SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]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 Section 240.14a-11(c) or Section 240.14a-12
TRUMP HOTELS & CASINO RESORTS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TRUMP HOTELS & CASINO RESORTS, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
[X]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_]$500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_]Fee computed on table below per Exchange Act Rules 14(a)-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total Fee Paid:
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[_]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:
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TRUMP HOTELS & CASINO RESORTS, INC.
MISSISSIPPI AVENUE AND THE BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
May 10, 1996
Dear Stockholders:
You are cordially invited to attend the first annual meeting of stockholders
(the "Annual Meeting") of Trump Hotels & Casino Resorts, Inc. (the "Company"),
which will be held at The Plaza Hotel, 768 Fifth Avenue, New York, New York on
Wednesday, June 12, 1996, commencing at 2:00 P.M.
We are pleased to report that during our first year as a public company, the
Company has become one of the largest casino entertainment companies in the
United States. As you are probably aware, we recently added the Trump Taj
Mahal Casino Resort to our corporate family and completed a major debt and
equity financing. Since the Company's inception, our financial performance has
surpassed expectations and the value of the Company's Common Stock has
increased dramatically. Indeed, management is committed to continuing this
momentum and maximizing long-term shareholder value.
The enclosed Notice and Proxy Statement contain details concerning the
business to come before the Annual Meeting. You will note that the Board of
Directors of the Company recommends a vote "FOR" each of the proposals listed
in the Notice and Proxy Statement. Please sign and return your proxy card in
the enclosed envelope at your earliest convenience to assure that your shares
will be represented and voted at the meeting even if you cannot attend.
Sincerely,
/s/ Nicholas L. Ribis
Nicholas L. Ribis
President and Chief Executive
Officer
TRUMP HOTELS & CASINO RESORTS, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 12, 1996
----------------
To the Stockholders of
TRUMP HOTELS & CASINO RESORTS, INC.
The first annual meeting of stockholders (the "Annual Meeting") of Trump
Hotels & Casino Resorts, Inc., a Delaware corporation (the "Company"), will be
held at The Plaza Hotel, 768 Fifth Avenue, New York, New York on Wednesday,
June 12, 1996, at 2:00 P.M., New York City time, for the following purposes:
1. To elect five Directors to the Company's Board of Directors;
2. To approve an amendment to the Company's 1995 Stock Incentive Plan to
increase from 1,000,000 to 4,000,000 the number of shares of the
Company's Common Stock, par value $.01 per share, reserved for
issuance thereunder;
3. To ratify the appointment by the Board of Directors of Arthur Andersen
LLP as independent auditors for the Company for the fiscal year ending
December 31, 1996; and
4. To act upon such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on May 7, 1996, as
the record date for the determination of stockholders entitled to receive
notice of and to vote at the Annual Meeting and any adjournment or
postponement thereof.
By order of the Board of Directors,
Robert M. Pickus
Secretary
May 10, 1996
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE
ANNUAL MEETING, PLEASE DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS
VOTED AT THE ANNUAL MEETING. IN THE EVENT YOU ATTEND THE ANNUAL MEETING AND
VOTE IN PERSON, THE PROXY WILL NOT BE USED.
TRUMP HOTELS & CASINO RESORTS, INC.
MISSISSIPPI AVENUE AND THE BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
----------------
PROXY STATEMENT
----------------
This Proxy Statement (the "Proxy Statement") is furnished in connection with
the solicitation of proxies by the Board of Directors of Trump Hotels & Casino
Resorts, Inc., a Delaware corporation (the "Company"), to be voted at the
annual meeting of stockholders of the Company to be held on Wednesday, June
12, 1996, at 2:00 P.M., New York City time, at The Plaza Hotel, 768 Fifth
Avenue, New York, New York, and at any adjournment or postponement thereof
(the "Annual Meeting"). A copy of the Company's Annual Report to Stockholders
for the fiscal year ended December 31, 1995, this Proxy Statement and the
accompanying proxy card are first being sent or given to stockholders on or
about May 10, 1996.
Properly executed proxies received prior to the Annual Meeting, unless
revoked, will be voted in accordance with the specified instructions.
Regarding the election of Directors, stockholders may vote in favor of all
nominees or withhold their votes as to all nominees or withhold their votes as
to specific nominees. With respect to all other proposals to be voted upon,
stockholders may vote in favor of a proposal, against a proposal or may
abstain from voting. Stockholders should specify their choices on the enclosed
proxy card. If no instructions are given with respect to the matters to be
acted upon, the persons named in the proxy solicited by the Company's Board of
Directors (the "Board of Directors") intend to vote FOR the election of the
Directors listed below, FOR approval of the amendment to the Company's 1995
Stock Incentive Plan (the "Stock Incentive Plan"), and FOR ratification of the
appointment by the Board of Directors of Arthur Andersen LLP as independent
auditors for the Company for the fiscal year ending December 31, 1996. If any
other matter should be presented at the Annual Meeting upon which a vote may
properly be taken, the shares represented by the proxy will be voted with
respect thereto by the person or persons holding such proxy as in their
judgment is in the best interests of the Company and its stockholders. The
Company does not know of any matters other than as described in the Notice of
Annual Meeting that are to come before the Annual Meeting.
Stockholders may vote by either completing and returning the enclosed proxy
card prior to the Annual Meeting, voting in person at the Annual Meeting or
submitting a signed proxy card at the Annual Meeting. Stockholders who execute
proxies may revoke them at any time before they are voted at the Annual
Meeting by written notice to the Secretary of the Company, by submitting a new
proxy or by personal ballot at the Annual Meeting.
The Board of Directors has fixed the close of business on May 7, 1996 as the
Record Date (the "Record Date") for determining stockholders entitled to
notice of and to vote at the Annual Meeting.
As of the Record Date, the Company had 24,140,090 shares of Common Stock,
par value $.01 per share ("Common Stock"), and 1,000 shares of Class B Common
Stock, par value $.01 per share ("Class B Common Stock"), outstanding and
entitled to vote at the Annual Meeting. Each share of Common Stock entitles
the holder thereof to one vote on each proposal to be acted upon at the Annual
Meeting and the 1,000 shares of Class B Common Stock, all of which are
beneficially owned by Donald J. Trump, are entitled to an aggregate of
8,081,023 votes on each proposal to be acted upon at the Annual Meeting. The
voting power of the shares of Class B Common Stock equals the voting power of
the number of shares of Common Stock issuable upon the conversion of the
limited partnership interests in Trump Hotels & Casino Resorts Holdings, L.P.,
a Delaware limited partnership ("THCR Holdings"), held by Mr. Trump and Trump
Casinos, Inc., a New Jersey corporation wholly owned by Mr. Trump ("TCI"). The
Class B Common Stock provides the holders thereof with a voting interest in
the Company which is proportionate to such holder's equity interest in THCR
Holdings' assets represented by limited partnership interests.
The presence in person or by proxy of the holders of the shares representing
a majority of the outstanding voting power of the Common Stock and Class B
Common Stock is necessary to constitute a quorum in connection with the
transaction of business at the Annual Meeting. The affirmative vote of a
majority of shares of Common Stock and Class B Common Stock present in person
or by proxy and entitled to vote at the Annual Meeting, voting as a single
class, is required for election of Directors, approval of the amendment to the
Stock Incentive Plan and ratification of the appointment of Arthur Andersen
LLP as auditors for the Company. Broker "non-votes" (i.e., proxies from
brokers or nominees indicating that such persons have not received
instructions from the beneficial owner or other persons entitled to vote
shares as to a matter with respect to which the brokers or nominees do not
have discretionary power to vote) and shares for which duly executed proxies
have been received but with respect to which holders of shares have abstained
from voting will be treated as present for purposes of determining the
presence of a quorum at the Annual Meeting. Broker "non-votes" will have no
effect on the outcome of the votes on the proposals to be acted upon at the
Annual Meeting. With respect to the approval of the amendment of the Stock
Incentive Plan and the ratification of the appointment of Arthur Andersen LLP
as independent auditors for the Company, abstentions will have the effect of a
negative vote.
2
PROPOSAL ONE
ELECTION OF DIRECTORS
Five Directors are to be elected to hold office until the next annual
meeting of stockholders and until their successors have been duly elected and
qualified. If the proxy is executed in such a manner as not to withhold
authority for the election of any or all of the nominees for Directors, then
the persons named in the proxy will vote the shares represented by the proxy
for the election of the following five nominees. If the proxy indicates that
the stockholder wishes to withhold a vote from one or more nominees for
Directors, such instructions will be followed by the persons named in the
proxy. All of the nominees are currently members of the five member Board of
Directors. Messrs. Trump and Ribis have been members of the Board of Directors
since the Company's inception in March 1995, and Messrs. Askins, Thomas and
Ryan have been members of the Board of Directors since June 12, 1995, when,
concurrently with the consummation of the initial public offering of the
Common Stock, the size of the Board of Directors was increased from two to
five members.
Should any one or more of these nominees become unable to serve for any
reason or will not serve, neither of which is anticipated, the Board of
Directors may, unless the Board of Directors by resolution provides for a
lesser number of Directors, designate substitute nominees, in which event the
persons named in the enclosed proxy card will vote for the election of such
substitute nominee or nominees.
The respective ages, positions with the Company, business experience during
the past five years and directorships in other companies of the nominees for
election as Directors of the Company are set forth below.
DONALD J. TRUMP, 49 years old, has been Chairman of the Board of the Company
and Trump Hotels & Casino Resorts Funding, Inc., a Delaware corporation ("THCR
Funding"), since their formation in March 1995. Mr. Trump is also Chairman of
the Board of Directors, President and Treasurer of Trump Plaza Funding, Inc.,
a New Jersey corporation ("Plaza Funding"), which was, until April 17, 1996,
the managing general partner of Trump Plaza Associates, a New Jersey general
partnership ("Plaza Associates"), that owns and operates the Trump Plaza Hotel
and Casino ("Trump Plaza"), in Atlantic City, New Jersey. Mr. Trump was a 50%
shareholder, Chairman of the Board of Directors, President and Treasurer of
TP/GP Corp., a New Jersey corporation ("TP/GP"), the managing general partner
of Plaza Associates prior to its merger into Plaza Funding in June 1993. Mr.
Trump was Chairman of the Executive Committee and President of Plaza
Associates from May 1986 to May 1992 and was a general partner of Plaza
Associates until June 1993. Mr. Trump has been a Director and President of
Trump Atlantic City Holding, Inc., a Delaware corporation formerly known as
Trump Plaza Holding, Inc. ("AC Holding Inc."), since February 1993 and was a
partner in Trump Atlantic City Associates, a New Jersey general partnership
formerly known as Trump Plaza Holding Associates ("Trump AC"), from February
1993 until June 1995. Mr. Trump has been Chairman of the Board of Directors of
Trump Atlantic City Funding, Inc., a Delaware corporation ("Trump AC
Funding"), since its formation in January 1996. Mr. Trump has been Chairman of
the Board of Directors, President and Treasurer of THCR Holding Corp., a
Delaware corporation formerly known as Taj Mahal Holding Corp. ("THCR Holding
Corp."), and THCR/LP Corporation, a New Jersey corporation formerly known as
TM/GP Corporation ("THCR/LP"), since 1991. Mr. Trump was Chairman of the Board
of Directors of THCR Merger Corp., a Delaware corporation ("Merger Sub"), from
its formation in January 1996 until its merger with and into THCR Holding
Corp. on April 17, 1996. Mr. Trump was Chairman of the Board of Directors,
President and Treasurer of Trump Taj Mahal Funding, Inc., a New Jersey
corporation ("Taj Funding"), from June 1988 until it was dissolved in April
1996, and has been sole Director, President and Treasurer of TCI since June
1988. Mr. Trump has been sole Director, President and Treasurer of Trump
Atlantic City Corporation, a Delaware corporation formerly known as The Trump
Taj Mahal Corporation ("TACC"), since March 1991; was Chairman of the
Executive Committee of Trump Taj Mahal Associates, a New Jersey general
partnership ("Taj Associates"), that owns and operates the Trump Taj Mahal
Casino Resort in Atlantic City, New Jersey (the "Taj Mahal"), from June 1988
to October 1991; and has been President and sole Director of Trump Taj Mahal
Realty Corp., a New Jersey corporation ("Realty Corp."), since May 1986. Mr.
Trump has been the sole Director of Trump Indiana, Inc., a Delaware
corporation ("Trump Indiana"), that owns and operates the Company's riverboat
gaming project in Buffington Harbor, on Lake
3
Michigan in Indiana (the "Indiana Riverboat"), since its formation in December
1992. Mr. Trump has been Chairman of the Board of Partner Representatives of
Trump's Castle Associates, a New Jersey general partnership ("TCA"), that owns
and operates Trump's Castle Casino Resort in Atlantic City, New Jersey
("Trump's Castle"), since May 1992; and was Chairman of the Executive
Committee of TCA from June 1985 to May 1992. Mr. Trump is also the managing
general partner of TCA, sole Director, Chairman of the Board, President and
Treasurer of Trump's Castle Funding, Inc., a New Jersey corporation ("Castle
Funding"), sole Director and President of TC/GP, Inc., a Delaware corporation
("TC/GP"), and Chairman of the Board and Treasurer of Trump's Castle Hotel &
Casino, Inc., a New Jersey corporation beneficially owned by Mr. Trump
("TCHI"). Mr. Trump is the President of The Trump Organization, which has been
in the business, through its affiliates and subsidiaries, of acquiring,
developing and managing real estate properties for more than the past five
years. Mr. Trump was a member of the Board of Directors of Alexander's Inc.
from 1987 to March 1992.
NICHOLAS L. RIBIS, 51 years old, has been President, Chief Executive
Officer, Chief Financial Officer, and a Director of the Company and THCR
Funding and the Chief Executive Officer of THCR Holdings since their formation
in March 1995. Mr. Ribis has been the Chief Executive Officer of Plaza
Associates since February 1991, was President from April 1994 to February
1995, was a member of its Executive Committee from April 1991 to May 29, 1992,
and was a Director and Vice President of TP/GP from May 1992 until its merger
into Plaza Funding in June 1993. Mr. Ribis has been Vice President of Plaza
Funding since February 1995 and Vice President of AC Holding Inc. since
February 1995. Mr. Ribis has served as a Director of AC Holding Inc. since
June 1993 and of Plaza Funding since July 1993. Mr. Ribis has been Chief
Executive Officer, President and Director of Trump AC Funding since its
formation in January 1996. Mr. Ribis has been a Director of THCR Holding Corp.
and THCR/LP since October 1991 and was Vice President of THCR Holding Corp.
and THCR/LP until June 1995. Mr. Ribis has been Chief Executive Officer of Taj
Associates since February 1991; Vice President of Taj Funding from September
1991 until it was dissolved in April 1996; Vice President of TCI since
February 1991 and Secretary of TCI since September 1991; Director of Realty
Corp. since October 1991; and a member of the Executive Committee of Taj
Associates from April 1991 to October 1991. Mr. Ribis has been the President
and Chief Executive Officer of Trump Indiana since its formation in December
1992. Mr. Ribis has also been Chief Executive Officer of TCA since March 1991;
was a member of the Executive Committee of TCA from April 1991 to May 1992;
has been a member of the Board of a Partner Representatives of TCA since May
1992; and has served as the Vice President and Assistant Secretary of TCHI
since December 1993 and January 1991, respectively. Mr. Ribis has served as
Vice President of TC/GP since December 1993 and had served as Secretary of
TC/GP from November 1991 to May 1992. From January 1993 to January 1995, Mr.
Ribis served as the Chairman of the Casino Association of New Jersey and has
been a member of the Board of Trustees of the New Jersey Casino Reinvestment
Development Authority (the "CRDA"), since October 1993. From January 1980 to
January 1991, Mr. Ribis was Senior Partner in, and from February 1991 to
December 1995, was Counsel to, the law firm of Ribis, Graham & Curtin (now
practicing as Graham, Curtin & Sheridan, A Professional Association), which
serves as New Jersey legal counsel to all of the above-named companies and
certain of their affiliated entities.
WALLACE B. ASKINS, 65 years old, has been a Director of the Company and THCR
Funding since June 1995, has been a Director of Trump AC Funding since April
1996 and has been a Director of Plaza Funding and AC Holding Inc. since April
1994. Mr. Askins was a member of the Board of Partner Representatives of TCA
from May 1992 to June 1995 and served as a Director of TC/GP from May 1992 to
December 1993. From June 1984 to November 1992, Mr. Askins served as Executive
Vice President, Chief Financial Officer and as a Director of Armco Inc. Mr.
Askins also serves as a Director of EnviroSource, Inc.
DON M. THOMAS, 65 years old, has been a Director of the Company and THCR
Funding since June 1995, has been a Director of Trump AC Funding since April
1996, was a Director of TP/GP until its merger into Plaza Funding in June 1993
and has been a Director of Plaza Funding and AC Holding Inc. since June 1993.
Mr. Thomas has been the Senior Vice President of Corporate Affairs of the
Pepsi-Cola Bottling Co. of New York since January 1985. Mr. Thomas was the
Acting Chairman, and a Commissioner, of the CRDA from 1985 through 1987, and a
Commissioner of the New Jersey Casino Control Commission (the "CCC") from 1980
through 1984. Mr. Thomas is an attorney licensed to practice law in the State
of New York.
4
PETER M. RYAN, 58 years old, has been a Director of the Company and THCR
Funding since June 1995. Mr. Ryan has also been the President of each of The
Marlin Group, LLC and The Brookwood Carrington Fund, LLC, real estate
financial advisory groups, since January 1995. Prior to that, Mr. Ryan was the
Senior Vice President of The Chase Manhattan Bank for more than five years.
Mr. Ryan has been a Director of the Childrens Medical Research Foundation,
Inc. since October 1995.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
THE NOMINEES NAMED ABOVE.
The following persons serve as executive officers of the Company: Mr. Trump,
Chairman of the Board; Mr. Ribis, President and Chief Executive Officer; Mr.
Robert M. Pickus, Executive Vice President and Secretary; and Mr. John P.
Burke, Senior Vice President of Corporate Finance and Treasurer. The officers
of the Company serve at the pleasure of the Board of Directors. The respective
ages, positions with the Company, business experience during the past five
years and directorships in other companies of Messrs. Pickus and Burke are set
forth below.
ROBERT M. PICKUS, 41 years old, has been Executive Vice President and
Secretary of the Company since its formation in 1995. He has also been the
Executive Vice President of Corporate and Legal Affairs of Plaza Associates
since February 1995. From December 1993 to February 1995, Mr. Pickus was the
Senior Vice President and General Counsel of Plaza Associates and, since April
1994, he has been the Vice President and Assistant Secretary of Plaza Funding
and Assistant Secretary of AC Holding Inc. Mr. Pickus has been Secretary and a
Director of Trump AC Funding since its formation in January 1996. Mr. Pickus
has been the Executive Vice President of Corporate and Legal Affairs of Taj
Associates since February 1995, and a Director of THCR Holding Corp. and
THCR/LP since November 1995. Mr. Pickus has been the Executive Vice President
and Secretary of Trump Indiana since its formation in December 1992. He was
the Senior Vice President and Secretary of Castle Funding from June 1988 to
December 1993 and General Counsel of TCA from June 1985 to December 1993. Mr.
Pickus was also Secretary of TCHI from October 1991 until December 1993. Mr.
Pickus has been the Executive Vice President of Corporate and Legal Affairs of
TCA since February 1995 and a member of the Board of Partner Representatives
of TCA since October 1995.
JOHN P. BURKE, 48 years old, has been Senior Vice President of Corporate
Finance of the Company, THCR Holdings and THCR Funding since January 1996, and
has been the Corporate Treasurer of the Company, THCR Holdings and THCR
Funding since their formation in 1995. He has also been Corporate Treasurer of
Plaza Associates and Taj Associates since October 1991. Mr. Burke has been
Treasurer of Trump AC Funding since its formation in January 1996. Mr. Burke
was a Director of THCR Holding Corp. and THCR/LP from October 1991 to April
1996, and Vice President of THCR/LP until June 1995. Mr. Burke has been the
Treasurer of Trump Indiana since its formation in December 1992. Mr. Burke has
been the Corporate Treasurer of TCA since October 1991, the Vice President of
TCA and TCHI since December 1993, the Chief Accounting Officer of TC/GP and
the Vice President-Finance of The Trump Organization since September 1990.
Messrs. Trump, Ribis, Pickus and Burke served as either partners, executive
officers and/or directors of Plaza Associates, Taj Associates, TCA, Plaza
Operating Partners Ltd. and their respective affiliated entities when such
parties filed their petitions for reorganization under Chapter 11 of the
Bankruptcy Code in 1991 and 1992, as applicable. The plans of reorganization
for such parties were confirmed and declared effective in the period from
August 1991 through January 1993.
5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 30, 1996, certain information
regarding the beneficial ownership of Common Stock by (i) each of the
Company's executive officers, (ii) each Director of the Company, (iii) each
person who is known to the Company to own beneficially more than 5% of the
Common Stock and (iv) all officers and Directors of the Company as a group.
Such information is based, in part, upon information provided by certain
stockholders of the Company. In the case of persons other than the officers
and Directors of the Company, such information is based solely on a review of
Schedules 13D and 13G filed with the Securities and Exchange Commission (the
"Commission").
BENEFICIAL OWNERSHIP
--------------------------
NAME NUMBER PERCENT
---- ------------ ----------
Donald J. Trump................................... 9,881,548(1) 29.0%
Nicholas L. Ribis................................. 72,487(2) *
John P. Burke..................................... 400(3) *
Robert M. Pickus.................................. 200 *
Wallace B. Askins................................. 3,000 *
Don M. Thomas..................................... 200 *
Peter M. Ryan..................................... 1,000 *
State Street Research & Management Company........ 1,270,300(4) 5.3%
Oppenheimer Group, Inc. .......................... 1,490,075(5) 6.2%
All officers and Directors of the Company (7 per-
sons)............................................ 9,958,835 29.3%
The above persons have sole voting and investment power, unless otherwise
indicated below.
- - --------
*Less than 1%.
(1) 725 Fifth Avenue, New York, New York 10022. These shares include 6,674,006
and 1,407,017 shares of Common Stock into which Mr. Trump's and TCI's
limited partnership interests in THCR Holdings are convertible, subject to
certain adjustments. TCI is a corporation wholly owned by Mr. Trump. These
shares also include (a) 275 shares of Common Stock held by Mr. Trump's wife,
Mrs. Marla M. Trump, which shares Mr. Trump disclaims beneficial ownership,
(b) 250 shares of Common Stock, 100 of which are held for Mr. Trump's
account and 150 of which are held as custodian for his children and (c)
1,800,000 shares of Common Stock underlying currently exercisable warrants
to purchase Common Stock held by Mr. Trump (the "Trump Warrants") of which
(i) 600,000 shares may be purchased on or before April 17, 1999 at $30.00
per share, (ii) 600,000 shares may be purchased on or before April 17, 2000
at $35.00 per share and (iii) 600,000 shares may be purchased on or before
April 17, 2001 at $40.00 per share. Mr. Trump beneficially owns an
approximately 25% limited partnership interest in THCR Holdings, of which
approximately 4% is held directly by TCI. Mr. Trump is also the beneficial
owner of all of the outstanding shares of Class B Common Stock (1,000
shares) of which he holds 800 shares directly and holds 200 shares through
TCI. See "Executive Compensation--Compensation Committee Interlocks and
Insider Participation-- Changes in Control."
(2) Includes a fully vested stock bonus award of 66,667 shares of Common
Stock. See "Executive Compensation." These shares also include 3,081
shares and 2,739 shares held by Mr. Ribis as custodian for his son,
Nicholas L. Ribis Jr., and his daughter, Alexandria Ribis, respectively,
of which shares Mr. Ribis disclaims beneficial ownership.
(3) Mr. Burke shares voting and dispositive power of 100 of these shares with
his wife. These shares also include 100 shares beneficially owned solely
by his wife, of which shares Mr. Burke disclaims beneficial ownership.
(4) One Financial Center, 30th Floor, Boston, Massachusetts 02111. State
Street Research & Management Company ("State Street") is an investment
adviser and disclaims beneficial ownership of these shares. Metropolitan
Life Insurance Company, One Madison Avenue, New York, New York 10010, is
the parent holding company of State Street.
(5) Oppenheimer Tower, World Financial Center, New York, New York 10281.
Oppenheimer Group, Inc. ("Oppenheimer") has shared voting and dispositive
power over these shares. These shares include 886,400 shares beneficially
owned by Oppenheimer Capital, an investment adviser, of which Oppenheimer
is the parent holding company.
6
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation paid to or
accrued by all the executive officers of the Company for each of the last
three completed fiscal years. Compensation accrued during one year and paid in
another is recorded under the year of accrual. Because the Company was formed
in 1995, compensation for the years ended December 31, 1994 and 1993 reflect
solely the compensation paid to or accrued by these individuals as executive
officers of Plaza Associates and Taj Associates. Compensation for the year
ended December 31, 1995, includes compensation paid to or accrued by these
individuals as executive officers of the Company, Plaza Associates and Taj
Associates, as applicable.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------------------- -------------------------
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(/1/) AWARDS($) OPTIONS(#) COMPENSATION
- - ------------------ ---- ---------- -------- ----------------- ---------- ---------- ------------
Donald J. Trump......... 1995 $ 583,333 $ -- $ -- $ -- -- $3,064,000(/2/)
Chairman of the Board 1994 -- -- -- -- -- 2,641,000(/2/)(/3/)
1993 -- -- -- -- -- 2,813,000(/2/)
Nicholas L. Ribis....... 1995 $1,355,636 $933,338(/4/) $ -- $933,324(/5/) 133,333 $ --
President and Chief 1994 1,306,000 250,000 169,407 -- -- --
Executive Officer 1993 748,253 500,000 383,497 -- -- --
Robert M. Pickus........ 1995 $ 198,972 $ 85,000 $ -- -- -- $ 4,004(/6/)
Executive Vice President 1994 163,759 32,500 -- -- -- 3,291(/6/)
and Secretary 1993 5,808 -- -- -- -- --
John P. Burke........... 1995 $ 100,000 $ 51,666 $ -- -- -- $ --
Senior Vice President of 1994 100,000 -- 46,000 -- -- --
Corporate Finance and 1993 95,590 28,000 46,000 -- -- --
Corporate Treasurer
- - --------
(1) Represents the dollar value of annual compensation not properly
categorized as salary or bonus, including amounts reimbursed for income
taxes. Following Commission rules, perquisites and other personal benefits
are not included in this table because the aggregate amount of that
compensation is less than the lesser of $50,000 or 10% of the total of
salary and bonus for each member of the Executive Group (defined as the
Company's Chief Executive Officer and the remaining most highly compensated
executive officers whose annual salary and bonus exceeded $100,000 for the
year ended December 31, 1995).
(2) The amounts listed represent amounts paid to Mr. Trump and Trump Plaza
Management Corp., a corporation wholly owned by Mr. Trump ("TPM"), pursuant
to the services agreements with Taj Associates (the "Taj Services
Agreement") and Plaza Associates (the "TPM Services Agreement"),
respectively. Payments received by TPM under the TPM Services Agreement are
currently pledged by TPM to secure lease payments for a helicopter that TPM
makes available to Plaza Associates. See "--Compensation Committee
Interlocks and Insider Participation--Certain Related Party Transactions--
Plaza Associates" and "--Taj Associates and Affiliates." Mr. Trump is
neither an employee of Plaza Associates nor Taj Associates.
(3) In addition to the amount listed as payments under the TPM Services
Agreement and the Taj Services Agreement, during 1994, Plaza Associates paid
to Mr. Trump an aggregate of $1,572,000 under a construction service
agreement and as a commission to secure a retail lease at Trump Plaza.
(4) Represents a fully vested stock bonus award of 66,667 shares of Common
Stock awarded pursuant to the Ribis Agreement (as defined) and the Stock
Incentive Plan, in connection with the June 1995 Offerings (as defined),
valued at $14.00 per share (the price per share of the Common Stock in the
June 1995 Offerings).
(5) Represents the value of 66,666 phantom stock units, valued at $14.00 per
share (the price per share of the Common Stock in the June 1995 Offerings).
These units had a value as of December 31, 1995 of $1,433,319 (based on a
closing price of $21.50 per share of Common Stock on December 31, 1995).
These phantom stock units were issued to Mr. Ribis in connection with the
Ribis Agreement (as defined) and the Stock Incentive Plan. Each phantom
stock unit entitles Mr. Ribis to one share of Common Stock on the vesting
date of the phantom stock unit. All of the phantom stock units are scheduled
to vest on June 12, 1997. Vesting will accelerate in the event of Mr. Ribis'
termination of employment with the Company (i) because of his death or
disability, (ii) by the Company without cause or (iii) voluntarily by Mr.
Ribis under circumstances which constitute a constructive termination.
Alternatively, the phantom stock units may expire prior to June 12, 1997, in
the event Mr. Ribis voluntarily terminates his employment with the Company
under circumstances which do not constitute constructive termination or if
he is terminated by the Company with cause. Dividend equivalents with
respect to the phantom stock units will be credited to a bookkeeping account
on behalf of Mr. Ribis and will be paid out in cash at the time the phantom
stock units vest or will expire along with the phantom stock units.
(6) Represents vested and unvested contributions made by Plaza Associates to
the Trump Plaza Hotel and Casino Retirement Savings Plan. Funds accumulated
for an employee under this plan, consisting of a certain percentage of the
employee's compensation plus Plaza Associates' employer matching
contributions equaling 50% of the participant's contributions, are retained
until termination of employment, attainment of age 59 1/2 or financial
hardship, at which time the employee may withdraw his or her vested funds.
7
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth options granted in 1995. No member of the
Executive Group other than Mr. Ribis received stock options in 1995. The
Company did not issue any stock appreciation rights ("SARs") in 1995. This
table also sets forth the hypothetical gains that would exist for the options
at the end of their ten-year terms at assumed annual rates of stock price
appreciation of 5% and 10%. The actual future value of the options will depend
on the market value of the Common Stock, continued employment with the Company
and other factors.
POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
----------------------------------------------------- ---------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES PRICE EXPIRATION
NAME GRANTED(#) IN FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ---------- -------------- --------- ------------- ---------- ----------
Nicholas L. Ribis....... 133,333(/1/) 100% $14.00 June 12, 2005 $1,173,060 $2,960,580
- - --------
(1) The options vest at the rate of 20% per year on each anniversary of the
date of the grant (June 12, 1995) subject to acceleration in certain
circumstances. See "--Employment Agreements."
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
The following table sets forth the number of shares covered by options held
by Mr. Ribis and the value of the options as of December 31, 1995. Mr. Ribis
was the only member of the Executive Group who held options in 1995. None of
these options were exercisable in 1995.
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT
NAME OPTIONS AT FY-END(#) FY-END($)(/1/)
---- ---------------------- --------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------------------- -------------------------
Nicholas L. Ribis....... N/A 133,333 N/A $ 2,866,660
- - --------
(1) Based on a closing price of $21.50 per share of Common Stock on December
31, 1995.
EMPLOYMENT AGREEMENTS
Donald J. Trump. Mr. Trump serves as the Chairman of the Board of Directors
of the Company pursuant to the Executive Agreement dated as of June 12, 1995,
among Mr. Trump, the Company and THCR Holdings (the "Executive Agreement"). In
consideration for Mr. Trump's services under the Executive Agreement, Mr.
Trump receives a salary of $1 million per year. Pursuant to the terms of the
Executive Agreement, Mr. Trump provides to the Company, from time to time,
when reasonably requested, marketing, advertising, professional and other
similar and related services with respect to the operation and business of the
Company. The Executive Agreement continues in effect (i) for an initial term
of five years, and (ii) thereafter, for a three-year rolling term until either
Mr. Trump or the Company provides notice to the other of the election not to
continue extending the term, in which case the term of the Executive Agreement
will end three years from the date such notice is given. The Executive
Agreement also provides that Mr. Trump may devote time and effort to Trump's
Castle and, subject to the terms of the Contribution Agreement, dated as of
June 12, 1995, between Mr. Trump and THCR Holdings (the "1995 Contribution
Agreement"), to other business matters, and that the Executive Agreement will
not be construed to restrict Mr. Trump from operating Trump's Castle in a
commercially reasonable manner and/or having an interest therein or conducting
any other activity not prohibited under the 1995 Contribution Agreement.
8
Nicholas L. Ribis. Plaza Associates had an employment agreement with
Nicholas L. Ribis (the "Ribis Plaza Agreement") pursuant to which Mr. Ribis
acted as Chief Executive Officer of Plaza Associates. The Ribis Plaza
Agreement provided for a $250,000 signing bonus and an annual salary of
$550,000 with annual increases of 10% on each anniversary. Pursuant to the
terms of the Ribis Plaza Agreement, in the event Plaza Associates engaged in
an offering of common shares to the public, Plaza Associates and Mr. Ribis
would agree to negotiate new compensation arrangements to include equity
participation for Mr. Ribis. As a result of the initial public offering by the
Company of $140 million of Common Stock on June 12, 1995 and the related
offering by THCR Holdings and THCR Funding of $155 million aggregate principal
amount of 15% Senior Secured Notes due 2005 (the "Senior Notes") (the "June
1995 Offerings"), the Company and THCR Holdings entered into a new employment
agreement with Mr. Ribis (the "Ribis Agreement") to replace the Ribis Plaza
Agreement, pursuant to which he agreed to serve as President and Chief
Executive Officer of the Company and Chief Executive Officer of THCR Holdings.
The term of the Ribis Agreement is five years and Mr. Ribis is required to
devote not less than 50% of his professional time to the affairs of the
Company and Plaza Associates, as measured on a quarterly basis, based on a 40-
hour work week. Under the Ribis Agreement, Mr. Ribis's annual salary is
$998,250, which is 50% of the aggregate current annual base salary
($1,996,500) that Mr. Ribis receives as Chief Executive Officer of the Company
($998,250), Taj Associates ($499,125) and TCA ($499,125). Mr. Ribis now
devotes 75% of his professional time to the operations of the Company, Plaza
Associates and Taj Associates, and his annual salary is $1,497,375 per year
with respect to his services to these entities. Mr. Ribis also receives
$499,125 per year from TCA with respect to his services to Trump's Castle. In
1995, the Stock Incentive Plan Committee granted to Mr. Ribis, under the Stock
Incentive Plan: (a) a stock bonus award of 66,667 shares of Common Stock,
which was fully vested when issued, (b) a phantom stock unit award of 66,666
units, entitling him to receive 66,666 shares of Common Stock on June 12,
1997, subject to certain conditions and (c) an award of non-qualified stock
options ("NQSOs") entitling Mr. Ribis to purchase 133,333 shares of the Common
Stock (and associated registration rights) at an exercise price of $14.00 per
share. The options will vest at the rate of 20% per year over a five-year
period and be subject to certain other conditions. In the event Mr. Ribis'
employment is terminated by the Company other than for "cause" or if he incurs
a "constructive termination without cause," Mr. Ribis will receive a severance
payment equal to one year's base salary, and his phantom stock units and
options will become fully vested. The Ribis Agreement defines (a) "cause" as
Mr. Ribis' (i) conviction of certain crimes, (ii) gross negligence or willful
misconduct in carrying out his duties, (iii) revocation of his casino key
employee license or (iv) a material breach of the agreement, and (b)
"constructive termination without cause" as the termination of Mr. Ribis'
employment at his initiative following the occurrence of certain events,
including (i) a reduction in compensation, (ii) the failure of Mr. Ribis to be
elected as Chief Executive Officer of the Company, (iii) the failure of Mr.
Ribis to be elected as a Director of the Company or (iv) a material diminution
of his duties. Mr. Ribis' phantom stock units will also automatically vest
upon his death or disability. The Ribis Agreement also provides for up to an
aggregate of $2.0 million of loans to Mr. Ribis to be used by him to pay his
income tax liability in connection with stock options, phantom stock units and
stock bonus awards, which loans will be forgiven, including both principal and
interest, in the event of a "change of control." The Ribis Agreement defines
"change of control" as the occurrence of any of the following events: (i) any
person (other than THCR Holdings, Mr. Trump or an affiliate of either) becomes
a beneficial owner of 50% or more of the voting stock of the Company, (ii) the
majority of the Board of Directors of the Company consists of individuals that
were not directors on June 12, 1995 (the "June 12 Directors"), provided,
however, that any person who becomes a director subsequent to June 12, 1995,
shall be considered a June 12 Director if his election or nomination was
supported by three-quarters of the June 12 Directors, (iii) the Company adopts
and implements a plan of liquidation or (iv) all or substantially all of the
assets or business of the Company are disposed of in a sale or business
combination in which shareholders of the Company would not beneficially own
the same proportion of voting stock of the successor entity. The Ribis
Agreement also provides certain demand and piggyback registration rights with
respect to certain shares of Common Stock issued to Mr. Ribis. Pursuant to the
Ribis Agreement, Mr. Ribis has agreed that upon termination of his employment
other than for "cause" or following a "change of control," he would not engage
in any activity competitive with the Company for a period of up to one year.
9
Mr. Ribis also has an employment agreement with Taj Associates (the "Ribis
Taj Agreement") pursuant to which Mr. Ribis acts as Chief Executive Officer of
Taj Associates, the term of which expires on September 25, 1996. Mr. Ribis
received a $250,000 signing bonus under the Ribis Taj Agreement. Pursuant to
the terms of the Ribis Taj Agreement, in the event that Taj Associates, or any
entity which acquires substantially all of Taj Associates, proposes to engage
in an offering of common shares to the public, Taj Associates and Mr. Ribis
will negotiate new compensation arrangements to include equity participation
for Mr. Ribis. Taj Associates may at any time terminate Mr. Ribis' employment
for "cause," which is defined in the Ribis Taj Agreement as Mr. Ribis' (i)
conviction of a felony or (ii) revocation or termination of his casino key
employee license issued by the CCC. Pursuant to the Ribis Taj Agreement, Mr.
Ribis has agreed that upon termination of his employment for cause by Taj
Associates or voluntarily by Mr. Ribis (other than following a material breach
of the agreement by Taj Associates), he would not engage in employment for or
on behalf of any other casino hotel located in Atlantic City for the lesser of
one year or the period then remaining in the term of the agreement, provided
that this covenant not to compete shall not be applicable in the case there is
a public offering of common shares and Mr. Ribis voluntarily terminates his
employment as the result of his and Taj Associates' failure to negotiate
mutually satisfactory compensation arrangements. Taj Associates and Mr. Ribis
expect to amend the Ribis Taj Agreement, retroactive to June 12, 1995,
pursuant to which, among other things, Mr. Ribis' annual salary will change
from $550,000 (with annual increases of 10% on each anniversary) to $499,125.
Robert M. Pickus. THCR Holdings has an employment agreement with Robert M.
Pickus (the "Pickus Agreement") pursuant to which he serves as Executive Vice
President and General Counsel. The Pickus Agreement, the initial term of which
expires on July 9, 1998 if not extended, provides for annual compensation of
$275,000, plus bonus. Mr. Pickus' employment may be terminated only for
"cause," which is defined in the Pickus Agreement as (i) revocation of his
casino key employee license, (ii) his conviction of certain crimes, (iii) his
disability or death or (iv) breach of his duty to THCR Holdings. Upon
termination for cause, Mr. Pickus will receive only compensation earned to the
date of termination. Pursuant to the Pickus Agreement, Mr. Pickus has agreed
not to accept employment for or on behalf of any other casino hotel located in
Atlantic City during the term of the Pickus Agreement.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS
Messrs. Trump and Ribis, officers of the Company, receive no remuneration
for serving on the Board of Directors. Each of the other Directors received an
annual fee of $50,000 and a meeting fee of $2,000 for each of the Board of
Directors or Committee meetings attended.
The Board of Directors met three times during 1995. During 1995, each of the
Directors during such period attended at least 75% of all meetings of the
Board of Directors and of each committee of which such Director was a member.
The Company has, as standing committees, an Executive Committee, an Audit
Committee, a Special Committee, a Stock Incentive Plan Committee and a
Compensation Committee. The Company does not have a Nominating Committee.
The current members of the Executive Committee are Messrs. Trump and Ribis.
The Executive Committee, during intervals between meetings of the Board of
Directors, has and exercises all of the powers of the Board of Directors in
the management of the business and affairs of the Company, subject to any
restrictions or limitations as the Board of Directors may from time to time
specify or as limited by the Delaware General Corporation Law.
The current members of the Audit Committee are Messrs. Askins, Ryan and
Thomas. The Audit Committee provides assistance to the Board of Directors with
respect to corporate accounting, reporting practices of the Company and the
quality and integrity of the financial reports of the Company. The Audit
Committee recommends to the Board of Directors the engagement of the
independent auditors of the Company and oversees audits and investigations of
the business and financial affairs of the Company, including, without
limitation, any audits or investigations which may be required by any
governmental regulatory authority.
10
The Special Committee, whose current members are Messrs. Askins, Ryan and
Thomas, met two times in 1995. The Special Committee is composed entirely of
independent Directors and reviews matters relating to transactions with
affiliates of the Company, and other matters as required pursuant to the THCR
Holdings Partnership Agreement (as defined), the Senior Note Indenture (as
defined) and the Mortgage Note Indenture (as defined).
The current members of the Stock Incentive Plan Committee are Messrs. Trump,
Askins, Ryan and Thomas. The Stock Incentive Plan Committee is the committee
responsible for administering the Stock Incentive Plan and has the authority
to grant awards to individuals pursuant to the Stock Incentive Plan, to
determine the number of awards to be so granted, the term of such awards, any
vesting requirements and any other administrative determinations required in
connection therewith.
The current members of the Compensation Committee are Messrs. Trump, Ribis,
Askins and Thomas. The Compensation Committee provides assistance to the Board
of Directors to ensure that the Company's officers, key executives and
Directors are compensated in accordance with the Company's total compensation
objectives and executive compensation policies, strategies and pay levels
necessary to support organizational objectives.
The Executive Committee, Audit Committee, Stock Incentive Plan Committee and
Compensation Committee did not meet in 1995. Certain of such committees,
however, took action by unanimous written consent in lieu of a meeting during
1995.
COMPENSATION COMMITTEE AND STOCK INCENTIVE PLAN COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
No officer or employee of the Company, other than Messrs. Trump and Ribis,
who serve on the Board of Directors of the Company, participated in the
deliberations of the Board of Directors of the Company concerning executive
compensation.
The Stock Incentive Plan Committee was formed on June 12, 1995, upon the
consummation of the June 1995 Offerings, and the Compensation Committee was
formed in August 1995. Set forth below is a description of the policies and
practices that the Compensation Committee will implement with respect to
future compensation determinations.
Compensation Philosophy. The Company's compensation program is designed to
attract, reward and retain highly qualified executives and to encourage the
achievement of business objectives and superior corporate performance. The
program ensures the Board of Directors and stockholders that (1) the
achievement of the overall goals and objectives of the Company can be
supported by adopting an appropriate executive compensation policy and
implementing it through an effective total compensation program and (2) the
total compensation program and practices of the Company are designed with full
consideration of all accounting, tax, securities law and other regulatory
requirements and are of the highest quality.
The Company's executive compensation program consists of two key elements:
(1) an annual compensation component composed of base salary and bonus, and
(2) a long-term compensation component composed of equity-based awards
pursuant to the Stock Incentive Plan.
Annual Compensation. The Compensation Committee will generally target annual
salary and bonus levels to be competitive with other similarly sized entities
in the casino entertainment industry. Base salaries will be determined by
evaluating the responsibilities associated with the position being evaluated
and the individual's overall level of experience. Annual salary adjustments
will be determined by giving consideration to the Company's performance and
the individual's contribution to that performance.
Bonuses are based on the Compensation Committee's assessment of the
Company's performance and an individual's contribution to that performance.
Corporate performance is measured by various quantitative and qualitative
factors. The primary quantitative factors that will be reviewed by the
Compensation Committee include such performance measures as net income and
return on average common stockholders' equity, both as absolute measures and
relative to previous years. Significant qualitative factors that will be
evaluated by the
11
Compensation Committee include the Company's performance in relation to
industry performance, progress toward achievement of the Company's long-term
business goals, the quality of the Company's earnings, and the overall
business and economic environment. The Compensation Committee believes that,
in accordance with its exercise of sound business judgment, the determination
of annual salary and bonus levels is inherently subjective and must include a
review of all relevant information, with no predetermined weight given to any
of the factors considered.
With the exception of Mr. Burke, all of the Company's named executive
officers are currently under employment contracts. See "Employment
Agreements." The annual salary for these individuals is set by the terms of
their employment contracts. Mr. Burke's salary was, and future salary
increases for the other named executive officers will be, based on the
considerations noted above.
In 1995, Mr. Ribis received a stock bonus of 66,667 shares of Common Stock.
This bonus was issued in connection with his employment agreement and pursuant
to the Stock Incentive Plan. The Compensation Committee will award bonuses to
the executive officers based on a subjective determination taking into account
the factors noted above.
Long-Term Compensation. In order to align stockholder and executive officer
interests, the long-term component of the Company's executive compensation
program utilizes equity-based awards whose value is directly related to the
value of the Common Stock. These equity-based awards will be granted by the
Stock Incentive Plan Committee pursuant to the Stock Incentive Plan.
Individuals to whom equity-based awards are to be granted and the amount of
Common Stock related to equity-based awards will be determined solely at the
discretion of the Stock Incentive Plan Committee. Because individual equity-
based award levels will be based on a subjective evaluation of each
individual's overall past and expected future contribution, no specific
formula is used to determine such awards for any executive.
In 1995, pursuant to the terms of the Ribis Agreement, Mr. Ribis was granted
options to purchase 133,333 shares of Common Stock, a stock bonus award of
66,667 shares of Common Stock and 66,666 phantom stock units.
Tax Deductibility of Executive Compensation. Section 162(m) of the Internal
Revenue Code limits the tax deductibility of compensation in excess of $1
million paid to certain members of senior management, unless the payments are
made under a performance-based plan as defined in Section 162(m). The
Company's general policy is to structure its compensation programs to preserve
the tax deductibility of compensation paid to its executive officers and other
members of management. All compensation paid pursuant to the Stock Incentive
Plan is exempt from the application of Section 162(m) and will continue to be
exempt therefrom until after the Annual Meeting. Thereafter, assuming the
amendment to the Stock Incentive Plan is approved by the stockholders, it is
designed to allow for the grant of equity-based awards that will be
performance-based and therefore exempt from the application of Section 162(m).
Although Mr. Ribis' total annual salary and bonus in 1995 exceeded $1 million,
such amounts were exempt from the application of Section 162(m) because of
certain grandfather provisions and therefore were fully deductible by the
Company. While the Company currently intends to pursue a strategy of
maximizing deductibility of senior management compensation, it also believes
it is important to maintain the flexibility to take actions it considers to be
in the best interests of the Company and its stockholders, which may be based
on considerations in addition to Section 162(m).
COMPENSATION COMMITTEE STOCK INCENTIVE PLAN COMMITTEE
Donald J. Trump Donald J. Trump
Nicholas L. Ribis Wallace B. Askins
Wallace B. Askins Peter M. Ryan
Don M. Thomas Don M. Thomas
12
COMPARATIVE STOCK PRICE PERFORMANCE GRAPH
The graph below compares the total cumulative return of the Common Stock
from June 7, 1995 (the date trading of the Common Stock commenced) to December
28, 1995, to the Standard & Poor's 500 Index and the Dow Jones Entertainment &
Leisure-Casinos Index. The graph assumes that dividends were reinvested and is
based on an investment of $100 on June 7, 1995 in each of the Common Stock,
the stocks comprising the Standard & Poor's 500 Index and the stocks
comprising the Dow Jones Entertainment & Leisure-Casinos Index.
Comparison of Total Return Among
Trump Hotels & Casino Resorts, Inc.,
Standard & Poor's 500 Index and
Dow Jones Entertainment & Leisure-Casinos Index
LOGO
CUMULATIVE TOTAL RETURN
-------------------------
6/7/95 12/28/95
----------- ------------
Trump Hotels & Casino Resorts, Inc. .......... $100 $154
S&P 500 Index................................. $100 $117
Dow Jones Entertainment & Leisure-Casinos In-
dex.......................................... $100 $ 94
13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Merger Transaction. On April 17, 1996, Merger Sub was merged with and
into THCR Holding Corp. (the "Merger"), pursuant to the Agreement and Plan of
Merger, dated as of January 8, 1996, among the Company, THCR Holding Corp. and
Merger Sub, as amended by the Amendment to Agreement and Plan of Merger, dated
as of January 31, 1996 (as amended, the "Merger Agreement"). As a result of
the Merger, and the related transactions discussed below, THCR Holdings
acquired Taj Associates. The Merger Transaction included, among other things:
(a) the Merger, the payment of an aggregate of approximately $31,181,240
in cash and the issuance of 323,423 shares of the Company's Common Stock to
the holders of Taj Mahal Holding Corp. (now known as THCR Holding Corp.)
Class A Common Stock pursuant to the Merger Agreement;
(b) the contribution (i) by Mr. Trump to Trump AC of all of his direct
and indirect ownership interests in Taj Associates, pursuant to the
contribution agreement, dated as of April 17, 1996, among Mr. Trump, TCI,
THCR/LP, and THCR Holdings (the "1996 Contribution Agreement") in exchange
for a modification of Mr. Trump's limited partnership interest in THCR
Holdings and (ii) by the Company to Trump AC of all of its indirect
ownership interests in Taj Associates acquired in the Merger;
(c) the public offerings by (i) the Company of 12,500,000 shares of
Common Stock (plus 750,000 shares of Common Stock issued in connection with
the partial exercise of the underwriters' over-allotment option (together,
the "Stock Offering")), and (ii) Trump AC and its wholly owned finance
subsidiary of $1,200,000,000 aggregate principal amount of 11% First
Mortgage Notes due 2006 (the "Mortgage Notes") (the "Mortgage Note
Offering," and, together with the Stock Offering, the "1996 Offerings");
(d) the redemption, immediately prior to the Merger, of the outstanding
shares of Taj Mahal Holding Corp. (now known as THCR Holding Corp.) Class B
Common Stock, in accordance with its terms, for $.50 per share;
(e) the redemption of the outstanding 11.35% Mortgage Bonds, Series A,
due 1999 of Trump Taj Mahal Funding, Inc.;
(f) the retirement (the "Plaza Note Retirement") of the outstanding 10
7/8% Mortgage Notes due 2001 of Plaza Funding (the "Plaza Notes");
(g) the satisfaction of the indebtedness of Taj Associates under its loan
agreement with National Westminster Bank USA;
(h) the purchase of certain real property used in the operation of the
Taj Mahal (the "Specified Parcels"), that was leased from Realty Corp.;
(i) the purchase of Trump Plaza East (as defined);
(j) the payment to Bankers Trust Company ("Bankers Trust") to obtain
releases of liens and guarantees that Bankers Trust had in connection with
indebtedness owed by Mr. Trump to Bankers Trust; and
(k) the issuance to Mr. Trump of the Trump Warrants.
As a result of the contribution by Mr. Trump to Trump AC (on behalf, and at
the direction, of THCR Holdings) of his direct and indirect ownership
interests in Taj Associates and the contribution by the Company to Trump AC
(on behalf, and at the direction, of THCR Holdings) of its indirect ownership
interests in Taj Associates acquired in the Merger, together with the
Company's contribution to THCR Holdings of the proceeds from the Stock
Offering, Mr. Trump's aggregate beneficial equity interest in THCR Holdings
decreased from approximately 40% to approximately 25%, and the Company's
aggregate beneficial equity interest in THCR Holdings increased from
approximately 60% to approximately 75%. In addition, Mr. Trump, the Company,
TCI and THCR/LP entered into the Second Amended and Restated Agreement of
Limited Partnership of THCR Holdings (as so amended and restated, the "THCR
Holdings Partnership Agreement"), which provided for, among other things, the
admission of TCI and THCR/LP as limited partners of THCR Holdings and the
14
adjustments of the respective partnership interests in THCR Holdings. In
connection with the Merger Transaction, Mr. Trump and certain of his
affiliates were released and discharged from certain obligations.
In connection with the June 1995 Offerings, Mr. Trump and the Company
entered into an exchange and registration rights agreement (the "Exchange and
Registration Rights Agreement") providing for the exchange of Mr. Trump's
limited partnership interest in THCR Holdings for Common Stock and for
registration rights with respect to such shares of Common Stock. In connection
with the Merger Transaction, Mr. Trump, the Company and TCI entered into an
amendment to the Exchange and Registration Rights Agreement, which modified
certain of the terms of the Exchange and Registration Rights Agreement and
provides for the exchange of TCI's limited partnership interests in THCR
Holdings for Common Stock and for registration rights with respect to such
shares of Common Stock.
Certain Related Party Transactions---The Company. In connection with the
June 1995 Offerings, Mr. Trump and the Company entered into a license
agreement (the "License Agreement"), under which Mr. Trump granted to the
Company the world-wide right and license to use the names "Trump," "Donald
Trump," and "Donald J. Trump," (including variations thereon, and together
with related intellectual property rights, the "Marks") for use in connection
with casino services, which license grant was secured by a security agreement
(the "Trademark Security Agreement"). In connection with the Merger
Transaction, Mr. Trump and the Company amended the License Agreement and the
Trademark Security Agreement in order to, among other things, grant the
Company a license in the Taj Marks (as defined) and provide for a security
interest therein. See "--Certain Related Party Transactions--Taj Associates
and Affiliates."
Upon consummation of the June 1995 Offerings, Mr. Trump contributed to the
capital of Trump Indiana and other new jurisdiction subsidiaries payments made
by him relating to expenditures for the development of the Indiana Riverboat
and other gaming ventures. As of June 12, 1995 these advances totaled
approximately $4.4 million. Of these amounts, approximately $3.0 million were
used to fund expenses related to the development of Trump Indiana. In order to
fund such expenses, THCR Holdings lent to Mr. Trump $3.0 million and Mr. Trump
issued to THCR Holdings a five-year promissory note bearing interest at a
fixed rate of 10%, payable annually. The promissory note provided that it
would be automatically canceled in the event that at any time during the
periods set forth below, the Common Stock traded on the NYSE, or any other
applicable national exchange or over-the-counter market, at a price per share
equal to or greater than the prices set forth below (subject to adjustment in
certain circumstances) for any ten trading days during any 15 consecutive
trading day period:
If on or prior to June 12, 1997................................... $25.00
If on or prior to June 12, 1998................................... $27.50
If on or prior to June 12, 1999................................... $30.00
If on or prior to June 12, 2000................................... $32.50
On March 27, 1996, the $3.0 million promissory note was canceled in accordance
with its terms.
The Company has entered into a ten-year lease with The Trump-Equitable Fifth
Avenue Company, a corporation wholly owned by Mr. Trump, dated as of July 1,
1995, for the lease of office space in The Trump Tower in New York City, which
the Company uses for general executive and administrative offices. The fixed
rent is $115,500 per year, paid in equal monthly installments, for the period
from July 1, 1995 to June 30, 2000, and will be $129,250 per year, paid in
equal monthly installments, for the period from July 1, 2000 to June 30, 2005.
In addition, the Company will pay as additional rent, among other things, a
portion of the property taxes due each year. The Company has the option to
terminate this lease upon ninety days' written notice and payment of
$32,312.50.
Certain Related Party Transactions--Plaza Associates. Seashore Four
Associates, an entity beneficially owned by Mr. Trump ("Seashore Four"), is
the fee owner of a parcel of land constituting a portion of the city block in
Atlantic City, New Jersey which is occupied by Trump Plaza's main tower (the
"Plaza Casino Parcel"),
15
which it leases to Plaza Associates pursuant to a lease (the "SFA Lease").
Seashore Four was assigned the lessor's interest in the existing SFA Lease in
connection with its acquisition of fee title to such parcel from a non-
affiliated third party in November 1983. The SFA Lease was entered into by
Plaza Associates with such third party on an arm's-length basis. Plaza
Associates recorded rental expenses of approximately $950,000 in 1995
concerning rent owed to Seashore Four.
Trump Seashore Associates, an entity beneficially owned by Mr. Trump ("Trump
Seashore"), is the fee owner of another parcel of land constituting a portion
of the Plaza Casino Parcel, which it leases to Plaza Associates pursuant to a
lease (the "TSA Lease"). In July 1988, Trump Seashore exercised an option to
purchase the fee title to such parcel from a non-affiliated third party. In
connection therewith, Trump Seashore was assigned the lessors' interest in the
Trump Seashore Lease, which interest was, in August 1991, as security for
indebtedness owed to a third party, transferred to the United States Trust
Company of New York ("UST"). The trust agreement between UST, Trump Seashore
and such third party creditor provides that the trust shall terminate on the
earlier of (i) August 1, 2012 or (ii) the date on which such third party
creditor certifies to UST that all principal, interest and other sums due and
owing from Trump Seashore to such third party creditor have been paid. In
September of 1995, Trump Seashore and such third party creditor extended the
term of the indebtedness described above and increased the interest rate to
paid thereon. Plaza Associates made rental payments to Trump Seashore of
approximately $1,175,000 in 1995.
In December 1993, Mr. Trump entered into an option agreement, as amended
(the "Trump World's Fair Purchase Option"), with Chemical Bank ("Chemical")
and ACFH Inc. ("ACFH"). The Trump World's Fair Purchase Option granted to Mr.
Trump an option to purchase (i) the former Trump Regency Hotel (now known as
Trump World's Fair) (including the land, improvements and personal property
used in the operation of the hotel) and (ii) certain secured promissory notes
(including a personal promissory note of Mr. Trump payable to Chemical for
$35.9 million (the "Trump Note")) made by Mr. Trump and/or certain of his
affiliates and payable to Chemical (the "Chemical Notes"). On June 12, 1995,
the Trump World's Fair Purchase Option was exercised for $58,150,000 ($60
million less $1,850,000 in option payments which were available as of that
date to offset the original exercise price), and title to Trump World's Fair
was transferred via directed deed from ACFH to Plaza Associates. In connection
with the exercise of the Trump World's Fair Purchase Option, the Trump Note
was canceled. The Company is currently in the process of renovating and
integrating Trump World's Fair into Trump Plaza.
On June 24, 1993, in connection with the 1993 refinancing of Trump Plaza,
(i) Mr. Trump transferred title to a hotel located adjacent to Trump Plaza's
main tower ("Trump Plaza East") to Missouri Boardwalk, Inc. ("Boardwalk"), a
wholly owned subsidiary of Midlantic National Bank ("Midlantic"), in exchange
for a reduction in indebtedness to Midlantic, (ii) Boardwalk leased Trump
Plaza East to Mr. Trump (the "Trump Plaza East Lease") for a term of five
years, which would have expired on June 30, 1998, during which time Mr. Trump
would have been obligated to pay Boardwalk $260,000 per month in lease
payments and (iii) Plaza Associates acquired an option to purchase Trump Plaza
East (the "Trump Plaza East Purchase Option"). In October 1993, Plaza
Associates assumed the Trump Plaza East Lease and related expenses. On April
17, 1996, in connection with the Merger Transaction, Plaza Associates
purchased Trump Plaza East and the Trump Plaza East Lease and related
obligations were terminated.
On June 24, 1993, Plaza Associates and TPM entered into the TPM Services
Agreement which amended and restated an earlier services agreement. Pursuant
to the TPM Services Agreement, TPM is required to provide to Plaza Associates,
from time to time when reasonably requested, consulting services on a non-
exclusive basis, relating to marketing, advertising, promotional and other
similar and related services (the "TPM Services") with respect to the business
and operations of Plaza Associates. In addition, the TPM Services Agreement
contains a non-exclusive "license" of the "Trump" name. TPM is not required to
devote any prescribed amount of time to the performance of its duties. In
consideration for the TPM Services, Plaza Associates pays TPM an annual fee of
$1.0 million in equal monthly installments, plus reasonable out-of-pocket
expenses. In 1995, Plaza Associates paid TPM $1,321,000 for the TPM Services.
Pursuant to the TPM Services Agreement, Plaza Associates has agreed to hold
TPM, its officers, directors and employees harmless from and against any loss
16
arising out of or in connection with the performance of the TPM Services and
to hold Mr. Trump harmless from and against any loss arising out of the
license of the "Trump" name. The TPM Services Agreement provides that its term
is coextensive with the period during which any Plaza Notes remain
outstanding.
Payments received under the TPM Services Agreement are currently pledged by
TPM to secure lease payments for a helicopter that TPM makes available to
Plaza Associates. Pending approval by the lessor of the helicopter, it is
currently contemplated that the stock of TPM will be transferred by Mr. Trump
to THCR Holdings, which will in turn assume the lease and related obligations,
as well as become entitled to all amounts payable under the TPM Services
Agreement.
Certain Related Party Transactions--Taj Associates and Affiliates. Taj
Associates has a lease with The Trump-Equitable Fifth Avenue Co., a
corporation wholly owned by Mr. Trump, for the lease of office space in The
Trump Tower in New York City, which Taj Associates uses as a marketing office.
The monthly payments under the lease had been $1,000, and the premises were
leased at such rent for four months in 1992, the full twelve months in 1993
and 1994 and eight months in 1995. On September 1, 1995, the lease was renewed
for a term of five years with an option for Taj Associates to cancel the lease
on September 1 of each year, upon six months' notice and payment of six
months' rent. Under the renewed lease, the monthly payments are $2,184.
From October 4, 1991, until April 17, 1996, Taj Associates leased the
Specified Parcels from Realty Corp., consisting of land adjacent to the site
of the Taj Mahal, which is used primarily for a bus terminal, surface parking
and the Taj Entertainment Complex, as well as the Steel Pier and a warehouse
complex. During 1993, 1994 and 1995, lease obligations to Realty Corp. for
these facilities were approximately $3.3 million per year. On April 17, 1996,
in connection with the Merger Transaction, Taj Associates purchased the
Specified Parcels from Realty Corp and the lease and related obligations were
terminated.
On October 4, 1991, Taj Associates entered into a guarantee with First
Fidelity Bank, National Association (now known as First Union National Bank)
("First Fidelity"), of the performance by Realty Corp. of its obligations
under a loan of approximately $78 million owing to First Fidelity (the "First
Fidelity Loan"), which loan was secured by a mortgage on the Specified
Parcels. Such guarantee was limited to any deficiency in the amount owed under
the First Fidelity Loan when due, up to a maximum of $30 million. In
connection with the purchase of the Specified Parcels, Realty Corp.'s
obligations to First Fidelity under the First Fidelity Loan were satisfied
and, First Fidelity, among other things, released Taj Associates from the
guarantee.
Taj Associates and Mr. Trump were parties to the Taj Services Agreement,
which became effective in April 1991, and which provided that Mr. Trump would
render to Taj Associates marketing, advertising, promotional and related
services with respect to the business operations of Taj Associates through
December 31, 1999. In consideration for the services to be rendered, Taj
Associates paid an annual fee (the "Annual Fee") equal to 1% of Taj
Associates' earnings before interest, taxes and depreciation less capital
expenditures for such year, with a minimum base fee of $500,000 per annum.
During the year 1995, and the period from January 1, 1996 to April 17, 1996,
Mr. Trump earned approximately $1.7 million and $0.4 million, respectively, in
respect of the Annual Fee, including amounts paid to a third party pursuant to
an assignment agreement. In addition, during the year 1995, and the period
from January 1, 1996 to April 17, 1996, Taj Associates reimbursed Mr. Trump
$261,000 and $148,000, respectively, for expenses pursuant to the Taj Services
Agreement. Taj Associates agreed to indemnify Mr. Trump from and against any
licensing fees arising out of his performance of the Taj Services Agreement,
and against any liability arising out of his performance of the Taj Services
Agreement, other than that due to his gross negligence or willful misconduct.
The Taj Services Agreement was terminated upon consummation of the Merger
Transaction on April 17, 1996.
On April 1, 1991, in connection with the Taj Services Agreement, Taj
Associates and Mr. Trump entered into an Amended and Restated License
Agreement (the "Taj License Agreement") which amended and restated an earlier
license agreement between the parties. Pursuant to the Taj License Agreement,
Taj Associates had the non-exclusive right to use the name and likeness of Mr.
Trump, and the exclusive right to use the name and related marks and designs
of the Trump Taj Mahal Casino Resort (collectively, the "Taj Marks"), in its
17
advertising, marketing and promotional activities through December 31, 1999.
Upon consummation of the Merger Transaction, the Taj License Agreement was
terminated and the Taj Marks were licensed to the Company under the License
Agreement. See "--Certain Related Party Transactions--The Company."
Other Relationships. The Commission requires issuers to disclose the
existence of any other corporation in which both (i) an executive officer of
the registrant serves on the board of directors and/or compensation committee,
and (ii) a director of the registrant serves as an executive officer. Messrs.
Ribis, Pickus and Burke, executive officers of the Company, have served on the
boards of directors of other entities in which members of the Board of
Directors (namely, Messrs. Trump and Ribis) served and continue to serve as
executive officers. Management believes that such relationships have not
affected the compensation decisions made by the Board of Directors in the last
fiscal year.
Messrs. Trump and Ribis served on the Board of Directors of Plaza Funding,
the former managing general partner of Plaza Associates, of which Messrs.
Trump and Ribis are executive officers. Messrs. Trump and Ribis also serve on
the Board of Directors of AC Holding Inc., of which Messrs. Trump, Ribis and
Burke are also executive officers. Mr. Trump is the sole Director of TACC, of
which Messrs. Trump, Ribis and Pickus are executive officers. Mr. Trump is not
compensated by such entities for serving as an executive officer, however, he
has a personal services agreement with Plaza Associates and the Company.
Messrs. Ribis, Pickus and Burke are not compensated by the foregoing entities,
however, they are compensated by Plaza Associates and the Company for their
service as executive officers.
Messrs. Ribis, Pickus, and Burke serve on the Board of Directors of THCR
Holding Corp., which held, prior to April 17, 1996, an indirect equity
interest in Taj Associates, of which Mr. Trump is an executive officer. Such
persons also serve on the Board of Directors of THCR/LP, the former managing
general partner of Taj Associates, of which Messrs. Trump and Ribis are
executive officers. Mr. Ribis is compensated by Taj Associates for his
services as its Chief Executive Officer. See "--Employment Agreements."
Mr. Ribis also serves on the Board of Directors of Realty Corp., which, in
the past, leased certain real property to Taj Associates, of which Mr. Trump
is an executive officer. Mr. Trump, however, does not receive any compensation
for serving as an executive officer of Realty Corp. Mr. Ribis also receives
compensation from TCA for acting as its Chief Executive Officer. See "--
Employment Agreements." Prior to December 1995, Mr. Ribis was Counsel to the
law firm of Ribis, Graham and Curtin (now practicing as Graham, Curtin &
Sheridan, A Professional Association), which serves as New Jersey legal
counsel to the Company and certain of its affiliated entities. John Barry, Mr.
Trump's brother-in-law, is a partner of Barry & McMoran, a New Jersey law firm
which provides, from time to time, legal services to Plaza Associates, Taj
Associates and certain of their affiliated entities.
Changes in Control. As security for certain indebtedness of Mr. Trump and
his affiliates (other than the Company and its subsidiaries) owed to certain
lenders, Mr. Trump pledged (and caused TCI to pledge) all of the shares of
Class B Common Stock and the limited partnership interests in THCR Holdings
held by Mr. Trump (and TCI). A foreclosure on all of such collateral could
result in a change of control of the Company.
CERTAIN RELATIONSHIPS
Affiliate party transactions are governed by the provisions of the
indentures pursuant to which the Senior Notes and the Mortgage Notes were
issued (the "Senior Note Indenture" and "Mortgage Note Indenture,"
respectively), which provisions generally require that such transactions be on
terms as favorable as would be obtainable from an unaffiliated party, and
require the approval of a majority of the independent Directors of the Company
for certain affiliated transactions.
Mr. Trump and certain affiliates have engaged in certain related party
transactions with respect to the Company and its subsidiaries. See "Executive
Compensation--Compensation Committee Interlocks and Insider
18
Participation--Certain Related Party Transactions--The Company," "--Plaza
Associates" and "--Other Relationships."
Plaza Associates and Taj Associates have joint insurance coverage with TCA
and other entities affiliated with Mr. Trump, for which the annual premiums
paid by Plaza Associates and Taj Associates was approximately $1.4 million and
$1.9 million, respectively, for the 12 months ending May 1996.
Plaza Associates leased portions of its warehouse facility located in Egg
Harbor Township, New Jersey to TCA; lease payments by TCA to Plaza Associates
totaled $6,000 in 1995.
Indemnification Agreements. In addition to the indemnification provisions in
the Company's and its subsidiaries' employment agreements, certain former and
current Directors of Plaza Funding entered into separate indemnification
agreements in May 1992 with Plaza Associates pursuant to which such persons
are afforded the full benefits of the indemnification provisions of the
partnership agreement governing Plaza Associates. Plaza Associates also
entered into an Indemnification Trust Agreement in November 1992 (the "Trust
Agreement") with Midlantic (the "Indemnification Trustee") pursuant to which
the sum of $100,000 was deposited by Plaza Associates with the Indemnification
Trustee for the benefit of the Directors of Plaza Funding and certain former
Directors of TP/GP to provide a source for indemnification for such persons if
Plaza Associates, Plaza Funding or TP/GP, as the case may be, fails to
immediately honor a demand for indemnification by such persons. The
indemnification agreements with the Directors of Plaza Funding and Directors
of TP/GP were amended in June 1993 to provide, among other things, that Plaza
Associates would maintain directors' and officers' insurance covering such
persons during the ten-year term (subject to extension) of the indemnification
agreements; provided, however, that if such insurance would not be available
on a commercially practicable basis, Plaza Associates could, in lieu of
obtaining such insurance, annually deposit an amount in the Indemnification
Trust Fund equal to $500,000 for the benefit of such Directors; provided,
however, that deposits relating to the failure to obtain such insurance shall
not exceed $2.5 million. Such Directors are covered by directors' and
officers' insurance maintained by Plaza Associates.
Pursuant to the Merger Agreement, Trump AC has agreed to provide to the
former officers and Directors of THCR Holding Corp. and THCR/LP (the "Taj
Indemnified Parties"), including Messrs. Ribis, Pickus and Burke,
indemnification as provided in the Company's Amended and Restated Certificate
of Incorporation and Amended and Restated By-Laws until April 17, 2002. In
addition, the Company agreed, and agreed to cause THCR Holding Corp. and
THCR/LP to agree, that until April 17, 2002, unless otherwise required by law,
the certificate of incorporation and by-laws of THCR Holding Corp. and THCR/LP
shall not be amended, repealed or modified to reduce or limit the rights of
indemnity afforded to the former Directors, officers and employees of THCR
Holding Corp. and THCR/LP or the ability of THCR Holding Corp. or THCR/LP to
indemnify such persons, nor to hinder, delay or make more difficult the
exercise of such rights of indemnity or the ability to indemnify. In addition,
Trump AC has also agreed to purchase and maintain in effect, until April 17,
2002, directors' and officers' liability insurance policies covering the Taj
Indemnified Parties on terms no less favorable than the terms of the then
current insurance policies' coverage or, if such directors' and officers'
liability insurance is unavailable for an amount no greater than 150% of the
premium paid by THCR Holding Corp. (on an annualized basis) for directors' and
officers' liability insurance during the period from January 1, 1996 to April
17, 1996, Trump AC has agreed to obtain as much insurance as can be obtained
for a premium not in excess (on an annualized basis) of such amount.
19
PROPOSAL TWO
INCREASE OF SHARES OF COMMON STOCK
RESERVED UNDER 1995 STOCK INCENTIVE PLAN
AMENDMENT
On June 5, 1995, the Board of Directors of the Company adopted the Stock
Incentive Plan which was subsequently approved by the sole stockholder of the
Company. As adopted and approved, the Stock Incentive Plan allows for the
issuance of 1,000,000 shares of Common Stock pursuant to awards granted
thereunder. As of May 1, 1996, a total of 733,334 shares of Common Stock
remained available for future grants under the Stock Incentive Plan. In order
to provide for sufficient shares of Common Stock for future grants under the
Stock Incentive Plan, the Stock Incentive Plan Committee has amended the Stock
Incentive Plan, subject to stockholder approval, to provide that the number of
shares of Common Stock reserved for issuance under the Stock Incentive Plan be
increased from 1,000,000 to 4,000,000. The Stock Incentive Plan as so amended
is hereby submitted to the stockholders of the Company for approval.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ADOPTION OF
THE AMENDMENT TO THE STOCK INCENTIVE PLAN ALLOWING FOR THE INCREASE OF SHARES
OF COMMON STOCK RESERVED FOR ISSUANCE THEREUNDER.
A general description of the basic features of the Stock Incentive Plan is
set forth below. Such description is qualified in its entirety by reference to
the full text of the Stock Incentive Plan, a copy of which may be obtained
without charge upon written request to John P. Burke, Senior Vice President of
Corporate Finance of the Company.
PURPOSE
The purpose of the Stock Incentive Plan is to provide a means through which
the Company and its subsidiaries and affiliates may attract able persons to
enter and remain in the employ of the Company and its subsidiaries and
affiliates and to provide a means whereby those key persons upon whom the
responsibilities of successful administration and management of the Company
and its subsidiaries and affiliates rest can acquire and maintain stock
ownership, thereby strengthening their commitment to the welfare of the
Company and its subsidiaries and affiliates.
ADMINISTRATION
The Stock Incentive Plan is administered by the Stock Incentive Plan
Committee, which is appointed by the Board of Directors, and no Stock
Incentive Plan Committee member is eligible to participate in the Stock
Incentive Plan. The Stock Incentive Plan Committee, subject to the provisions
of the Stock Incentive Plan, in its sole discretion, may grant awards under
the Stock Incentive Plan, and has the power to construe the Stock Incentive
Plan, to determine all questions thereunder and to adopt and amend such rules
and regulations for the administration of the Stock Incentive Plan as it may
deem desirable.
ELIGIBILITY, GRANT OF AWARDS
Pursuant to the Stock Incentive Plan, all Directors, employees and
consultants of the Company and certain of its subsidiaries and affiliates who
have been selected by the Stock Incentive Plan Committee as participants are
eligible to receive awards of various forms of equity-based incentive
compensation, including stock options, stock appreciation rights, restricted
stock awards, performance shares and phantom stock units, stock bonus awards,
and awards consisting of combinations of such incentives. The Company and its
subsidiaries currently have approximately 9,800 persons who are so eligible
(comprising all employees, Directors and consultants).
Options granted under the Stock Incentive Plan may be "incentive stock
options" ("ISOs"), within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), or NQSOs; provided, however, that ISOs
may only be granted to participants who are also employees of the Company. The
exercise price of the options will be determined by the Stock Incentive Plan
Committee when the options are granted,
20
subject to a minimum price in the case of ISOs of the Fair Market Value (as
defined in the Stock Incentive Plan) of the Common Stock on the date of grant
and a minimum price in the case of NQSOs of the par value of the Common Stock.
Options vest and become exercisable as determined by the Stock Incentive Plan
Committee. The option exercise price may be paid in cash or in shares of
Common Stock or, in the discretion of the Stock Incentive Plan Committee, (i)
in other property having a Fair Market Value on the date of exercise equal to
the option exercise price, or (ii) by delivering to the Company a copy of
irrevocable instructions to a stockbroker to deliver promptly to the Company
an amount of sale or loan proceeds sufficient to pay the exercise price.
The Stock Incentive Plan permits the Stock Incentive Plan Committee to grant
SARs. An SAR granted as an alternative or a supplement to a related stock
option will entitle its holder to be paid an amount equal to the Fair Market
Value of the Common Stock subject to the SAR on the date of exercise of the
SAR less the exercise price of the related stock option or such other price as
the Stock Incentive Plan Committee may determine at the time of the grant of
the SAR (which may not be less than the lowest price which the Stock Incentive
Plan Committee may determine under the Stock Incentive Plan for such stock
option.) SARs vest and become exercisable as determined by the Stock Incentive
Plan Committee.
Shares of Common Stock covered by a restricted stock award will be issued to
the recipient at the time the award is granted but will be subject to
forfeiture in the event continued employment and/or other restrictions and
conditions established by the Stock Incentive Plan Committee at the time the
award is granted are not satisfied.
A performance share or phantom stock award will provide for the future
payment of cash or the issuance of shares of Common Stock to the recipient if
continued employment or other performance objectives established by the Stock
Incentive Plan Committee at the time of grant are attained.
Stock bonus awards provide for the issuance of unrestricted Common Stock in
such amounts and subject to such terms and conditions as the Stock Incentive
Plan Committee may in its sole discretion deem.
EFFECT OF CHANGE IN CONTROL OF THE COMPANY
In the event of a Change in Control of the Company all options and SARs will
become immediately vested and exercisable, the restrictions with regard to
restricted stock will lapse and phantom stock unit awards will become
immediately payable. In addition, in the event of such an occurrence, the
Stock Incentive Plan Committee will immediately determine the extent to which
any performance goals have been met with regard to any outstanding performance
share awards and will cause any amounts determined to be earned due to the
full or partial attainment of such goals to be immediately paid to
participants. Finally, all amounts deferred under the Stock Incentive Plan
will be immediately paid out. For purposes of the Stock Incentive Plan, unless
the Board of Directors of the Company otherwise directs by resolution, a
Change in Control is defined as (i) the acquisition by any person or group of
persons, acting in concert, other than Mr. Trump or any of his affiliates, of
30% or more of either the outstanding Common Stock or the combined voting
power of the Company's outstanding securities, (ii) a change in the majority
membership of the Board of Directors of the Company over a two year period not
authorized by the members in office at the beginning of such two year period
or (iii) the liquidation, dissolution or sale of all or substantially all of
the assets of the Company. Neither a merger, consolidation or corporate
reorganization in which the owners of the combined voting power of the
Company's then outstanding voting securities entitled to vote generally prior
to such combination, own 50% or more of the resulting entity's outstanding
voting securities shall, by itself, be considered a Change in Control.
The market value of the Common Stock as of May 7, 1996 was $32 per share.
FEDERAL TAX CONSEQUENCES
Set forth below is a brief description of the federal income tax
consequences applicable to ISOs and NQSOs granted under the Stock Incentive
Plan.
ISOs. No taxable income is realized by the optionee upon the grant or
exercise of an ISO. If Common Stock is issued to an optionee pursuant to the
exercise of an ISO, and if no disqualifying disposition of such shares is made
by such optionee within two years after the date of grant or within one year
after the transfer of
21
such shares to such optionee, then (1) upon sale of such shares, any amount
realized in excess of the option price will be taxed to such optionee as a
long-term capital gain and any loss sustained will be a long-term capital
loss, and (2) no deduction will be allowed to the optionee's employer for
federal income tax purposes.
If the Common Stock acquired upon the exercise of an ISO is disposed of
prior to the expiration of either holding period described above, generally
(1) the optionee will realize ordinary income in the year of disposition in an
amount equal to the excess (if any) of the fair market value of such shares at
exercise (or, if less, the amount realized on the disposition of such shares)
over the option price paid for such shares, and (2) the optionee's employer
will be entitled to deduct such amount for federal income tax purposes if the
amount represents an ordinary and necessary business expense. Any further gain
(or loss) realized by the optionee will be taxed as short-term or long-term
capital gain (or loss), as the case may be, and will not result in any
deduction by the employer.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following termination of employment, the
exercise of the Option will generally be taxed as the exercise of a NQSO.
For purposes of determining whether an optionee is subject to any
alternative minimum tax liability, an optionee who exercises an ISO generally
would be required to increase his or her alternative minimum taxable income,
and compute the tax basis in the stock so acquired, in the same manner as if
the optionee had exercised an NQSO. Each optionee is potentially subject to
the alternative minimum tax. In substance, a taxpayer is required to pay the
higher of his/her alternative minimum tax liability or his/her "regular"
income tax liability. As a result, a taxpayer has to determine his/her
potential liability under the alternative minimum tax.
In general, for purposes of the alternative minimum tax, the exercise of an
ISO will be treated essentially as if it were the exercise of a NQSO. As a
result, the rules of Section 83 of the Code relating to transfers of property,
including restricted property, will apply in determining the optionee's
alternative minimum taxable income. Consequently, an optionee exercising an
ISO with respect to unrestricted Common Stock will have income, for purposes
of determining the base for the application of the alternative minimum tax, in
an amount equal to the spread between the option price for the shares and the
fair market value of the shares on the date of exercise.
NQSOs. With respect to NQSOs: (1) no income is realized by the optionee at
the time the Option is granted; (2) generally, at exercise, ordinary income is
realized by the optionee in an amount equal to the difference between the
option price paid for the shares and the fair market value of the shares, if
unrestricted, on the date of exercise, and the optionee's employer is
generally entitled to a tax deduction in the same amount subject to applicable
tax withholding requirements; and (3) at sale, appreciation (or depreciation)
after the date of exercise is treated as either short-term or long-term
capital gain (or loss) depending on how long the shares have been held.
SPECIAL RULES APPLICABLE TO CORPORATE INSIDERS
As a result of the rules under Section 16(b) of the Securities Exchange Act
of 1934, "insiders" (as defined in the Exchange Act), as well as non-insiders,
generally will be taxed immediately upon the exercise of an NQSO as long as
the exercise occurs at least six months following the grant of the Option. In
that case, the general tax rules discussed above with respect to NQSOs will
apply to insiders as well as non-insiders. In the event that less than six
months have elapsed at the time of exercise of an NQSO, the insider will
recognize ordinary compensation income at the time such six month period
elapses in an amount equal to the excess, if any, of the fair market value of
the shares on such date over the exercise price.
NEW PLAN BENEFITS
Because the Stock Incentive Plan is a discretionary plan, it is not possible
to determine what awards the Stock Incentive Plan Committee will grant under
the Stock Incentive Plan in the future. The only executive officer of the
Company to receive an award under the Stock Incentive Plan in 1995 was Mr.
Ribis who received options for 133,333 shares of Common Stock, a stock bonus
award of 66,667 shares of Common Stock, and 66,666 phantom stock units.
22
PROPOSAL THREE
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has, upon recommendation of the Audit Committee and
subject to ratification by the stockholders, appointed Arthur Andersen LLP as
independent certified public accountants to report on the consolidated
financial statements of the Company for the fiscal year ending December 31,
1996, and to perform such other services as may be required of Arthur Andersen
LLP. Although stockholder ratification of the Board of Directors' selection is
not required, the Board of Directors considers it desirable for the
stockholders to pass upon the selection of the independent auditors. If the
stockholders disapprove of the selection of Arthur Andersen LLP as independent
auditors, the Board of Directors will consider the selection of other
independent certified public accountants. One or more representatives of
Arthur Andersen LLP will be present at the Annual Meeting, will have the
opportunity to make a statement if he or she desires to do so and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" RATIFICATION OF
ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
FOR 1996.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and executive officers, and persons who own more than 10% of the
Common Stock, to file with the Commission initial reports of ownership and
reports of changes in ownership of Common Stock. Officers, Directors and
greater than 10% stockholders are required by Commission regulation to furnish
the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company, all Section 16(a) filing requirements
applicable to its officers, Directors and greater than 10% beneficial owners
were complied with during the fiscal year ended December 31, 1995, except that
one report covering two transactions (relating to indirect beneficial
ownership) was filed late on behalf of the Chief Executive Officer of the
Company.
STOCKHOLDER PROPOSALS--1997 ANNUAL MEETING
Any proposals of stockholders of the Company intended to be included in the
Company's proxy statement and form of proxy relating to the Company's next
annual meeting of stockholders must be in writing and received by the
Secretary of the Company at the Company's office at Mississippi Avenue and The
Boardwalk, Atlantic City, New Jersey 08401 no later than January 10, 1997. In
the event that the next annual meeting of stockholders is called for a date
that is not within 30 days before or after June 12, 1997, in order to be
timely, notice by the stockholder must be received not later than the close of
business on the tenth day following the day on which such notice of the date
of the annual meeting was mailed or such public disclosure of the date of the
annual meeting was made, whichever first occurs.
Any stockholder interested in making a proposal is referred to Article II,
Section 11 of the Company's Amended and Restated By-Laws.
OTHER MATTERS
Management does not know of any matters other than the foregoing that will
be presented for consideration at the Annual Meeting. However, if other
matters properly come before the Annual Meeting, it is the intention of the
persons named in the enclosed proxy card to take such action as is in the best
interests of the Company and its stockholders.
23
The entire cost of soliciting proxies from its stockholders will be borne by
the Company. In addition to the use of the mails, proxies may be solicited by
personal interview, telephone or telegram by Directors, officers or regular
employees of the Company, who will not receive additional compensation for
such solicitation but may be reimbursed for reasonable out-of-pocket expenses
incurred in connection therewith. The Company has retained MacKenzie Partners,
Inc., a proxy soliciting firm, to assist in the solicitation of proxies and
will pay such firm a fee, estimated not to exceed $15,000 plus reimbursement
of reasonable out-of-pocket expenses, which are not expected to exceed
$15,000. Arrangements may also be made with brokerage firms and other
custodians, nominees and fiduciaries to forward proxy solicitation materials
to the beneficial owners of shares of Common Stock held of record by such
persons, in which case the Company will reimburse such brokerage firms,
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred by them in connection therewith.
The Company will provide to any stockholder of record and beneficial owners
at the close of business on May 7, 1996, without charge upon written request
to its Secretary at Mississippi Avenue and The Boardwalk, Atlantic City, New
Jersey 08401, a copy of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995.
The principal executive offices of the Company are located at Mississippi
Avenue and The Boardwalk, Atlantic City, New Jersey 08401, and the Company's
telephone number is (609) 441-6060.
By order of the Board of Directors,
Robert M. Pickus
Secretary
24
AMENDMENT NO. 1 TO THE
TRUMP HOTELS & CASINO RESORTS, INC.
1995 STOCK INCENTIVE PLAN
WHEREAS, Section 16 of the Trump Hotels & Casino Resorts, Inc. (the
"Company") 1995 Stock Incentive Plan (the "Plan") authorizes the Stock Incentive
Plan Committee (the "Committee") of the Board of Directors of the Company (the
"Board") to amend the Plan; and
WHEREAS, the Committee has authorized the amendment of the Plan to
increase the number of shares of common stock of the Company, par value $0.01
per share (the "Common Stock"), available for issuance thereunder from 1,000,000
to 4,000,000 shares of Common Stock, subject to stockholder approval; and
WHEREAS, the Committee has instructed the officers of the Company to
so amend the Plan upon such stockholder approval;
NOW, THEREFORE, subject to approval by the stockholders of the
Company, the Plan is hereby amended as follows:
1. Section 5(a) of the Plan is hereby deleted in its entirety and the
following inserted in lieu thereof:
"(a) Subject to Section 13, the aggregate number of shares of Stock
made subject to all Awards may not exceed 4,000,000;"
* * *
As adopted by the Stock Incentive Plan Committee of the Board of Directors of
Trump Hotels & Casino Resorts, Inc. as of May 10, 1996.
________________________
TRUMP HOTELS & CASINO RESORTS, INC.
1995 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of the Plan is to provide a means through which the
Company and its Subsidiaries and Affiliates may attract able persons to enter
and remain in the employ of the Company and its Subsidiaries and Affiliates and
to provide a means whereby employees, directors and consultants of the Company
and its Subsidiaries and Affiliates can acquire and maintain Common Stock
ownership, or be paid incentive compensation measured by reference to the value
of Common Stock, thereby strengthening their commitment to the welfare of the
Company and its Subsidiaries and Affiliates and promoting an identity of
interest between stockholders and these employees.
So that the appropriate incentive can be provided, the Plan provides
for granting Incentive Stock Options, Nonqualified Stock Options, Stock
Appreciation Rights, Restricted Stock Awards, Phantom Stock Unit Awards,
Performance Share Unit Awards and Stock Bonus Awards, or any combination of the
foregoing.
2. DEFINITIONS
The following definitions shall be applicable throughout the Plan.
(a) "Affiliate" means any affiliate of the Company within the meaning
of 17 CFR (S) 230.405.
(b) "Award" means, individually or collectively, any Incentive Stock
Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock
Award, Phantom Stock Unit Award, Performance Share Unit Award or Stock Bonus
Award.
(c) "Award Period" means a period of time within which performance is
measured for the purpose of determining whether an Award of Performance Share
Units has been earned.
(d) "Board" means the Board of Directors of the Company.
(e) "Cause" means the Company, a Subsidiary or Affiliate having cause
to terminate a Participant's employment or service under any existing
employment, consulting or any other agreement between the Participant and the
Company or a Subsidiary or Affiliate or, in the absence of such an employment,
consulting or other agreement, upon (i) the determination by the Committee that
the Participant has ceased to perform his duties to the Company, a Subsidiary or
Affiliate (other than as a result of his incapacity due to physical or mental
illness or injury), which failure amounts to an intentional and extended neglect
of his
duties to such party, (ii) the Committee's determination that the Participant
has engaged or is about to engage in conduct materially injurious to the
Company, a Subsidiary or Affiliate or (iii) the Participant having been
convicted of a felony.
(f) "Change in Control" shall, unless the Board otherwise directs by
resolution adopted prior thereto or, in the case of a particular award, the
applicable Award agreement states otherwise, be deemed to occur if (i) any
"person" (as that term is used in Sections 13 and 14(d)(2) of the Exchange Act)
other than a Permitted Holder (as defined below) is or becomes the beneficial
owner (as that term is used in Section 13(d) of the Exchange Act), directly or
indirectly, of 30% or more of either the outstanding shares of Common Stock or
the combined voting power of the Company's then outstanding voting securities
entitled to vote generally, (ii) during any period of two consecutive years
beginning on the date of the consummation of the IPO, individuals who constitute
the Board at the beginning of such period cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for election by
the Company's shareholders of each new director was approved by a vote of at
least three-quarters of the directors then still in office who were directors at
the beginning of the period or (iii) the Company undergoes a liquidation or
dissolution or a sale of all or substantially all of the assets of the Company.
Neither the IPO nor any merger, consolidation or corporate reorganization in
which the owners of the combined voting power of the Company's then outstanding
voting securities entitled to vote generally prior to said combination, own 50%
or more of the resulting entity's outstanding voting securities shall, by
itself, be considered a Change in Control. As used herein, "Permitted Holder"
means Donald J. Trump or any of his affiliates (as such term is defined in Rule
1-02 of Regulation S-X under the Securities Act).
(g) "Code" means the Internal Revenue Code of 1986, as amended. Reference
in the Plan to any section of the Code shall be deemed to include any amendments
or successor provisions to such section and any regulations under such section.
(h) "Committee" means the Compensation Committee of the Board or such other
committee of at least two people as the Board may appoint to administer the
Plan.
(i) "Common Stock" means the common stock par value $0.01 per share, of the
Company.
(j) "Company" means Trump Hotels & Casino Resorts, Inc.
(k) "Date of Grant" means the date on which the granting of an Award is
authorized or such other date as may be specified in such authorization.
2
(l) "Disability" means disability as defined in the long-term disability
plan of the Company, a Subsidiary or Affiliate, as may be applicable to the
Participant in question, or, in the absence of such a plan, the complete and
permanent inability by reason of illness or accident to perform the duties of
the occupation at which a Participant was employed or served when such
disability commenced or, if the Participant was retired when such disability
commenced, the inability to engage in any substantial gainful activity, in
either case as determined by the Committee based upon medical evidence
acceptable to it.
(m) "Disinterested Person" means a person who is (i) a "disinterested
person" within the meaning of Rule 16b-3 under the Exchange Act, or any
successor rule or regulation and (ii) an "outside director" within the meaning
of Section 162(m) of the Code; provided, however, that clause (ii) shall apply
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only with respect to grants of Awards with respect to which the Company's tax
deduction could be limited by Section 162(m) of the Code if such clause did not
apply.
(n) "Eligible Person" means any (i) person regularly employed by the
Company, a Subsidiary or Affiliate who satisfies all of the requirements of
Section 6; provided, however, that no such employee covered by a collective
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bargaining agreement shall be an Eligible Person unless and to the extent that
such eligibility is set forth in such collective bargaining agreement or in an
agreement or instrument relating thereto; (ii) director of the Company, a
Subsidiary or Affiliate; or (iii) consultant to the Company, a Subsidiary or
Affiliate.
(o) "Exchange Act" means the Securities Exchange Act of 1934.
(p) "Fair Market Value" on a given date means (i) if the Stock is listed on
a national securities exchange, the mean between the highest and lowest sale
prices reported as having occurred on the primary exchange with which the Stock
is listed and traded on the date prior to such date, or, if there is no such
sale on that date, then on the last preceding date on which such a sale was
reported; (ii) if the Stock is not listed on any national securities exchange
but is quoted in the National Market System of the National Association of
Securities Dealers Automated Quotation System on a last sale basis, the average
between the high bid price and low ask price reported on the date prior to such
date, or, if there is no such sale on that date, then on the last preceding date
on which a sale was reported; (iii) if the Stock is not listed on a national
securities exchange nor quoted in the National Market System of the National
Association of Securities Dealers Automated Quotation System on a last sale
basis, the amount determined by the Committee to be the fair market value based
upon a good faith attempt to value the
3
Stock accurately and computed in accordance with applicable regulations of the
Internal Revenue Service; or (iv) notwithstanding clauses (i) - (iii) above,
with respect to Awards granted as of the consummation of the IPO, the price at
which Stock is sold to the public in the IPO.
(q) "Holder" means a Participant who has been granted an Award.
(r) "Incentive Stock Option" means an Option granted by the Committee to a
Participant under the Plan which is designated by the Committee as an Incentive
Stock Option pursuant to Section 422 of the Code.
(s) "Interest Portion" has the meaning ascribed thereto in Section 9(g).
(t) "IPO" means the initial offering of Common Stock to the public through
an effective registration statement.
(u) "Nonqualified Stock Option" means an Option granted by the Committee to
a Participant under the Plan which is not designated by the Committee as an
Incentive Stock Option.
(v) "Normal Termination" means termination of employment or service with
the Company and all Subsidiaries and Affiliates:
(i) Upon retirement pursuant to the retirement plan of the Company,
a Subsidiary or Affiliate, as may be applicable at the time to
the Participant in question;
(ii) On account of Disability;
(iii) With the written approval of the Committee; or
(iv) By the Company, a Subsidiary or Affiliate without Cause.
(w) "Option" means an Award granted under Section 7 of the Plan.
(x) "Option Period" means the period described in Section 7(c).
(y) "Option Price" means the exercise price set for an Option described in
Section 7(a).
(z) "Participant" means an Eligible Person who has been selected by the
Committee to participate in the Plan and to receive an Award pursuant to
Section 6.
4
(aa) "Performance Goals" means the performance objectives of the Company, a
Subsidiary or Affiliate during an Award Period or Restricted Period established
for the purpose of determining whether, and to what extent, Awards will be
earned for an Award Period or Restricted Period.
(bb) "Performance Share Unit" means a hypothetical investment equivalent
equal to one share of Stock granted in connection with an Award made under
Section 9 of the Plan.
(cc) Phantom Stock Unit" means a hypothetical investment equivalent equal
to one share of Stock granted in connection with an Award made under Section 10
of the Plan, or credited with respect to Awards of Performance Share Units which
have been deferred under Section 9.
(dd) "Phantom Stock Unit Portion" has the meaning ascribed thereto in
Section 9(g).
(ee) "Plan" means the Company's 1995 Stock Incentive Plan.
(ff) "Restricted Period" means, with respect to any share of Restricted
Stock or any Phantom Stock Unit, the period of time determined by the Committee
during which such Award is subject to the restrictions set forth in Section 10.
(gg) "Restricted Stock" means shares of Stock issued or transferred to a
Participant subject to forfeiture and the other restrictions set forth in
Section 10.
(hh) "Restricted Stock Award" means an Award of Restricted Stock granted
under Section 10 of the Plan.
(ii) Securities Act" means the Securities Act of 1933, as amended.
(jj) "Stock" means the Common Stock or such other authorized shares of
stock of the Company as the Committee may from time to time authorize for use
under the Plan.
(kk) "Stock Appreciation Right" or "SAR" means an Award granted under
Section 8 of the Plan.
(ll) Stock Bonus" means an Award granted under Section 11 of the Plan.
(mm) "Stock Option Agreement" means the agreement between the Company and a
Participant who has been granted an Option pursuant to Section 7 which defines
the rights and obligations of the parties as required in Section 7(d).
5
(nn) "Subsidiary" means any subsidiary of the Company as defined in Section
424(f) of the Code.
(oo) "Valuation Date" means the last day of an Award Period or the date of
death of a Participant, as applicable.
(pp) "Vested Unit" shall have the meaning ascribed thereto in Section
10(e).
3. EFFECTIVE DATE, DURATION AND SHAREHOLDER APPROVAL
The Plan is effective as of June 5, 1995, the date of adoption of the Plan
by the Board. The effectiveness of the Plan and the validity of any and all
Awards granted pursuant to the Plan is contingent upon approval of the Plan by
the stockholders of the Company in a manner which complies with Rule 16b-3
promulgated pursuant to the Exchange Act and 422(b)(1) of the Code. Unless and
until the stockholders approve the Plan in compliance therewith, no Award
granted under the Plan shall be effective. See Section 17 for the applicability
of the shareholder approval requirements of Section 162(m) of the Code.
The expiration date of the Plan, after which no Awards may be granted
hereunder, shall be June 5, 2005; provided, however, that the administration of
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the Plan shall continue in effect until all matters relating to the payment of
Awards previously granted have been settled.
4. ADMINISTRATION
The Committee shall administer the Plan. Each member of the Committee
shall, at the time he takes any action with respect to an Award under the Plan,
be a Disinterested Person. The majority of the members 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 or acts approved in writing by a majority
of the Committee shall be deemed the acts of the Committee.
Subject to the provisions of the Plan, the Committee shall have exclusive
power to:
(a) Select the Eligible Persons to participate in the Plan;
(b) Determine the nature and extent of the Awards to be made to each
Participant;
(c) Determine the time or times when Awards will be made;
(d) Determine the duration of each Award Period and Restricted Period;
6
(e) Determine the conditions to which the payment of Awards may be subject;
(f) Establish the Performance Goals for each Award Period;
(g) Prescribe the form of Stock Option Agreement or other form or forms
evidencing Awards; and
(h) Cause records to be established in which there shall be entered, from
time to time as Awards are made to Participants, the date of each Award, the
number of Incentive Stock Options, Nonqualified Stock Options, SARs, Phantom
Stock Units, Performance Share Units, shares of Restricted Stock and Stock
Bonuses awarded by the Committee to each Participant, the expiration date, the
Award Period and the duration of any applicable Restricted Period.
The Committee shall have the authority, subject to the provisions of the
Plan, to establish, adopt, or revise such rules and regulations and to make all
such determinations relating to the Plan as it may deem necessary or advisable
for the administration of the Plan. The Committee's interpretation of the Plan
or any documents evidencing Awards granted pursuant thereto and all decisions
and determinations by the Committee with respect to the Plan shall be final,
binding, and conclusive on all parties unless otherwise determined by the Board.
5. GRANT OF AWARDS; SHARES SUBJECT TO THE PLAN
The Committee may, from time to time, grant Awards of Options, Stock
Appreciation Rights, Restricted Stock, Phantom Stock Units, Performance Share
Units and/or Stock Bonuses to one or more Participants; provided, however, that:
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(a) Subject to Section 13, the aggregate number of shares of Stock
made subject to all Awards may not exceed 1,000,000;
(b) Such shares shall be deemed to have been used in payment of Awards
whether they are actually delivered or the Fair Market Value equivalent of
such shares is paid in cash. In the event any Option, SAR not attached to
an Option, Restricted Stock, Phantom Stock Unit or Performance Share Unit
shall be surrendered, terminate, expire, or be forfeited, the number of
shares of Stock no longer subject thereto shall thereupon be released and
shall thereafter be available for new Awards under the Plan to the fullest
extent permitted by Rule 16b-3 under the Exchange Act (if applicable at the
time);
(c) Stock delivered by the Company in settlement of Awards under the
Plan may be authorized and unissued Stock
7
or Stock held in the treasury of the Company or may be purchased on the
open market or by private purchase; and
(d) Following the date that the exemption from the application of
Section 162(m) of the Code described in Section 17 (or any other exemption
having similar effect) ceases to apply to Awards, no person may be granted
Options or SARs under the Plan with respect to more than 500,000 shares of
Stock in any one year.
6. ELIGIBILITY
Participation shall be limited to Eligible Persons who have received
written notification from the Committee, or from a person designated by the
Committee, that they have been selected to participate in the Plan.
7. STOCK OPTIONS
The Committee is authorized to grant one or more Incentive Stock Options or
Nonqualified Stock Options to any Participant; provided, however, that no
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Incentive Stock Options shall be granted to any Participant who is not an
employee of the Company or a Subsidiary. Each Option so granted shall be
subject to the following conditions, or to such other conditions as may be
reflected in the applicable Stock Option Agreement.
(a) OPTION PRICE. The exercise price ("Option Price") per share of Stock
for each Option shall be set by the Committee at the time of grant but shall not
be less than (i) in the case of an Incentive Stock Option, and subject to
Section 7(e), the Fair Market Value of a share of Stock at the Date of Grant,
and (ii) in the case of a Non-Qualified Stock Option, the par value per share of
Stock; provided, however, that following the date that the exemption from the
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application of Section 162(m) of the Code described in Section 17 (or any other
exemption having similar effect) ceases to apply to Options, all Options
intended to qualify as "performance-based compensation" under Section 162(m) of
the Code shall have an Option Price per share of Stock no less than the Fair
Market Value of a share of Stock on the Date of Grant.
(b) MANNER OF EXERCISE AND FORM OF PAYMENT. Options which have become
exercisable may be exercised by delivery of written notice of exercise to the
Committee accompanied by payment of the Option Price. The Option Price shall be
payable in cash and/or shares of Stock valued at the Fair Market Value at the
time the Option is exercised or, in the discretion of the Committee, either (i)
in other property having a fair market value on the date of exercise equal to
the Option Price, or (ii) by delivering to the Committee a copy of irrevocable
instructions to a
8
stockbroker to deliver promptly to the Company an amount of sale or loan
proceeds sufficient to pay the Option Price.
(c) OPTION PERIOD AND EXPIRATION. Options shall vest and become
exercisable in such manner and on such date or dates determined by the Committee
and shall expire after such period, not to exceed ten years, as may be
determined by the Committee (the "Option Period"); provided, however, that
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notwithstanding any vesting dates set by the Committee, the Committee may in its
sole discretion accelerate the exercisability of any Option, which acceleration
shall not affect the terms and conditions of any such Option other than with
respect to exercisability. If an Option is exercisable in installments, such
installments or portions thereof which become exercisable shall remain
exercisable until the Option expires. Unless otherwise stated in the applicable
Option Agreement, the Option shall expire earlier than the end of the Option
Period in the following circumstances:
(i) If prior to the end of the Option Period, the Holder shall undergo
a Normal Termination, the Option shall expire on the earlier of the last day of
the Option Period or the date that is three months after the date of such Normal
Termination. In such event, the Option shall remain exercisable by the Holder
until its expiration, only to the extent the Option was exercisable at the time
of such Normal Termination.
(ii) If the Holder dies prior to the end of the Option Period and
while still in the employ or service of the Company, a Subsidiary or Affiliate,
or within three months of Normal Termination, the Option shall expire on the
earlier of the last day of the Option Period or the date that is twelve months
after the date of death of the Holder. In such event, the Option shall remain
exercisable by the person or persons to whom the Holder's rights under the
Option pass by will or the applicable laws of descent and distribution until its
expiration, only to the extent the Option was exercisable by the Holder at the
time of death.
(iii) If the Holder ceases employment or service with the Company and
all Subsidiaries and Affiliates for reasons other than Normal Termination or
death, the Option shall expire immediately upon such cessation of employment or
service.
(d) STOCK OPTION AGREEMENT - OTHER TERMS AND CONDITIONS. Each Option
granted under the Plan shall be evidenced by a Stock Option Agreement, which
shall contain such provisions as may be determined by the Committee and, except
as may be specifically stated otherwise in such Stock Option Agreement, which
shall be subject to the following terms and conditions:
(i) Each Option or portion thereof that is exercisable shall be
exercisable for the full amount or for any part thereof.
9
(ii) Each share of Stock purchased through the exercise of an
Option shall be paid for in full at the time of the exercise. Each Option
shall cease to be exercisable, as to any share of Stock, when the Holder
purchases the share or exercises a related SAR or when the Option expires.
(iii) Subject to Section 12(k), Options shall not be transferable
by the Holder except by will or the laws of descent and distribution and
shall be exercisable during the Holder's lifetime only by him.
(iv) Each Option shall vest and become exercisable by the Holder in
accordance with the vesting schedule established by the Committee and set
forth in the Stock Option Agreement.
(v) Each Stock Option Agreement may contain a provision that, upon
demand by the Committee for such a representation, the Holder shall deliver
to the Committee at the time of any exercise of an Option a written
representation that the shares to be acquired upon such exercise are to be
acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such representation
prior to the delivery of any shares issued upon exercise of an Option shall
be a condition precedent to the right of the Holder or such other person to
purchase any shares. In the event certificates for Stock are delivered
under the Plan with respect to which such investment representation has
been obtained, the Committee may cause a legend or legends to be placed on
such certificates to make appropriate reference to such representation and
to restrict transfer in the absence of compliance with applicable federal
or state securities laws.
(vi) Each Incentive Stock Option Agreement shall contain a provision
requiring the Holder to notify the Company in writing immediately after the
Holder makes a disqualifying disposition of any Stock acquired pursuant to
the exercise of such Incentive Stock Option. A disqualifying disposition
is any disposition (including any sale) of such Stock before the later of
(a) two years after the Date of Grant of the Incentive Stock Option or (b)
one year after the date the Holder acquired the Stock by exercising the
Incentive Stock Option.
(e) INCENTIVE STOCK OPTION GRANTS TO 10% STOCKHOLDERS. Notwithstanding
anything to the contrary in this Section 7, if an Incentive Stock Option is
granted to a Holder who owns stock representing more than ten percent of the
voting power of all classes of stock of the Company or of a Subsidiary, the
Option
10
Period shall not exceed five years from the Date of Grant of such Option
and the Option Price shall be at least 110 percent of the Fair Market Value (on
the Date of Grant) of the Stock subject to the Option.
(f) $100,000 PER YEAR LIMITATION FOR INCENTIVE STOCK OPTIONS. To the
extent the aggregate Fair Market Value (determined as of the Date of Grant) of
Stock for which Incentive Stock Options are exercisable for the first time by
any Participant during any calendar year (under all plans of the Company and its
Subsidiaries) exceeds $100,000, such excess Incentive Stock Options shall be
treated as Nonqualified Stock Options.
(g) VOLUNTARY SURRENDER. The Committee may permit the voluntary surrender
of all or any portion of any Nonqualified Stock Option and its corresponding
SAR, if any, granted under the Plan to be conditioned upon the granting to the
Holder of a new Option for the same or a different number of shares as the
Option surrendered or require such voluntary surrender as a condition precedent
to a grant of a new Option to such Participant. Such new Option shall be
exercisable at an Option Price, during an Option Period, and in accordance with
any other terms or conditions specified by the Committee at the time the new
Option is granted, all determined in accordance with the provisions of the Plan
without regard to the Option Price, Option Period, or any other terms and
conditions of the Nonqualified Stock Option surrendered.
8. STOCK APPRECIATION RIGHTS
Any Option granted under the Plan may include SARs, either at the Date of
Grant or, except in the case of an Incentive Stock Option, by subsequent
amendment. The Committee also may award SARs to Participants independent of any
Option. An SAR shall be subject to such terms and conditions not inconsistent
with the Plan as the Committee shall impose, including, but not limited to, the
following:
(a) VESTING. SARs granted in connection with an Option shall become
exercisable, be transferable and shall expire according to the same vesting
schedule, transferability rules and expiration provisions as the corresponding
Option. An SAR granted independent of an Option shall become exercisable, be
transferable and shall expire in accordance with a vesting schedule,
transferability rules and expiration provisions as established by the Committee
and reflected in an Award agreement. Notwithstanding the above, an SAR shall
not be exercisable by a person subject to Section 16(b) of the Exchange Act for
at least six months following the Date of Grant.
11
(b) AUTOMATIC EXERCISE. If on the last day of the Option Period (or in the
case of an SAR independent of an Option, the period established by the Committee
after which the SAR shall expire), the Fair Market Value of the Stock exceeds
the Option Price (or in the case of an SAR granted independent of an Option, the
Fair Market Value of the Stock on the Date of Grant), the Holder has not
exercised the SAR or the corresponding Option, and neither the SAR nor the
corresponding Option has expired, such SAR shall be deemed to have been
exercised by the Holder on such last day and the Company shall make the
appropriate payment therefor.
(c) PAYMENT. Upon the exercise of an SAR, the Company shall pay to the
Holder an amount equal to the number of shares subject to the SAR multiplied by
the excess, if any, of the Fair Market Value of one share of Stock on the
exercise date over the Option Price, in the case of an SAR granted in connection
with an Option, or the Fair Market Value of one share of Stock on the Date of
Grant, in the case of an SAR granted independent of an Option. With respect to
SARs exercised before the Company has been subject to the reporting requirements
of Section 13(a) of the Exchange Act for one year, the Company shall issue or
transfer to the Participant shares of Stock with a Fair Market Value at such
time equal to 100 percent of any such excess. With respect to SARs exercised
after the Company has been subject to such reporting requirements for at least
one year, the Company shall pay such excess in cash, in shares of Stock valued
at Fair Market Value, or any combination thereof, as determined by the
Committee. Fractional shares shall be settled in cash.
(d) METHOD OF EXERCISE. A Participant may exercise an SAR at such time or
times as may be determined by the Committee at the time of grant by filing an
irrevocable written notice with the Committee or its designee, specifying the
number of SARs to be exercised, and the date on which such SARs were awarded.
Such time or times determined by the Committee may take into account any
applicable "window periods" required by Rule 16b-3 under the Exchange Act.
(e) EXPIRATION. Except as otherwise provided in the case of SARs granted
in connection with Options, an SAR shall expire on a date designated by the
Committee which is not later than ten years after the Date of Grant of the SAR.
9. PERFORMANCE SHARES
(a) AWARD GRANTS. The Committee is authorized to establish Performance
Share programs to be effective over designated Award Periods determined by the
Committee. At the beginning of each Award Period, the Committee will establish
in writing Performance Goals based upon financial objectives for the Company for
such Award Period and a schedule relating the accomplishment of the
12
Performance Goals to the Awards to be earned by Participants. Performance Goals
may include absolute or relative growth in earnings per share or rate of return
on stockholders' equity or other measurement of corporate performance and may be
determined on an individual basis or by categories of Participants. The
Committee shall determine the number of Performance Share Units to be awarded,
if any, to each Participant who is selected to receive such an Award. The
Committee may add new Participants to a Performance Share program after its
commencement by making pro rata grants.
(b) DETERMINATION OF AWARD. At the completion of a Performance Share
Award Period, or at other times as specified by the Committee, the Committee
shall calculate the number of shares of Stock earned with respect to each
Participant's Performance Share Unit Award by multiplying the number of
Performance Share Units granted to the Participant by a performance factor
representing the degree of attainment of the Performance Goals.
(c) PARTIAL AWARDS. A Participant for less than a full Award Period,
whether by reason of commencement or termination of employment or otherwise,
shall receive such portion of an Award, if any, for that Award Period as the
Committee shall determine.
(d) PAYMENT OF PERFORMANCE SHARE UNIT AWARDS. Performance Share Unit
Awards shall be payable in that number of shares of Stock determined in
accordance with Section 9(b); provided, however, that, at its discretion, the
-------- -------
Committee may make payment to any Participant in the form of cash upon the
specific request of such Participant. The amount of any payment made in cash
shall be based upon the Fair Market Value of the Stock on the day prior to
payment. Payments of Performance Share Unit Awards shall be made as soon as
practicable after the completion of an Award Period.
(e) ADJUSTMENT OF PERFORMANCE GOALS. The Committee may, during the Award
Period, make such adjustments to Performance Goals as it may deem appropriate,
to compensate for, or reflect, (i) extraordinary or non-recurring events
experienced during an Award Period by the Company or by any other corporation
whose performance is relevant to the determination of whether Performance Goals
have been attained; (ii) any significant changes that may have occurred during
such Award Period in applicable accounting rules or principles or changes in the
Company's method of accounting or in that of any other corporation whose
performance is relevant to the determination of whether an Award has been earned
or (iii) any significant changes that may have occurred during such Award Period
in tax laws or other laws or regulations that alter or affect the computation of
the measures of Performance Goals used for the calculation of Awards; provided,
--------
however, that following the date that the exemption from the application of
- - -------
Section 162(m) of the Code
13
described in Section 17 (or any other exemption having similar effect) ceases to
apply to Performance Share Unit Awards, with respect to such Awards intended to
qualify as "performance-based compensation" under Section 162(m) of the Code,
such adjustment shall be made only to the extent that the Committee determines
that such adjustments may be made without a loss of deductibility for such Award
under Section 162(m) of the Code.
10. RESTRICTED STOCK AWARDS AND PHANTOM STOCK UNITS
(a) AWARD OF RESTRICTED STOCK AND PHANTOM STOCK UNITS.
(i) The Committee shall have the authority (1) to grant Restricted
Stock and Phantom Stock Unit Awards, (2) to issue or transfer Restricted
Stock to Participants, and (3) to establish terms, conditions and
restrictions applicable to such Restricted Stock and Phantom Stock Units,
including the Restricted Period, which may differ with respect to each
grantee, the time or times at which Restricted Stock or Phantom Stock Units
shall be granted or become vested and the number of shares or units to be
covered by each grant.
(ii) The Holder of a Restricted Stock Award shall execute and
deliver to the Company an Award agreement with respect to the Restricted
Stock setting forth the restrictions applicable to such Restricted Stock.
If the Committee determines that the Restricted Stock shall be held in
escrow rather than delivered to the Holder pending the release of the
applicable restrictions, the Holder additionally shall execute and deliver
to the Company (i) an escrow agreement satisfactory to the Committee, and
(ii) the appropriate blank stock powers with respect to the Restricted
Stock covered by such agreements. If a Participant shall fail to execute a
Restricted Stock agreement and, if applicable, an escrow agreement and
stock powers, the Award shall be null and void. Subject to the
restrictions set forth in Section 10(b), the Holder shall generally have
the rights and privileges of a stockholder as to such Restricted Stock,
including the right to vote such Restricted Stock. At the discretion of
the Committee, cash dividends and stock dividends with respect to the
Restricted Stock may be either currently paid to the Holder or withheld by
the Company for the Holder's account, and interest may be paid on the
amount of cash dividends withheld at a rate and subject to such terms as
determined by the Committee. Cash dividends or stock dividends so withheld
by the Committee shall not be subject to forfeiture.
(iii) Upon the Award of Restricted Stock, the Committee shall
cause a stock certificate registered in the name of the Holder to be issued
and, if it so determines, deposited together with the stock powers with an
escrow
14
agent designated by the Committee. If an escrow arrangement is used, the
Committee shall cause the escrow agent to issue to the Holder a receipt
evidencing any stock certificate held by it registered in the name of the
Holder.
(iv) The terms and conditions of a grant of Phantom Stock Units
shall be reflected in a written Award agreement. No shares of Stock shall
be issued at the time a Phantom Stock Unit Award is made, and the Company
will not be required to set aside a fund for the payment of any such Award.
Holders of Phantom Stock Units shall receive an amount equal to the cash
dividends paid by the Company upon one share of Stock for each Phantom
Stock Unit then credited to such Holder's account ("Dividend Equivalents").
The Committee shall, in its sole discretion, determine whether to credit to
the account of, or to currently pay to, each Holder of an Award of Phantom
Stock Units such Dividend Equivalents. Dividend Equivalents credited to a
Holder's account shall be subject to forfeiture on the same basis as the
related Phantom Stock Units, and may bear interest at a rate and subject to
such terms as are determined by the Committee.
(b) RESTRICTIONS.
(i) Restricted Stock awarded to a Participant shall be subject to the
following restrictions until the expiration of the Restricted Period, and
to such other terms and conditions as may be set forth in the applicable
Award agreement: (1) if an escrow arrangement is used, the Holder shall not
be entitled to delivery of the stock certificate; (2) the shares shall be
subject to the restrictions on transferability set forth in the Award
agreement; (3) the shares shall be subject to forfeiture to the extent
provided in subparagraph (d) and the Award Agreement and, to the extent
such shares are forfeited, the stock certificates shall be returned to the
Company, and all rights of the Holder to such shares and as a shareholder
shall terminate without further obligation on the part of the Company.
(ii) Phantom Stock Units awarded to any Participant shall be
subject to (1) forfeiture until the expiration of the Restricted Period, to
the extent provided in subparagraph (d) and the Award agreement, and to the
extent such Awards are forfeited, all rights of the Holder to such Awards
shall terminate without further obligation on the part of the Company and
(2) such other terms and conditions as may be set forth in the applicable
Award agreement.
(iii) The Committee shall have the authority to remove any or all
of the restrictions on the Restricted Stock and Phantom Stock Units
whenever it may determine that, by
15
reason of changes in applicable laws or other changes in circumstances
arising after the date of the Restricted Stock Award or Phantom Stock
Award, such action is appropriate.
(c) RESTRICTED PERIOD. The Restricted Period of Restricted Stock and
Phantom Stock Units shall commence on the Date of Grant and shall expire from
time to time as to that part of the Restricted Stock and Phantom Stock Units
indicated in a schedule established by the Committee.
(d) FORFEITURE PROVISIONS. Except to the extent determined by the
Committee and reflected in the underlying Award agreement, in the event a Holder
terminates employment with the Company and all Subsidiaries and Affiliates
during a Restricted Period, that portion of the Award with respect to which
restrictions have not expired ("Non-Vested Portion") shall be treated as
follows.
(i) Upon the voluntary resignation of a Participant or discharge by the
Company, a Subsidiary or Affiliate for Cause, the Non-Vested
Portion of the Award shall be completely forfeited.
(ii) Upon Normal Termination, the Non-Vested Portion of the Award shall
be prorated for service during the Restricted Period and shall be
received as soon as practicable following termination.
(iii) Upon death, the Non-Vested Portion of the Award shall be prorated
for service during the Restricted Period and paid to the
Participant's beneficiary as soon as practicable following death.
(e) DELIVERY OF RESTRICTED STOCK AND SETTLEMENT OF PHANTOM STOCK UNITS.
Upon the expiration of the Restricted Period with respect to any shares of Stock
covered by a Restricted Stock Award, the restrictions set forth in Section 10(b)
and the Award agreement shall be of no further force or effect with respect to
shares of Restricted Stock which have not then been forfeited. If an escrow
arrangement is used, upon such expiration, the Company shall deliver to the
Holder, or his beneficiary, without charge, the stock certificate evidencing the
shares of Restricted Stock which have not then been forfeited and with respect
to which the Restricted Period has expired (to the nearest full share) and any
cash dividends or stock dividends credited to the Holder's account with respect
to such Restricted Stock and the interest thereon, if any.
Upon the expiration of the Restricted Period with respect to any Phantom
Stock Units covered by a Phantom Stock Unit Award, the Company shall deliver to
the Holder, or his beneficiary, without charge, one share of Stock for each
Phantom Stock Unit which has not then been forfeited and with respect to which
the
16
Restricted Period has expired ("Vested Unit") and cash equal to any Dividend
Equivalents credited with respect to each such Vested Unit and the interest
thereon, if any; provided, however, that, if so noted in the applicable Award
-------- -------
agreement, the Committee may, in its sole discretion, elect to pay cash or part
cash and part Stock in lieu of delivering only Stock for Vested Units. If cash
payment is made in lieu of delivering Stock, the amount of such payment shall be
equal to the Fair Market Value of the Stock as of the date on which the
Restricted Period lapsed with respect to such Vested Unit.
(f) STOCK RESTRICTIONS. Each certificate representing Restricted Stock
awarded under the Plan shall bear the following legend until the end of the
Restricted Period with respect to such Stock:
"Transfer of this certificate and the shares represented hereby is
restricted pursuant to the terms of a Restricted Stock Agreement, dated as
of _________, between Trump Hotels & Casino Resorts, Inc. and
___________________. A copy of such Agreement is on file at the offices of
the Company at 725 Fifth Avenue, New York, New York 10022."
Stop transfer orders shall be entered with the Company's transfer agent and
registrar against the transfer of legended securities.
11. STOCK BONUS AWARDS
The Committee may issue unrestricted Stock under the Plan, alone or in
tandem with other Awards, in such amounts and subject to such terms and
conditions as the Committee shall from time to time in its sole discretion
determine. Stock Bonus Awards under the Plan shall be granted as, or in payment
of, a bonus, or to provide incentives or recognize special achievements or
contributions.
12. GENERAL
(a) ADDITIONAL PROVISIONS OF AN AWARD. Awards under the Plan also may be
subject to such other provisions (whether or not applicable to the benefit
awarded to any other Participant) as the Committee determines appropriate
including, without limitation, provisions to assist the Participant in financing
the purchase of Stock upon the exercise of Options, provisions for the
forfeiture of or restrictions on resale or other disposition of shares of Stock
acquired under any Award, provisions giving the Company the right to repurchase
shares of Stock acquired under any Award in the event the Participant elects to
dispose of such shares, and provisions to comply with Federal and state
securities laws and Federal and state tax withholding requirements. Any such
provisions shall be reflected in the applicable Award agreement.
17
(b) PRIVILEGES OF STOCK OWNERSHIP. Except as otherwise specifically
provided in the Plan, no person shall be entitled to the privileges of stock
ownership in respect of shares of Stock which are subject to Awards hereunder
until such shares have been issued to that person.
(c) GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to
make payment of Awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by governmental agencies as
may be required. Notwithstanding any terms or conditions of any Award to the
contrary, the Company shall be under no obligation to offer to sell or to sell
and shall be prohibited from offering to sell or selling any shares of Stock
pursuant to an Award unless such shares have been properly registered for sale
pursuant to the Securities Act with the Securities and Exchange Commission or
unless the Company has received an opinion of counsel, satisfactory to the
Company, that such shares may be offered or sold without such registration
pursuant to an available exemption therefrom and the terms and conditions of
such exemption have been fully complied with. The Company shall be under no
obligation to register for sale under the Securities Act any of the shares of
Stock to be offered or sold under the Plan. If the shares of Stock offered for
sale or sold under the Plan are offered or sold pursuant to an exemption from
registration under the Securities Act, the Company may restrict the transfer of
such shares and may legend the Stock certificates representing such shares in
such manner as it deems advisable to ensure the availability of any such
exemption.
(d) TAX WITHHOLDING. Notwithstanding any other provision of the Plan, the
Company, a Subsidiary or an Affiliate, as appropriate, shall have the right to
deduct from all Awards cash and/or Stock, valued at Fair Market Value on the
date of payment, in an amount necessary to satisfy all Federal, state or local
taxes as required by law to be withheld with respect to such Awards and, in the
case of Awards paid in Stock, the Holder or other person receiving such Stock
may be required to pay to the Company or a Subsidiary, as appropriate, prior to
delivery of such Stock, the amount of any such taxes which the Company or
Subsidiary is required to withhold, if any, with respect to such Stock. Subject
in particular cases to the disapproval of the Committee, the Company may accept
shares of Stock of equivalent Fair Market Value in payment of such withholding
tax obligations if the Holder of the Award elects to make payment in such manner
and, with respect to a Holder subject to Section 16(b) of the Exchange Act, if
at least six months prior to the date such tax obligation is determined;
provided, however, that such six-month advance election shall not be required if
- - -------- -------
it is not necessary in order for the withholding election to be exempt from the
application of such Section 16(b);
18
(e) CLAIM TO AWARDS AND EMPLOYMENT RIGHTS. No employee or other person
shall have any claim or right to be granted an Award under the Plan or, having
been selected for the grant of an Award, to be selected for a grant of any other
Award. Neither the Plan nor any action taken hereunder shall be construed as
giving any Participant any right to be retained in the employ or service of the
Company, a Subsidiary or an Affiliate.
(f) DESIGNATION AND CHANGE OF BENEFICIARY. Each Participant shall file
with the Committee a written designation of one or more persons as the
beneficiary who shall be entitled to receive the amounts payable with respect to
an Award of Performance Share Units, Phantom Stock Units or Restricted Stock, if
any, due under the Plan upon his death. A Participant may, from time to time,
revoke or change his beneficiary designation without the consent of any prior
beneficiary by filing a new designation with the Committee. The last such
designation received by the Committee shall be controlling; provided, however,
-------- -------
that no designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt. If no beneficiary
designation is filed by the Participant, the beneficiary shall be deemed to be
his or her spouse or, if the Participant is unmarried at the time of death, his
or her estate.
(g) PAYMENTS TO PERSONS OTHER THAN PARTICIPANTS. If the Committee shall
find that any person to whom any amount is payable under the Plan is unable to
care for his affairs because of illness or accident, or is a minor, or has died,
then any payment due to such person or his estate (unless a prior claim therefor
has been made by a duly appointed legal representative) may, if the Committee so
directs the Company, be paid to his spouse, child, relative, an institution
maintaining or having custody of such person, or any other person deemed by the
Committee to be a proper recipient on behalf of such person otherwise entitled
to payment. Any such payment shall be a complete discharge of the liability of
the Committee and the Company therefor.
(h) NO LIABILITY OF COMMITTEE MEMBERS. No member of the Committee shall be
personally liable by reason of any contract or other instrument executed by such
member or on his behalf in his capacity as a member of the Committee nor for any
mistake of judgment made in good faith, and the Company shall indemnify and hold
harmless each member of the Committee and each other employee, officer or
director of the Company to whom any duty or power relating to the administration
or interpretation of the Plan may be allocated or delegated, against any cost or
expense (including counsel fees) or liability (including any sum paid in
settlement of a claim) arising out of any act or omission to act
19
in connection with the Plan unless arising out of such person's own fraud or
willful bad faith; provided, however, that approval of the Board shall be
-------- -------
required for the payment of any amount in settlement of a claim against any such
person. 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 Articles of Incorporation or By-Laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
(i) GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to the
principles of conflicts of law thereof.
(j) FUNDING. Except as provided under Section 10, no provision of the Plan
shall require the Company, for the purpose of satisfying any obligations under
the Plan, to purchase assets or place any assets in a trust or other entity to
which contributions are made or otherwise to segregate any assets, nor shall the
Company maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for such
purposes. Holders shall have no rights under the Plan other than as unsecured
general creditors of the Company, except that insofar as they may have become
entitled to payment of additional compensation by performance of services, they
shall have the same rights as other employees under general law.
(k) NONTRANSFERABILITY. A person's rights and interest under the Plan,
including amounts payable, may not be sold, assigned, donated, or transferred or
otherwise disposed of, mortgaged, pledged or encumbered except, in the event of
a Holder's death, to a designated beneficiary to the extent permitted by the
Plan, or in the absence of such designation, by will or the laws of descent and
distribution; provided, however, the Committee may, in its sole discretion,
-------- -------
allow for transfer of Awards other than Incentive Stock Options to other persons
or entities, subject to such conditions or limitations as it may establish to
ensure that Awards intended to be exempt from Section 16(b) of the Exchange Act
pursuant to Rule 16b-3 under the Exchange Act continue to be so exempt or for
other purposes.
(l) RELIANCE ON REPORTS. Each member of the Committee and each member of
the Board shall be fully justified in relying, acting or failing to act, and
shall not be liable for having so relied, acted or failed to act in good faith,
upon any report made by the independent public accountant of the Company and its
Subsidiaries and Affiliates and upon any other information furnished in
connection with the Plan by any person or persons other than himself.
20
(m) RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
profit sharing, group insurance or other benefit plan of the Company or any
Subsidiary except as otherwise specifically provided in such other plan.
(n) EXPENSES. The expenses of administering the Plan shall be borne by the
Company and its Subsidiaries and Affiliates.
(o) PRONOUNS. Masculine pronouns and other words of masculine gender shall
refer to both men and women.
(p) 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.
(q) TERMINATION OF EMPLOYMENT. For all purposes herein, a person who
transfers from employment or service with the Company to employment or service
with a Subsidiary or Affiliate or vice versa shall not be deemed to have
terminated employment or service with the Company, a Subsidiary or Affiliate.
13. CHANGES IN CAPITAL STRUCTURE
Awards granted under the Plan and any agreements evidencing such Awards,
the maximum number of shares of Stock subject to all Awards and the maximum
number of shares of Stock with respect to which any one person may be granted
Options or SARs during any year shall be subject to adjustment or substitution,
as determined by the Committee in its sole discretion, as to the number, price
or kind of a share of Stock or other consideration subject to such Awards or as
otherwise determined by the Committee to be equitable (i) in the event of
changes in the outstanding Stock or in the capital structure of the Company by
reason of stock dividends, stock splits, reverse stock splits,
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges, or other relevant changes in capitalization occurring after the Date
of Grant of any such Award or (ii) in the event of any change in applicable laws
or any change in circumstances which results in or would result in any
substantial dilution or enlargement of the rights granted to, or available for,
Participants in the Plan, or which otherwise warrants equitable adjustment
because it interferes with the intended operation of the Plan. In addition, in
the event of any such adjustments or substitution, the aggregate number of
shares of Stock available under the Plan shall be appropriately adjusted by the
Committee, whose determination shall be conclusive. Any adjustment in Incentive
Stock Options under this Section 13 shall be made only to the extent not
constituting a "modification" within the meaning of Section 424(h)(3) of the
Code, and any adjustments under this Section 13 shall be made in a manner which
21
does not adversely affect the exemption provided pursuant to Rule 16b-3 under
the Exchange Act. Further, following the date that the exemption from the
application of Section 162(m) of the Code described in Section 17 (or any other
exemption having similar effect) ceases to apply to Awards, with respect to
Awards intended to qualify as "performance-based compensation" under Section
162(m) of the Code, such adjustments or substitutions shall be made only to the
extent that the Committee determines that such adjustments or substitutions may
be made without a loss of deductibility for Awards under Section 162(m) of the
Code. The Company shall give each Participant notice of an adjustment hereunder
and, upon notice, such adjustment shall be conclusive and binding for all
purposes.
Notwithstanding the above, in the event of any of the following:
A. The Company is merged or consolidated with another corporation or
entity and, in connection therewith, consideration is received by
shareholders of the Company in a form other than stock or other equity
interests of the surviving entity;
B. All or substantially all of the assets of the Company are acquired by
another person;
C. The reorganization or liquidation of the Company; or
D. The Company shall enter into a written agreement to undergo an event
described in clauses A, B or C above,
then the Committee may, in its discretion and upon at least 10 days advance
notice to the affected persons, cancel any outstanding Awards and pay to the
Holders thereof, in cash, the value of such Awards based upon the price per
share of Stock received or to be received by other shareholders of the Company
in the event. The terms of this Section 13 may be varied by the Committee in
any particular Award agreement.
14. EFFECT OF CHANGE IN CONTROL
Except to the extent reflected in a particular Award agreement:
(a) In the event of a Change in Control, notwithstanding any vesting
schedule with respect to an Award of Options, SARs, Phantom Stock Units or
Restricted Stock, such Option or SAR shall become immediately exercisable with
respect to 100 percent of the shares subject to such Option or SAR, and the
Restricted Period shall expire immediately with respect to 100 percent of such
Phantom Stock Units or shares of Restricted Stock.
22
(b) In the event of a Change in Control, all incomplete Award Periods in
effect on the date the Change in Control occurs shall end on the date of such
change, and the Committee shall (i) determine the extent to which Performance
Goals with respect to each such Award Period have been met based upon such
audited or unaudited financial information then available as it deems relevant,
(ii) cause to be paid to each Participant partial or full Awards with respect to
Performance Goals for each such Award Period based upon the Committee's
determination of the degree of attainment of Performance Goals, and (iii) cause
all previously deferred Awards to be settled in full as soon as possible.
(c) The obligations of the Company under the Plan shall be binding upon any
successor corporation or organization resulting from the merger, consolidation
or other reorganization of the Company, or upon any successor corporation or
organization succeeding to substantially all of the assets and business of the
Company. The Company agrees that it will make appropriate provisions for the
preservation of Participant's rights under the Plan in any agreement or plan
which it may enter into or adopt to effect any such merger, consolidation,
reorganization or transfer of assets.
15. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of this Plan by the Board nor the submission of this
Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under this Plan, and such arrangements
may be either applicable generally or only in specific cases.
16. AMENDMENTS AND TERMINATION
The Board may at any time terminate the Plan. Subject to Section 13, with
the express written consent of an individual Participant, the Board or the
Committee may cancel or reduce or otherwise alter outstanding Awards if, in its
judgment, the tax, accounting, or other effects of the Plan or potential payouts
thereunder would not be in the best interest of the Company. The Board or the
Committee may, at any time, or from time to time, amend or suspend and, if
suspended, reinstate, the Plan in whole or in part; provided, however, that
-------- -------
without further stockholder approval neither the Board nor the Committee shall
make any amendment to the Plan which would:
(a) Increase the maximum number of shares of Stock which may be
issued pursuant to Awards, except as provided in Section 13;
23
(b) Change the maximum Option Price;
(c) Extend the maximum Option Period;
(d) Extend the termination date of the Plan; or
(e) Change the class of persons eligible to receive Awards under the
Plan.
17. EFFECT OF SECTION 162(m) OF THE CODE
The Plan, and all Awards issued thereunder, are intended to be exempt from
the application of Section 162(m) of the Code, which restricts under certain
circumstances the Federal income tax deduction for compensation paid by a public
company to named executives in excess of $1 million per year. The exemption is
based on Proposed Treasury Regulation Section 1.162-27(f), in the form proposed
on the effective date of the Plan, with the understanding that such regulation
generally exempts from the application of Section 162(m) of the Code
compensation paid pursuant to a plan that existed before a company becomes
publicly held. Under such Proposed Treasury Regulation, this exemption is
available to the Plan for the duration of the period that lasts until the
earlier of (i) the expiration or material modification of the Plan, (ii) the
exhaustion of the maximum number of shares of Stock available for Awards under
the Plan, as set forth in Section 5(a), or (iii) the 1999 annual meeting of
shareholders of the Company. The Committee may, without shareholder approval
(unless otherwise required to comply with Rule 16b-3 under the Exchange Act),
amend the Plan retroactively and/or prospectively to the extent it determines
necessary in order to comply with any subsequent clarification of Section 162(m)
of the Code required to preserve the Company's Federal income tax deduction for
compensation paid pursuant to the Plan. To the extent that the Committee
determines as of the Date of Grant of an Award that (i) the Award is intended to
comply with Section 162(m) of the Code and (ii) the exemption described above is
no longer available with respect to such Award, such Award shall not be
effective until any stockholder approval required under Section 162(m) of the
Code has been obtained.
* * *
As adopted by the Board of Directors of
Trump Hotels & Casino Resorts, Inc. as of
June 5, 1995
24
TRUMP HOTELS & CASINO RESORTS, INC.
Mississippi Avenue and The Boardwalk
Atlantic City, New Jersey 08401
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
to be held at The Plaza Hotel, 768 Fifth Avenue, New York, New York 10019 at
2:00 p.m., local time, on June 12, 1996
The undersigned hereby appoints Nicholas L. Ribis and Robert M. Pickus,
and each of them, with full power of substitution, as proxies of the undersigned
to vote all shares of stock which the undersigned is entitled in any capacity to
vote at the above-stated annual meeting, and at any and all adjournments or
postponements thereof (the "Annual Meeting"), on the matters set forth on the
reverse side of this Proxy Card, and, in their discretion, upon all matters
incident to the conduct of the Annual Meeting and upon such other matters as may
properly be brought before the Annual Meeting. This proxy revokes all prior
proxies given by the undersigned.
ALL PROPERLY EXECUTED PROXIES WILL BE VOTED AS DIRECTED. IF NO
INSTRUCTIONS ARE INDICATED ON A PROPERLY EXECUTED PROXY, SUCH PROXY WILL BE
VOTED FOR APPROVAL OF PROPOSALS 1, 2 AND 3. All ABSTAIN votes will be counted in
determining the existence of a quorum at the Annual Meeting, but will have the
same effect as a vote AGAINST Proposals 2 and 3.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF TRUMP HOTELS
& CASINO RESORTS, INC.
RECEIPT OF THE NOTICE OF MEETING AND THE PROXY STATEMENT, DATED MAY 10,
1996 (THE "PROXY STATEMENT"), IS HEREBY ACKNOWLEDGED.
PLEASE SIGN AND DATE ON THE REVERSE SIDE AND
MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued on reverse side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TRUMP HOTELS & CASINO RESORTS, INC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
Please mark boxes in blue or black ink.
1. Election of Directors FOR all nominees listed below: [ ]
Nominees: Donald J. Trump, Nicholas L. Ribis, Wallace B. Askins, Don M.
Thomas and Peter M. Ryan
INSTRUCTION: IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW:
2. Proposal to approve an amendment to the Company's 1995 Stock Incentive Plan
to increase the number of shares of Common Stock reserved for issuance
thereunder from 1,000,000 to 4,000,000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal to ratify the appointment of Arthur Andersen LLP as the independent
public auditors of the Company for the fiscal year ending December 31, 1996.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In the discretion of the proxies with respect to any other matters that
may properly come before the Annual Meeting.
(JOINT OWNERS SHOULD EACH SIGN. PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEARS
ON THIS CARD. WHEN SIGNING AS ATTORNEY, TRUSTEE, EXECUTOR, ADMINISTRATOR,
GUARDIAN OR CORPORATE OFFICER, PLEASE GIVE YOUR FULL TITLE BELOW.)
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(TITLE OR AUTHORITY)
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(SIGNATURE)
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(SIGNATURE)
DATED:______________________ , 1996
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.