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EXHIBIT 10.3
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
SHAREHOLDERS AGREEMENT
THIS AGREEMENT is made as of November 12, 1996, by and among BLACK HAWK
GAMING & DEVELOPMENT COMPANY, INC., a Colorado corporation (the "Company"),
DIVERSIFIED OPPORTUNITIES GROUP LTD., an Ohio limited liability company or its
nominee as described in Section 12 (the "Investor"), and ROBERT D. GREENLEE
("Greenlee") and FRANK B. DAY ("Day"). The Investor, Greenlee and Day are
sometimes collectively referred to as the "Shareholders" and individually as a
"Shareholder."
RECITALS
A. Pursuant to a certain Amended and Restated Purchase Agreement
dated as of even date herewith, by and between Investor and the Company (the
"Purchase Agreement"), Investor is acquiring certain Shares and a Note which is
convertible into certain Shares (each as defined in the Purchase Agreement) of
the Company.
B. It is a condition to closing the transactions contemplated by the
Purchase Agreement that the parties enter into this Agreement for the purposes,
among others, of (i) establishing the composition of the Company's Board of
Directors (the "Board"), (ii) assuring continuity in the management and
ownership of the Company, and (iii) limiting the manner and terms by which the
Shareholders' Shares may be transferred.
C. Capitalized terms used herein are defined in Paragraph 7 hereof.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Covenants With Respect To Voting.
(a) From and after the Closing (as defined in the Purchase
Agreement) and until the occurrence of both of the conditions described in
Sections 1(a)(i) and 1(a)(ii) below, each of Greenlee and Day shall vote all of
his Shareholder Shares (as defined in paragraph 7 hereof) and any other voting
securities of the Company over which such Shareholder has voting control and
shall take all other necessary or desirable actions within his control (whether
in his capacity as a stockholder, director, member of a board committee or
officer of the Company or otherwise, and including, without limitation,
attendance at meetings in person or by proxy for purposes of obtaining a quorum
and execution of written consents in lieu of meetings), and the Company shall
take all reasonable, necessary or desirable actions within its control
(including, without limitation,
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calling special board and shareholder meetings), to ensure that the size of the
Board remains at seven (three members being nominees of the Investor) and
voting for the election of Jeffrey P. Jacobs as Chief Executive Officer and Co-
Chairman of the Board of Seller and to duly call or cause the Company to call a
special meeting of shareholders of the Company to occur on or before January
31, 1997 (the "Special Meeting") to approve Investor's acquisition of the
Shares which may be acquired upon conversion of the Note and to vote or
continue to vote at the Special Meeting or otherwise, as the case may be, their
Shares in favor of the following proposals, which will become effective at such
time as Purchaser owns 820,000 or more Shares:
(i) expanding the number of directors of the
Company to nine and electing (or, if already
appointed by the Board, ratifying the
appointment of five directors designated by
the Investor (the "Investor Directors"));
and
(ii) adopting staggered terms for the Company's
Board in accordance with Section 7-108-106
of the Colorado Business Corporation Act
and, no later than the next annual meeting
of Shareholders following such time as the
Investor owns 820,000 or more Shares,
nominating directors to the three classes as
follows: Class I shall have three directors
(one nominee of the Company and two nominees
of the Investor, Class II shall have three
nominees (two nominees of the Company and
one of the Investor) and Class III shall
have three nominees (two nominees of the
Investor and one of the Company);
(iii) electing or ratifying the election of
Jeffrey P. Jacobs as Chief Executive Officer
and as Chairman of the Board of the Company;
(iv) at the request of the Investor, electing at
least one of the Investor Directors to the
board of directors of any of the Company's
Subsidiaries (a "Sub Board"); or
(v) at the request of the Investor, at least one
of the Investor Directors shall be a member
of the Compensation Committee and, at the
request of the Investor, at least one of the
Investor Directors shall be a member of any
other committee of the board or a Sub Board,
and any other committees of the Board or a
Sub Board shall be created only upon the
approval of six members of the Board.
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(b) The removal from the Board or a Sub Board (with or without
cause) of any representative designated pursuant to this Paragraph 1 by the
Investor shall be at the Investor's written request, but only upon such written
request and under no other circumstances.
(c) In the event that any representative designated hereunder
by the Investor hereunder ceases to serve as a member of the Board or a Sub
Board during his term of office, the resulting vacancy on the Board or the Sub
Board shall be filled by a representative designated by the Investor as
provided hereunder.
(d) The Company shall pay the reasonable out-of-pocket
expenses incurred by each director in connection with attending the meetings of
the Board, any Sub Board and any committee thereof.
(e) If any party fails to designate a representative to fill a
directorship pursuant to the terms of this Paragraph 1, the election of an
individual to such directorship shall be accomplished in accordance with the
Company's bylaws and applicable law.
(f) Greenlee's and Day's obligation to vote their Shares as
described in this Paragraph 1 constitutes a voting agreement created under
Section 7-107-302 of the Colorado Business Corporation Act.
2. IRREVOCABLE PROXY. IN ORDER TO SECURE EACH OF GREENLEE'S AND
DAY'S OBLIGATION TO VOTE HIS SHAREHOLDER SHARES AND OTHER VOTING SECURITIES OF
THE COMPANY IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 1 HEREOF, EACH OF
GREENLEE AND DAY HEREBY APPOINTS THE INVESTOR AS HIS TRUE AND LAWFUL PROXY AND
ATTORNEY-IN-FACT, WITH FULL POWER OF SUBSTITUTION, TO VOTE ALL OF HIS
SHAREHOLDER SHARES AND OTHER VOTING SECURITIES OF THE COMPANY FOR THE ELECTION
AND/OR REMOVAL OF DIRECTORS AND ALL SUCH OTHER MATTERS AS EXPRESSLY PROVIDED
FOR IN PARAGRAPH 1. THE INVESTOR MAY EXERCISE THE IRREVOCABLE PROXY GRANTED TO
HIM/IT HEREUNDER AT ANY TIME GREENLEE OR DAY FAILS TO COMPLY WITH THE
PROVISIONS OF THIS AGREEMENT. THE PROXIES AND POWERS GRANTED BY GREENLEE AND
DAY PURSUANT TO THIS PARAGRAPH 2 ARE COUPLED WITH AN INTEREST AND ARE GIVEN TO
SECURE THE PERFORMANCE OF THEIR RESPECTIVE OBLIGATIONS TO THE INVESTOR UNDER
THIS AGREEMENT. SUCH PROXIES AND POWERS SHALL BE IRREVOCABLE-FOR THE TERM SET
FORTH IN PARAGRAPH 1 OF THIS AGREEMENT AND SHALL SURVIVE THE DEATH,
INCOMPETENCY, DISABILITY OR BANKRUPTCY OF GREENLEE OR DAY AND THE SUBSEQUENT
HOLDERS OF THEIR SHAREHOLDER SHARES.
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3. Representations and Warranties of Greenlee and Day
Each of Greenlee and Day represents and warrants that (i) each is
the record owner of the number of Shareholder Shares set forth opposite his
name on Schedule A attached hereto, and (ii) such Shareholder has not granted
and is not a party to any proxy, voting trust or other agreement which is
inconsistent with, conflicts with or violates any provision of this Agreement.
No holder of Shareholder Shares shall grant any proxy or become party to any
voting trust or other agreement which is inconsistent with, conflicts with or
violates any provision of this Agreement.
4. Restrictions on Transfer of Shareholder Shares.
(a) Transfer of Shareholder Shares. No Shareholder shall
sell, transfer, assign, pledge or otherwise dispose of (whether with or without
consideration and whether voluntarily or involuntarily or by operation of law)
any interest in any Shareholder Shares (a "Transfer"), except pursuant to the
provisions of this Paragraph 4; provided however that any Shareholder may,
without restriction and without notice to any other Shareholder, transfer
Shareholder Shares by inter vivos gift or testamentary disposition to a
transferring Shareholder's spouse or lineal descendants or to a trust for the
benefit of such persons, to a family partnership consisting of the Shareholder
and/or such persons if the designated transferee, heir, trust or partnership,
upon transfer of record ownership of such Shares, agrees to be bound by the
terms and provisions of this Agreement.
(b) First Offer Right. Subject to Paragraph 4(c), below, at
least 30 days prior to making any Transfer of any Shareholder Shares (the
"Election Period"), the transferring Shareholder (the "Transferring
Shareholder") shall deliver a written notice (an "Offer Notice") to the Company
and the other Shareholders (the "Other Shareholders"). The Offer Notice shall
disclose in reasonable detail the proposed number of Shareholder Shares to be
transferred, the proposed terms and conditions of the Transfer and the identity
of the prospective transferee(s) (if known). Each Other Shareholder may elect
to purchase all (but not less than all) of his Pro Rata Share (as defined
below) of the Shareholder Shares specified in the Offer Notice at the price and
on the terms specified therein by delivering written notice of such election to
the Transferring Shareholder as soon as practical but in any event within 20
days after delivery of the Offer Notice. Any Shareholder Shares not elected to
be purchased by the end of such 20-day period shall be reoffered for the
ten-day period prior to the expiration of the Election Period by the
Transferring Shareholder on a pro rata basis to the Other Shareholders who have
elected to purchase their Pro Rata Share and, if there are any such Shareholder
Shares remaining after such allocation, the Company shall have the right to
purchase such remaining Shareholder Shares. If the Other Shareholders and/or
the Company have elected to purchase Shareholder Shares from the Transferring
Shareholder, the transfer of such shares shall be consummated as soon as
practical after the delivery of the election notice(s) to the Transferring
Shareholder, but in any event within 15 days after the expiration of the
Election Period. To the extent that the Company and the Other Shareholders
have not elected to purchase all of the Shareholder Shares being offered, the
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Transferring Shareholder may, within 90 days after the expiration of the
Election Period, transfer such Shareholder Shares to one or more third parties
at a price no less than the price per share specified in the Offer Notice and
on other terms no more favorable to the transferees thereof than offered to the
Company and the Other Shareholders in the Offer Notice. Any Shareholder Shares
not transferred within such 90-day period shall be reoffered to the Other
Shareholders under this Paragraph 4 prior to any subsequent Transfer. The
purchase price specified in any Offer Notice shall be payable solely in cash at
the closing of the transaction or in installments over time, and no Shareholder
Shares may be pledged except on terms and conditions satisfactory to the
Investor. Each Shareholder's "Pro Rata Share" shall be based upon such
Shareholder's proportionate ownership of all Shareholder Shares owned by
Shareholders other than the Transferring Shareholder.
(c) Exception for Market Transactions. Should a Transferring
Shareholder wish to sell Shareholder Shares in a bona-fide open market
transaction, pursuant to Rule 144 adopted under the Securities Act of 1933 or
otherwise, such Shareholder, at least 48 hours prior to entering a sell or
limit order with respect to such shares, shall so advise the Company and the
Other Shareholders who shall have a period of 48 hours to elect to purchase
their Pro Rata Share of such shares at the price which could have been obtained
upon execution of the order on the open market during such 48 hour period. If
the Other Shareholders and/or the Company have elected to purchase Shareholder
Shares from the Transferring Shareholder, the transfer of such Shares shall be
consummated with three days after the Company and/or any Shareholder elects to
purchase Shareholder Shares under this Paragraph 4(c). To the extent that the
Company and the Other Shareholders have not elected to purchase all of the
Shareholder Shares being offered pursuant to this Paragraph 4(c), the
Transferring Shareholder may transfer such Shares in such open market
transaction or as otherwise described above. Any Shareholder Shares not so
transferred shall be reoffered to the Other Shareholders under this Paragraph 4
prior to any subsequent Transfer.
5. Legend.
(a) Each certificate evidencing Shareholder Shares and each
certificate issued in exchange for or upon the transfer of any Shareholder
Shares covered hereby shall be stamped or otherwise imprinted with a legend in
substantially the following form:
The transfer of the securities represented by this certificate is
subject to the conditions specified in the Shareholders
Agreement, dated as of November 12, 1996 and as amended and
modified from time to time, between the issuer (the "Company")
and certain stockholders, and the Company reserves the right to
refuse the transfer of such securities until such conditions have
been fulfilled with respect to such transfer.
The Company shall imprint such legend on certificates evidencing Shareholder
Shares outstanding as of the date hereof.
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6. Transfer. Prior to transferring any Shareholder Shares to any
Person, the Transferring Shareholder shall cause the prospective transferee to
be bound by this Agreement and to execute and deliver to the Company and the
Other Shareholders a counterpart of this Agreement.
7. Definitions.
"Affiliate" of a Person means any other Person controlling, controlled
by or under common control with such first Person.
"Board" has the meaning set forth in the preamble.
"Closing" has the meaning set forth in the Purchase Agreement.
"Common Stock" means the Company's common shares, $.001 par value.
"Company" has the meaning set forth in the preamble.
"Investor" has the meaning set forth in the preamble.
"Investor Directors" has the meaning set forth in Paragraph 1(a).
"Note has the meaning set forth in the Purchase Agreement.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Purchase Agreement" has the meaning set forth in the preamble.
"Shareholder Shares" means (i) any Common Stock purchased or otherwise
acquired by any Shareholder, and (ii) any Common Stock issued or issuable with
respect to the securities referred to in clause (i) above by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
"Shareholders" has the meaning set forth in the preamble.
"Sub Board" has the meaning set forth in Paragraph l(a)(v).
"Subsidiary" means, with respect to any Person, any corporation limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled,
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directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a limited liability
company, partnership, association or other business entity, a majority of the
limited liability company, partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by any
Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority
of limited liability company, partnership, association or other business entity
gains or losses or shall be or control the managing director or general partner
of such limited liability company, partnership, association or other business
entity.
"Transfer" has the meaning set forth in Paragraph 4.
8. Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Shareholder Shares in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Shareholder Shares as the owner
of such shares for any purpose.
9. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Shareholders unless such modification,
amendment or waiver is approved in writing by the parties hereto. The failure
of any party to enforce any of the provisions of this Agreement shall in no way
be construed as a waiver of such provisions and shall not affect the right of
such party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.
10. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect the validity, legality or enforceability of any other provision of
this Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
11. Entire Agreement. Except as otherwise expressly set forth
herein, this Agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way.
12. Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
parties hereto and may not be assigned; provided, however, subject to any
required approval of the Division, the Commission (both as
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defined in the Purchase Agreement) and the state and local liquor licensing
authorities, the Investor may assign its rights and obligations hereunder, in
whole or in part, to one or more corporations, limited liability companies,
partnerships, trusts or other entities which are under common control with, or
controlled through equity and/or voting control by the Investor or Jeffrey P.
Jacobs; it being acknowledged that (i) any entity managed by Jacobs
Entertainment Ltd. and/or Jeffrey P. Jacobs, (ii) any entity in which either
Jacobs Entertainment Ltd. or Jeffrey P. Jacobs is one of the trustees and/or
one of the beneficiaries or (iii) any entity in which either Jacobs
Entertainment Ltd. or Jeffrey P. Jacobs beneficially owns 15% or more of the
outstanding equity securities constitutes common control.
13. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which taken
together shall constitute one and the same agreement.
14. Remedies. The Company and the Shareholders shall be entitled to
enforce their rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages would not be an adequate remedy for any breach of the
provisions of this Agreement and the Shareholders may in their discretion apply
to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief (without posting a bond or other security)
in order to enforce or prevent any violation of the provisions of this
Agreement.
15. Notices. Except for notices given in accordance with Section
4(c), which shall be deemed given only upon receipt by the Company and the
Other Shareholders, all notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid or sent by telecopier. Such
notices, demands and other communications shall be sent to the Company, the
Investor, Greenlee and Day at the addresses indicated below:
Notices to the Investor:
Diversified Opportunities Group Ltd.
c/o Jacobs Entertainment Ltd.
425 Lakeside Avenue
Cleveland, OH 44114
Attention: Jeffrey P. Jacobs
Fax No.: (216) 861-6315
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with a copy (which shall not constitute notice) to:
Hahn Loeser Parks
3300 BP America Building
200 Public Square
Cleveland, OH 44114-2301
Attention: Stephen P. Owendoff, Esq.
Fax No.: (216) 241-2824
Notices to the Company:
Black Hawk Gaming & Development Company, Inc. 2060
Broadway, Suite 400 Boulder, Colorado 80302 Attention:
Stephen R. Roark, President Fax No.: (303) 444-7968
with a copy (shall not constitute notice) to:
Jones & Keller P.C.
1625 Broadway, Suite 1600
Denver, Colorado 80202
Attention: Samuel E. Wing, Esq.
Fax No.: (303) 893-6506
Notices to Greenlee:
Robert D. Greenlee
c/o Black Hawk Gaming & Development Company, Inc. 2060
Broadway, Suite 400 Boulder, Colorado 80302 Fax No.: (303)
444-7968
Notices to Day:
Frank B. Day
c/o Rock Bottom Restaurants, Inc.
1050 Walnut Street, Suite 402
Boulder, Colorado 80302
Fax No.: (303) 417-4199
16. GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEABILITY OF THIS AGREEMENT AND
THE EXHIBITS AND SCHEDULES HERETO
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SHALL BE GOVERNED BY THE LAWS OF THE STATE OF COLORADO, WITHOUT GIVING EFFECT
TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE
STATE OF COLORADO OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION
OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF COLORADO.
17. Business Days. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or legal holiday
in the State of Colorado, the time period shall automatically be extended to
the business day immediately following such Saturday, Sunday or legal holiday.
18. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK.]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
DIVERSIFIED OPPORTUNITIES GROUP LTD.
By: JACOBS ENTERTAINMENT LTD., its manager
By /s/ David C. Grunenwald
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Its Vice President
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BLACK HAWK GAMING &
DEVELOPMENT COMPANY, INC.
By /s/ Robert D. Greenlee
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Its Chief Executive Officer
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/s/ Robert D. Greenlee
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ROBERT D. GREENLEE
/s/ Frank B. Day
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FRANK B. DAY
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