WARRANT AGREEMENT
BY AND BETWEEN
JCC HOLDING COMPANY
and
▇▇▇▇▇▇'▇ CRESCENT CITY INVESTMENT COMPANY
Dated as of October 30, 1998
TABLE OF CONTENTS*
Page
SECTION 1. Definitions.........................................................................................1
SECTION 2. Warrant Certificates................................................................................2
SECTION 3. Execution of Warrant Certificates...................................................................2
SECTION 4. Registration........................................................................................2
SECTION 5. Registration of Transfers and Exchanges.............................................................3
SECTION 6. Warrants; Exercise of Warrants......................................................................3
SECTION 7. Payment of Taxes....................................................................................5
SECTION 8. Mutilated or Missing Warrant Certificates...........................................................5
SECTION 9. Reservation of Warrant Shares; Rights...............................................................5
SECTION 10. Obtaining Stock Exchange Listings.................................................................6
SECTION 11. Adjustment of Exercise Price and Number of Warrant Shares Issuable................................6
(a) Adjustment for Change in Capital Stock............................................................7
(b) When De Minimis Adjustment May Be Deferred........................................................8
(c) When No Adjustment Required.......................................................................8
(d) Notice of Adjustment..............................................................................8
(e) Notice of Certain Transactions....................................................................8
(f) Reorganization of Company.........................................................................9
(g) Company Determination Final.......................................................................9
(h) When Issuance or Payment May Be Deferred.........................................................10
(i) Adjustment in Number of Shares...................................................................10
(j) Limitation on Exercise of Warrants...............................................................11
(k) Antidilution.....................................................................................11
(l) Form of Warrants.................................................................................12
SECTION 12. Fractional Interests.............................................................................12
SECTION 13. Redemption of Warrants...........................................................................13
SECTION 14. Notices to Warrant Holders.......................................................................13
------------------
* This Table of Contents does not constitute a part of this Agreement or have
any bearing upon the interpretation of any of its terms or provisions.
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SECTION 15. Notices to Company and Warrant Holders...........................................................15
SECTION 16. Supplements and Amendments.......................................................................16
SECTION 17. Successors.......................................................................................16
SECTION 18. Assignment; Transfer.............................................................................16
SECTION 19. Termination......................................................................................16
SECTION 20. Governing Law....................................................................................16
SECTION 21. Benefits of This Agreement.......................................................................16
SECTION 22. Counterparts.....................................................................................17
ii
THIS WARRANT AGREEMENT (the "Agreement") is dated as of
October 30, 1998 and entered into by and between JCC HOLDING COMPANY, a
Delaware corporation (the "Company"), and ▇▇▇▇▇▇'▇ CRESCENT CITY INVESTMENT
COMPANY, a Nevada corporation ("HCCIC").
WHEREAS, the Company proposes to issue to HCCIC, or its
designee, Common Stock Purchase Warrants, as hereinafter described (the
"Warrants"), to purchase (subject to the limitations of Section 11(j) hereof) up
to an aggregate of 4,000,000 shares of Common Stock (as defined herein) of the
Company (the Common Stock issuable on exercise of the Warrants being referred to
herein as the "Warrant Shares"), pursuant to the Third Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code As Modified Through
October 13, 1998, of ▇▇▇▇▇▇'▇ Jazz Company, a Louisiana general partnership
("HJC"), ▇▇▇▇▇▇'▇ Jazz Finance Corp., a Delaware corporation, and ▇▇▇▇▇▇'▇ New
Orleans Investment Company, a Nevada corporation (the "Plan of Reorganization").
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Definitions
As used in this Agreement, the following capitalized terms
shall have the following meanings:
Affiliate: Any person who, with respect to any other person,
directly or indirectly controls or is controlled by or is under the direct or
indirect common control with such other person.
Casino: The casino to be located at the site of the former
Rivergate Convention Center in New Orleans, Louisiana that is operated pursuant
to the Casino Operating Contract.
Casino Opening Date: The date upon which the Casino first
opens to the public and commences business.
Casino Operating Contract: The amended and renegotiated casino
operating contract among the State of Louisiana by and through the Louisiana
Gaming Control Board, HJC and JCC, executed October 30, 1998, as it may be
amended or supplemented from time to time.
Class A Common Stock: Prior to the Transition Date, the class
A common stock, $.01 par value, of the Company.
Common Stock: After the Transition Date, the unclassified
common stock, $.01 par value, of the Company.
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JCC: Jazz Casino Company, L.L.C., a Louisiana limited
liability company and whollyowned subsidiary of the Company.
New Bonds: The Senior Subordinated Notes due 2009 with
Contingent Payments of JCC issued pursuant to the Plan of Reorganization.
Permitted Transferee: HET or its Affiliates.
New Contingent Bonds: The Senior Subordinated Contingent
Notes due 2009 of JCC issued pursuant to the Plan of Reorganization.
Transition Date: Transition Date shall have the meaning set
forth in the Restated Certificate of Incorporation of the Company filed with the
Secretary of State of Delaware on October 27, 1998.
SECTION 2. Warrant Certificates . The certificates evidencing
the Warrants (the "Warrant Certificates") to be delivered pursuant to this
Agreement shall be in registered form only and shall be substantially in the
form set forth in Exhibit A attached hereto.
SECTION 3. Execution of Warrant Certificates. Warrant
Certificates shall be signed on behalf of the Company by its Chairman of the
Board or its President or a Vice President and by its Secretary or an Assistant
Secretary under its corporate seal. Each such signature upon the Warrant
Certificates may be in the form of a facsimile signature of the present or any
future Chairman of the Board, President, Vice President, Secretary or Assistant
Secretary and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Company may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, President,
Vice President, Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant Certificates shall be delivered or disposed of he shall
have ceased to hold such office. The seal of the Company may be in the form of a
facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any
of the Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Company, such Warrant
Certificates nevertheless may be delivered or disposed of as though such person
had not ceased to be such officer of the Company; and any Warrant Certificate
may be signed on behalf of the Company by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the
Company to sign such Warrant Certificate, although at the date of the execution
of this Warrant Agreement any such person was not such officer.
SECTION 4. Registration. The Company shall number and
register the Warrant Certificates in a register as they are issued.
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SECTION 5. Registration of Transfers and Exchanges. The
Company shall from time to time register the transfer by HET or its Affiliate to
a Permitted Transferee of any outstanding Warrant Certificates in a Warrant
register to be maintained by the Company upon surrender of such Warrant
Certificates accompanied by a written instrument or instruments of transfer in
form satisfactory to the Company, duly executed by the registered holder or
holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney. Upon any such registration of transfer, a new Warrant
Certificate shall be issued to the transferee(s) and the surrendered Warrant
Certificate shall be canceled and disposed of by the Company.
The Warrant holders agree that each certificate representing
Warrant Shares will bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH
LAWS."
Warrant Certificates may be exchanged at the option of the
holder(s) thereof, when surrendered to the Company at its office for another
Warrant Certificate or other Warrant Certificates of like tenor and representing
in the aggregate a like number of Warrants. Warrant Certificates surrendered for
exchange shall be canceled and disposed of by the Company.
SECTION 6. Warrants; Exercise of Warrants. Subject to the
terms of this Agreement, each holder of a Warrant shall have the right, which
may be exercised at any time after the opening of business on the Transition
Date until on or before 5:00 p.m., New York time on the sixth anniversary of the
Casino Opening Date (the "Exercise Period"), to receive from the Company the
number of fully paid and nonassessable Warrant Shares which the holder may at
the time be entitled to receive on exercise of such Warrants and payment to the
Company of the Exercise Price (as defined below) then in effect for such Warrant
Shares. In the alternative, to the extent the Common Stock is listed on any
securities exchange registered under the Exchange Act of 1934, as amended, or
quoted on the NASDAQNMS, each holder of a Warrant may exercise its right, during
the Exercise Period, to receive Warrant Shares on a net basis, such that,
without the exchange of any funds, such holder of a Warrant receives that number
of Warrant Shares otherwise issuable (or payable) upon exercise of its Warrants
less that number of Warrant Shares having a Current Market Price (as defined in
Section 12) at the time of exercise equal to the aggregate Exercise Price that
would otherwise have been paid by such holder of Warrant Shares. Each Warrant
not exercised prior to 5:00 p.m., New York
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time, on the sixth anniversary of the Casino Opening Date shall become void and
all rights thereunder and all rights in respect thereof under this Agreement
shall cease as of such time.
A Warrant may be exercised at any time during the Exercise
Period upon surrender to the Company at its office designated for such purpose
(the address of which is set forth in Section 15 hereof) of the certificate or
certificates evidencing the Warrants to be exercised with the form of election
to purchase on the reverse thereof duly filled in and signed, which signature
shall be guaranteed by a bank or trust company having an office or correspondent
in the United States or a broker or dealer which is a member of a registered
securities exchange or the National Association of Securities Dealers, Inc., and
upon payment to the Company of the exercise price (the "Exercise Price") which
is set forth in the form of Warrant Certificate attached hereto as Exhibit A,
subject to adjustment pursuant to Section 11, for the number of Warrant Shares
in respect of which such Warrants are then exercised. Payment of the aggregate
Exercise Price shall be made in cash or by certified or official bank check
payable to the order of the Company.
Subject to the provisions of Section 7 hereof, upon such
surrender of Warrants and payment of the Exercise Price the Company shall issue
and cause to be delivered with all reasonable dispatch to or upon the written
order of the holder and in such name or names as the Warrant holder may
designate, a certificate or certificates for the number of full Warrant Shares
issuable upon the exercise of such Warrants together with cash as provided in
Section 12; provided, however, that if any consolidation, merger or lease or
sale of assets is proposed to be effected by the Company as described in
subsection (f) of Section 11 hereof, or a tender offer or an exchange offer for
shares of Common Stock of the Company shall be made, upon such surrender of such
Warrants and payment of the Exercise Price as aforesaid, the Company shall, as
soon as possible, but in any event not later than two business days thereafter,
issue and cause to be delivered the full number of Warrant Shares issuable upon
the exercise of such Warrants in the manner described in this sentence together
with cash as provided in Section 12. Such certificate or certificates shall be
deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such Warrant Shares as of
the date of the surrender of such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable at any time during the
Exercise Period, at the election of the holders thereof, either in full or from
time to time in part and, in the event that a certificate evidencing Warrants is
exercised in respect of fewer than all of the Warrant Shares issuable on such
exercise at any time prior to the date of expiration of the Warrants, a new
certificate evidencing the remaining Warrant or Warrants will be issued and
delivered pursuant to the provisions of this Section 6 and of Section 3 hereof.
All Warrant Certificates surrendered upon exercise of Warrants
shall be canceled and disposed of by the Company. The Company shall keep copies
of this Agreement and any notices given or received hereunder available for
inspection by the holders during normal business hours at its office.
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SECTION 7. Payment of Taxes . The Company will pay all
documentary stamp taxes, if any, attributable to the initial issuance of Warrant
Shares upon the exercise of Warrants; provided, however, that the Company shall
not be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue of any Warrant Certificates or any certificates
for Warrant Shares in a name other than that of the registered holder of a
Warrant Certificate surrendered upon the exercise of a Warrant, and the Company
shall not be required to issue or deliver such Warrant Certificates unless or
until the person or persons requesting the issuance thereof shall have paid to
the Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid.
SECTION 8. Mutilated or Missing Warrant Certificates. In
case any of the Warrant Certificates shall be mutilated, lost, stolen or
destroyed, the Company may in its discretion issue, in exchange and substitution
for and upon cancellation of the mutilated Warrant Certificate, or in lieu of
and substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of such Warrant Certificate and
indemnity, if requested, also reasonably satisfactory to it.
SECTION 9. Reservation of Warrant Shares; Rights. The
Company will at all times reserve and keep available, free from preemptive
rights, out of the aggregate of its authorized but unissued Common Stock or its
authorized and issued Common Stock held in its treasury, for the purpose of
enabling it to satisfy any obligation to issue Warrant Shares upon exercise of
Warrants, the maximum number of shares of Common Stock which may then be
deliverable upon the exercise of all outstanding Warrants.
The Company shall issue, together with each Warrant Share
issued upon exercise of a Warrant, any rights issued to holders of Common Stock
in addition thereto or in replacement therefor, whether or not such rights shall
be exercisable at such time, but only if such rights are issued and outstanding
and held by other holders of Common Stock at such time and have not expired.
The Company or, if appointed, the transfer agent for the
Common Stock (the "Transfer Agent") and every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the exercise of any of the
rights of purchase aforesaid will be irrevocably authorized and directed at all
times to reserve such number of authorized shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent and with every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Company will furnish such Transfer Agent a copy
of all notices of adjustments and certificates related thereto, transmitted to
each holder pursuant to Section 14 hereof.
Before taking any action which would cause an adjustment
pursuant to Section 11 hereof to reduce the Exercise Price below the then par
value (if any) of the Warrant
5
Shares, the Company will take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable Warrant Shares at the Exercise Price as so
adjusted.
The Company covenants that all Warrant Shares which may be
issued upon exercise of Warrants will, upon issue, be fully paid, nonassessable,
free of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issue thereof.
SECTION 10. Obtaining Stock Exchange Listings . The Company
will from time to time take all action which may be necessary so that the
Warrant Shares, immediately upon their issuance upon the exercise of Warrants,
will be listed on the principal securities exchanges and markets within the
United States of America, if any, on which other shares of Common Stock are then
listed.
The Company shall grant each Warrant holder such registration
rights with respect to the Warrant Shares subject to Warrants as are set forth
in the Registration Rights Agreement between the Company and HCCIC dated as of
October 30, 1998 (the "Registration Rights Agreement").
SECTION 11. Adjustment of Exercise Price and Number of
Warrant Shares Issuable . The Exercise Price and the number of Warrant Shares
issuable upon the exercise of each Warrant are subject to adjustment from time
to time upon the occurrence of the events enumerated in this Section 11. For
purposes of this Section 11, "Common Stock" means shares now or hereafter
authorized of any class of common stock of the Company and any other stock of
the Company, however designated, that has the right (subject to any prior rights
of any class or series of preferred stock) to participate in any distribution of
the assets or earnings of the Company without limit as to per share amount.
(a) Adjustment for Change in Capital Stock.
If the Company:
(1) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(3) combines its outstanding shares of Common Stock into a
smaller number of shares;
(4) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock or preferred stock; or
6
(5) issues by reclassification of its Common Stock any
shares of its capital stock;
then the Exercise Price in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which he would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action.
In the case of a dividend or distribution the adjustment shall
become effective immediately after the record date for determination of holders
of shares of Common Stock entitled to receive such dividend or distribution, and
in the case of a subdivision, combination or reclassification, the adjustment
shall become effective immediately after the effective date of such corporate
action.
If after an adjustment a holder of a Warrant upon exercise of
the Warrant may receive shares of two or more classes of capital stock of the
Company, the Company shall determine the allocation of the adjusted Exercise
Price between the classes of capital stock. After such allocation, the exercise
privilege and the Exercise Price of each class of capital stock shall thereafter
be subject to adjustment on terms comparable to those applicable to Common Stock
in this Section 11.
Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Price need be made unless the
adjustment would require an increase or decrease of at least 1% in the Exercise
Price. Any adjustments that are not made shall be carried forward and taken into
account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be.
(c) When No Adjustment Required.
No adjustment need be made for a transaction referred to in subsection (a) of
this Section 11 if Warrant holders are to participate in the transaction on a
basis and with notice that the board of directors of the Company (the "Board of
Directors") determines to be fair and appropriate in light of the basis and
notice on which holders of Common Stock participate in the transaction.
No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.
7
No adjustment need be made for a change in the par value or no
par value of the Common Stock.
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue on
the cash.
(d) Notice of Adjustment.
Whenever the Exercise Price is adjusted, the Company shall
provide the notices required by Section 14 hereof.
(e) Notice of Certain Transactions.
If:
(1) the Company takes any action that would require an
adjustment in the Exercise Price pursuant to subsection (a) of this
Section 11 and if the Company does not arrange for Warrant holders to
participate pursuant to subsection (c) of this Section 11;
(2) the Company takes any action that would require a
supplemental Warrant Agreement pursuant to subsection (f) of this
Section 11; or
(3) there is a liquidation or dissolution of the Company,
the Company shall mail to Warrant holders a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. The Company shall mail the notice at least 15
days before such date. Failure to mail the notice or any defect in it shall not
affect the validity of the transaction.
(f) Reorganization of Company.
If the Company consolidates or merges with or into, or
transfers or leases all or substantially all its assets to, any person, upon
consummation of such transaction the Warrants shall automatically become
exercisable for the kind and amount of securities, cash or other assets which
the holder of a Warrant would have owned immediately after the consolidation,
merger, transfer or lease if the holder had exercised the Warrant immediately
before the effective date of the transaction. Concurrently with the consummation
of such transaction, the corporation formed by or surviving any such
consolidation or merger if other than the Company, or the person to which such
sale or conveyance shall have been made, shall enter into a supplemental Warrant
Agreement so providing and further providing for adjustments which shall be as
nearly equivalent as may be practical to the adjustments provided for in this
Section 11. The successor Company shall mail to Warrant holders a notice
describing the supplemental Warrant Agreement.
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If the issuer of securities deliverable upon exercise of
Warrants under the supplemental Warrant Agreement is an affiliate of the formed,
surviving, transferee or lessee corporation, that issuer shall join in the
supplemental Warrant Agreement.
If this subsection (f) applies, subsection (a) of this Section
11 do not apply.
(g) Company Determination Final.
Any determination that either the Company or the Board of
Directors must make pursuant to Section 12 or subsections (a) and (c) of this
Section 11 is conclusive.
(h) When Issuance or Payment May Be Deferred.
In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the holder of any Warrant exercised after such record date
the Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise over and above the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise on the basis of the Exercise Price,
and (ii) paying to such holder any amount in cash in lieu of a fractional share
pursuant to Section 12; provided, however, that the Company shall deliver to
such holder a due ▇▇▇▇ or other appropriate instrument evidencing such holder's
right to receive such additional Warrant Shares, other capital stock and cash
upon the occurrence of the event requiring such adjustment.
(i) Adjustment in Number of Shares.
Upon each adjustment of the Exercise Price pursuant to this
Section 11, each Warrant outstanding prior to the making of the adjustment in
the Exercise Price shall thereafter evidence the right to receive upon payment
of the adjusted Exercise Price that number of shares of Common Stock (calculated
to the nearest hundredth) obtained from the following formula:
E
N/ = N x___
E/
where:
N/ = the adjusted number of Warrant Shares issuable upon
exercise of a Warrant by payment of the adjusted
Exercise Price.
N = the number of Warrant Shares previously issuable
upon exercise of a Warrant by payment of the Exercise
Price prior to adjustment.
E/ = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
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(j) Limitation on Exercise of Warrants.
Notwithstanding anything to the contrary in this Agreement,
▇▇▇▇▇▇'▇ Entertainment, Inc., a Delaware corporation ("HET"), and all
Subsidiaries (as defined herein) of HET, including HCCIC, will not be
permitted to exercise Warrants with respect to that number of Warrant Shares
which would cause HET and all Subsidiaries of HET to own in the aggregate
more than 50.0% of the Common Stock until such time as such exercise would
not cause HET and all Subsidiaries of HET to own in the aggregate more than
50.0% of the Common Stock. "Subsidiary" with respect to HET, means (i) a
corporation a majority of whose capital stock with voting power, under
ordinary circumstances, to elect directors is at the time, directly or
indirectly, owned by HET, by HET and one or more Subsidiaries of HET or by
one or more Subsidiaries of HET or (ii) any individual, partnership, joint
venture, trust, association, jointstock company, unincorporated organization
or government or any agency or political subdivision thereof in which HET,
one or more Subsidiaries of HET, or HET and one or more Subsidiaries of HET,
directly or indirectly, at the date of determination thereof has at least
majority ownership interest.
(k) Antidilution.
The Company and HCCIC (collectively, the "Parties") hereby
acknowledge and agree that this Agreement is intended to allow HCCIC during the
Exercise Period to exercise Warrants to purchase shares of Common Stock
sufficient to entitle HET and all Subsidiaries of HET, including HCCIC, to own
in the aggregate 50.0% of the Company's Common Stock. Accordingly, the Parties
intend for HCCIC to be protected from dilution to the fullest extent possible.
Therefore, if any event or circumstance that could lead to the dilution of
HCCIC's interest upon exercise of the Warrants (such events include, without
limitation, issuances of additional Common Stock pursuant to employee benefit
plans or otherwise, issuances of securities convertible into Common Stock,
issuances of classes of equity or voting securities other than Common Stock
(including securities exercisable for, or convertible into, such securities),
extraordinary dividends, distributions to stockholders and incurrence of
indebtedness to stockholders) occurs, then, regardless of any consideration paid
to the Company in connection with such event and in addition to or as a
supplement to any other adjustment required by this Section 11, the number of
Warrant Shares shall be adjusted as necessary by the Board of Directors in good
faith to give full effect to the Parties' aforementioned intent. For purposes of
calculating the percentage of the Company's Common Stock held by HET and its
Subsidiaries with respect to this Section 11(k), any shares of Common Stock
transferred by HET or its Subsidiaries to any person or entity which is not a
Permitted Transferee shall be deemed to be held by HET and its Subsidiaries;
provided, however, that HET and its Subsidiaries shall not be deemed to hold (i)
shares transferred pursuant to options to purchase a number of shares of Common
Stock constituting in the aggregate up to 3.0% of the Common Stock issued on the
date of consummation of the Plan of Reorganization (the "Effective Date") to the
shareholders of New Orleans Louisiana Development Company, (ii) shares
transferred pursuant to options to purchase a number of shares of Common Stock
constituting in the aggregate up to 1.5% of the Common Stock issued
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on the Effective Date to First National Bank of Commerce, (iii) shares
constituting in the aggregate up to 3.5% of the Common Stock issued on the
Effective Date to senior secured bondholders of Grand Palais Casino, Inc., (iv)
shares constituting in the aggregate 2.0% of the Common Stock issued on the
Effective Date to a disbursing agent for the benefit of the holders of the $435
million of 14 1/4% First Mortgage Notes due 2001 with Contingent Interest who
consent to certain releases under the Plan of Reorganization, (v) any shares of
Common Stock which are both (a) transferred after the Effective Date to HET or
any of its Subsidiaries from any person or entity which is not a Permitted
Transferred, and (b) subsequently transferred (and not reacquired) to a person
or entity which is not a Permitted Transferee, prior to the date as of which the
percentage of the Company's Common Stock held by HET and its Subsidiaries is
calculated.
(l) Form of Warrants.
Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
SECTION 12. Fractional Interests. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by the
same holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 12,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the Current Market Price on the day
immediately preceding the date the Warrant is presented for exercise, multiplied
by such fraction. As used in this Agreement, the "Current Market Price" per
share of Common Stock on any date is the average of the Quoted Prices of the
Common Stock for 30 consecutive trading days commencing 45 trading days before
the date in question. The "Quoted Price" shall, as of any date, be the average
with respect to the preceding 10 consecutive trading days as follows: (A) if the
Common Stock is listed or admitted to trading on any securities exchange, the
closing price, regular way on such day on the principal exchange on which the
Common Stock is traded, or if no sale takes place on such day, the average of
the closing bid and asked prices on such day, (B) if the Common Stock is not
then listed or admitted to trading on any securities exchange, the last reported
sale price on such day, or if there is no such last reported sale price on such
day, the average of the closing bid and the asked prices on such day, as
reported by a reputable quotation source designated by the Company, or (C) if
neither clause (A) nor (B) is applicable, the average of the reported high bid
and low asked prices on such day, as reported by a reputable quotation service,
or a newspaper of general circulation in the Borough of Manhattan, City of New
York, customarily published on each business day, designated by the Company. If
there are no such prices on a business day, then the Quoted Price shall not be
determinable for such business day. In the absence of one or more such
quotations, the
11
independent members of the Board of Directors shall determine the Current Market
Price on the basis of such quotations as it in good faith considers appropriate.
SECTION 13. Redemption of Warrants. If at any time after the
Transition Date the Quoted Price of the Common Stock has exceeded $20.00 per
share for 45 consecutive trading days, the Board of Directors may elect to
redeem up to 75% of the then outstanding Warrants for a redemption price equal
to $0.05 per Warrant upon 45 days' written notice to all Warrant holders;
provided, however, that each Warrant holder shall have the right to exercise
Warrants and receive Warrant Shares (in accordance with Section 6 hereof) during
such 45 day notice period and any such Warrants exercised or Warrant Shares
received during such 45 day notice period shall not be subject to redemption
under this Section 13. If fewer than 75% of the Warrants outstanding at the time
are to be redeemed, the Board of Directors shall give written notice as to the
aggregate number of Warrants to be redeemed. Warrant holders are not required to
exercise Warrants not called for redemption and such Warrants shall remain valid
and exercisable during the term of this Agreement. If (i) an election to redeem
Warrants is made pursuant to this Section 13, and (ii) during the 45 day notice
period HCCIC exercises Warrants with respect to that number of Warrant Shares
which at the time of exercise would cause HET and all Subsidiaries of HET to own
in the aggregate 50.0% of the Common Stock, then none of the Warrants called for
redemption (whether or not exercised by HCCIC) shall be redeemed.
SECTION 14. Notices to Warrant Holders. Upon any adjustment
of the Exercise Price pursuant to Section 11, the Company shall promptly
thereafter (i) cause to be filed with the Company a certificate of a firm of
independent public accountants of recognized standing selected by the Board of
Directors (who may be the regular auditors of the Company) setting forth the
Exercise Price after such adjustment and setting forth in reasonable detail the
method of calculation and the facts upon which such calculations are based and
setting forth the number of Warrant Shares (or portion thereof) issuable after
such adjustment in the Exercise Price, upon exercise of a Warrant and payment of
the adjusted Exercise Price, which certificate shall be conclusive evidence of
the correctness of the matters set forth therein, and (ii) cause to be given to
each of the registered holders of the Warrant Certificates at his address
appearing on the Warrant register written notice of such adjustments by
firstclass mail, postage prepaid. Where appropriate, such notice may be given in
advance and included as a part of the notice required to be mailed under the
other provisions of this Section 14.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for
or purchase shares of Common Stock or of any other subscription rights
or warrants; or
(b) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or
assets (other than cash dividends or cash distributions payable out of
consolidated earnings or earned surplus or dividends
12
payable in shares of Common Stock or distributions referred to in
subsection (a) of Section 11 hereof); or
(c) of any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is
required, or of the conveyance or transfer of the properties and assets
of the Company substantially as an entirety, or of any reclassification
or change of Common Stock issuable upon exercise of the Warrants (other
than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common
Stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(e) the Company proposes to take any action (other than
actions of the character described in subsection (a) of Section 11
hereof) which would require an adjustment of the Exercise Price
pursuant to Section 11;
then the Company shall cause to be given to each of the registered holders of
the Warrant Certificates at his address appearing on the Warrant register, at
least 20 days (or 10 days in any case specified in clauses (a) or (b) above)
prior to the applicable record date hereinafter specified, or promptly in the
case of events for which there is no record date, by firstclass mail, postage
prepaid, a written notice stating (i) the date as of which the holders of record
of shares of Common Stock to be entitled to receive any such rights, options,
warrants or distribution are to be determined, or (ii) the initial expiration
date set forth in any tender offer or exchange offer for shares of Common Stock,
or (iii) the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange such shares for securities
or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up. The failure to give the notice required by this Section 14 or any defect
therein shall not affect the legality or validity of any distribution, right,
option, warrant, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of Directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company.
SECTION 15. Notices to Company and Warrant Holders. Any
notice or demand authorized by this Agreement to be given or made by the
registered holder of any Warrant Certificate to or on the Company shall be
sufficiently given or made when and if deposited in the mail, first class or
registered, postage prepaid, addressed to the office of the
13
Company expressly designated by the Company at its office for purposes of this
Agreement (until the Warrant holders are otherwise notified in accordance with
this Section 15 by the Company), as follows:
JCC Holding Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Secretary
With a copy to:
▇▇▇▇▇▇ & Bird LLP
One Atlantic Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 303093425
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Any notice pursuant to this Agreement to be given by the
Company to the registered holder(s) of any Warrant Certificate shall be
sufficiently given when and if deposited in the mail, firstclass or registered,
postage prepaid, addressed (until the Company is otherwise notified in
accordance with this Section 15 by such holder) to such holder at the address
appearing on the Warrant register of the Company. In addition, any notice
pursuant to this Agreement to be given by the Company to the registered
holder(s) of any Warrant Certificate shall also be given to:
▇▇▇▇▇▇'▇ Entertainment, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ 900712007
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SECTION 16. Supplements and Amendments. The Company may from
time to time supplement or amend this Agreement without the approval of any
holders of Warrant Certificates in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provision herein, or to make any other provisions in regard to
matters or questions arising hereunder which the Company may deem necessary or
desirable and which shall not in any way adversely affect the interests of the
holders of the Warrant Certificates.
14
SECTION 17. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company shall bind and inure to the
benefit of its respective successors and assigns hereunder.
SECTION 18. Assignment; Transfer. This Warrant Agreement and
the rights and obligations hereunder shall not be assignable or transferable by
HET or its Affiliates to any person other than to a Permitted Transferee.
SECTION 19. Termination. This Agreement shall terminate at
5:00 p.m., New York time on the sixth anniversary of the Casino Opening Date.
Notwithstanding the foregoing, this Agreement will terminate on any earlier date
if all Warrants have been exercised in full.
SECTION 20. Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be construed in
accordance with the internal laws of said State.
SECTION 21. Benefits of This Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company and the registered holders of the Warrant Certificates any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company and the registered holders
of the Warrant Certificates.
SECTION 22. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
[Signature Page To Follow]
15
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
JCC HOLDING COMPANY
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇'▇ CRESCENT CITY
INVESTMENT COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Authorized Representative
S-1
EXHIBIT A
[Form of Warrant Certificate]
[Face]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENT OF SUCH ACT OR SUCH LAWS.
No. 4,000,000 Warrants
Warrant Certificate
JCC HOLDING COMPANY
This Warrant Certificate certifies that ________________, or
registered assigns, is the registered holder of Warrants expiring at 5:00 p.m.,
New York time on the sixth anniversary of the Casino Opening Date (as defined in
the Warrant Agreement) (the "Warrants"), to purchase Common Stock (as defined
herein) of JCC Holding Company, a Delaware corporation (the "Company"). As used
herein, "Common Stock" shall mean, after the Transition Date (as defined in the
Warrant Agreement), the unclassified common stock, $.01 par value, of the
Company. Each Warrant entitles the holder upon exercise to receive from the
Company any time after the opening of business on the Transition Date until on
or before 5:00 p.m., New York time on the sixth anniversary of the Casino
Opening Date (the "Exercise Period"), up to one fully paid and nonassessable
share of Common Stock (a "Warrant Share") at the initial exercise price (the
"Exercise Price") of $15.00 per share payable in lawful money of the United
States of America upon surrender of this Warrant Certificate and payment of the
Exercise Price at the office of the Company designated for such purpose, but
only subject to the conditions set forth herein and in the Warrant Agreement
referred to on the reverse hereof. Notwithstanding the foregoing, Warrants may
be exercised without the exchange of funds pursuant to the net exercise
provisions of Section 6 of the Warrant Agreement. The Exercise Price and number
of Warrant Shares issuable upon exercise of the Warrants are subject to
adjustment upon the occurrence of certain events set forth in the Warrant
Agreement.
Warrants may be exercised at any time during the Exercise
Period, and to the extent not exercised during the Exercise Period such Warrants
shall become void.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the following pages hereof and such further
provisions shall for all purposes have the same effect as though fully set forth
at this place.
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This Warrant Certificate shall not be valid unless signed
by two officers of the Company as required in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be signed by its President and by its Secretary and has caused
its corporate seal to be affixed hereunto or imprinted hereon.
Dated:
JCC HOLDING COMPANY
By:
-------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
By:
-------------------------------
L. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Secretary
A-2
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants expiring the sixth anniversary of the Casino
Opening Date entitling the holder on exercise to receive shares of Common Stock
and are issued or to be issued pursuant to a Warrant Agreement dated as of
October 30, 1998 (the "Warrant Agreement"), duly executed and delivered by the
Company, which Warrant Agreement is hereby incorporated by reference in and made
a part of this instrument and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities thereunder of
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company.
Warrants may be exercised at any time during the Exercise
Period. The holder of Warrants evidenced by this Warrant Certificate may
exercise them by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed, together
with payment of the Exercise Price in cash or by certified or official bank
check at the office of the Company designated for such purpose. In the event
that upon any exercise of Warrants evidenced hereby the number of Warrants
exercised shall be less than the total number of Warrants evidenced hereby,
there shall be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised. No adjustment shall
be made for any dividends on any Common Stock issuable upon exercise of this
Warrant.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price set forth on the face hereof may, subject to
certain conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
Notwithstanding anything to the contrary in the Warrant
Agreement, ▇▇▇▇▇▇'▇ Entertainment, Inc., a Delaware corporation ("HET"), and all
Subsidiaries (as defined herein) of HET, including ▇▇▇▇▇▇'▇ Crescent City
Investment Company, a Nevada corporation ("HCCIC"), will not be permitted to
exercise Warrants with respect to that number of Warrant Shares which would
cause HET and all Subsidiaries of HET to own in the aggregate more than 50.0% of
the Common Stock until such time as such exercise would not cause HET and all
Subsidiaries of HET to own in the aggregate more than 50.0% of the Common Stock.
"Subsidiary" with respect to HET, means (i) a corporation a majority of whose
capital stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by HET, by HET and one
or more Subsidiaries of HET or by one or more Subsidiaries of HET or (ii) any
individual, partnership, joint venture, trust, association, joint-
A-3
stock company, unincorporated organization or government or any agency or
political subdivision thereof in which HET, one or more Subsidiaries of HET, or
HET and one or more Subsidiaries of HET, directly or indirectly, at the date of
determination thereof has at least majority ownership interest.
The Warrant Agreement is intended to allow HCCIC during the
Exercise Period to exercise Warrants to purchase shares of Common Stock
sufficient to entitle HET and all Subsidiaries of HET, including HCCIC, to own
in the aggregate 50.0% of the Company's Common Stock. Accordingly, the Company
and HCCIC (collectively, the "Parties") intend for HCCIC to be protected from
dilution to the fullest extent possible. Therefore, if any event or circumstance
that could lead to the dilution of HCCIC's interest upon exercise of the
Warrants occurs, then, regardless of any consideration paid to the Company in
connection with such event and in addition to or as a supplement to any other
adjustment required by Section 11 of the Warrant Agreement, the number of
Warrant Shares shall be adjusted as necessary by the Board of Directors of the
Company in good faith to give full effect to the Parties' aforementioned intent.
Subject to certain exceptions listed in the Warrant Agreement, for purposes of
calculating the percentage of the Company's Common Stock held by HET and its
Subsidiaries under this antidilution provision, any shares of Common Stock
transferred by HET or its Subsidiaries to any person or entity which is not a
Permitted Transferee (as defined herein) shall be deemed to be held by HET and
its Subsidiaries.
If at any time after the Transition Date the Quoted Price (as
defined in the Warrant Agreement) of the Common Stock has exceeded $20.00 per
share for 45 consecutive trading days, the board of directors of the Company may
elect to redeem up to 75% of the then outstanding Warrants for a redemption
price equal to $0.05 per Warrant upon 45 days' written notice to all Warrant
holders; provided, however, that each Warrant holder shall have the right to
exercise Warrants and receive Warrant Shares (in accordance with Section 6 of
the Warrant Agreement) during such 45 day notice period and any such Warrants
exercised or Warrant Shares received during such 45 day notice period shall not
be subject to redemption under Section 13 of the Warrant Agreement. If fewer
than 75% of the Warrants outstanding at the time are to be redeemed, the board
of directors of the Company shall give written notice as to the aggregate number
of Warrants to be redeemed. Warrant holders are not required to exercise
Warrants not called for redemption and such Warrants shall remain valid and
exercisable during the term of the Warrant Agreement. If (i) an election to
redeem Warrants is made pursuant to Section 13 of the Warrant Agreement, and
(ii) during the 45 day notice period HCCIC exercises Warrants with respect to
that number of Warrant Shares which at the time of exercise would cause HET and
all Subsidiaries of HET to own in the aggregate 50.0% of the Common Stock, then
none of the Warrants called for redemption (whether or not exercised by HCCIC)
shall be redeemed.
The holders of the Warrants are entitled to certain
registration rights with respect to the Common Stock purchasable upon exercise
thereof. Said registration rights are set forth in full in a Registration Rights
Agreement dated as of October 30, 1998, between the
A-4
Company and HCCIC. A copy of the Registration Rights Agreement may be obtained
by the holder hereof upon written request to the Company.
Warrant Certificates, when surrendered at the office of the
Company by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Company a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company may deem and treat the registered holder(s)
thereof as the absolute owner(s) of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone), for the
purpose of any exercise hereof, of any distribution to the holder(s) hereof, and
for all other purposes, and the Company shall not be affected by any notice to
the contrary. Neither the Warrants nor this Warrant Certificate entitles any
holder hereof to any rights of a stockholder of the Company.
This Warrant Certificate, the Warrant Agreement, and the
rights and obligations hereunder and thereunder shall not be assignable or
transferable by HET and its affiliates to any person other than a Permitted
Transferee. A "Permitted Transferee" shall mean HET or its affiliates.
A-5
[Form of Election to Purchase]
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive __________ shares of
Common Stock and herewith tenders payment for such shares to the order of JCC
Holding Company in the amount of $_________ in accordance with the terms hereof
unless the holder exercises Warrants pursuant to the net exercise provisions of
Section 6 of the Warrant Agreement. The undersigned requests that a certificate
for such shares be registered in the name of ________________, whose address is
_______________________________ and that such shares be delivered to
________________ whose address is _________________________________. If said
number of shares is less than all of the shares of Common Stock purchasable
hereunder, the undersigned requests that a new Warrant Certificate representing
the remaining balance of such shares be registered in the name of
______________, whose address is _________________________, and that such
Warrant Certificate be delivered to _________________, whose address is
__________________.
Signature:
--------------------------------
Date:
--------------------
Signature Guaranteed:
---------------------
A-6