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Exhibit G
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
SHAREHOLDERS AGREEMENT
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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 XXXXXX X. XXXXXXXX
("Xxxxxxxx") and XXXXX X. DAY ("Day"). The Investor, Xxxxxxxx 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
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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 Xxxxxxxx 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
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desirable actions within its control (including, without limitation, 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 Xxxxxxx X. Xxxxxx 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 0-000-000 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 Xxxxxxx X.
Xxxxxx 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) Xxxxxxxx'x and Day's obligation to vote their Shares as
described in this Paragraph 1 constitutes a voting agreement created under
Section 0-000-000 of the Colorado Business Corporation Act.
2. IRREVOCABLE PROXY. IN ORDER TO SECURE EACH OF XXXXXXXX'X 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
XXXXXXXX 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 XXXXXXXX OR DAY FAILS TO COMPLY WITH THE PROVISIONS
OF THIS AGREEMENT. THE PROXIES AND POWERS GRANTED BY XXXXXXXX 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 XXXXXXXX OR DAY AND THE SUBSEQUENT HOLDERS OF THEIR
SHAREHOLDER SHARES.
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3. REPRESENTATIONS AND WARRANTIES OF XXXXXXXX AND DAY
Each of Xxxxxxxx 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
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elected to purchase all of the Shareholder Shares being offered, the
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.
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The Company shall imprint such legend on certificates evidencing Shareholder
Shares outstanding as of the date hereof.
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).
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"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, 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
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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 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 Xxxxxxx X. Xxxxxx; it being
acknowledged that (i) any entity managed by Xxxxxx Entertainment Ltd. and/or
Xxxxxxx X. Xxxxxx, (ii) any entity in which either Xxxxxx Entertainment Ltd. or
Xxxxxxx X. Xxxxxx is one of the trustees and/or one of the beneficiaries or
(iii) any entity in which either Xxxxxx Entertainment Ltd. or Xxxxxxx X. Xxxxxx
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,
Xxxxxxxx and Day at the addresses indicated below:
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Notices to the Investor:
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Diversified Opportunities Group Ltd.
c/x Xxxxxx Entertainment Ltd.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Fax No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
---------------------------------------------------
Xxxx Xxxxxx Parks
0000 XX Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
Notices to the Company:
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Black Hawk Gaming & Development Company, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, President
Fax No.: (000) 000-0000
with a copy (shall not constitute notice) to:
---------------------------------------------
Xxxxx & Xxxxxx P.C.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Fax No.: (000) 000-0000
Notices to Xxxxxxxx:
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Xxxxxx X. Xxxxxxxx
c/o Black Hawk Gaming & Development Company, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
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Notices to Day:
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Xxxxx X. Day
c/o Rock Bottom Restaurants, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
16. GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEABILITY OF THIS AGREEMENT AND
THE EXHIBITS AND SCHEDULES HERETO 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.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
DIVERSIFIED OPPORTUNITIES
GROUP LTD.
By: XXXXXX ENTERTAINMENT LTD.,
its manager
By /s/ Xxxxx X. Xxxxxxxxxx
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Its Vice President
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BLACK HAWK GAMING &
DEVELOPMENT COMPANY, INC.
By /s/ Xxxxxx X. Xxxxxxxx
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Its Chief Executive Officer
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/s/ Xxxxxx X. Xxxxxxxx
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XXXXXX X. XXXXXXXX
/s/ Xxxxx X. Day
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XXXXX X. DAY
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