1
EXHIBIT 10.31
SHAREHOLDER VOTING AND CONTROL AGREEMENT
AGREEMENT dated this 30th day of November, 1996, by and between Xxxxx
X. Xxxxxxx ("Xxxxxxx"), Xxxxxxxx X. XxXxxxx ("XxXxxxx"), Xxxxxxx X. Xxxxx
("Xxxxx"), Xxxxxx X. Xxxxxxx ("Xxxxxxx"), Xxxxxxx Xxxxxxxxx ("Xxxxxxxxx"),
Xxxxxxx X. Xxxx ("Xxxx"), E. Xxxxx Xxxxx and Xxxx X. Xxxxx and National Lodging
Companies, Inc. ("Lodging"), all of such parties hereinafter referred to
collectively as "Shareholders."
RECITALS
The Shareholders own all of the outstanding common stock of Jubilee
Gaming Corporation ("the Company"), a Minnesota corporation which operates the
Jubilee Casino in Cripple Creek, Colorado (the "Business"). The Board of
Directors of the Company, consisting of Messrs. Forsman, Klinkhammer, XxXxxxx
and Xxxxx have determined that it is advisable and in the best interests of the
Company to obtain additional capital through a public offering of common stock
of the Company and have authorized the Company's chief executive officer to
enter into a Letter of Intent with X. X. Xxxxxx & Co., Inc. and Xxxxxxxx Xxxxxx
& Co., Inc. dated August 8, 1996, providing for a public offering of 1,200,000
units of the Company's securities (each unit consisting of one share of common
stock and one common stock purchase warrant) for a gross offering price of
$6,000,000 or $5.00 per unit (the "Public Financing"). In order to provide for
the independence of the Company in the operation and control of the Business,
the Shareholders desire to make certain provisions regarding the management and
control of the Company, to take place effective upon the closing of the Public
Financing, all as hereinafter set forth. The Shareholders intend that, subject
to the closing of the Public Financing, this Agreement constitute a Shareholder
Voting Agreement within the meaning of Minnesota Statutes Section 302A.455
among Messrs. Xxxxxxx, XxXxxxx and Xxxxx and Lodging. In addition, the
Shareholders intend that this Agreement constitute a Shareholder Control
Agreement among them within the meaning of Minnesota Statutes, Section
302A.457.
In consideration of the premises and the mutual covenants hereinafter
contained, the Shareholders agree as follows:
1. CONDITION PRECEDENT TO EFFECTIVENESS; TERM. This Agreement and
all covenants contained herein by the Shareholders, shall become effective upon
the closing of the Public Financing. In the event the Public Financing is not
completed on or before March 1, 1997, this Agreement shall be null and void and
of no further effect. Upon its becoming effective, this Agreement shall
continue in force until January 1, 2001. This Agreement may be extended for up
to one additional year upon the written consent of Lodging and the holders of a
majority of the shares of the Company then owned by Messrs. Xxxxxxx, Xxxxx and
XxXxxxx. This Agreement shall also terminate at such time as Lodging, or
Lodging and its affiliates in the aggregate, beneficially own 20% or less of
the Company's outstanding common stock. For purposes of the foregoing
provisions of this Section 1, ownership of the Company's shares shall be
determined in the manner specified by Rule 13d-3 of the
2
Securities Exchange Act of 1934 ("Exchange Act"), as amended, and the term
"affiliate" shall have the meaning set forth in Rule 144(a) of the General
Rules and Regulations under the Securities Act of 1933.
2. EXCHANGE ACT REPORTING. If, as a result of this Agreement,
the Shareholders constitute a "group" within the meaning of Section 13(d) of
the Exchange Act, as amended, the parties agree that Xxxxxxx may prepare and
file, on their behalf, with the Securities and Exchange Commission one or more
forms of Schedule 13D or any successor form thereto, and any and all amendments
thereto, to disclose any group relationship and voting provisions and stock
ownership relating thereto. The Shareholders agree to fully cooperate with
Xxxxxxx in connection with the filing of one or more Schedules 13D with the
Securities and Exchange Commission required to be filed, together with
amendments thereto, to disclose any such group relationship, securities,
ownership and voting provisions, or changes thereto, as may be required
pursuant to Section 13(d) of the Exchange Act. In the event Xxxxxxx is not
able to obtain the signature of any Shareholder which may be required in
connection with any of the foregoing filings, such Shareholder hereby grants to
Xxxxxxx, Xxxxx or XxXxxxx, and each of them acting individually, an irrevocable
power of attorney, coupled with an interest, to make, execute and file any of
such schedules or forms on behalf of such Shareholder. In the event Xxxxxxx is
unavailable, unwilling, deceased, disabled or fails for any reason to effect
any such filings, such filings may be prepared, coordinated and filed as
contemplated herein by Xxxxx or XxXxxxx, or any of them acting individually.
Any and all such filings shall be made on advice, and with the assistance, of
legal counsel.
3. VOTING FOR BOARD OF DIRECTORS. The Board of Directors of the
Company shall, until their successors are elected, consist of the current
members of the Board, Xxxx X. Xxxxxxxxxxx, XxXxxxx, Xxxxx and Xxxxxxx, (the
"Current Members"), together with an additional Gaming Director to be
designated by Xxxxx and Xxxxxxx and two additional non-employee directors (the
"Independent Directors") as hereinafter provided. In the event of the death or
resignation of one of the Current Members, the following procedure shall
apply:
(a) a vacancy created by the loss of Messrs. Xxxxxxxxxxx or
XxXxxxx, shall be filled by a person designated by the
remaining Lodging Director; and
(b) a vacancy created by the loss of any of Messrs. Xxxxxxx or
Xxxxx, thereby shall be filled by a person designated by the
remaining Gaming Directors.
For purposes of this Agreement, "Lodging Directors" shall mean Messrs.
Xxxxxxxxxxx and XxXxxxx, or any successor director appointed or elected to
their positions pursuant to this Agreement. The term "Gaming Directors" shall
mean Messrs. Xxxxx and Xxxxxxx, or any successor or additional Gaming Director
appointed or elected to their positions pursuant to this Agreement. The term
"Independent Directors" shall mean directors who are not employees of the
Company or any affiliate of the Company and shall exclude any person who is an
officer, director, shareholder or employee of Lodging.
2
3
3.1 At least ninety (90) days prior to any regular or
special meeting of the shareholders of the Company at which directors
are to be elected, the Board of Directors of the Company shall meet
and select a slate of proposed directors of the Company, which shall
consist of the Lodging Directors, the Gaming Directors and two
Independent Directors, who shall be designated by resolution of the
Board of Directors in which the Lodging Directors and a majority of
the Gaming Directors shall have voted in favor of such Independent
Director nominees.
3.2 The nominees designated at such meeting of the Board
shall be the nominees of the management of the Company and shall be so
designated to the shareholders of the Company at their next meeting
(regular or special) at which directors are elected, and shall be so
designated in the Company's proxy statement.
3.3 It is agreed and understood that the Independent
Directors and all newly-elected Directors other than the Current
Directors, when elected by the Shareholders, shall take office subject
to, and upon receiving, approval of suitability by the Colorado
Limited Gaming Control Commission (the "Commission"). In the event
any Independent Director shall be found unsuitable by the Commission,
the vacancy created thereby shall be filled by the remaining members
of the Board of Directors who shall designate another person as a
successor Independent Director, and who shall be subject to approval
of suitability by the Commission prior to assuming office.
4. VOTING AGREEMENT. The Shareholders agree that at any regular
or special meeting of the shareholders of the Company at which directors are to
be elected, they will vote their shares in favor of the two nominees designated
by the Lodging Directors, the three nominees designated by the Gaming Directors
and the two Independent Directors designated by the Board of Directors as
provided in the foregoing Section 3. Notwithstanding the foregoing, in the
event any of the procedures specified in the foregoing Section 3 shall not
occur, or shall occur but any or all of said Section 3 shall be held invalid by
a court of competent jurisdiction, Lodging, XxXxxxx, Xxxxx and Xxxxxxx agree
that they will in all events vote their shares in favor of the election to the
Board of Directors of:
(a) two persons designated as nominees by Lodging;
(b) three persons designated as nominees by Messrs. Xxxxx
and Xxxxxxx; and
(c) two Independent Directors designated as nominees
unanimously in writing by Lodging, and at least two of Messrs. XxXxxxx, Xxxxx
and Xxxxxxx.
Notwithstanding the foregoing, it is agreed that in all events a Director shall
not assume office until he or she is found suitable by the Commission.
3
4
5. MISCELLANEOUS.
5.1 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given upon receipt
if delivered personally, telecopied (which is confirmed) or mailed by
registered or certified mail, return receipt requested, to the parties
at 0000 Xxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx 00000, or
at such other address for a party as shall be specified by like
notice.
5.2 DESCRIPTIVE HEADINGS. The descriptive headings
herein are inserted for convenience only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
5.3 COUNTERPARTS. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the
same agreement and shall become effective when two or more
counterparts have been signed by each of the parties and delivered to
the other parties, it being understood that all parties need not sign
the same counterpart.
5.4 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement shall
constitute the entire agreement of the parties concerning the subject
matter hereof and shall supersede all prior agreements and
understandings, both written and oral, among the parties with respect
to the subject matter hereof, and shall not be assigned by operation
of law or otherwise without the written consent of all other parties
to this agreement; provided, however, that Lodging may assign its
rights and obligations under this Agreement to any wholly-owned
subsidiary of Lodging that becomes a party to this Agreement and
agrees to perform and assume the obligations of Lodging hereunder, but
no such assignment shall relieve Lodging of its obligations hereunder
if such assignee does not perform such obligations; provided further,
however, that in the event of the disability or death of an individual
party hereto, the rights and obligations under this Agreement may be
assigned to such party's duly appointed personal representative who
agrees to become a party to this Agreement.
5.5 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Minnesota
without regard to any applicable principles of conflicts of law;
provided, however, that with respect to the ability of any person to
assume the duties, rights and responsibilities of a Director of the
Company, the Colorado Limited Gaming Act, as amended, and the rules
and regulations of the Colorado Limited Gaming Control Commission,
shall govern.
5.6 PARTIES IN INTEREST; ADDITIONAL PARTIES. This
Agreement shall be binding upon and inure solely to the benefit of
each party hereto and such party's successors and assigns. With the
consent of the Gaming Directors and the Lodging Directors, additional
persons who are shareholders of the Company may become parties to this
Agreement by signing a counterpart copy thereof.
4
5
5.7 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so
long as the legal substance of the transactions contemplated hereby is
not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that
the transactions contemplated hereby are fulfilled to the extent
possible.
5.8 ARBITRATION. Upon any dispute or controversy arising
out of this Agreement, any party hereto may call for the resolution of
such dispute or controversy by arbitration by and in accordance with
the rules of the American Arbitration Association in the City of
Minneapolis, by three arbitrators, at least one of whom shall be a
member of the Bar of the State of Minnesota. The arbitrators shall
render written findings, conclusions of law and decision, unless the
parties thereto waive the same. The decision of the arbitrators shall
be conclusive and binding upon the parties hereto, and enforceable by
them in a court of competent jurisdiction. The arbitrators may, in
their discretion, award attorneys' fees and arbitration costs in favor
of a prevailing party; otherwise, each party shall bear its or his own
expense in connection with any such arbitration proceeding.
5.9 AMENDMENT. This Agreement, insofar as it
constitutes, and operates as, a shareholder voting agreement, may be
amended by written amendment signed by all of the parties hereto or,
if not signed by all of the parties hereto, by not less than a
majority in interest of Lodging and XxXxxxx and a majority in interest
of Xxxxx and Xxxxxxx. In the event that any shareholder named herein
shall fail to execute this Agreement, then in such event this
Agreement shall be valid and binding upon the remaining signatories
hereto as a Shareholder Voting Agreement within the meaning of
Minnesota Statutes Section 302A.455. For purposes of this Agreement,
the term "majority in interest" means the holder or holders of a
majority of the total issued and outstanding shares of the Company
owned by the subject persons.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective the day and year first above written.
/s/ Xxxxx X. Xxxxxxx
-------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxxxxx X. XxXxxxx
-------------------------
Xxxxxxxx X. XxXxxxx
5
6
/s/ Xxxxxxx X. Xxxxx
--------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx Xxxxxxxxx
--------------------------------
Xxxxxxx X. Xxxx
--------------------------------
E. Xxxxx Xxxxx
--------------------------------
Xxxx X. Xxxxx
NATIONAL LODGING COMPANIES, INC.
By /s/ Xxxx X. Xxxxxxxxxxx
--------------------------------
Xxxx X. Xxxxxxxxxxx, Chairman
6
