Exhibit 10.15
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement") is entered into
as of April 25, 2001, by and among Colony RIH Holdings, Inc., a Delaware
corporation (the "Company"), Colony RIH Voteco, LLC, a Delaware limited
liability company ("Voteco"), Colony Investors IV, L.P., a Delaware limited
partnership ("Colony IV"), Nicholas L. Ribis ("Ribis") and any additional
securityholders of the Company as identified from time to time on Schedule A
hereto (each an "Employee Stockholder" and, together with Voteco, Colony IV and
Ribis, the "Stockholders").
RECITALS
WHEREAS, as of the date hereof Colony RIH Acquisitions, Inc.,
a Delaware corporation ("CRA"), a wholly owned subsidiary of the Company,
purchased (the "Acquisition") (i) all the issued and outstanding shares of
capital stock of Resorts International Hotel, Inc., a New Jersey corporation
("RIH"), (ii) all the issued and outstanding shares of capital stock of New Pier
Operating Company, Inc., a New Jersey Corporation ("New Pier") and (iii) the
Warehouse Assets (as defined in the Purchase Agreement) pursuant to a Purchase
Agreement dated as of October 30, 2000 (as amended through the date hereof, the
"Purchase Agreement");
WHEREAS, in connection with the Acquisition, the Company,
desires to (1) sell to Ribis the number of shares of Class A Common Stock, par
value $.01 per share ("Class A Common"), and Class B Common Stock, par value
$.01 per share ("Class B Common" and, collectively with the Class A Common,
"Common Stock"), equivalent in the aggregate to 5% of the Class A Common and
Class B Common outstanding as of the consummation of the Acquisition, and (2)
grant to Ribis and to certain of its senior officers certain options to acquire
and other rights with respect to the Common Stock; and
WHEREAS, the Company, Voteco, Colony IV, Ribis and the
Employee Stockholders desire to enter into this Agreement for the purpose of
regulating certain aspects of their relationships with regard to each other and
the Company.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the Company and the
Stockholders agree as follows:
ARTICLE I.
DEFINITIONS
As used herein, the terms below shall have the following
meanings. Any such term, unless the context otherwise requires, may be used in
the singular or plural, depending upon reference.
"Affiliate" means (i) any Person or entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company (including, without limitation, each of the
Stockholders and their Related Parties), (ii) any spouse or non-adult child
(including by adoption) of such Person, (iii) any relative other than a spouse
or non-adult child
(including by adoption) who has the same principal residence of any natural
person described in clause (i) above, (iv) any trust in which any such Persons
described in clause (i), (ii) or (iii) above has a beneficial interest and (v)
any corporation, partnership, limited liability company or other organization of
which any such Persons described in clause (i), (ii) or (iii) above collectively
own more than fifty percent (50%) of the equity of such entity. For purposes of
this definition, beneficial ownership of more than ten percent (10%) of the
voting common equity of a Person shall be deemed to be control of such Person.
"Approved Purchaser" means a proposed purchaser of Common
Stock, that, in connection with its proposed purchase of Common Stock, (i) has
obtained all licenses, permits, registrations, authorizations, consents,
waivers, orders, findings of suitability or other approvals required to be
obtained from, and has made all filings, notices or declarations required to be
made with, all Gaming Authorities under all applicable Gaming Laws or (ii) is
not required to obtain any such licenses, permits, registrations,
authorizations, consents, waivers, orders, findings of suitability or other
approvals.
"Mr. Barrack" means Thomas J. Barrack, Jr., an individual.
"Board" means the Board of Directors of the Company.
"Class A Common" has the meaning set forth in the recitals
hereto.
"Class B Common" has the meaning set forth in the recitals
hereto.
"Closing Date" has the meaning set forth in the recitals
hereto.
"Commission" means the Securities and Exchange Commission.
"Common Stock" has the meaning set forth in the recitals
hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exempt Transfer" means transfers of Restricted Securities (i)
by any Stockholder to such Stockholder's Related Parties, so long as effected
pursuant to a bona fide transaction not intended to avoid the provisions of this
Agreement, (ii) subject to Section 2.4 hereof, by any Stockholder to any other
Person pursuant to an effective registration statement under the Securities Act,
and (iii) by Ribis or any Employee Stockholder to the Company, Voteco, Colony IV
or Affiliates of the Company, Voteco or Colony IV, provided that no transfer
pursuant to the foregoing clause (i) shall be an Exempt Transfer unless the
transferee agrees in writing to be bound by this Agreement as if such transferee
were a Stockholder with respect to such transferred securities and evidences
such agreement by executing a joinder agreement substantially in the form of
Exhibit 1 hereto, and, provided further, that no transfer pursuant to the
foregoing clauses (i) or (ii) shall be permitted unless the transferee is an
Approved Purchaser.
"Gaming Authorities" means all governmental authorities or
agencies with regulatory control or jurisdiction over the gaming or gambling
operations of the Company and its Subsidiaries, including without limitation the
New Jersey Casino Control Commission.
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"Gaming Laws" means any U.S. Federal, state, local or foreign
statute, ordinance, rule, regulation, permit, consent, approval, license,
judgment, order, decree, injunction or other authorization governing or relating
to the current or contemplated manufacturing, distribution, casino gambling and
gaming activities and operations of the Company and its Subsidiaries, including,
without limitation, the New Jersey Gaming Control Act and the rules and
regulations promulgated thereunder.
"IPO" means the closing of a public offering pursuant to an
effective registration statement under the Securities Act covering shares of the
Company's Common Stock, which shares are approved for listing or quotation on
the New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market.
"Offered Securities" has the meaning provided in Section
2.4(a).
"Offering Notice" has the meaning provided in Section
2.4(a)(i).
"Offering Stockholder" has the meaning provided in Section
2.4(a).
"Person" means an individual, partnership, limited liability
company, joint venture, corporation, trust or unincorporated organization or any
other similar entity.
"Qualified Sale" has the meaning set forth in Section 2.6(a).
"Qualified Stockholders" means Ribis (and for the purposes of
this definition Ribis shall be deemed to hold any Restricted Securities held by
Ribis' Related Parties who received such securities in an Exempt Transfer from
Ribis) and any other party hereinafter designated as a Qualified Stockholder by
Voteco in its sole and absolute discretion.
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Section 3.1, including, without
limitation, all registration, filing and NASD fees, all stock exchange listing
fees, all fees and expenses of complying with securities or blue sky laws, all
word processing, duplicating and printing expenses, messenger and delivery
expenses, the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance.
"Related Party" with respect to any Stockholder means (A) any
controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate
family member (in the case of an individual) of such Stockholder or (B) any
trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80% or more
controlling interest of which consist of such Stockholder and/or such other
Persons referred to in the immediately preceding clause (A).
"Reoffered Shares" has the meaning provided in Section
2.4(a)(iv).
"Restricted Securities" means any Common Stock owned
beneficially or of record by any Stockholder, including, in the case of Ribis
and Employee Stockholders, any shares of Common Stock that are subject to
vesting, and excluding any securities of the Company
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beneficially owned by Voteco, Colony IV or their respective Affiliates and
convertible into, exchangeable for or otherwise providing the holder thereof any
right to acquire shares of Common Stock.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means, with respect to any Person, all other
Persons of which such Person owns, directly or indirectly, a majority of the
voting capital stock or is a general partner or otherwise has the power to
control, by agreement or otherwise, the management and general business affairs
of such other Person.
"Tag-Along Offeror" has the meaning set forth in Section
2.5(a).
"Tag-Along Notice" has the meaning provided in Section 2.5(a).
"Tag-Along Percentage" has the meaning provided in Section
2.5(a).
"Tag-Along Shares" has the meaning provided in Section 2.5(a).
"Termination Date" has the meaning provided in Section 2.4(e).
"Third Party" has the meaning provided in Section 2.5(a).
"Transfer" has the meaning provided in Section 2.1.
"Transfer Restrictions Agreement" has the meaning provided in
Section 2.5(a).
"Transferee" has the meaning provided in Section 2.2.
ARTICLE II.
RESTRICTIONS ON TRANSFER
SECTION 2.1. General. (a) With respect to Ribis and each
Employee Stockholder, prior to the earlier of (1) that day following
consummation of an IPO on which any agreement entered into with the underwriter
or underwriters of such IPO restricting the ability of such Stockholder to sell,
assign, hypothecate or otherwise transfer Restricted Securities expires or is
terminated and (2) if no such agreement is entered into, the thirtieth business
day following an IPO, no Stockholder shall, directly or indirectly, sell,
assign, hypothecate or otherwise transfer (in each case, a "Transfer")
Restricted Securities without the express, written consent of Voteco, which may
be granted or denied at Voteco's sole and absolute discretion. Notwithstanding
the immediately preceding sentence, this Agreement shall not at any time limit,
restrict or apply to (1) any pledge of Restricted Securities held by Ribis to
secure obligations to Colony IV or its Affiliates, (2) any Exempt Transfer, (3)
any Transfer of Restricted Securities contemplated by the Note issued by Ribis
to Colony IV, dated of even date herewith or (4) any sale or other disposition
of Restricted Securities by Ribis or an Employee Stockholder pursuant to Section
2.5.
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(b) The Company shall not, and shall not permit any transfer
agent or registrar for the Restricted Securities to, transfer upon the books of
the Company any Restricted Securities purportedly Transferred by any Stockholder
to any purported Transferee, in any manner, unless such purported Transfer has
occurred in accordance with this Agreement, and any such purported Transfer not
in compliance with this Agreement shall be void.
SECTION 2.2. Legends; Securities Subject to this Agreement. In
the event a Stockholder shall Transfer any Restricted Securities (including any
such Restricted Securities acquired after the date hereof) to any Person (all
Persons acquiring Restricted Securities from a Stockholder, as described in this
Agreement, regardless of the method of transfer, shall be referred to
collectively as "Transferees" and individually as a "Transferee") in accordance
with this Agreement, such securities shall nonetheless bear legends as provided
in Section 4.1; provided that the provisions of this Section 2.2 shall not apply
in respect of a sale of Restricted Securities in a registered public offering
under the Securities Act or pursuant to Rule 144, or any successor rule, under
the Securities Act, pursuant to which the Transferee receives securities that
are freely tradable under the Federal securities laws.
SECTION 2.3. No Violations or Breach. No Stockholder shall,
directly or indirectly, Transfer any Restricted Securities at any time if such
action would constitute a violation of any Federal or state securities laws, a
breach of the conditions to any exemption from registration of Restricted
Securities under any such laws, a breach of any undertaking or agreement of such
Stockholder entered into pursuant to such laws or in connection with obtaining
an exemption thereunder or a violation of any Gaming Laws. In order to enforce
the foregoing, the Company may request that, in addition to any other
documentation reasonably required pursuant to this Agreement, the transferring
Stockholder provide it with a written opinion of counsel, in form and substance
reasonably acceptable to counsel to the Company, to the effect that such
Transfer is exempt from registration under the Federal securities laws and does
not violate any Gaming Laws, and that the transferee is an Approved Purchaser.
SECTION 2.4. Right of First Offer.
(a) General. Subject to Section 2.4(c) hereof, each time Ribis
or an Employee Stockholder proposes to Transfer any Restricted Securities, Ribis
or such Employee Stockholder, as applicable (the "Offering Stockholder"), shall
first make an offering of such Restricted Securities (referred to collectively
herein as the "Offered Securities") to the Company in accordance with the
following provisions:
(i) The Offering Stockholder shall deliver a notice (the "Offering
Notice") to the Company stating (1) the Offering Stockholder's
bona fide intention to offer such Offered Securities; (2) the
number of shares of such Offered Securities to be offered for
sale; (3) the price and terms, if any, upon which the Offering
Stockholder proposes to offer such Offered Securities; and (4)
that the proposed purchaser (the "Proposed Purchaser") of the
Offered Securities is an Approved Purchaser.
(ii) Within 15 days after the Offering Notice is given, the Company
may elect to purchase from the Offering Stockholder, at the
price and on the terms
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specified in the Offering Notice, any or all of the shares of
Offered Securities offered in the Offering Notice. Such right
shall be exercised by written notice delivered to the Offering
Stockholder by the Company prior to the expiration of the
15-day exercise period.
(iii) The closing of the purchase of any shares of Offered
Securities by the Company shall take place at the principal
offices of the Company (or such other location as the parties
may agree on) within fifteen (15) business days after the
expiration of the 15-day period following the giving of the
Offering Notice on a date and at a time reasonably acceptable
to each of the Company and the Offering Stockholder. At such
closing, the Company shall make payment in the appropriate
amount by means of a certified or cashier's check or a wire
transfer for the benefit of the Offering Stockholder against
delivery of certificates representing the securities so
purchased, duly endorsed in blank by the Person or Persons in
whose name such certificate is registered or accompanied by a
duly executed and guarantied stock or security assignment
separate from the certificate. The Company's obligation to
effect such payment shall be conditioned on the delivery of
such securities free and clear of any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, except
(a) as created by this Agreement and (b) with respect to Ribis
or any Employee Stockholder, any stock option or similar
agreement entered into between such Employee Stockholder and
the Company subsequent to the date hereof.
(iv) In the event the Company does not elect to purchase any or all
of the shares of Offered Securities offered in the Offering
Notice, the Company shall give written notice to Voteco and
Colony IV of its decision not to exercise its rights or of the
number of Offered Securities available for purchase (the
"Reoffered Shares") on or before the final day of such 15-day
period. The right to purchase such Reoffer Shares shall pass
automatically from the Company to Voteco and Colony IV. Voteco
and Colony IV will have until the 25th day following the
Offering Notice to the Company to exercise their purchase
rights under this Section 2.4 by written notice to the
Offering Stockholder and the Company. The closing of any
purchase and sale under this Subsection shall be held within
15 business days following the exercise by Voteco or Colony
IV, as the case may be, of the repurchase rights hereunder at
the principal offices of the Company (or such other location
as the parties may agree) on a date and at a time reasonably
acceptable to each of Voteco or Colony IV, as the case may be,
and the Offering Stockholder. At such closing, Voteco or
Colony IV, as the case may be, shall make payment in the
appropriate amount by means of a certified or cashier's check
or a wire transfer for the benefit of the Offering Stockholder
against delivery of certificates representing the securities
so purchased, duly endorsed in blank by the Person or Persons
in whose name such certificate is registered or accompanied by
a duly executed and guarantied stock or security assignment
separate from the
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certificate. Voteco's or Colony IV's obligation to effect such
payment shall be conditioned on the delivery of such
securities free and clear of any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, except
(a) as created by this Agreement and (b) with respect to Ribis
or any Employee Stockholder, any stock option or similar
agreement entered into between Ribis or such Employee
Stockholder and the Company subsequent to the date hereof.
(b) Right to Sell. In the event that all of the Offered
Securities being offered are not purchased at the closings referred to in
Subsections (a)(iii) or (a)(iv), the Offering Stockholder shall have the right
to sell or otherwise dispose of all Offered Securities offered in the Offering
Notice and not so purchased at the price stated, and upon other terms and
conditions not more favorable to the Proposed Purchaser in the aggregate than
specified, in the Offering Notice. The Offering Stockholder shall have such
right for the 90-day period beginning on the earlier of (i) the receipt by the
Offering Stockholder of notice from Voteco and Colony IV that they elect not to
exercise their purchase right under Subsection (a)(iv) and (ii) the closing of a
purchase and sale under Subsection (a)(iv), or such longer period not exceeding
six months from the earlier of the foregoing clauses (i) and (ii) as may be
required for the Proposed Purchaser to become an Approved Purchaser, so long as
the Offering Stockholder reasonably believes that the Proposed Purchaser will
become, and the Proposed Purchaser is exercising bona fide and good faith
efforts to become, an Approved Purchaser in connection with such proposed sale
or other disposition of Offered Securities. In the event that the Offering
Stockholder does not sell or otherwise dispose of such Offered Securities at the
price stated, and upon other terms and conditions not more favorable to the
Proposed Purchaser in the aggregate than specified, in the Offering Notice
within the period set forth in the previous sentence, the right of first offer
provided for in this Section 2.4 shall continue to be applicable to any
subsequent disposition of such Restricted Securities.
(c) Exception. Notwithstanding the terms and provisions of
Section 2.4(a) hereof, the right of first offer provided for in this Section 2.4
shall not be applicable to any repurchase of equity securities by the Company
upon the retirement or termination of Ribis or an Employee Stockholder, except
as set forth in Subsection 2.4(e) below, or any Exempt Transfer and shall
terminate upon the consummation of an IPO.
(d) Transferees Bound. In the event that the right of first
offer set forth in this Section 2.4 is not exercised, the purchaser of such
Restricted Securities shall be bound by the terms of this Agreement as required
by Section 2.2.
(e) Termination of Employment. If an Employee Stockholder
ceases to be employed by the Company or any subsidiary of the Company, for any
or no reason (each, a "Termination Date"), and the repurchase by the Company of
Restricted Securities owned by such Employee Stockholder is not governed by any
other agreement between the Company and such Employee Stockholder, then (1) such
Employee Stockholder shall be deemed an Offering Stockholder, (2) any and all
shares of Restricted Securities owned by such Employee Stockholder (excluding
(A) shares that are subject to vesting but have not vested and (B) shares that
are subject to forfeiture and are forfeited, in each case upon such termination)
shall be deemed Offered Securities, (3) the proposed offer price of such Offered
Securities shall be the "Fair Market Value" of the Offered
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Securities on the applicable Termination Date and (4) the provisions of
Subsections 2.4(a) to 2.4(d) shall be applied (except such Employee Stockholder
shall not be entitled to exercise any rights thereunder).
For the purposes of this Agreement, "Fair Market
Value" (when capitalized, unless the context clearly indicates
otherwise) means, as to a Qualified Stockholder, as of any
given date, (A) if shares of Common Stock of the same class as
the Offered Securities are publicly traded, the closing sale
price of such shares on such date (or the nearest preceding
date on which the Common Stock was traded) as reported in The
Wall Street Journal, or (B) if shares of Common Stock of the
same class as the Offered Securities are not publicly traded,
the fair market value of the Offered Securities as determined
in accordance with the procedures set forth below, in each
case based on the per share value of the Company as a whole as
of the relevant date, without any discount for the sale of a
minority interest and without considering lack of liquidity of
such Offered Securities, including transfer and other
restrictions on the Offered Securities:
(1) The Board shall determine the fair market value of
the Offered Securities in good faith, using
commercially reasonable methods and at the Company's
sole expense, provided, that if the Qualified
Stockholder is a member of or non-voting observer on
the Board, he shall recuse himself from all
deliberations of the Board regarding such
determination, and except as otherwise provided
herein shall not be entitled to receive or be
provided access to any minutes or other records of
the Board with respect to such determination. The
Board shall communicate the per share valuation as so
determined in writing to the Qualified Stockholder
within twenty business days of the date that his
employment with the Company is terminated or the
Board takes cognizance of the need to determine the
Fair Market Value of the Common Stock, and, upon his
request, shall provide to him appropriate supporting
documentation regarding the methods, assumptions and
other bases used in arriving at such valuation. If
acceptable to the Qualified Stockholder, the fair
market value of the Offered Securities shall be as so
determined.
(2) If the fair market value as determined under (1) is
not acceptable to the Qualified Stockholder, he shall
determine the fair market value of the Offered
Securities in good faith, using commercially
reasonable methods and at the Qualified Stockholder's
sole expense, and shall communicate the per share
valuation (the "Qualified Stockholder's Value") as so
determined in writing to the Board within 20 business
days following the Board's communication to the
Qualified Stockholder of the per share valuation
pursuant to clause (1) above and, upon the Board's
request, shall provide to the Board appropriate
supporting documentation regarding the methods,
assumptions and other bases
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used in arriving at such valuation. If acceptable to
the Board, the fair market value of the Offered
Securities shall be as so determined.
(3) If the fair market value as determined under (2) is
not acceptable to the Board, the Board and the
Qualified Stockholder shall then negotiate in good
faith to agree upon the fair market value of the
Offered Securities, based on the valuations under (1)
and (2) above.
(4) If the Board and the Qualified Stockholder shall be
unable by the foregoing means to agree upon the fair
market value of the Offered Securities within ten
business days after the Board has been advised of the
Qualified Stockholder's Value, the issue shall then
be submitted to binding arbitration in Atlantic City,
New Jersey according to the rules and procedures of
the American Arbitration Association. The Company and
the Qualified Stockholder shall each submit to the
arbitrator their valuations under (1) and (2) above,
together with all supporting documentation regarding
the methods, assumptions and other bases used in
arriving at such valuation. The arbitrator shall then
be instructed to choose which of the two valuations
more closely reflects the fair market value of the
Offered Securities, and shall not have the right to
choose a third valuation as the appropriate fair
market value of the Offered Securities. The party
whose valuation is not so chosen by the arbitrator
shall pay any and all costs and expenses of the
arbitration (but not the initial valuation by the
other party) including without limitation reasonable
attorneys' fees and other fees incurred by the
prevailing party in such arbitration.
For the purposes of this Agreement, "Fair Market
Value" (when capitalized, unless the context clearly indicates
otherwise) means, as to the Employee Stockholders other than
the Qualified Stockholders, as of any given date, (A) if
shares of Common Stock of the same class as the Offered
Securities are publicly traded, the closing sale price of such
shares on such date (or the nearest preceding date on which
the Common Stock was traded) as reported in The Wall Street
Journal, or (B) if shares of Common Stock of the same class as
the Offered Securities are not publicly traded, the value of
the Offered Securities as determined in good faith by the
Board, based upon the per share value of the Company as a
whole, without any discount for sale of a minority interest
and without considering any lack of liquidity of such Offered
Securities, including transfer and other restrictions thereon.
SECTION 2.5. Tag-Along Provisions.
(a) General. Subject to the Transfer Restriction Agreement
dated as of the date hereof (the "Transfer Restrictions Agreement") by and among
Mr. Barrack, Voteco and Colony IV, in
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the event that Voteco or Colony IV (in such capacity, a "Tag-Along Offeror")
proposes to offer Restricted Securities to any Person or group of Persons other
than an Affiliate (a "Third Party" and collectively, "Third Parties"), such sale
or other disposition shall not be permitted unless the Tag-Along Offeror shall
offer (or cause the Third Party to offer) the Qualified Stockholders the right
to elect to include, at the sole option of each Qualified Stockholder, in the
sale or other disposition to the Third Party such number of shares of such class
or classes of Restricted Securities that the Tag-Along Offeror proposes to offer
that are owned by such Qualified Stockholder as shall be determined in
accordance with Subsection 2.5(a)(i) (the "Tag-Along Shares"). The Tag-Along
Offeror shall deliver a notice (the "Tag-Along Notice") to the Qualified
Stockholders stating (1) the Tag-Along Offeror's bona fide intention to offer
such Tag-Along Shares; (2) the number of shares to be offered for sale; and (3)
the price and terms, if any, upon which the Tag-Along Offeror proposes to offer
such Tag-Along Shares. Notwithstanding any other provision of the Agreement,
Voteco and Colony IV shall be permitted to transfer Restricted Securities to
each other and to any Affiliate of either of them, provided that any subsequent
attempted transfer by such Affiliate of such Restricted Securities shall be
subject to this Subsection 2.5(a).
(i) Each Qualified Stockholder shall have the right, but
not the obligation, to sell or include in the Third
Party offer up to that percentage (the "Tag-Along
Percentage") of the number of Restricted Securities
owned by such Qualified Stockholder (rounded up to
the nearest whole share) equal to the ratio of (1)
the number of Restricted Securities that the
Tag-Along Offeror proposes to offer to the Third
Party to (2) the aggregate number of shares of
Restricted Securities owned by the Tag-Along Offeror.
(ii) The purchase from Qualified Stockholders pursuant to
this Section 2.5(a) shall be on the same terms and
conditions, including the price per share, the form
of consideration and the date of sale or other
disposition, as are received by the Tag-Along
Offeror.
(iii) Promptly (but in no event later than 15 business
days) after the consummation of the sale or other
disposition of shares of Restricted Securities of the
Tag-Along Offeror and the other Stockholders to the
Third Party pursuant to the Third Party offer, the
Tag-Along Offeror shall (1) notify such Qualified
Stockholders of the completion thereof, (2) cause to
be remitted to such Qualified Stockholders the total
sales price attributable to the Tag-Along Shares
which such Qualified Stockholders sold or otherwise
disposed of pursuant to the Third Party offer, and
(3) furnish such other evidence of the completion and
time of completion of such sale or other disposition
and the terms thereof as may be reasonably requested
by the Qualified Stockholders.
(iv) If within 15 business days after the Tag-Along Notice
is given, a Qualified Stockholder has not accepted
the offer to make an inclusion election, such
Qualified Stockholder will be deemed to have waived
any and all of its rights with respect to the sale or
other disposition of the Tag-Along Shares described
in the Tag-Along Notice. The Tag-Along Offeror shall
have the
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right to sell or otherwise dispose of the Restricted
Securities of the Tag-Along Offeror to the Third
Party or any other Person upon terms and conditions
(including the price per securities) not materially
more favorable to the Tag-Along Offeror than were set
forth in the Tag-Along Notice. The Tag-Along Offeror
shall have such right for the 60-day period beginning
on the 15th day after the Tag-Along Notice is given,
or such longer period not exceeding six months from
the 15th day after the Tag-Along Notice is given as
may be required for the Third Party to become an
Approved Purchaser, so long as the Tag-Along Offeror
reasonably believes that the Third Party will become,
and the Third Party is exercising bona fide and good
faith efforts to become, an Approved Purchaser in
connection with such proposed sale or other
disposition.
(v) If, at the end of such period, the Tag-Along Offeror
has not completed the sale of shares of Restricted
Securities of the Tag-Along Offeror in accordance
with the terms of the Third Party's offer, all the
restrictions on sale contained in this Agreement with
respect to Restricted Securities owned by the
Tag-Along Offeror shall again be in effect (unless
such period is extended with the consent of each of
the Qualified Stockholders).
(b) Exception. Notwithstanding any provision herein to the
contrary, Qualified Stockholders, other than Ribis, shall have no right to sell
or dispose of Tag-Along Shares pursuant to Subsection 2.5(a) if Voteco, Colony
IV or any Affiliate of either of them, individually or collectively, proposes to
sell to a Third Party or Third Parties any number of shares of Common Stock, if
after such sale Voteco, Colony IV and their respective Affiliates own in the
aggregate (x) if on or before an IPO, at least 80 percent of the
then-outstanding common equity of the Company, or (y) if after an IPO, at least
50 percent of the then-outstanding common equity of the Company, or shares of
Common Stock representing in the aggregate no greater than 20 percent of the
aggregate shares of Common Stock held by Voteco or Colony IV as of the date
hereof.
(c) Relationship to Section 2.4. Any proposed Transfer by any
Qualified Stockholder of Tag-Along Shares pursuant to this Section 2.5 is exempt
from Section 2.4, provided that Voteco or Colony IV shall have the right to
acquire the Tag-Along Shares on the same terms and at the same time as such
shares would otherwise be sold to the Third Party.
SECTION 2.6. Company Sale.
(a) General. If Voteco, Colony IV or their respective
Affiliates propose at any time to sell to a Third Party or Third Parties that
are Approved Purchasers, Restricted Securities representing 90 percent or more
of the then-outstanding common equity of the Company (a "Qualified Sale") or
propose to undertake an IPO, Ribis and all Employee Stockholders (1) will
consent to and raise no objections against such Qualified Sale or IPO, (2) in
any vote of stockholders required to approve such Qualified Sale, vote the
Restricted Securities held by them in favor of such Qualified Sale, provided
that this Subsection 2.6(a)(2) shall not be deemed to subject any such Qualified
Sale to any such vote, (3) in such Qualified Sale, will agree to sell the
Restricted Securities held by them at the price and on the terms and conditions
upon which
11
Voteco, Colony IV or their respective Affiliates propose to sell or otherwise
dispose of Restricted Securities held by them and (4) if requested by Voteco,
Colony IV or their respective Affiliates, will consent to and raise no
objections to any recapitalization or reclassification of the equity securities
of the Company, including any related amendment to the Certificate of
Incorporation of the Company, required to facilitate such Qualified Sale or IPO,
provided that, as to each class of Common Stock, all shares of such class are
treated identically in such recapitalization, reclassification and/or amendment.
Ribis and the Employee Stockholders will take all actions in their capacity as
stockholders that Voteco, Colony IV or their respective Affiliates reasonably
deem necessary or desirable in connection with the consummation of the Qualified
Sale or IPO. Without limiting the generality of the foregoing, it is expressly
agreed that, in respect of a Qualified Sale or IPO in accordance with this
Section 2.6, no Stockholder will assert any "dissenters" or similar statutory or
legal right, or otherwise assert any challenge to, such Qualified Sale.
(b) Same Consideration to all Stockholders. The obligations of
the Employee Stockholders with respect to a Qualified Sale are subject to the
satisfaction of the condition that, upon the consummation of the Qualified Sale,
all of the holders of Restricted Securities will receive the same form and
amount of consideration per share of Restricted Securities, and if any holders
of Restricted Securities are given an option as to the form and amount of
consideration to be received, all holders will be given the same option, it
being understood that if required by applicable law, appropriate tax
withholdings shall be deducted.
(c) Securities Law Compliance. If Voteco and Colony IV enter
into any negotiation or transaction for which Rule 506 under the Securities Act
(or any similar rule then in effect) may be available with respect to such
negotiation or transaction, Ribis and such Employee Stockholders as Voteco or
Colony IV may request will, upon such request, appoint a purchaser
representative (as such term is defined in Rule 501 under the Securities Act)
reasonably acceptable to Voteco and Colony IV. If Ribis or any Employee
Stockholder appoints a purchaser representative at the request of the Company,
the Company will pay the fees of such purchaser representative.
SECTION 2.7. Proportional Holding Requirement. Notwithstanding
any provision herein to the contrary, in no case shall Ribis or any Employee
Stockholder transfer Restricted Securities if, after giving effect to and as a
result of such transfer, such person would hold a number of shares of Class A
Common and Class B Common other than in equal proportion to the number of shares
of Class A Common and Class B Common then outstanding, respectively.
ARTICLE III.
REGISTRATION RIGHTS
SECTION 3.1. Incidental Registration. If, after an IPO, the
Company proposes to register any of its Common Stock under the Securities Act in
connection with a public offering of such securities solely for cash (other than
by a registration in connection with an acquisition or in a manner which would
not permit registration of Restricted Securities), it will each such time give
prompt written notice to all holders of Restricted Securities of such holders'
rights under this Section 3.1. Upon the written request of any such holder
received by the Company within
12
15 days after the receipt of any such notice (which request shall specify the
Restricted Securities intended to be disposed of by such holder and the intended
method of disposition thereof), the Company will, subject to the terms of this
Agreement, use its best efforts to effect the registration under the Securities
Act of all Restricted Securities which the Company has been so requested to
register by the holders thereof, to the extent requisite to permit the
disposition (in accordance with the intended methods thereof as aforesaid) of
the Restricted Securities to be so registered, by inclusion of such Restricted
Securities in the registration statement which covers the securities which the
Company proposes to register, provided that, if at any time after giving written
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such registration,
the Company shall determine for any reason either not to register or to delay
registration of such securities, the Company may, at its election, give written
notice of such determination to each holder of Restricted Securities, and
thereupon the Company (i) in the case of a determination not to register, shall
be relieved of its obligation to register any Restricted Securities in
connection with such registration (but not from its obligation to pay the
Registration Expenses therewith) and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering Restricted
Securities, for the same period as the delay in registering such other
securities. Notwithstanding the foregoing, during the first two years following
an IPO, Restricted Securities held by Ribis or an Employee Stockholder shall not
be eligible for incidental registration rights hereunder and shall not be
includible in any such registration statement unless Voteco, Colony or their
respective Affiliates are also including Restricted Securities in such
registration statement. In the event that during the first two years following
an IPO, Voteco, Colony IV or their respective Affiliates are including
Restricted Securities in a registration statement to which incidental
registration rights under this Section 3.1 otherwise apply, then Ribis and each
Employee Stockholder shall be entitled to incidental registration rights
hereunder only with respect to that number of Restricted Securities bearing the
same proportion to all of his Restricted Securities as the Restricted Securities
to be registered by Voteco, Colony IV and their respective Affiliates bears to
all Restricted Securities owned by Voteco, Colony IV and their respective
Affiliates in the aggregate. The Company will pay all Registration Expenses in
connection with each registration of Restricted Securities requested pursuant to
this Section 3.1.
SECTION 3.2. Priority in Incidental Registrations. If the
Company reasonably determines that the distribution of all or a specified number
of such Restricted Securities concurrently with the other securities being
distributed in the proposed registration would interfere with the successful
marketing thereof (such determination to state the basis of such belief and the
approximate number of such Restricted Securities which may be distributed
without such effect), the Company may, upon written notice to all holders of
such Restricted Securities, reduce pro rata the number of such Restricted
Securities so that the resultant aggregate number of such Restricted Securities
so included in such registration shall be equal to the number of shares stated
in such determination. The Company shall not enter into any agreement that would
result in either: (a) the number of Restricted Securities held by Ribis and
Employee Stockholders to be included in a registration pursuant to Section 3.1
being reduced pursuant to the foregoing sentence prior to any similar reduction
of shares of Common Stock held by any other holder to be included in such
registration pursuant to incidental registration rights, or (b) the reduction
rate provided for in the foregoing sentence with respect to the Restricted
Securities held by Ribis and Employee Stockholders being greater than the
reduction
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rate applicable to Common Stock of any other holder to be included in such
registration pursuant to incidental registration rights.
ARTICLE IV.
MISCELLANEOUS
SECTION 4.1. Legend. The certificates representing the Restricted
Securities to be held by each of the Stockholders shall bear the following
legend in addition to any other legend that may be required from time to time
under applicable law or pursuant to any other contractual obligation:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE
DISPOSED OF (A "TRANSFER") EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF A STOCKHOLDERS AGREEMENT DATED AS OF __________
__, 2001. ANY TRANSFEREE OF THESE SECURITIES TAKES SUBJECT TO
THE TERMS OF SUCH AGREEMENT, A COPY OF WHICH IS ON FILE WITH
THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR
STATE SECURITIES LAWS, AND NO TRANSFER OF THESE SECURITIES MAY
BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, OR (B) PURSUANT TO AN EXEMPTION
THEREFROM WITH RESPECT TO WHICH THE COMPANY MAY, UPON REQUEST,
REQUIRE A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT
SUCH TRANSFER IS EXEMPT FROM THE REQUIREMENTS OF THE ACT.
Each of the parties hereto agrees that it will not transfer
any Restricted Securities without complying with each of the restrictions set
forth herein and agrees that in connection with any such transfer it will, if
requested by the Company, deliver at its expense to the Company an opinion of
counsel, in form and substance reasonably satisfactory to the Company and
counsel for the Company, that such transfer is not in violation of the
securities laws of the United States of America or any state thereof or any
Gaming Laws.
SECTION 4.2. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to each party at the address of such party set forth below such
party's signature on this Agreement or to such address as the party to whom
notice is to be given may provide by like notice to each of the other parties to
this Agreement, a copy of which notice shall be on file with the Secretary of
the Company.
14
SECTION 4.3. Interpretation. When a reference is made in this
Agreement to an Article, Section or Schedule, such reference shall be to an
Article or Section of or a Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The Transfer Restrictions Agreement and the
transactions contemplated by it are transactions contemplated by this Agreement.
To the extent any restriction on the activities of the Company or its
Subsidiaries under the terms of this Agreement requires prior approval under any
Gaming Law, such restriction shall be of no force or effect unless and until
such approval is obtained. If any provision of this Agreement is illegal or
unenforceable under any Gaming Law, such provision shall be void and of no force
or effect.
SECTION 4.4. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
SECTION 4.5. Entire Agreement; No Third-Party Beneficiaries.
This Agreement constitutes the entire agreement, and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this agreement and are not intended to confer
upon any Person other than the parties any rights or remedies hereunder.
SECTION 4.6. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ANY APPLICABLE CONFLICTS OF LAW.
SECTION 4.7. Gaming Laws. Each of the provisions of this
Agreement is subject to and shall be enforced in compliance with the Gaming
Laws.
SECTION 4.8. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, provided that Voteco and Colony
IV may assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to any affiliate of Colony Capital, Inc. that
assumes Voteco's and Colony IV's obligations hereunder; provided further that,
notwithstanding any provision of this Agreement, no consent of the parties
hereto shall be required under this Section 4.8 for the Company to consummate a
merger or consolidation so long as such surviving corporation assumes the
Company's obligations hereunder. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
SECTION 4.9. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located
15
in the State of New York or in New York state court, this being in addition to
any other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto (a) consents to commit itself to the personal
jurisdiction of any Federal court located in the State of New York or any New
York state court in the event any dispute arises out of this Agreement or any of
the transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than a Federal or state court sitting in the State
of New York.
SECTION 4.10. Amendments and Waivers. Except as expressly
provided herein, this Agreement may not be amended except by an instrument in
writing signed on behalf of the holders of not less than a majority of all
shares of Restricted Stock held by all Stockholders, provided that the approval
of Voteco shall be required in any event; provided further that any amendment
that (i) affects the rights of holders of any class of Common Stock, which
amendment does not equally affect the rights of all holders of shares of such
class equally on a per share basis, and (ii) affects adversely the rights of any
Qualified Stockholder hereunder, shall require the written consent of Qualified
Stockholders holding at least a majority of all Restricted Securities held by
Qualified Stockholders.
SECTION 4.11. Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms to the fullest extent permitted by law.
SECTION 4.12. Cumulative Remedies. All rights and remedies of
either party hereto are cumulative of each other and of every other right or
remedy such party may otherwise have at law or in equity, and the exercise of
one or more rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies.
SECTION 4.13. Arbitration; Dispute Resolution Process. The
parties hereby agree that, in order to obtain prompt and expeditious resolution
of any disputes under this Agreement, each claim, dispute or controversy of
whatever nature, arising out of, in connection with, or in relation to the
interpretation, performance or breach of this Agreement (or any other agreement
contemplated by or related to this Agreement), including without limitation any
claim based on contract, tort or statute, or the arbitrability of any claim
hereunder (an "Arbitrable Claim"), shall be settled, at the request of any party
of this Agreement, exclusively by final and binding arbitration conducted in New
York. All such Arbitrable Claims shall be settled by three arbitrators in
accordance with the Commercial Arbitration Rules then in effect of the American
Arbitration Association (the "CAR"). EACH PARTY HERETO EXPRESSLY CONSENTS TO,
AND WAIVES ANY FUTURE OBJECTION TO, SUCH FORUM AND ARBITRATION RULES. Judgment
upon any award may be entered by any state or Federal court having jurisdiction
thereof. Except as required by law (including, without limitation, the rules and
regulations of the Commission and any stock exchange or quotation system which
the Restricted Securities are listed on or qualified for inclusion in), no party
nor the arbitrator shall disclose the existence, content, or results of any
arbitration hereunder without the prior written consent of all
16
parties. Except as provided herein, the laws of the State of New York shall
govern the interpretation, enforcement and all proceedings pursuant to this
Section 4.13.
The arbitrators referenced herein shall provide a written
statement to all parties to this Agreement setting forth the substantive basis
of such arbitrators' resolution of any Arbitrable Claim.
Adherence to this dispute resolution process shall not limit
the right of the parties hereto to obtain any provisional remedy, including
without limitation, injunctive or similar relief, from any court of competent
jurisdiction as may be necessary to protect their respective rights and
interests pending arbitration. Notwithstanding the foregoing sentence, this
dispute resolution procedure is intended to be the exclusive method of resolving
any Arbitrable Claims arising out of or relating to this Agreement. The parties
further agree that the nature, scope and timing of any production of documents
or other information or witness in respect of the resolution of any Arbitrable
Claim pursuant to this Section 4.13 shall be in accordance with the CAR.
The arbitration procedures shall follow the substantive law of
the State of New York, including the provisions of statutory law dealing with
arbitration, as it may exist at the time of the demand for arbitration, insofar
as said provisions are not in conflict with this Agreement and specifically
excepting therefrom sections of any such statute dealing with discovery and
sections requiring notice of the hearing date by registered or certified mail.
SECTION 4.14. Waiver of Jury Trial. Consistent with Section
4.13, each signatory to this Agreement further waives its respective right to a
jury trial of any claim or cause of action arising out of this Agreement or any
dealings between any of the signatories hereto relating to the subject matter of
this Agreement. The scope of this waiver is intended to be all-encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this Agreement, including, without limitation, contract
claims, tort claims, and all other common law and statutory claims. This waiver
is irrevocable, meaning that it may not be modified either orally or in writing,
and this waiver shall apply to any subsequent amendments, supplements or other
modifications to this Agreement or to any other document or agreement relating
to the transactions contemplated by this Agreement.
SECTION 4.15. Term. (a) Unless earlier terminated by an
instrument in writing amending this Agreement pursuant to Section 4.10, this
Agreement shall terminate if (1) Ribis and Employee Stockholders or their
Related Parties no longer beneficially own any shares of Restricted Securities
or (2) Voteco, Colony IV or their respective Affiliates own Restricted
Securities representing less than 25 percent of the then-outstanding common
equity of the Company (except if any purported Transfer of such Restricted
Securities that results a condition set forth in clause (1) or (2) is in
violation of this Agreement).
(b) Ribis and any Employee Stockholder, upon ceasing to
beneficially own any shares of Restricted Securities, shall cease to be party to
or have any rights under this Agreement.
SECTION 4.16. Representation by Counsel. Each party hereto
represents and agrees with each other that it has been represented by or had the
opportunity to be represented by, independent counsel of its own choosing, and
that it has had the full right and opportunity to
17
consult with its respective attorney(s), that to the extent, if any, that it
desired, it availed itself of this right and opportunity, that it or its
authorized officers (as the case may be) have carefully read and fully
understand this Agreement in its entirety and have had it fully explained to
them by such party's respective counsel, that each is fully aware of the
contents thereof and its meaning, intent and legal effect, and that it or its
authorized officer (as the case may be) is competent to execute this Agreement
and has executed this Agreement free from coercion, duress or undue influence.
The parties to this Agreement participated jointly in the negotiation and
drafting of this Agreement. If an ambiguity or question of intent or
interpretation arises, then this Agreement will be construed as if drafted
jointly by the parties to this Agreement, and no presumption or burden of proof
will arise favoring or disfavoring any party to this Agreement by virtue of the
authorship of any of the provisions of this Agreement.
SECTION 4.17. Voting. Ribis, Voteco and Colony IV agree that,
unless Ribis' services pursuant to the Vice Chairman Agreement have been
terminated by CRA or Ribis, for any or no reason, (i) Voteco and Colony IV shall
vote all shares of the Company held by them which have voting rights to
nominate, second and elect Ribis to the Board of Directors of the Company; and
(ii) Voteco and Colony IV shall cause their representatives on the Board to
take, and Ribis shall take, all action necessary to cause Ribis and the Board
representatives of Voteco and Colony IV to be elected or appointed to the Board
of Directors of CRA.
(Signature pages follow)
18
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
COLONY RIH HOLDINGS, INC.
By: /s/ Thomas J. Barrack, Jr.
----------------------------
Name: Thomas J. Barrack, Jr.
Title: President
Address: 1999 Avenue of the Stars, Suite 1200
Los Angeles, California 90067
Telecopy: (310) 282-8813
COLONY RIH VOTECO, LLC
By: /s/ Thomas J. Barrack, Jr.
----------------------------
Name: Thomas J. Barrack, Jr.
Title: Member
Address: 1999 Avenue of the Stars, Suite 1200
Los Angeles, California 90067
Telecopy: (310) 282-8813
[Signature Page to Stockholders Agreement]
COLONY INVESTORS IV, L.P.
By: COLONY CAPITAL IV, L.P., its general partner
By: COLONY GP IV, INC., its general partner
By: /s/ Thomas J. Barrack, Jr.
----------------------------
Name: Thomas J. Barrack, Jr.
Title: Managing Director, CEO, and President
Address: 1999 Avenue of the Stars, Suite 1200
Los Angeles, California 90067
Telecopy: (310) 282-8813
[Signature Page to Stockholders Agreement]
/s/ Nicholas L. Ribis
-------------------------------
Nicholas L. Ribis
Address:
[Signature Page to Stockholders Agreement]