IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
HARRAH'S ENTERTAINMENT, INC., >
a Delaware corporation and HARRAH'S 1
OPERATING COMPANY, INC., a Delaware )
corporation, 1I-
Plaintiffs, ) Civil Action No. 19479
)
V. 1)
JCC HOLDING COMPANY, a Delaware )
corporation, 1)
Defendant. )
MEMORANDUM OPINION
Date Submitted: May 29,2002
Date Decided: May 3 1,2002
Kevin G. Abrams, Thomas A. Beck, Daniel A. Dreisbach, Lisa R. Stark, Kelly A.
Green, and John D. Hendershot, Esquires, of RICHARDS, LAYTON & FINGER,
Wilmington, Delaware; Of Counsel: Charles W. Cox, II, Esquire, of LATHAM &
WATKINS, Los Angeles, California; Mark A. Finkelstein, Esquire, of LATHAM &
WATKINS, Costa Mesa, California, Attorneys for Plaintiffs.
Robert K. Payson, Peter J. Walsh, Jr., Stephen C. Norman, Michael A. Pittenger,
Janine M. Salamone, Brian C. Ralson, and John M. Seaman, Esquires, of POTTER
ANDERSON & CORROON, Wilmington, Delaware, Attorneys for Defendant.
STRINE, Vice Chancellor
This is a dispute over whether plaintiff Han-ah's Entertainment, Inc.
("Hart-ah's" or "HE,") can nominate more than one director for election at
the annual meeting of defendant JCC Holding Company, Inc., now
scheduled for June 4,2002. Harrah's nominated two candidates to compete
for the two board seats up for election at that annual meeting.
JCC rejected Harrah's second nominee, contending that language in
SNIPPETS:
the annual meeting of defendant JCC Holding Company, Inc., now
for the two board seats up for election at that annual meeting.
In the recent reorganization, JCC's charter
JCC's `Noteholders" were given the
directors on the JCC board were also given
perpetuate its majority control during the three-year classified board period.
"right" to nominate one director at the First Anniversary Meeting.
nominations are made in compliance with the General Nomination
electoral rights, and that the rule of contract construction in favor of the free
exercise of franchise rights is implicated.
clear and convincing evidence in favor of JCC's restrictive interpretation,
"Affiliated Transaction Provision" - embodies this concept.
See 8 Del.
The Nominated Directors in Group I, listed in subsection of this Section 3.2, shall serve for
At the First Anniversary Meeting, HET and the majority of the Non-HET Nominated Directors
effect as the Specific Nomination Provision,
Anniversary Meeting" is a limitation on Harrah's ability to nominate more
The Noteholders (who were eventually formally constituted as a Noteholders Committee by the
This MOU would provide JCC with a basis to file a pre-packaged
' JCC itself had an awkward position in the negotiations.
reorganization corporate instruments, including JCC's revised charter and bylaws.
member staggered board with 3 classes of directors to be fixed by the Articles of
anniversary of the Effective Date of the Plan of Reorganization [the "First Anniversarv
At the Second Anniversarv Meeting.
recourse to extrinsic evidence in the event of ambiguity.
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