<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
</TABLE>
BLACK HAWK GAMING & DEVELOPMENT CO.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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<PAGE> 2
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
240 MAIN STREET
BLACK HAWK, COLORADO 80422
(303) 582-1117
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 9, 2000
- --------------------------------------------------------------------------------
To the Shareholders of Black Hawk Gaming & Development Company, Inc.:
DATE: June 9, 2000
TIME: 9:00 a.m.
PLACE: The Lodge Casino
240 Main Street
Black Hawk, Colorado
MATTERS TO BE VOTED ON:
1. Election of two directors;
2. Ratification of Deloitte & Touche LLP as our independent
auditors for 2000; and
3. Any other matters properly brought before shareholders at our
meeting.
You are cordially invited to attend the meeting in person. To ensure
that you are represented at the meeting, please fill in, sign and return the
enclosed proxy card as promptly as possible. Your early attention to the proxy
statement will be greatly appreciated because it will reduce the cost we incur
in obtaining your voting instructions.
By Order of the Board of Directors
/s/ Stanley Politano
Stanley Politano, Secretary
May 8, 2000
<PAGE> 3
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information About Voting....................................................................... 1
Stock Ownership........................................................................................ 3
Proposal No. 1 Election of Directors................................................................. 5
Proposal No. 2 Appointment of Independent Auditors................................................... 15
Other Matters.......................................................................................... 15
Shareholder Proposals.................................................................................. 16
Appendix A--Audit Committee Charter
</TABLE>
<PAGE> 4
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
240 MAIN STREET
BLACK HAWK, COLORADO 80422
PROXY STATEMENT
JUNE 9, 2000 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished to you in connection with the
solicitation of proxies by the Board of Directors of the Company for use at our
2000 annual meeting. This Proxy Statement and the enclosed proxy card were sent
to shareholders on or about May 8, 2000.
The following matters will be acted on at our annual meeting:
1. Election of two Directors to serve three year terms;
2. Ratification of the appointment of Deloitte & Touche LLP as
our independent auditors for 2000; and
3. Any other business as may properly come before our meeting.
GENERAL INFORMATION ABOUT VOTING
Who can vote?
You can vote your shares of common stock if our records show that you
owned the shares on May 5, 2000. A total of 4,111,757 shares of common stock can
vote at the annual meeting. You get one vote for each share of common stock. The
enclosed proxy card shows the number of shares you can vote.
How do I vote by proxy?
Follow the instructions on the enclosed proxy card to vote on each
proposal to be considered at the annual meeting. Sign and date the proxy card
and mail it back to us in the enclosed envelope. The proxyholders named on the
proxy card will vote your shares as you instruct. If you sign and return the
proxy card but do not vote on a proposal, the proxyholders will vote for you on
that proposal. Unless you instruct otherwise, the proxyholders will vote for
each of the two director nominees and for the other proposal to be considered at
the meeting.
What if other matters come up at the annual meeting?
The matters described in this proxy statement are the only matters we
know will be voted on at the annual meeting. If other matters are properly
presented at the meeting, the proxyholders will vote your shares as they see
fit.
<PAGE> 5
Can I change my vote after I return my proxy card?
Yes. At any time before the vote on a proposal, you can change your
vote either by giving the Company's secretary a written notice revoking your
proxy card or by signing, dating, and returning to us a new proxy card. We will
honor the proxy card with the latest date.
Can I vote in person at the annual meeting rather than by completing the proxy
card?
Although we encourage you to complete and return the proxy card to
ensure that your vote is counted, you can attend the annual meeting and vote
your shares in person.
What do I do if my shares are held in "street name"?
If your shares are held in the name of your broker, a bank, or other
nominee, that party should give you instructions for voting your shares.
How are votes counted?
We will hold the annual meeting if holders of a majority of the shares
of common stock entitled to vote either sign and return their proxy cards or
attend the meeting. If you sign and return your proxy card, your shares will be
counted to determine whether we have a quorum even if you abstain or fail to
vote on any of the proposals listed on the proxy card. Election of the nominees
as Directors and approval of the appointment of independent auditors will
require the affirmative vote of a majority of the shares represented at the
meeting.
If your shares are held in the name of a nominee, and you do not tell
the nominee how to vote your shares (so-called "broker nonvotes"), the nominee
can vote them as it sees fit only on matters that self regulatory organizations
determine to be routine, and not on any other proposal. Broker nonvotes will be
counted as present to determine if a quorum exists but will not be counted as
present and entitled to vote on any nonroutine proposal.
Who pays for this proxy solicitation?
We do. In addition to sending you these materials, some of our
employees may contact you by telephone, by mail, or in person. None of these
employees will receive any extra compensation for doing this.
2
<PAGE> 6
STOCK OWNERSHIP
The following table shows the number of shares of common stock
beneficially owned as of May 5, 2000 by:
o each person who we know beneficially owns more than 5% of our
common stock;
o each director and nominee;
o each executive officer named in Executive Compensation; and
o our directors, nominees and executive officers as a group.
<TABLE>
<CAPTION>
Percentage of
Common Stock
Beneficially Owned Beneficially Owned(3)
------------------------------- ---------------------
Name Shares Options(1)
---- ---------- ----------
<S> <C> <C> <C>
Jeffrey P. Jacobs 1,333,333(2) 70,000 33.6
Diversified Opportunities Group Ltd.
c/o Jacobs Entertainment Ltd.
425 Lakeside Avenue
Cleveland, Ohio 44114
Stephen R. Roark 28,571 147,500 4.1
240 Main Street
Black Hawk, Colorado 80422
Antone R. Cook 3,500 37,967 1.0
240 Main Street
Black Hawk, Colorado 80422
Stanley Politano 619 66,667 1.6
240 Main Street
Black Hawk, Colorado 80422
Frank B. Day 440,966 35,000 11.5
248 Centennial Parkway, Suite 100
Louisville, Colorado 80302
J. Patrick McDuff 1,094 13,250 *
1375 Walnut
Boulder, Colorado 80302
</TABLE>
3
<PAGE> 7
<TABLE>
<S> <C> <C> <C>
Robert H. Hughes 1,239 15,000 *
27459 Hemlock Drive
West Lake, Ohio 44145
Timothy Knudsen 761 333 --
213 Vista Circle
North Olmstead, Ohio 44070
Stephen P. Owendoff, Esq -0- -0- --
Hahn Loeser & Parks
3300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2301
Robert D. Greenlee 483,113 11.8
2060 Broadway, Suite 400
Boulder, Colorado 80302
Officers and Directors as 1,810,083 319,050 48.1
a group (nine persons)
</TABLE>
- ------------------------
*less than 1%
(1) Represents shares underlying options which are exercisable within 60
days.
(2) These shares are held by Diversified Opportunities Group, Ltd., an
affiliate of Mr. Jacobs, and are therefore deemed beneficially owned by
him.
(3) All percentages are computed in accordance with Rule 13d-3 adopted
under the Securities Exchange Act of 1934.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Based on a review of the record, we believe that all reports required
under Section 16(a) of the Securities Exchange Act of 1934 have been timely
filed by our officers and directors.
4
<PAGE> 8
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At our 1998 annual meeting, shareholders approved a proposal to stagger
the election of members to our Board of Directors so that:
o two directors were elected for terms expiring at our 1999
annual meeting;
o two directors were elected for terms expiring at our 2000
annual meeting; and
o three directors were elected for a term expiring at our 2001
annual meeting.
The terms of Messrs. Day and Owendoff expire at this, our 2000 annual
meeting, and we propose that they be elected to three year terms expiring at our
annual meeting in 2003.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF MESSRS.
DAY AND OWENDOFF. PROXIES SOLICITED BY YOUR BOARD OF DIRECTORS WILL BE VOTED FOR
THEM UNLESS INSTRUCTIONS ARE GIVEN TO THE CONTRARY.
The following sets forth certain information with respect to both of
these nominees, and our other directors and executive officers.
Name Age Position(s) Held
---- --- ----------------
Jeffrey P. Jacobs 46 Chairman of the Board and Chief Executive Officer
Stephen R. Roark 52 President, Chief Financial Officer and a Director
Antone R. Cook 56 Vice President of Gaming Operations
Stanley Politano 50 Vice President, Secretary and Treasurer
Frank B. Day 66 Vice President, a Director and Nominee
J. Patrick McDuff 51 A Director
Robert H. Hughes 59 A Director
Timothy Knudsen 46 A Director
Stephen P. Owendoff 56 A Director and Nominee
5
<PAGE> 9
JEFFREY P. JACOBS, from 1995 to present, served as Chairman and Chief
Executive Officer of Jacobs Entertainment, Inc., a company based in Cleveland,
Ohio that has investments in gaming companies and ventures, including the
Company and Colonial Downs Holdings, Inc., which operates a horse-racing track
and satellite wagering facilities. From 1975 to present, he has also served as
President and Chief Executive Officer of Jacobs Investments, Inc., a company
engaged in the development, construction and operation of residential and
commercial real estate and entertainment projects in Ohio. Mr. Jacobs also
served in the Ohio House of Representatives from 1982 until 1986. He is also
Chairman and Chief Executive Officer of Colonial Downs Holdings, Inc. which is a
reporting company under the Securities Exchange Act of 1934. Mr. Jacobs became
our Chief Executive Officer and Co-Chairman on November 12, 1996 and became our
Chairman on December 31, 1997.
STEPHEN R. ROARK, has been employed as our Chief Financial Officer
since August 1993. Mr. Roark became a director of the Company in 1994. He was
elected our President in July 1995. Prior to that time he was an independent
consultant in the Denver area rendering financial and accounting assistance to
companies in the public marketplace. Mr. Roark has 17 years of public accounting
experience having served as a partner with a large local accounting firm and as
a partner with a national accounting firm. Mr. Roark was with Hanifen, Imhoff
and Prudential Securities, Inc. for three years and is a member of the American
Institute of Certified Public Accountants and the Colorado Society of Certified
Public Accountants. Mr. Roark obtained his B.S.B.A. in Accounting from the
University of Denver in 1973.
ANTONE R. COOK, has been employed by us as Vice President of Gaming
Operations since April 25, 1998 and supervises overall gaming operations at the
Gilpin Hotel Casino and The Lodge Casino. From February 1, 1996 until April 25,
1998 he was General Manager of the Gilpin Hotel Casino. He was Casino Manager of
Binions Horseshoe Hotel & Casino from November 1994 until January 31, 1996. For
the 30 years prior thereto, he was associated with several casinos and gaming
ventures, primarily in Las Vegas, Nevada and held many staff, supervisory and
management positions. Mr. Cook holds gaming licenses in Colorado, South Dakota
and Nevada.
STANLEY POLITANO, has been Vice President of the Company since August
1994 and is a former director of ours. He was appointed our Secretary and
Treasurer in April 1998. He received his B.S. degree in Business, majoring in
finance, from the University of Colorado in 1972. He has 22 years of experience
in the securities industry, working in both retail and wholesale capacities. He
has worked for Rauscher Pierce Securities Corporation and Prudential- Bache
Securities, Inc. and was a vice president with E.F. Hutton & Company, Inc. and
Hanifen Imhoff Securities Corporation. He has served as Treasurer for Mission
Corps International, a non-profit organization.
FRANK B. DAY, Chairman of the Board, Chief Executive Officer and
President of Rock Bottom Restaurants, Inc., has been employed since January 1980
as President of Concept Restau rants, Inc., and Managing General Partner of the
Hotel Boulderado in Boulder, Colorado since
6
<PAGE> 10
August 1982. Concept Restaurants, Inc. owns or operates twelve full service
restaurants in Colorado front range communities. From 1959 to present, Mr. Day
has owned and operated food service and hospitality facilities in Illinois,
Michigan, Wisconsin, and Colorado. He attended Harvard University from 1950 to
1956 and received B.A. and M.B.A. degrees. Mr. Day is also an active real estate
investor and is active in many civic and nonprofit organizations, having served
as a director of the Boulder Chamber of Commerce (September 1988 to September
1991) and Downtown Boulder, Inc. (from June 1987 to June 1990). Mr. Day has been
a Vice President and one of our directors since 1992.
J. PATRICK MCDUFF, has been the Northern Region President for Vectra
Bank Colorado since October 1996. Prior to assuming those duties he was
President, Chief Executive Officer and director of one of Vectra's subsidiary
banks from July 1987 through October 1996. From 1972 through July 1987, Mr.
McDuff worked for IntraWest Bank of Boulder, ending his employment as Senior
Vice President and Senior Loan Officer. He attended the University of Arkansas
from 1966 to 1972 and received a B.S.B.A. degree in Finance and Commercial
Banking. Mr. McDuff is also active in many civic and non-profit organizations,
having served as a director of Boulder Center Y.M.C.A. (from January 1987 to
December 1992), Boulder Valley Rotary Club (from April 1985 to June 1988) and
Longs Peak Council of the Boy Scouts of America (from January 1991 to March
1993). Mr. McDuff's employer, Vectra Bank Colorado, is a wholly owned subsidiary
of Zions Bancorporation, a reporting company under the Securities Exchange Act
of 1934. Mr. McDuff became one of our directors in 1994.
ROBERT H. HUGHES, served as Chief Financial Officer of Jacobs
Investments, Inc. from 1993 to May 1999 when he retired. Mr. Hughes was a
partner in charge of the audit department of the Cleveland office of the
accounting firm of Deloitte & Touche LLP until his retirement in 1991. Mr.
Hughes is a certified public accountant (retired). Mr. Hughes serves as a member
of the Board of Directors of Colonial Downs Holdings, Inc., a reporting company
under the Securities Exchange Act of 1934. Mr. Hughes has been one of our
directors since November 12, 1996.
TIMOTHY KNUDSEN, has been associated with Knudsen, Gardner & Howe, a
Cleveland, Ohio based marketing communications agency for 21 years. He was
elected President of the agency in 1984. Mr. Knudsen holds a B.S. degree in
Marketing from Dyke Business College and has studied toward an advanced degree
at Cleveland State University. Mr. Knudsen was elected as one of our directors
in February 1998.
STEPHEN P. OWENDOFF, is a Partner in the Cleveland law firm of Hahn
Loeser & Parks LLP. He has been a partner in this firm since 1977, and prior to
that was an associate. He heads the Business Practice Area of this firm, and has
a general corporate practice, including public and private security offerings
for issuers and underwriters, acquisitions and sales with businesses, including
branch acquisitions and dispositions for financial institutions. He received his
undergraduate degree from Kent State University, Kent, Ohio and his law degree
from
7
<PAGE> 11
Georgetown University Law Center in Washington, D.C. Mr. Owendoff is active in
many civic and non-profit organizations in Cleveland, Ohio.
The Board of Directors had three meetings during 1999. Each director
attended all of the meetings of the Board and of each committee that he belongs
to. Our Board of Directors has two committees. The following describes the
function and membership of each committee and the number of times it met with
respect to fiscal 1999:
AUDIT COMMITTEE--TWO MEETINGS
We have adopted an Audit Committee Charter which is attached to this
Proxy Statement as Appendix A. The Charter requires our Audit Committee to
undertake a variety of activities designed to assist our Board of Directors in
fulfilling its oversight role regarding our auditors' independence, our
financial reporting process, our systems of internal control and compliance with
applicable laws, rules and regulations. The Charter also makes it clear that the
independent auditors are ultimately accountable to the Board of Directors and
the Audit Committee, not management. Please take a few minutes to read our
Charter. If you have any comments or suggestions, we would welcome them.
The members of our Audit Committee for 1999 were J. Patrick McDuff and
Robert H. Hughes. For the year 2000 these two persons will be joined by Stephen
P. Owendoff.
COMPENSATION COMMITTEE--FOUR MEETINGS
The function of our Compensation Committee is review and approval of
compensation and benefit programs for key executives and administration of our
stock options plans. See "Compensation Committee Report on Executive
Compensation" below.
The members of our Compensation Committee are Frank B. Day, Robert H.
Hughes and Timothy Knudsen.
There are no family relationships between or among any directors or
executive officers and, except as set forth in the above resumes, none serve as
a director of any company required to file reports under the Securities Exchange
Act of 1934 or which is registered under the Investment Company Act of 1940.
8
<PAGE> 12
EXECUTIVE COMPENSATION.
Cash Compensation. None of the members of the Compensation Committee is
or has been an officer or employee, nor do they serve on the compensation
committee, of any company related to or affiliated with us. The following table
sets forth information regarding the compensation paid by us for services
rendered in all capacities during 1997, 1998 and 1999 to (i) our Chief Executive
Officer, and (ii) our other named executive officers whose total annual
compensation for 1999 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
---------------------------------- ------------------------------------
Awards Payouts
------------------------------------
Securities
Other Under-
Annual Restricted lying All Other
Compen- Stock Options/ LTIP Compen-
Name of Year Salary Bonus sation Award(s) SARs Payouts sation
Officer/Director ($) ($) ($) (#) ($) ($) ($)
- ------------------------ -------- -------- -------- -------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jeffrey P. Jacobs 1997 150,000 -- -- -- -- -- --
Chief Executive Officer
1998 200,000 50,000 -- -- -- -- --
1999 305,000 137,000 -- -- * -- --
Stephen R. Roark 1997 130,000 -- -- -- 15,000 -- --
President
1998 138,000 35,000 -- -- -- -- --
1999 220,000 60,000 -- -- 45,000 -- --
Antone R. Cook 1998 175,000 35,000 -- -- -- -- --
Vice President
1999 240,000 60,000 -- -- 30,000 -- --
Stanley Politano 1997 91,000 -- -- -- 10,000 -- --
Vice President
1998 102,000 15,000 -- -- -- -- --
1999 106,000 20,000 -- -- 15,000 -- --
</TABLE>
* As of January 1, 2000, Mr. Jacobs was granted options to acquire up to
45,000 shares of our Common Stock at $6.46 per share. The options have a
five year term and vest ratably over three years. These options are not
included in the table above.
9
<PAGE> 13
Compensation Arrangements. Effective January 1, 2000, we entered into a
three year employment agreement with Mr. Jacobs which contains customary terms
and conditions and which provides for a base salary of the greater of $300,000
per year or 1.5% of our earnings before interest, taxes, depreciation and
amortization ("EBITDA") (up to $50 million) each year. Mr. Jacobs is also
entitled to receive a bonus of not less than 25% nor more than 40% of his base
salary with the percentage to be established by our Compensation Committee. Mr.
Jacobs is entitled to the present value of his base salary for the unexpired
term of the agreement if he is terminated without cause. In addition, he is
entitled to one year's base salary if another company acquires us, our assets
are sold to another company or there is a 50% change in the ownership of our
common stock, unless Mr. Jacobs is a participant in any such transaction.
Effective May 1, 1999, and amended on January 1, 2000, we entered into
a three year and eight month employment agreement with Mr. Roark which contains
customary terms and conditions and which provides for a base salary of the
greater of $250,000 per year or 1.05% of our EBITDA (up to $50 million) each
year. Mr. Roark is also entitled to receive a bonus of not less than 25% nor
more than 40% of his base salary with the percentage to be established by our
Compensation Committee. Mr. Roark is entitled to the present value of his base
salary for the unexpired term of the agreement if he is terminated without
cause. In addition, he is entitled to one year's base salary if another company
acquires us, our assets are sold to another company or there is a 50% change in
the ownership of our common stock, unless Mr. Roark is a participant in any such
transaction.
Effective February 1, 1999, we entered into a three year employment
agreement with Antone R. Cook which contains customary terms and conditions and
which provides for a salary of $250,000 per year and a bonus, to be determined
by the Board of Directors, of not less than $25,000 per year.
Effective November 22, 1999, we entered into a three year employment
agreement with Stanley Politano which contains customary terms and conditions
and which provides for a salary of $111,000 per year, which increases $5,000 in
years two and three. He is eligible for a bonus at the discretion of the Board
of Directors.
Directors are elected at each annual meeting of our shareholders. All
directors except Messrs. Jacobs and Roark receive $1,000 and $500 per Board and
Committee meeting attended, respectively. Since January 1, 1997, one-half of
this compensation has been paid in the form of our restricted common stock
valued at the market price on the meeting date and one-half in cash.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.
The Compensation Committee endeavors to ensure that the compensation
program for our executive officers is effective in attracting and retaining key
executives responsible for our success and is tailored to promote our long-term
interests and that of our stockholders. Our executive officer compensation
program in the fiscal year 1999 was principally comprised of base salary, a cash
bonus and long-term incentive compensation in the form of incentive stock
options or non-qualified stock options.
10
<PAGE> 14
The Compensation Committee takes into account various qualitative and
quantitative indicators of corporate and individual performance in determining
the level and composition of compensation for our Chief Executive Officer and
his recommendations regarding the other executive officers. In particular, the
Compensation Committee considers several financial performance measures,
including revenue growth, net income and EBITDA levels. However, in 1999 we did
not apply any specific quantitative formula in making compensation decisions. We
also consider contributions of our officers, including dedication and loyalty
that, while difficult to quantify, are important to our company's long-term
success. The Compensation Committee seeks to create a mutuality of interest
between our executive officers and our stockholders by increasing the executive
officers' ownership of our company's common stock through our stock option
plans.
Salary levels for our company's executive officers are significantly
influenced by the need to attract and retain management employees with high
levels of expertise. In each case, consideration is given both to personal
factors, such as the individual's experience, responsibilities and work
performance, and to external factors, such as salaries paid by comparable
companies in the gaming and casino entertainment industry. With regard to the
latter, it is important to recognize that because of the opening of new
properties in Black Hawk, Colorado in 1999 and 2000, the scheduled openings of
new properties in 2000 and 2001, and the growth of casinos in Las Vegas,
riverboat and dockside gaming, Native American gaming operations and the
proliferation of jurisdictions in which gaming is permitted, our company
competes with numerous other companies for a limited pool of experienced and
skilled personnel. Therefore, it is critical that we provide compensation
arrangements that are competitive in the casino industry.
With respect to the personal factors, the Compensation Committee makes
salary bonus and stock option grant decisions in a review based on the
recommendations of the Chief Executive Officer. This review considers the
decision-making responsibilities of each position as well as the experience and
work performance of each executive. The Chief Executive Officer views work
performance as the single most important measurement factor. With respect to the
Chief Executive Officer, the Compensation Committee considers a variety of
factors, including company financial performance, prospects for company growth,
vision, leadership and ability to obtain and retain other key executives.
The Compensation Committee approves all employment agreements with key
executive officers with the philosophy and policies described above in mind.
/s/ Compensation Committee Members
/s/ Timothy Knudsen
/s/ Robert H. Hughes
/s/ Frank B. Day
11
<PAGE> 15
STOCK OPTIONS.
We have two stock option plans. Options granted to the Executive
Officers named above during 1999 were as follows:
OPTION/SAR GRANTS IN LAST FISCAL YEAR*
<TABLE>
<CAPTION>
Individual Grants
- ----------------------------------------------------------------------
Percent of
Number of Total Potential Realizable Value Alternative to
Securities Options/ at Assumed Annual Rates (f) and (g)
Underlying SARs of Stock Price Appreciation Grant Date
Options/ Granted to for Option Term Value
SARs Employees Exercise or Expi- ---------------------------- --------------
Granted in Fiscal Base Price ration Grant Date
Name (#) Year 5%(($)h) Date 5%($) 10%($) Present Value $
(a) (b) (c) (d) (e) (f) (g) (h)
- ---------------- ---------- --------- ----------- -------- ------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen R. Roark 45,000 48 6.75 5-1-09 191,250 484,099 188,550
Antone R. Cook 30,000 32 8.38 2-2-09 158,009 400,427 154,200
Stanley Politano 15,000 16 6.25 11-22-09 58,958 149,413 60,300
</TABLE>
No options were exercised by the Executive Officers during 1999. The
following table provides information regarding unexercised stock options held by
the Executive Officers as of December 31, 1999.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised in-the-Money
Shares Options/SARs Options/SARs
Acquired at Fiscal Year End (#) at Fiscal Year End ($)
on Value ---------------------- ----------------------
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
(a) (b) (c) (d) (e)
- ------------------- -------- -------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Jeffrey P. Jacobs* -- -- 70,000/0 17,150/0
Stephen R. Roark -- -- 197,500/50,000 34,337/325
Antone R. Cook -- -- 37,967/33,333 8,102/216
Stanley Politano -- -- 66,667/18,333 15,133/216
</TABLE>
* As of January 1, 2000, Mr. Jacobs was granted options to acquire up to
45,000 shares of our Common Stock at $6.46 per share. The options have
a five year term and vest ratably over three years. These options are
not included in the table above.
12
<PAGE> 16
PERFORMANCE OF BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.'S COMMON STOCK.
The line graph below compares the total cumulative return of our Stock
to (a) the Standard & Poor 500 Stock Index (the "S&P 500 Index"), and (b) the
Dow Jones Casinos Index. The graph assumes reinvestment of dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
THE S&P 500 INDEX AND THE DOW JONES CASINOS INDEX
<TABLE>
<CAPTION>
Black Hawk Gaming & Dow Jones
Development Company, Inc. S&P 500 Casinos Index
------------------------- ------- -------------
<S> <C> <C> <C>
12/94 100.00 100.00 100.00
12/95 67.18 137.58 132.64
12/96 60.93 169.45 144.67
12/97 81.25 226.13 128.05
12/98 98.43 291.80 87.60
12/99 73.43 353.29 132.38
</TABLE>
* $100 INVESTED ON DECEMBER 31, 1994 IN STOCK OR INDEX--INCLUDING
REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDED DECEMBER 31.
(1) The line graph for Black Hawk Gaming & Development Company, Inc.
assumes that $100 was invested in the common stock of the Company on
December 31, 1994. There have been no stock splits or dividends paid.
(2) The Dow Jones Casinos Index was formerly referred to as the Dow Jones
Entertainment & Leisure--Casinos Index.
13
<PAGE> 17
CERTAIN TRANSACTIONS WITH OUR AFFILIATES.
In 1996 we formed Black Hawk/Jacobs Entertainment LLC ("LLC"), a
Colorado limited liability company owned 75% by us, 24% by Black Hawk
Entertainment Ltd. ("BH") and 1% by DOGL, affiliates of Jeffrey P. Jacobs for
the purpose of developing and operating The Lodge Casino. We share with BH a
management fee of 5% of adjusted gross gaming proceeds for the gaming operations
of the LLC on a 50%-50% basis. We also share profits and losses with BH on a
basis of 75% to us and 25% to BH. During the year ended December 31, 1999, BH
received $1,275,000 in management fees from the LLC and was allocated $1,754,000
in profits. Mr. Jacobs and other affiliates received an annual credit
enhancement fee of 2% of the amount so guaranteed for personally guaranteeing
the LLC's $40 million credit facility. Fees of $227,000 were charged by them for
the year ended December 31, 1999 for the continuing guarantees. In April, 1999,
we refinanced our debt and the guarantees were terminated.
In order to assist us in our efforts to research, develop, perform due
diligence and possibly acquire new gaming opportunities, we entered into an
agreement with Premier One Development Company, Inc. ("Premier") effective
October 1, 1997. Premier is an affiliate of Mr. Jacobs and it employs several
people to perform the services set forth above. The amount paid or accrued by us
during calendar 1999 for these services was $225,000. This agreement was renewed
at the same annual rate for a two year period effective January 1, 2000.
The agreements described above were negotiated at arm's length between
Mr. Jacobs and his affiliates and our disinterested officers and directors and
are deemed by our management to be fair and in our best interests and that of
our shareholders.
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<PAGE> 18
PROPOSAL NO. 2
APPOINTMENT OF INDEPENDENT AUDITORS
We have engaged the firm of Deloitte & Touche LLP as independent
auditors to audit and report to our shareholders on our financial statements for
the years 1991 through 1999. During all nine years, there were no disagreements
with Deloitte & Touche LLP on any matter of accounting principle or practice,
financial statement disclosure, or auditing scope or procedure, which, if not
resolved to the satisfaction of Deloitte & Touche LLP, would have caused them to
make a reference to the subject matter of the disagreement in connection with
its reports. Representatives of the firm are expected to be present at the
annual meeting and will have the opportunity make a statement if they desire to
do so and will be available to respond to appropriate questions. Although your
approval of the engagement of independent auditors is not required by law, we
desire to solicit your reaction. If the appointment of Deloitte & Touche LLP is
not approved by a majority of the shares represented at the meeting, we will
consider the appointment of other independent auditors for 2000. Moreover, if
satisfactory arrangements as to the timing and costs of the 2000 audit cannot be
made, we reserve the right to engage another accounting firm.
WE RECOMMEND A VOTE FOR THE APPROVAL OF THE APPOINTMENT OF DELOITTE &
TOUCHE LLP AS OUR INDEPENDENT AUDITORS FOR THE YEAR 2000 SUBJECT TO THE
DISCUSSION ABOVE. PROXIES GIVEN TO US WILL BE VOTED FOR THIS PROPOSAL UNLESS A
VOTE AGAINST THIS PROPOSAL OR ABSTENTION IS SPECIFICALLY INDICATED.
OTHER MATTERS
At the date of mailing of this proxy statement, we are not aware of any
business to be presented at the annual meeting other than the proposals
discussed above. If other proposals are properly brought before the meeting, any
proxies returned to us will be voted as the proxyholders see fit.
You can obtain a copy of our Annual Report on Form 10-K for the year
ended December 31, 1999 at no charge by writing to us at 240 Main Street, Post
Office Box 21, Black Hawk, Colorado 80422, Attention: Shareholder Relations.
15
<PAGE> 19
SHAREHOLDER PROPOSALS
To be considered for inclusion in the Company's Proxy Statement for the
2001 annual meeting, proposals of shareholders must be received by the Company
no later than January 8, 2001. Such proposals should be directed to the
Secretary of the Company.
By Order of the
Board of Directors
By /s/ Stanley Politano
------------------------------
Stanley Politano, Secretary
Black Hawk, Colorado
May 8, 2000
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<PAGE> 20
APPENDIX A
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
AUDIT COMMITTEE CHARTER
The following sets forth the activities required of our Audit Committee.
CONTINUOUS ACTIVITIES
o Provide an open avenue of communication and active dialogue between
the independent auditors and the Board of Directors.
o Meet two times per year or more frequently as circumstances require.
The Committee may ask members of management or others to attend
meetings and provide pertinent information as necessary.
o Instruct the independent auditor that the Board of Directors, as the
stockholders' representative, is the auditor's client.
o Inform the independent auditors that they are ultimately accountable
to the Board of Directors and the Audit Committee.
o Assure the independence of the independent auditor and confirm in
writing; require the independent auditors to provide written
disclosure as to any relationships with the Company.
o Review with the independent auditor efforts to assure completeness of
audit coverage, elimination of redundant efforts, and the effective
use of audit resources.
o Inquire of management and the independent auditor about significant
risks or exposures and assess the steps management has taken to
minimize such risks to the Company.
o Consider and review with the independent auditor:
o The adequacy of the Company's internal controls including
computerized information system controls and security.
o Related findings and recommendations of the independent auditor
together with management's responses.
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<PAGE> 21
o Consider and review with management and the independent auditor:
o Significant findings during the year, including the status of
previous audit recommendations.
o Any difficulties encountered in the course of audit work
including any restrictions on the scope of activities or access
to required information.
o Meet periodically with the independent auditor and management in
separate executive sessions to discuss any matters that the Committee
or these groups believe should be discussed privately with the Audit
Committee.
o Report periodically to the Board of Directors on significant results
of the foregoing activities.
CONTINUOUS ACTIVITIES REGARDING REPORTING SPECIFIC POLICIES
o Advise financial management and the independent auditor that they are
expected to provide a timely analysis of significant current financial
reporting issues and practices.
o Provide that financial management and the independent auditor discuss
with the Audit Committee their qualitative judgments about the
appropriateness, not just the acceptability, of accounting principles
and financial disclosure practices used or proposed to be adopted by
the Company and, particularly, about the degree of aggressiveness or
conservatism of its accounting principles and underlying estimates.
o Inquire as to the auditor's independent qualitative judgments about
the appropriateness, not just the acceptability, of the accounting
principles and the clarity of the financial disclosure practices used
or proposed to be adopted by the Company.
o Inquire as to the auditor's views about whether management's choices
of accounting principles are conservative, moderate or extreme from
the perspective of income, asset, and liability recognition, and
whether those principles are common practices or are minority
practices.
o Determine, as regards to new transactions or events, the auditor's
reasoning for the appropriateness of the accounting principles and
disclosure practices adopted by management.
o Assure that the auditor's reasoning is described in determining the
appropriateness of changes in accounting principles and disclosure
practices.
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<PAGE> 22
o Inquire as to the auditor's views about how the Company's choices of
accounting principles and disclosure practices may affect
shareholders' and analysts' views and attitudes about the Company.
"WHEN NECESSARY" ACTIVITIES
o Monitor if the Company's activities have expanded to the point where
an internal audit function should be implemented.
o Review and concur in the appointment, replacement, reassignment, or
dismissal of a Director of Internal Audit.
o Review and approve requests for any management consulting engagements
to be performed by the Company's independent auditors and be advised
of any other study undertaken at the request of management that is
beyond the scope of the audit engagement letter.
o Review periodically with general counsel, legal and regulatory matters
that may have a material impact on the Company's financial statements,
registration statements and other reporting requirements related to
filings with the Securities and Exchange Commission.
o Conduct or authorize investigations into any matters with the
Committee's scope of responsibilities. The Committee shall be
empowered to retain independent counsel and other professionals to
assist in the conduct of any investigation.
SCHEDULED ACTIVITIES
o Recommend the selection of the independent auditor for approval by the
Board of Directors and election by shareholders, approve the
compensation of the independent auditor, and review, recommend and
approve the discharge of the independent auditor if appropriate.
o Consider, in consultation with the independent auditor, the audit
scope and plan of the independent auditor.
o Review with management and the independent auditor the results of
annual audits including:
o The independent auditor's audit of the Company's annual financial
statements, accompanying footnotes and their report thereon.
o The independent auditor's audit of businesses acquired by the
Company.
3
<PAGE> 23
o Any significant changes required in the independent auditor's
audit plans.
o Other matters related to the conduct of the audits which are to
be communicated to the Audit Committee under generally accepted
auditing standards.
o Review the results of the annual audit procedures of directors and
officers' expense accounts and management perquisites with the
independent auditors.
o Review annually with the independent auditors the results of
monitoring compliance with the Company's code of conduct.
o Describe the Committee's composition and responsibilities, and how
they were discharged in the Company's annual proxy statement.
o Arrange for the independent auditor to be available to the full Board
of Directors at least annually to help provide a basis for the Board
to recommend to shareholders the appointment of the auditor.
o Assure that the auditor's reasoning is described in accepting or
questioning significant estimates made by management.
o Review and update the Audit Committee's Charter annually.
4
<PAGE> 24
PROXY PROXY
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
240 Main Street
Black Hawk, Colorado 80422
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Black Hawk Gaming & Development Company,
Inc. acknowledges receipt of the notice of the annual meeting of shareholders,
to be held Friday, June 9, 2000, at 9:00 a.m., at The Lodge Casino at Black
Hawk, 240 Main Street, Black Hawk, Colorado and hereby appoints Jeffrey P.
Jacobs and Stephen R. Roark, or either of them, each with the power of
substitution, as attorneys and proxies to vote all the shares of the undersigned
at the annual meeting and at all adjournments thereof, hereby ratifying and
confirming all that the attorneys and proxies may do or cause to be done by
virtue hereof. The above-named attorneys and proxies are instructed to vote all
of the undersigned's shares as follows:
1. Election of Two Directors.
Frank B. Day Stephen P. Owendoff
[ ] For [ ] For
[ ] Against [ ] Against
[ ] Abstain [ ] Abstain
2. Ratification of the appointment of Deloitte & Touche LLP as
independent auditors for 2000, subject to the discussion set forth
in the Proxy Statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Transaction of such other business as may properly come before the meeting.
<PAGE> 25
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES LISTED ABOVE IN PROPOSAL 1 AND FOR PROPOSAL 2.
DATED: 2000
----------------- ------------------------------------------
SIGNATURE
------------------------------------------
SIGNATURE IF HELD JOINTLY
Please sign your name exactly as it appears
below. When shares are held by joint
tenants, both should sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such. If a
corporation, please sign in full corporate
name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. NOTE: SECURITIES
DEALERS PLEASE STATE THE NUMBER OF SHARES VOTED BY THIS
PROXY:
----------------------------------
