE> 34
Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners of
the Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or
indirectly, more than 66 2/3% of the combined voting power of
the then outstanding voting securities entitled to vote
generally in the election of directors of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of
the Outstanding Company Voting Securities, and (ii) no Person
(excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust)
of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or
indirectly, 40% or more of the combined voting power of the
then outstanding voting securities of such corporation except
to the extent that such ownership existed prior to the
Business Combination, and (iii) at least a majority of the
members of the board of directors of the corporation
resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination; or
(4) Approval by the stockholders of the Company
of a complete liquidation or dissolution of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(f) "Committee" means the committee of the Board
described in Article 4.
(g) "Company" means JCC Holding Company, a Delaware
corporation.
(h) "Covered Employee" means a covered employee as
defined in Code Section 162(m)(3), provided that no employee shall be
a Covered Employee until the deduction limitation of Code Section
162(m) are applicable to the Company and any reliance period under
Code Section 162(m) has expired, as described in Section 16.15 hereof.
(i) "Disability" shall mean any illness or other
physical or mental condition of a Participant that renders the
Participant incapable of performing his customary and usual duties for
the Company, or any medically determinable illness or other physical
or mental condition resulting from a bodily injury, disease or mental
disorder which, in the judgment of the Committee, is permanent and
- 3 -
<PAGE> 35
continuous in nature. The Committee may require such medical or other
evidence as it deems necessary to judge the nature and permanency of
the Participant's condition.
(j) "Dividend Equivalent" means a right granted to a
Participant under Article 11.
(k) "Effective Date" has the meaning assigned such term
in Section 2.1.
(l) "Fair Market Value", on any date, means (i) if the
Stock is listed on a securities exchange or is traded over the Nasdaq
National Market, the closing sales price on such exchange or over such
system on such date or, in the absence of reported sales on such date,
the closing sales price on the immediately preceding date on which
sales were reported, or (ii) if the Stock is not listed on a
securities exchange or traded over the Nasdaq National Market, the
mean between the bid and offered prices as quoted by Nasdaq for such
date, provided that if it is determined that the fair market value is
not properly reflected by such Nasdaq quotations, Fair Market Value
will be determined by such other method as the Committee determines in
good faith to be reasonable.
(m) "Incentive Stock Option" means an Option that is
intended to meet the requirements of Section 422 of the Code or any
successor provision thereto.
(n) "Non-Qualified Stock Option" means an Option that is
not an Incentive Stock Option.
(o) "Option" means a right granted to a Participant
under Article 7 of the Plan to purchase Stock at a specified price
during specified time periods. An Option may be either an Incentive
Stock Option or a Non-Qualified Stock Option.
(p) "Other Stock-Based Award" means a right, granted to
a Participant under Article 12, that relates to or is valued by
reference to Stock or other Awards relating to Stock.
(q) "Parent" means a corporation which owns or
beneficially owns a majority of the outstanding voting stock or voting
power of the Company. For Incentive Stock Options, the term shall have
the same meaning as set forth in Code Section 424(e).
(r) "Participant" means a person who, as an employee,
officer, consultant or director of the Company or any Subsidiary, has
been granted an Award under the Plan.
(s) "Performance Unit" means a right granted to a
Participant under Article 9, to receive cash, Stock, or other Awards,
the payment of which is
- 4 -
<PAGE> 36
contingent upon achieving certain performance goals established by the
Committee.
(t) "Plan" means the JCC Holding Company 1998 Long-Term
Incentive Plan, as amended from time to time.
(u) "Restricted Stock Award" means Stock granted to a
Participant under Article 10 that is subject to certain restrictions
and to risk of forfeiture.
(v) "Stock" means the $0.01 par value Class A Common
Stock of the Company, and after the Transition Date, the $0.01 par
value Unclassified Common Stock of the Company, and such other
securities of the Company as may be substituted for Stock pursuant to
Article 14.
(w) "Stock Appreciation Right" or "SAR" means a right
granted to a Participant under Article 8 to receive a payment equal to
the difference between the Fair Market Value of a share of Stock as of
the date of exercise of the SAR over the grant price of the SAR, all
as determined pursuant to Article 8.
(x) "Subsidiary" means any corporation, limited
liability company, partnership or other entity of which a majority of
the outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Company. For Incentive Stock Options,
the term shall have the meaning set forth in Code Section 424(f).
(y) "Transition Date" has the meaning set forth in the
Restated Certificate of Incorporation of the Company.
(z) "1933 Act" means the Securities Act of 1933, as
amended from time to time.
(aa) "1934 Act" means the Securities Exchange Act of
1934, as amended from time to time.
ARTICLE 4
ADMINISTRATION
4.1 COMMITTEE. The Plan shall be administered by the Compensation
Committee of the Board or, at the discretion of the Board from time to time, by
the Board. The Committee shall consist of two or more members of the Board. It
is intended that the directors appointed to serve on the Committee shall be
"non-employee directors" (within the meaning of Rule 16b-3 promulgated under
the 1934 Act) and "outside directors" (within the meaning of Code Section
162(m) and the regulations thereunder) to the extent that Rule 16b-3 and, if
necessary for relief from the limitation under Code Section 162(m) and such
relief is sought by the Company, Code Section 162(m),
- 5 -
<PAGE> 37
respectively, are applicable. However, the mere fact that a Committee member
shall fail to qualify under either of the foregoing requirements shall not
invalidate any Award made by the Committee which Award is otherwise validly
made under the Plan. The members of the Committee shall be appointed by, and
may be changed at any time and from time to time in the discretion of, the
Board. During any time that the Board is acting as administrator of the Plan,
it shall have all the powers of the Committee hereunder, and any reference
herein to the Committee (other than in this Section 4.1) shall include the
Board.
4.2 ACTION BY THE COMMITTEE. For purposes of administering the
Plan, the following rules of procedure shall govern the Committee. A majority
of the Committee shall constitute a quorum. The acts of a majority of the
members present at any meeting at which a quorum is present, and acts approved
unanimously in writing by the members of the Committee in lieu of a meeting,
shall be deemed the acts of the Committee. Each member of the Committee is
entitled to, in good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of the Company or any
Parent or Subsidiary, the Company's independent certified public accountants,
or any executive compensation consultant or other professional retained by the
Company to assist in the administration of the Plan.
4.3 AUTHORITY OF COMMITTEE. The Committee has the exclusive
power, authority and discretion to:
(a) Designate Participants;
(b) Determine the type or types of Awards to be granted
to each Participant;
(c) Determine the number of Awards to be granted and the
number of shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award
granted under the Plan, including but not limited to, the exercise
price, grant price, or purchase price, any restrictions or limitations
on the Award, any schedule for lapse of forfeiture restrictions or
restrictions on the exercisability of an Award, and accelerations or
waivers thereof, based in each case on such considerations as the
Committee in its sole discretion determines;
(e) Accelerate the vesting or lapse of restrictions of
any outstanding Award, based in each case on such considerations as
the Committee in its sole discretion determines;
(f) Determine whether, to what extent, and under what
circumstances an Award may be settled in, or the exercise price of an
Award may be paid in, cash, Stock, other Awards, or other property, or
an Award may be canceled, forfeited, or surrendered;
- 6 -
<PAGE> 38
(g) Prescribe the form of each Award Agreement, which
need not be identical for each Participant;
(h) Decide all other matters that must be determined in
connection with an Award;
(i) Establish, adopt or revise any rules and regulations
as it may deem necessary or advisable to administer the Plan;
(j) Make all other decisions and determinations that may
be required under the Plan or as the Committee deems necessary or
advisable to administer the Plan; and
(k) Amend the Plan or any Award Agreement as provided
herein.
4.4. DECISIONS BINDING. The Committee's interpretation of the
Plan, any Awards granted under the Plan, any Award Agreement and all decisions
and determinations by the Committee with respect to the Plan are final,
binding, and conclusive on all parties.
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1. NUMBER OF SHARES. Subject to adjustment as provided in
Section 14.1, the aggregate number of shares of Stock reserved and available
for Awards or which may be used to provide a basis of measurement for or to
determine the value of an Award (such as with a Stock Appreciation Right or
Performance Unit Award) shall be 750,000, of which not more than 10% may be
granted as Awards of Restricted Stock or unrestricted Stock Awards.
5.2. LAPSED AWARDS. To the extent that an Award is canceled,
terminates, expires or lapses for any reason, any shares of Stock subject to
the Award will again be available for the grant of an Award under the Plan and
shares subject to SARs or other Awards settled in cash will be available for
the grant of an Award under the Plan.
5.3. STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award
may consist, in whole or in part, of authorized and unissued Stock, treasury
Stock or Stock purchased on the open market.
5.4. LIMITATION ON AWARDS. Notwithstanding any provision in the
Plan to the contrary, the maximum number of shares of Stock with respect to one
or more Options and/or SARs that may be granted during any one calendar year
under the Plan to any one Covered Employee shall be 750,000. The maximum fair
market value (measured as of the date of grant) of any Awards other than
Options and SARs that may be received
- 7 -
<PAGE> 39
by a Covered Employee (less any consideration paid by the Participant for such
Award) during any one calendar year under the Plan shall be $2,000,000.
ARTICLE 6
ELIGIBILITY
6.1. GENERAL. Awards may be granted only to individuals who are
employees, officers, consultants or directors of the Company or a Parent or
Subsidiary; provided, however, that to the extent necessary to preserve the
employee benefits plan exemption under applicable state blue sky laws, no
non-employee director or consultant of the Company will be eligible to receive
Awards under the Plan until such time, if any, as the Company's common stock
shall be traded on a national securities exchange or on the Nasdaq National
Market.
ARTICLE 7
STOCK OPTIONS
7.1. GENERAL. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(a) EXERCISE PRICE. The exercise price per share of
Stock under an Option shall be determined by the Committee, provided
that the exercise price for any Option shall not be less than the Fair
Market Value as of the date of the grant.
(b) TIME AND CONDITIONS OF EXERCISE. The Committee shall
determine the time or times at which an Option may be exercised in
whole or in part. The Committee also shall determine the performance
or other conditions, if any, that must be satisfied before all or part
of an Option may be exercised. The Committee may waive any exercise
provisions at any time in whole or in part based upon factors as the
Committee may determine in its sole discretion so that the Option
becomes exerciseable at an earlier date.
(c) PAYMENT. The Committee shall determine the methods
by which the exercise price of an Option may be paid, the form of
payment, including, without limitation, cash, shares of Stock, or
other property (including "cashless exercise" arrangements), and the
methods by which shares of Stock shall be delivered or deemed to be
delivered to Participants; provided that if shares of Stock
surrendered in payment of the exercise price were themselves acquired
otherwise than on the open market, such shares shall have been held by
the Participant for at least six months.
- 8 -
<PAGE> 40
(d) EVIDENCE OF GRANT. All Options shall be evidenced by
a written Award Agreement between the Company and the Participant. The
Award Agreement shall include such provisions, not inconsistent with
the Plan, as may be specified by the Committee.
(e) ADDITIONAL OPTIONS UPON EXERCISE. The Committee may,
in its sole discretion, provide in an Award Agreement, or in an
amendment thereto, for the automatic grant of a new Option to any
Participant who delivers shares of Stock as full or partial payment of
the exercise price of the original Option. Any new Option granted in
such a case (i) shall be for the same number of shares of Stock as the
Participant delivered in exercising the original Option, (ii) shall
have an exercise price of 100% of the Fair Market Value of the
surrendered shares of Stock on the date of exercise of the original
Option (the grant date for the new Option), and (iii) shall have a
term equal to the unexpired term of the original Option.
7.2. INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock
Options granted under the Plan must comply with the following additional rules:
(a) EXERCISE PRICE. The exercise price per share of
Stock shall be set by the Committee, provided that the exercise price
for any Incentive Stock Option shall not be less than the Fair Market
Value as of the date of the grant.
(b) EXERCISE. In no event may any Incentive Stock Option
be exercisable for more than ten years from the date of its grant.
(c) LAPSE OF OPTION. An Incentive Stock Option shall
lapse under the earliest of the following circumstances; provided,
however, that the Committee may, prior to the lapse of the Incentive
Stock Option under the circumstances described in paragraphs (3), (4)
and (5) below, provide in writing that the Option will extend until a
later date, but if Option is exercised after the dates specified in
paragraphs (3), (4) and (5) below, it will automatically become a
Non-Qualified Stock Option:
(1) The Incentive Stock Option shall lapse as
of the option expiration date set forth in the Award
Agreement.
(2) The Incentive Stock Option shall lapse ten
years after it is granted, unless an earlier time is set in
the Award Agreement.
(3) If the Participant terminates employment
for any reason other than as provided in paragraph (4) or (5)
below, the Incentive Stock Option shall lapse, unless it is
previously exercised, three months after the Participant's
termination of employment; provided, however, that if the
Participant's employment is terminated by the Company for
cause or by the
- 9 -
<PAGE> 41
Participant without the consent of the Company, the Incentive
Stock Option shall (to the extent not previously exercised)
lapse immediately.
(4) If the Participant terminates employment by
reason of his Disability, the Incentive Stock Option shall
lapse, unless it is previously exercised, one year after the
Participant's termination of employment.
(5) If the Participant dies while employed, or
during the three-month period described in paragraph (3) or
during the one-year period described in paragraph (4) and
before the Option otherwise lapses, the Option shall lapse
one year after the Participant's death. Upon the
Participant's death, any exercisable Incentive Stock Options
may be exercised by the Participant's beneficiary, determined
in accordance with Section 13.6.
Unless the exercisability of the Incentive Stock Option is
accelerated as provided in Article 13, if a Participant exercises an
Option after termination of employment, the Option may be exercised
only with respect to the shares that were otherwise vested on the
Participant's termination of employment.
(d) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair
Market Value (determined as of the time an Award is made) of all
shares of Stock with respect to which Incentive Stock Options are
first exercisable by a Participant in any calendar year may not exceed
$100,000.00.
(e) TEN PERCENT OWNERS. No Incentive Stock Option shall
be granted to any individual who, at the date of grant, owns stock
possessing more than ten percent of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary unless
the exercise price per share of such Option is at least 110% of the
Fair Market Value per share of Stock at the date of grant and the
Option expires no later than five years after the date of grant.
(f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of
an Incentive Stock Option may be made pursuant to the Plan after the
day immediately prior to the tenth anniversary of the Effective Date.
(g) RIGHT TO EXERCISE. During a Participant's lifetime,
an Incentive Stock Option may be exercised only by the Participant or,
in the case of the Participant's Disability, by the Participant's
guardian or legal representative.
(h) DIRECTORS. The Committee may not grant an Incentive
Stock Option to a non-employee director. The Committee may grant an
Incentive Stock Option to a director who is also an employee of the
Company or Parent or Subsidiary but only in that individual's position
as an employee and not as a director.
- 10 -
<PAGE> 42
ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1. GRANT OF SARs. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:
(a) RIGHT TO PAYMENT. Upon the exercise of a Stock
Appreciation Right, the Participant to whom it is granted has the
right to receive the excess, if any, of:
(1) The Fair Market Value of one share of Stock
on the date of exercise; over
(2) The grant price of the Stock Appreciation
Right as determined by the Committee, which shall not be less
than the Fair Market Value of one share of Stock on the date
of grant.
(b) OTHER TERMS. All awards of Stock Appreciation Rights
shall be evidenced by an Award Agreement. The terms, methods of
exercise, methods of settlement, form of consideration payable in
settlement, and any other terms and conditions of any Stock
Appreciation Right shall be determined by the Committee at the time of
the grant of the Award and shall be reflected in the Award Agreement.
ARTICLE 9
PERFORMANCE UNITS
9.1. GRANT OF PERFORMANCE UNITS. The Committee is authorized to
grant Performance Units to Participants on such terms and conditions as may be
selected by the Committee. The Committee shall have the complete discretion to
determine the number of Performance Units granted to each Participant. All
Awards of Performance Units shall be evidenced by an Award Agreement.
9.2. RIGHT TO PAYMENT. A grant of Performance Units gives the
Participant rights, valued as determined by the Committee, and payable to, or
exercisable by, the Participant to whom the Performance Units are granted, in
whole or in part, as the Committee shall establish at grant or thereafter. The
Committee shall set performance goals and other terms or conditions to payment
of the Performance Units in its discretion which, depending on the extent to
which they are met, will determine the number and value of Performance Units
that will be paid to the Participant.
9.3. OTHER TERMS. Performance Units may be payable in cash, Stock,
or other property, and have such other terms and conditions as determined by
the Committee and reflected in the Award Agreement.
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<PAGE> 43
ARTICLE 10
RESTRICTED STOCK AWARDS
10.1. GRANT OF RESTRICTED STOCK. The Committee is authorized to
make Awards of Restricted Stock to Participants in such amounts and subject to
such terms and conditions as may be selected by the Committee. All Awards of
Restricted Stock shall be evidenced by a Restricted Stock Award Agreement.
10.2. ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject
to such restrictions on transferability and other restrictions as the Committee
may impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, upon the satisfaction of performance
goals or otherwise, as the Committee determines at the time of the grant of the
Award or thereafter.
10.3. FORFEITURE. Except as otherwise determined by the Committee
at the time of the grant of the Award or thereafter, upon termination of
employment during the applicable restriction period or upon failure to satisfy
a performance goal during the applicable restriction period, Restricted Stock
that is at that time subject to restrictions shall be forfeited and reacquired
by the Company; provided, however, that the Committee may provide in any Award
Agreement that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in whole or
in part restrictions or forfeiture conditions relating to Restricted Stock.
10.4. CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted
under the Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing shares of Restricted Stock are
registered in the name of the Participant, certificates must bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Restricted Stock.
ARTICLE 11
DIVIDEND EQUIVALENTS
11.1 GRANT OF DIVIDEND EQUIVALENTS. The Committee is authorized to
grant Dividend Equivalents to Participants subject to such terms and conditions
as may be selected by the Committee. Dividend Equivalents shall entitle the
Participant to receive payments equal to dividends with respect to all or a
portion of the number of shares of Stock subject to an Award, as determined by
the Committee. The Committee may provide that Dividend Equivalents be paid or
distributed when accrued or be deemed to have been reinvested in additional
shares of Stock, or otherwise reinvested.
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<PAGE> 44
ARTICLE 12
OTHER STOCK-BASED AWARDS
12.1. GRANT OF OTHER STOCK-BASED AWARDS. The Committee is
authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that are payable in, valued in whole or in part
by reference to, or otherwise based on or related to shares of Stock, as deemed
by the Committee to be consistent with the purposes of the Plan, including
without limitation shares of Stock awarded purely as a "bonus" and not subject
to any restrictions or conditions, convertible or exchangeable debt securities,
other rights convertible or exchangeable into shares of Stock, and Awards
valued by reference to book value of shares of Stock or the value of securities
of or the performance of specified Parents or Subsidiaries. The Committee shall
determine the terms and conditions of such Awards.
ARTICLE 13
PROVISIONS APPLICABLE TO AWARDS
13.1. STAND-ALONE, TANDEM, AND SUBSTITUTE AWARDS. Awards granted
under the Plan may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with, or in substitution for, any other Award
granted under the Plan. If an Award is granted in substitution for another
Award, the Committee may require the surrender of such other Award in
consideration of the grant of the new Award. Awards granted in addition to or
in tandem with other Awards may be granted either at the same time as or at a
different time from the grant of such other Awards.
13.2. EXCHANGE PROVISIONS. The Committee may at any time offer to
exchange or buy out any previously granted Award for a payment in cash, Stock,
or another Award (subject to Section 14.1), based on the terms and conditions
the Committee determines and communicates to the Participant at the time the
offer is made.
13.3. TERM OF AWARD. The term of each Award shall be for the period
as determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option or a Stock Appreciation Right granted in tandem with the
Incentive Stock Option exceed a period of ten years from the date of its grant
(or, if Section 7.2(e) applies, five years from the date of its grant).
13.4. FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan
and any applicable law or Award Agreement, payments or transfers to be made by
the Company or a Parent or Subsidiary on the grant or exercise of an Award may
be made in such form as the Committee determines at or after the time of grant,
including without limitation, cash, Stock, other Awards, or other property, or
any combination, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case determined in accordance
with rules adopted by, and at the discretion of, the Committee.
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<PAGE> 45
13.5. LIMITS ON TRANSFER. No right or interest of a Participant in
any unexercised or restricted Award may be pledged, encumbered, or hypothecated
to or in favor of any party other than the Company or a Parent or Subsidiary,
or shall be subject to any lien, obligation, or liability of such Participant
to any other party other than the Company or a Parent or Subsidiary. No
unexercised or restricted Award shall be assignable or transferable by a
Participant other than by will or the laws of descent and distribution or,
except in the case of an Incentive Stock Option, pursuant to a domestic
relations order that would satisfy Section 414(p)(1)(A) of the Code if such
Section applied to an Award under the Plan; provided, however, that the
Committee may (but need not) permit other transfers where the Committee
concludes that such transferability (i) does not result in accelerated
taxation, (ii) does not cause any Option intended to be an incentive stock
option to fail to be described in Code Section 422(b), and (iii) is otherwise
appropriate and desirable, taking into account any factors deemed relevant,
including without limitation, any state or federal tax or securities laws or
regulations applicable to transferable Awards.
13.6 BENEFICIARIES. Notwithstanding Section 13.5, a Participant
may, in the manner determined by the Committee, designate a beneficiary to
exercise the rights of the Participant and to receive any distribution with
respect to any Award upon the Participant's death. A beneficiary, legal
guardian, legal representative, or other person claiming any rights under the
Plan is subject to all terms and conditions of the Plan and any Award Agreement
applicable to the Participant, except to the extent the Plan and Award
Agreement otherwise provide, and to any additional restrictions deemed
necessary or appropriate by the Committee. If no beneficiary has been
designated or survives the Participant, payment shall be made to the
Participant's estate. Subject to the foregoing, a beneficiary designation may
be changed or revoked by a Participant at any time provided the change or
revocation is filed with the Committee.
13.7. STOCK CERTIFICATES. All Stock certificates delivered under
the Plan are subject to any stop-transfer orders and other restrictions as the
Committee deems necessary or advisable to comply with federal or state
securities laws, rules and regulations and the rules of any national securities
exchange or automated quotation system on which the Stock is listed, quoted, or
traded. The Committee may place legends on any Stock certificate to reference
restrictions applicable to the Stock.
13.8 ACCELERATION UPON DEATH OR DISABILITY. Notwithstanding any
other provision in the Plan or any Participant's Award Agreement to the
contrary, upon the Participant's death or Disability during his employment or
service as a consultant or director, all outstanding Options, Stock
Appreciation Rights, and other Awards in the nature of rights that may be
exercised shall become fully exercisable and all restrictions on outstanding
Awards shall lapse. Any Option or Stock Appreciation Rights Awards shall
thereafter continue or lapse in accordance with the other provisions of the
Plan and the Award Agreement. To the extent that this provision causes
Incentive Stock Options to exceed the dollar limitation set forth in Section
7.2(d), the excess Options shall be deemed to be Non-Qualified Stock Options.
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<PAGE> 46
13.9. ACCELERATION UPON A CHANGE IN CONTROL. Except as otherwise
provided in the Award Agreement, upon the occurrence of a Change in Control,
all outstanding Options, Stock Appreciation Rights, and other Awards in the
nature of rights that may be exercised shall become fully exercisable and all
restrictions on outstanding Awards shall lapse; provided, however that such
acceleration will not occur if, in the opinion of the Company's accountants,
such acceleration would preclude the use of "pooling of interest" accounting
treatment for a Change in Control transaction that (a) would otherwise qualify
for such accounting treatment, and (b) is contingent upon qualifying for such
accounting treatment. To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Section 7.2(d), the excess
Options shall be deemed to be Non-Qualified Stock Options.
13.10. ACCELERATION UPON CERTAIN EVENTS NOT CONSTITUTING A CHANGE IN
CONTROL. In the event of the occurrence of any circumstance, transaction or
event not constituting a Change in Control (as defined in Section 3.1) but
which the Board of Directors deems to be, or to be reasonably likely to lead
to, an effective change in control of the Company of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of the 1934
Act, the Committee may in its sole discretion declare all outstanding Options,
Stock Appreciation Rights, and other Awards in the nature of rights that may be
exercised to be fully exercisable, and/or all restrictions on all outstanding
Awards to have lapsed, in each case, as of such date as the Committee may, in
its sole discretion, declare, which may be on or before the consummation of
such transaction or event. To the extent that this provision causes Incentive
Stock Options to exceed the dollar limitation set forth in Section 7.2(d), the
excess Options shall be deemed to be Non-Qualified Stock Options.
13.11. ACCELERATION FOR ANY OTHER REASON. Regardless of whether an
event has occurred as described in Section 13.9 or 13.10 above, the Committee
may in its sole discretion at any time determine that all or a portion of a
Participant's Options, Stock Appreciation Rights, and other Awards in the
nature of rights that may be exercised shall become fully or partially
exercisable, and/or that all or a part of the restrictions on all or a portion
of the outstanding Awards shall lapse, in each case, as of such date as the
Committee may, in its sole discretion, declare. The Committee may discriminate
among Participants and among Awards granted to a Participant in exercising its
discretion pursuant to this Section 13.11.
13.12 EFFECT OF ACCELERATION. If an Award is accelerated under
Section 13.9 or 13.10, the Committee may, in its sole discretion, provide (i)
that the Award will expire after a designated period of time after such
acceleration to the extent not then exercised, (ii) that the Award will be
settled in cash rather than Stock, (iii) that the Award will be assumed by
another party to the transaction giving rise to the acceleration or otherwise
be equitably converted in connection with such transaction, or (iv) any
combination of the foregoing. The Committee's determination need not be uniform
and
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<PAGE> 47
may be different for different Participants whether or not such Participants
are similarly situated.
13.13. PERFORMANCE GOALS. The Committee may determine that any Award
granted pursuant to this Plan to a Participant (including, but not limited to,
Participants who are Covered Employees) shall be determined solely on the basis
of (a) the achievement by the Company or a Parent or Subsidiary of a specified
target return, or target growth in return, on equity or assets, (b) the
Company's, Parent's or Subsidiary's stock price, (c) the achievement by an
individual or a business unit of the Company, Parent or Subsidiary of a
specified target, or target growth in, revenues, net income or earnings per
share, (d) the achievement of objectively determinable goals with respect to
service or product delivery, service or product quality, customer satisfaction,
meeting budgets and/or retention of employees or (e) any combination of the
goals set forth in (a) through (d) above. If an Award is made on such basis,
the Committee shall establish goals prior to the beginning of the period for
which such performance goal relates (or such later date as may be permitted
under Code Section 162(m) or the regulations thereunder) and the Committee may
for any reason reduce (but not increase) any Award, notwithstanding the
achievement of a specified goal. Any payment of an Award granted with
performance goals shall be conditioned on the written certification of the
Committee in each case that the performance goals and any other material
conditions were satisfied.
13.14. TERMINATION OF EMPLOYMENT. Whether military, government or
other service or other leave of absence shall constitute a termination of
employment shall be determined in each case by the Committee at its discretion,
and any determination by the Committee shall be final and conclusive. A
termination of employment shall not occur in a circumstance in which a
Participant transfers from the Company to one of its Parents or Subsidiaries,
transfers from a Parent or Subsidiary to the Company, or transfers from one
Parent or Subsidiary to another Parent or Subsidiary.
ARTICLE 14
CHANGES IN CAPITAL STRUCTURE
14.1. GENERAL. In the event a stock dividend is declared upon the
Stock, the shares of Stock then subject to each Award shall be increased
proportionately without any change in the aggregate purchase price therefor. In
the event the Stock shall be changed into or exchanged for a different number
or class of shares of stock or securities of the Company or of another
corporation, whether through reorganization, recapitalization,
reclassification, share exchange, stock split-up, combination of shares, merger
or consolidation, there shall be substituted for each such share of Stock then
subject to each Award the number and class of shares into which each
outstanding share of Stock shall be so exchanged, all without any change in the
aggregate purchase price for the shares then subject to each Award, or, subject
to Section 15.2, there shall be made such other equitable adjustment as the
Committee shall approve.
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<PAGE> 48
ARTICLE 15
AMENDMENT, MODIFICATION AND TERMINATION
15.1. AMENDMENT, MODIFICATION AND TERMINATION. The Board or the
Committee may, at any time and from time to time, amend, modify or terminate
the Plan without stockholder approval; provided, however, that the Board or
Committee may condition any amendment or modification on the approval of
stockholders of the Company if such approval is necessary or deemed advisable
with respect to tax, securities or other applicable laws, policies or
regulations.
15.2 AWARDS PREVIOUSLY GRANTED. At any time and from time to time,
the Committee may amend, modify or terminate any outstanding Award without
approval of the Participant; provided, however, that, subject to the terms of
the applicable Award Agreement, such amendment, modification or termination
shall not, without the Participant's consent, reduce or diminish the value of
such Award determined as if the Award had been exercised, vested, cashed in or
otherwise settled on the date of such amendment or termination. No termination,
amendment, or modification of the Plan shall adversely affect any Award
previously granted under the Plan, without the written consent of the
Participant.
ARTICLE 16
GENERAL PROVISIONS
16.1. NO RIGHTS TO AWARDS. No Participant or eligible participant
shall have any claim to be granted any Award under the Plan, and neither the
Company nor the Committee is obligated to treat Participants or eligible
participants uniformly.
16.2. NO SHAREHOLDER RIGHTS. No Award gives the Participant any of
the rights of a stockholder of the Company unless and until shares of Stock are
in fact issued to such person in connection with such Award.
16.3. WITHHOLDING. The Company or any Parent or Subsidiary shall
have the authority and the right to deduct or withhold, or require a
Participant to remit to the Company, an amount sufficient to satisfy federal,
state, and local taxes (including the Participant's FICA obligation) required
by law to be withheld with respect to any taxable event arising as a result of
the Plan. With respect to withholding required upon any taxable event under the
Plan, the Committee may, at the time the Award is granted or thereafter,
require that any such withholding requirement be satisfied, in whole or in
part, by withholding shares of Stock having a Fair Market Value on the date of
withholding equal to the amount required to be withheld for tax purposes, all
in accordance with such procedures as the Committee establishes.
16.4. NO RIGHT TO CONTINUED SERVICE. Nothing in the Plan or any
Award Agreement shall interfere with or limit in any way the right of the
Company or any Parent or Subsidiary to terminate any Participant's employment
or status as an officer,
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<PAGE> 49
director or consultant at any time, nor confer upon any Participant any right
to continue as an employee, officer, director or consultant of the Company or
any Parent or Subsidiary.
l6.5. UNFUNDED STATUS OF AWARDS. The Plan is intended to be an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained
in the Plan or any Award Agreement shall give the Participant any rights that
are greater than those of a general creditor of the Company or any Parent or
Subsidiary.
16.6. INDEMNIFICATION. To the extent allowable under applicable
law, each member of the Committee shall be indemnified and held harmless by the
Company from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by such member in connection with or resulting from any
claim, action, suit, or proceeding to which such member may be a party or in
which he may be involved by reason of any action or failure to act under the
Plan and against and from any and all amounts paid by such member in
satisfaction of judgment in such action, suit, or proceeding against him
provided he gives the Company an opportunity, at its own expense, to handle and
defend the same before he undertakes to handle and defend it on his own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
them harmless.
16.7. RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan
shall be taken into account in determining any benefits under any pension,
retirement, savings, profit sharing, group insurance, welfare or benefit plan
of the Company or any Parent or Subsidiary unless provided otherwise in such
other plan.
16.8. EXPENSES. The expenses of administering the Plan shall be
borne by the Company and its Parents or Subsidiaries.
16.9. TITLES AND HEADINGS. The titles and headings of the Sections
in the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.
16.10. GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.
16.11. FRACTIONAL SHARES. No fractional shares of Stock shall be
issued and the Committee shall determine, in its discretion, whether cash shall
be given in lieu of fractional shares or whether such fractional shares shall
be eliminated by rounding up.
16.12. GOVERNMENT AND OTHER REGULATIONS. The obligation of the
Company to make payment of awards in Stock or otherwise shall be subject to all
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<PAGE> 50
applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Company shall be under no obligation to
register under the 1933 Act, or any state securities act, any of the shares of
Stock paid under the Plan. The shares paid under the Plan may in certain
circumstances be exempt from registration under the 1933 Act, and the Company
may restrict the transfer of such shares in such manner as it deems advisable
to ensure the availability of any such exemption.
16.13. GOVERNING LAW. To the extent not governed by federal law, the
Plan and all Award Agreements shall be construed in accordance with and
governed by the laws of the State of Delaware.
16.14 ADDITIONAL PROVISIONS. Each Award Agreement may contain such
other terms and conditions as the Committee may determine; provided that such
other terms and conditions are not inconsistent with the provisions of this
Plan.
16.15 Code Section 162(m). The deduction limits of Code Section
162(m) and the regulation thereunder do not apply to the Company until such
time, if any, as any class of the Company's common equity securities is
registered under Section 12 of the 1934 Act or the Company otherwise meets the
definition of a "publicly held corporation" under Treasury Regulation
1.162-27(c) or any successor provision. Upon becoming a publicly held
corporation, the deduction limits of Code Section 162(m) and the regulations
thereunder shall not apply to compensation payable under this Plan until the
expiration of the reliance period described in Treasury Regulation 1.162-27(f)
or any successor regulation.
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<PAGE> 51
JCC HOLDING COMPANY
1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose. The purpose of the JCC Holding Company 1999
Non-Employee Director Stock Option Plan (the "Plan") is to advance the
interests of JCC Holding Company (the "Company") by encouraging ownership of
the Company's $0.01 par value Class A common stock of the Company, and after
the Transition Date (as defined in the Company's Restated Certificate of
Incorporation), the $0.01 par value unclassified common stock of the Company,
and such other securities of the Company as may be substituted for such stock
pursuant to Section 6 hereof (the "Common Stock") by certain non-employee
directors of the Company, thereby giving such directors an increased incentive
to devote their efforts to the success of the Company.
2. Administration. Grants of options under this Plan are
automatic. This Plan is intended to be a "formula plan" as for purposes of
Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and shall be interpreted accordingly. The Board of Directors of the
Company has authority to interpret the Plan and otherwise administer the plan
in accordance with its terms.
3. Eligibility. Except as provided otherwise in this Section 3,
options under the Plan shall be granted in accordance with Section 5 to each
Non-Employee Director (as defined below) of the Company; provided that shares
of the Company's Common Stock remain available for grant hereunder in
accordance with Section 4. For purposes of this Plan, prior to the Transition
Date, a "Non-Employee Director" shall mean each member of the Company's Board
of Directors who is not an employee of (i) the Company, (ii) Harrah's
Entertainment, Inc. ("HET"), or (iii) a Controlled Affiliate (as such term is
defined in the Company's Restated Certificate of Incorporation) of HET. Upon
the Transition Date and thereafter, a "Non-Employee Director" shall mean each
member of the Company's Board of Directors who is not an employee of the
Company or of HET. A Non-Employee Director to whom an option is granted under
the Plan shall be referred to hereinafter as a "Grantee."
4. Shares Subject to Plan. The shares subject to the Plan shall
be authorized but unissued or reacquired shares of the Company's Common Stock.
Subject to adjustment in accordance with the provisions of Section 6 of the
Plan, the maximum number of shares of Common Stock for which options may be
granted under the Plan shall be 150,000 and the initial adoption of the Plan by
the Board of Directors of the Company shall constitute a reservation of 150,000
authorized but unissued, or reacquired, shares of Common Stock for issuance
only upon the exercise of options granted under the Plan. In the event that any
outstanding option granted under the Plan for any reason expires or is
terminated prior to the end of the period during which options may be granted
under the Plan, the shares of Common Stock allocable to the unexercised portion
of such option may again be subject in whole or in part to any option granted
under the Plan.
<PAGE> 52
5. Terms and Conditions of Options. Options granted pursuant to
the Plan shall be evidenced by Stock Option Agreements in such form as shall
comply with and be subject to the following terms and conditions:
(a) Grant. Each Non-Employee Director of the Company shall be
granted an option to purchase 5,000 shares of the Company's Common Stock,
subject to adjustment as provided in Section 6, on the later of (i) the date of
approval of the Plan by the Company's shareholders, or (ii) the date such
person first becomes a Non-Employee Director. In addition, as of the day
following the first annual meeting of the Company's shareholders that occurs
more than one year after the person first becomes a Non-Employee Director and
on the day following each subsequent annual meeting of the Company's
shareholders, if such person is serving as a Non-Employee Director as of such
date, such Non-Employee Director shall be granted an option to purchase 5,000
shares of the Company's Common Stock, subject to adjustment as provided in
Section 6. Each such day that options are to be granted under the Plan is
referred to hereinafter as a "Grant Date."
If on any Grant Date, shares of Common Stock are not available under
this Plan to grant to Non-Employee Directors the full amount of a grant
contemplated by the immediately preceding paragraph, then each Non-Employee
Director shall receive an option (a "Reduced Grant") to purchase shares of
Common Stock in an amount equal to the number of shares of Common Stock then
available under the Plan divided by the number of Non-Employee Directors as of
the applicable Grant Date. Fractional shares shall be ignored and not granted.
If a Reduced Grant has been made and, thereafter, during the term of
this Plan, additional shares of Common Stock become available for grant (e.g.,
because of the forfeiture or lapse of an option), then each person who was a
Non-Employee Director both on the Grant Date on which the Reduced Grant was
made and on the date additional shares of Common Stock become available (a
"Continuing Non-Employee Director") shall receive an additional option to
purchase shares of Common Stock. The number of newly available shares shall be
divided equally among the options granted to the Continuing Non-Employee
Directors; provided, however, that the aggregate number of shares of Common
Stock subject to a Continuing Non-Employee Director's additional option plus
any prior Reduced Grant to the Continuing Non-Employee Director on the
applicable Grant Date shall not exceed 1,000 shares (subject to adjustment
pursuant to Section 6). If more than one Reduced Grant has been made, available
options shall be granted beginning with the earliest such Grant Date.
(b) Option Price. The option price for each option granted under
the Plan shall be the Fair Market Value (as defined below) of the shares of
Common Stock subject to the option on the date of grant of the option. For
purposes of the Plan, the "Fair Market Value" on any date, means (i) if the
Common Stock is listed on a securities exchange or is traded over the Nasdaq
National Market, the closing sales price on such exchange or over such system
on such date or, in the absence of reported sales on such date, the closing
sales price on the immediately preceding date on which sales were reported, or
(ii) if the Common Stock is not listed on a securities exchange or traded over
the Nasdaq National Market, the mean
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<PAGE> 53
between the bid and offered prices as quoted by Nasdaq for such date, provided
that if it is determined that the fair market value is not properly reflected
by such Nasdaq quotations, Fair Market Value will be determined by such other
method as the Board of Directors determines in good faith to be reasonable.
(c) Medium and Time of Payment. The option price shall be payable
in full upon the exercise of an option in cash. To the extent permitted under
Regulation T of the Federal Reserve Board, and subject to applicable securities
laws, options may be exercised through a broker in a so-called "cashless
exercise" whereby the broker sells the option shares and delivers cash sales
proceeds to the Company in payment of the exercise price.
(d) Term. Each option granted under the Plan shall, to the extent
not previously exercised, terminate and expire on the date ten (10) years after
the date of grant of the option, unless earlier terminated as provided
hereinafter in Section 5(g).
(e) Exercisability. Each option granted under this Plan shall be
immediately exercisable, in whole or in part.
(f) Method of Exercise. All options granted under the Plan shall
be exercised by an irrevocable written notice directed to the Secretary of the
Company at the Company's principal place of business. Such written notice shall
be accompanied by payment in full of the option price for the shares for which
such option is being exercised. The Company shall make delivery of certificates
representing the shares for which an option has been exercised within a
reasonable period of time; provided, however, that if any law, regulation or
agreement requires the Company to take any action with respect to the shares
for which an option has been exercised before the issuance thereof, then the
date of delivery of such shares shall be extended for the period necessary to
take such action. Certificates representing shares for which options are
exercised under the Plan may bear such restrictive legends as may be necessary
or desirable in order to comply with applicable federal and state securities
laws. Nothing contained in the Plan shall be construed to require the Company
to register any shares of Common Stock underlying options granted under this
Plan.
(g) Effect of Termination of Directorship or Death.
(i) Termination of Directorship. Upon termination of any
Grantee's membership on the Board of Directors of the Company for any
reason other than for cause or death, the options held by the Grantee
under the Plan shall terminate ninety (90) days following the date of
termination of the Grantee's membership on the Board of Directors or,
if earlier, on the date of expiration of the options as provided by
Section 5(d) of the Plan. If the Grantee's membership on the Board of
Directors is terminated for cause, all options granted to such Grantee
shall expire upon such termination.
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<PAGE> 54
(ii) Death. In the event of the death of a Grantee, the
Grantee's personal representatives, heirs or legatees (the "Grantee's
Successors") may exercise the options held by the Grantee on the date
of death, upon proof satisfactory to the Company of their authority.
The Grantee's Successors must exercise any such options within one (1)
year after the Grantee's death and in any event prior to the date on
which the options expire as provided by Section 5(d) of the Plan. Such
exercise otherwise shall be subject to the terms and conditions of the
Plan.
(h) Transferability of Options. Any option granted pursuant to
the Plan shall be assignable or transferable by the Grantee by will, by the
laws of descent and distribution, or pursuant to a domestic relations order
that would satisfy Section 414(p)(1)(A) of the Internal Revenue Code of 1986,
as amended, if such provision applied to an option under the Plan. In addition,
any option granted pursuant to the Plan shall be transferable by the Grantee to
any of the following permitted transferees, upon such reasonable terms and
conditions as the Board of Directors may establish: any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the Grantee's household (other than a tenant or employee), a trust in
which these persons (or the Grantee) have more than fifty percent of the
beneficial interests, a foundation in which these persons (or the Grantee)
control the management of assets, and any other entity in which these persons
(or the Grantee) own more than fifty percent of the voting interests.
(i) Rights as Shareholder. Neither the Grantee nor the Grantee's
Successors shall have rights as a shareholder of the Company with respect to
shares of Common Stock covered by the Grantee's option until the Grantee or the
Grantee's Successors become the holder of record of such shares.
(j) No Options after Ten Years. No options shall be granted
except within a period of ten (10) years after the effective date of the Plan.
6. Adjustments. In the event a stock dividend is declared upon
the Common Stock, the shares of Common Stock then subject to each option shall
be increased proportionately without any change in the aggregate purchase price
therefor. In the event the Common Stock shall be changed into or exchanged for
a different number or class of shares of stock or securities of the Company or
of another corporation, whether through reorganization, recapitalization,
reclassification, share exchange, stock split-up, combination of shares, merger
or consolidation, there shall be substituted for each such share of Common
Stock then subject to each option the number and class of shares into which
each outstanding share of Common Stock shall be so exchanged, all without any
change in the aggregate purchase price for the shares then subject to each
option, or there shall be made such other equitable adjustment as the Board of
Directors shall approve.
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7. Effective Date and Termination of Plan.
(a) Effective Date. The Plan shall become effective upon approval
of the same by the Board of Directors of the Company, subject to approval of
the Plan by the shareholders of the Company no later than the first annual
meeting of shareholders held after approval of the Plan by the Board of
Directors.
(b) Termination. The Plan shall terminate on the second day
following the 2008 Annual Meeting, but the Board of Directors may terminate the
Plan at any time prior to such date. The Board of Directors may, at any time
and from time to time, amend or modify the Plan without stockholder approval;
provided, however, that the Board may condition any amendment or modification
on the approval of stockholders of the Company if such approval is necessary or
deemed advisable with respect to tax, securities or other applicable laws,
policies or regulations. No amendment modification or termination of the Plan
shall adversely affect the rights of the Grantees who have outstanding Options
without the consent of such Grantees.
8. No Obligation to Exercise Option. The granting of an option
shall impose no obligation upon the Grantee to exercise such option.
9. Amendment. The Board of Directors may, at any time and from
time to time, amend, modify or terminate the Plan without shareholder approval;
provided, however, that the Board of Directors may condition any amendment or
modification on the approval of shareholders of the Company if such approval is
necessary or deemed advisable with respect to tax, securities or other
applicable laws, policies or regulations. Any amendment to the Plan shall not,
without the written consent of the Grantee, affect such Grantee's rights under
any option theretofore granted to such Grantee.
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