STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT, dated as of December 23, 1997 (the
"Agreement"), is made and entered into by Family Golf Centers, Inc., a
Delaware corporation ("Parent"), Family Golf Acquisitions, Inc., a Colorado
corporation and a wholly-owned subsidiary of Parent ("Acquisition"), and the
parties listed on Schedule A (the "Stockholders").
WITNESSETH:
WHEREAS, on December 23, 1997, Parent, Acquisition and MetroGolf
Incorporated, a Colorado corporation (the "Company"), entered into an
Agreement and Plan of Merger (as such agreement may hereafter be amended,
restated or renewed from time to time, the "Merger Agreement"), pursuant to
which Acquisition will commence a cash tender offer to purchase any and all
outstanding shares of common stock, without par value per share, of the
Company (the "Company Common Stock"), and Acquisition will be merged with and
into the Company. Capitalized terms used and not defined herein shall have
the respective meanings ascribed to them in the Merger Agreement;
WHEREAS, set forth opposite each Stockholder's name on Schedule A is the
number of shares of Company Common Stock owned by such Stockholder; and
WHEREAS, the Stockholders are executing this Agreement as an inducement
to Parent and Acquisition to facilitate the Offer and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to
any securities shall mean having "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), including pursuant to any agreement,
arrangement or understanding, whether or not in writing but excluding any
shares deemed to be beneficially owned by a Person as a result of the
participation of such Person in a "group" within the meanings of Section
13(d)(3) of the Exchange Act.
(b) "Merger" shall mean the merger contemplated by the Merger
Agreement.
(c) "Offer" shall mean the cash tender offer contemplated by the
Merger Agreement for all of the outstanding shares of Company Common Stock as
such offer may be amended as permitted by the Merger Agreement.
(d) "Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
(e) "Termination Event " shall mean the termination of the Merger
Agreement in accordance with Section 8.01(b), 8.01(c) and 8.01(f) thereof.
2. The Acquisition Offer.
(a) Provided that neither Parent nor Acquisition is not then in
material breach of the Merger Agreement and provided that there has not been
issued an injunction which would prohibit the Stockholders from tendering
their respective shares, the Stockholders hereby, severally and not jointly
and severally, agree to validly tender (and not to withdraw), pursuant to and
in accordance with the terms of the Offer, not later than the fifth business
day after the receipt by the respective Stockholders of the offer to
purchase, transmittal letter and other relevant offer documents (the "Offer
Documents"), the number of shares of Company Common Stock set forth opposite
such Stockholder's name on Schedule A attached hereto, which shares
constitute all of the Company Common Stock Beneficially Owned by each
Stockholder (other than, for purposes of this Agreement, shares underlying
any options held by such Stockholder until such time any such option is
exercised) (collectively, the "Existing Shares" and, together with any shares
of Company Common Stock acquired by any Stockholder after the date hereof and
prior to the termination of this Agreement, whether upon exercise of options,
warrants or rights, the conversion or exchange of convertible or exchangeable
securities, or by means of purchase, dividend, distribution or otherwise, the
"Shares"). Each Stockholder hereby acknowledges and agrees that
Acquisition's obligation to accept for payment Shares purchased pursuant to
the Offer, including the Shares Beneficially Owned by such Stockholder, is
subject to the terms and conditions of the Offer.
(b) Each Stockholder hereby agrees to permit Acquisition to publish
and disclose in the Offer Documents and, if stockholder approval is required
under applicable law, the proxy statement, if any (including all documents
and schedules filed with the Securities and Exchange Commission (the
"Commission")), such Stockholder's identity and ownership of Company Common
Stock and the nature of such Stockholder's commitments, arrangements and
understandings under this Agreement.
(c) Each of the Stockholders hereby grants to Acquisition an
irrevocable option (each, a "Purchase Option" and collectively, the "Purchase
Options") to purchase the Shares Beneficially Owned by such Stockholder (the
"Option Shares") at a purchase price equal to $1.50, subject to adjustment as
hereinafter provided. Subject to the penultimate sentence of this Section
2(c), each Purchase Option is currently exercisable in whole or in part, and
shall remain exercisable in whole but not in part until 5:00 p.m. (Denver,
Colorado time) on the date which is 270 days after a Termination Event (the
"Option Period"), so long as: (i) all applicable waiting periods under the
HSR Act required for the purchase by Acquisition of the Option Shares upon
such exercise shall have expired or been waived, and (ii) there shall not be
in effect any preliminary or final injunction or other order issued by any
court or governmental, administrative or regulatory agency or authority
prohibiting the exercise of the Purchase Options pursuant to this Agreement.
The Option Period
2
shall be extended for the time period that any such preliminary injunction or
order shall be in effect that otherwise prohibits the exercise of a Purchase
Option. To exercise the Purchase Options, Acquisition shall send a written
notice (the "Notice") to the Stockholders identifying the place, date and
time (not less than five nor more than 20 business days from the date of the
Notice) for the closing of such purchase. Acquisition shall not exercise the
Purchase Options prior to the occurrence of a Termination Event. At such
closing, the Stockholders shall deliver the certificates for the Shares duly
endorsed for transfer against receipt of the purchase price therefor.
3. Grant of Irrevocable Proxy. Concurrently with the execution hereof,
each Stockholder is delivering to Acquisition an irrevocable proxy (the
"Proxy"), in the form of Exhibit A hereto, which shall be deemed to be
coupled with an interest with respect to all of the Shares, to vote all of
the Shares and to represent and otherwise act for the Stockholders in the
same manner and with the same effect as if the Stockholder were personally
present, for the Merger or, in Acquisition's discretion, against any other
proposal for a merger or other business combination of the Company with any
party other than Acquisition, or against any sale of all or substantially all
of the assets of the Company to any party other than Acquisition, or any
similar extraordinary corporate transaction with any party other than
Acquisition (any such merger, business combination, sale of assets or similar
extraordinary corporate transaction, other than the Merger, is referred to
herein as a "Business Combination"), at any annual or special meeting (or any
adjournment or postponement thereof) of the stockholders of the Company at
which the Merger or any Business Combination is submitted to a vote. The
Proxy shall expire upon the earlier of (i) the consummation of the Merger;
(ii) 270 days from the date hereof or (iii) the termination of the Merger
Agreement resulting from a breach thereof by either Parent or Acquisition.
4. Covenants, Representations and Warranties of Each Stockholder.
(a) Each Stockholder hereby, severally and not jointly and
severally, represents and warrants, to Parent and Acquisition as follows:
(i) Ownership of Shares. Each Stockholder is either (A)
the record and Beneficial Owner of, or (B) the Beneficial Owner but not the
record holder of, the number of Shares set forth opposite the Stockholder's
name on Schedule A hereto, as the case may be. As of December __, 1997, the
Shares set forth opposite such Stockholder's name on Schedule A hereto
constitute all of the Shares owned of record or Beneficially Owned by such
Stockholder. Except as provided on Schedule A, such Stockholder has sole
power to issue instructions with respect to the matters set forth in Sections
2 and 3 hereof, sole power of disposition, sole power of conversion, sole
power to demand appraisal rights and sole power to agree to all of the
matters set forth in this Agreement, in each case with respect to all of the
Shares set forth opposite such Stockholder's name on Schedule A hereto, as
the case may be, with no material limitations, qualifications or restrictions
on such rights, subject to applicable securities laws and the terms of this
Agreement.
(ii) Power; Binding Agreement. Each Stockholder has the
legal capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party, including, without
limitation,
3
any voting agreement, stockholder's agreement or voting trust. This Agreement
has been duly and validly executed and delivered by such Stockholder and
constitutes a valid and binding agreement of such Stockholder, enforceable
against such Stockholder in accordance with its terms. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which such Stockholder is trustee whose consent is required for the
execution and delivery of this Agreement or the consummation by such
Stockholder of the transactions contemplated hereby. If such Stockholder is
married and such Stockholder's Shares constitute community property, this
Agreement has been duly authorized, executed and delivered by, and
constitutes a valid and binding agreement of, such Stockholder's spouse,
enforceable against such person in accordance with its terms.
(iii) No Conflicts. Except for filings under the
Exchange Act or, if applicable, the HSR Act (A) no filing with, and no
permit, authorization, consent or approval of, any state or federal public
body or authority is necessary for the execution of this Agreement by each
Stockholder and the consummation by such Stockholder of the transactions
contemplated hereby, except where the failure to obtain such consent, permit,
authorization, approval or filing would not interfere with such Stockholder's
ability to perform its obligations hereunder, and (B) none of the execution
and delivery of this Agreement by such Stockholder, the consummation by such
Stockholder of the transactions contemplated hereby or compliance by such
Stockholder with any of the provisions hereof shall (1) conflict with or
result in any breach of any applicable organizational documents applicable to
such Stockholder, (2) except as provided on Schedule A, result in a violation
or breach of, or constitute (with or without notice or lapse of time or both)
a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which such Stockholder is a party or
by which such Stockholder or any of such Stockholder's properties or assets
may be bound, or (3) violate any order, writ, injunction, decree, judgment,
order, statute, rule or regulation applicable to such Stockholder or any of
such Stockholder's properties or assets, in each such case except to the
extent that any conflict, breach, default or violation would not interfere
with the ability of such Stockholder to perform its obligations hereunder.
(iv) No Encumbrances. Except as provided on Schedule A or
required by Sections 2 and 3, the Shares of each Stockholder and the
certificates representing such Shares are now, and at all times during the
term hereof will be, held by such Stockholder, or by a nominee or custodian
for the benefit of such Stockholder, free and clear of all liens, claims,
security interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever.
(v) No Finder's Fees. No broker, investment banker,
financial adviser or other person (other than Prime Charter Ltd.) is entitled
to any broker's, finder's, financial adviser's or other similar fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of any Stockholder.
4
(vi) Restriction on Transfer, Proxies and
Non-Interference. Except as required by this Agreement, no Stockholder shall
directly or indirectly without the consent of Acquisition: (A) offer for
sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose
of, or enter into any contract, option or other arrangement or understanding
with respect to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of such
Stockholder's Shares, or any interest therein, (B) grant any proxies or
powers of attorney, deposit any shares into a voting trust or enter into a
voting agreement with respect to any Shares, or (C) take any action that
could reasonably be expected to have the effect of preventing or disabling
such Stockholder from performing such Stockholder's obligations under this
Agreement.
(vii) Waiver of Appraisal Rights. Each Stockholder
hereby waives any rights of appraisal or rights to dissent from the Merger
that the Stockholder may have.
(b) Each of Parent and Acquisition hereby represents and warrants
to each of the Stockholders as follows:
(i) Organization, Standing and Corporate Power. Parent
is a corporation duly organized, validly existing and in good standing under
the laws of the state of Delaware and Acquisition is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Colorado, and each has adequate corporate power and authority to own its
properties and carry on its business as presently conducted. Each of Parent
and Acquisition has the corporate power and authority to enter into and
perform all of its obligations under this Agreement and to consummate the
transactions contemplated hereby.
(ii) No Conflicts. Except, if applicable, for filings
under the Exchange Act and the HSR Act, (A) no filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by either Parent
or Acquisition and the consummation by Parent and Acquisition of the
transactions contemplated hereby, except where the failure to obtain such
consent, permit, authorization, approval or filing would not interfere with
its ability to perform its obligations hereunder, and (B) none of the
execution and delivery of this Agreement by Parent or Acquisition, the
consummation by Parent or Acquisition of the transactions contemplated hereby
or compliance by Parent and Acquisition with any of the provisions hereof
shall (1) conflict with or result in any breach of any applicable
organizational documents applicable to Parent or Acquisition, (2) result in a
violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which Parent or
Acquisition is a party or by which Parent or Acquisition or any of Parent's
or Acquisition's properties or assets may be bound, or (3) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to Parent or Acquisition or any of Parent's or Acquisition's
properties or assets, in each such case except to the extent that any
conflict, breach, default or violation would not interfere with the ability
of Parent or Acquisition to perform its obligations hereunder.
5
(iii) Execution, Delivery and Performance by Parent
and Acquisition. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of Parent and Acquisition, and each of
Parent and Acquisition has taken all other actions required by law, its
Certificate of Incorporation and its Bylaws or other organizational documents
in order to consummate the transactions contemplated by this Agreement. This
Agreement constitutes the valid and binding obligation of Parent and
Acquisition and is enforceable in accordance with its terms, except as
enforceability may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally.
(c) Each Stockholder hereby agrees to use his best efforts to
obtain all necessary releases, consents or waivers from all lien holders
and/or pledgees to perform his obligations under this Agreement, including,
without limitation, the obligations under Section 2(a).
5. Stop Transfer. Each Stockholder agrees with, and covenants to,
Parent and Acquisition that prior to a Termination Event such Stockholder
shall not request that the Company register the transfer (book-entry or
otherwise) of any certificate or uncertificated interest representing any of
such Stockholder's Shares, unless such transfer is made in compliance with
this Agreement.
6. Recapitalization. In the event of a stock dividend or distribution,
or any change in the Company Common Stock by reason of any stock dividend,
split-up, recapitalization, combination, exchange of shares or the like, the
term "Shares" shall be deemed to refer to and include the Shares as well as
all such stock dividends and distributions and any shares into which or for
which any or all of the Shares may be changed or exchanged and the purchase
price of the Shares, as contained in the Offer, and the Purchase Price of the
Purchase Options, shall be amended as may be appropriate to reflect such
event.
7. Stockholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his or her capacity as such director or
officer and nothing herein shall limit or affect any action taken by such
person in his or her capacity as a director or officer. Each Stockholder
signs solely in his or her capacity as the record and Beneficial Owner of, or
the trustee of a trust whose beneficiaries are the Beneficial Owners of, such
Stockholder's Shares.
8. Stockholders' Obligations. All obligations and liabilities of each
Stockholder under this Agreement shall be several and not joint and no
Stockholder shall have any liability for any obligations or liabilities under
this Agreement of any other Stockholder.
9. Further Assurances. From time to time, at the other parties'
reasonable request and without further consideration, each Stockholder and
Acquisition and Parent shall execute and deliver such additional documents as
may be reasonably necessary or desirable to consummate and make effective, in
the most expeditious manner practicable, the tender of Shares or sale of
Option Shares by any such Stockholder contemplated by Section 2 of this
Agreement.
10. Miscellaneous.
6
(a) Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.
(b) Certain Events. Each Stockholder agrees that this Agreement
and the obligations hereunder shall attach to such Stockholder's Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of such Shares shall pass, whether by operation of law or
otherwise, including, without limitation, such Stockholder's heirs,
guardians, administrators or successors. Notwithstanding any transfer of
Shares, the transferor shall remain liable for the performance of all
obligations under this Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by operation
of law or otherwise without the prior written consent of the other parties.
(d) Amendment, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except
upon the execution and delivery of a written agreement executed by the
parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, or by mail
(registered or certified mail, postage prepaid, return receipt requested) or
by any courier service, such as Federal Express, providing proof of delivery.
All communications hereunder shall be delivered to the respective parties at
the following addresses or the addresses set forth on the signature pages
hereto:
If to Parent or Acquisition: Family Golf Centers, Inc.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Fax: 000-000-0000
Attn: Xx. Xxxxxxx Xxxxx
copies to: Squadron, Ellenoff, Plesent & Xxxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
Attn: Xxxxxxx X. Xxxx, Esq.
If to the Company: MetroGolf Incorporated
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Fax: 000-000-0000
Attn: Xx. Xxxxxxx X. Xxxxxxxxxxxx
7
copies to: Brownstein, Hyatt, Xxxxxx & Xxxxxxxxxx
000 00xx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Fax: 000-000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
If to Stockholders: At the addresses set forth on the signature
pages
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of
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 will not affect
any other provision or portion of any provision in such jurisdiction, and
this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision or portion of any
provision had never been contained herein.
(g) Specific Performance. Each of the parties hereto recognizes
and acknowledges that a breach by it of any covenants or agreements contained
in this Agreement will cause the other party to sustain damages for which it
would not have an adequate remedy at law for money damages, and therefore
each of the parties hereto agrees that in the event of any such breach the
aggrieved party shall be entitled to the remedy of specific performance of
such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any
other party hereto with its obligations hereunder, and any custom or practice
of the parties at variance with the terms hereof, shall not constitute a
waiver by such party of its right to exercise any such or other right, power
or remedy or to demand such compliance.
(j) No Third-Party Beneficiaries. This Agreement is not intended
to be for the benefit of, and shall not be enforceable by, any person or
entity who or which is not a party hereto; provided that, in the event of a
Stockholder's death, the benefits to be received by the Stockholder hereunder
shall inure to his successors and heirs.
8
(k) Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York, without giving effect
to the principles of conflicts of law thereof.
(l) Jurisdiction. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Supreme Court in the State of New York in any
action, suit or proceeding arising in connection with this Agreement, and
agrees that any such action, suit or proceeding shall be brought only in such
court (and waives any objection based on forum non conveniens or any other
objection to venue therein); provided, however, that such consent to
jurisdiction is solely for the purpose referred to in this paragraph (1) and
shall not be deemed to be a general submission to the jurisdiction of said
Court or in the State of New York other than for such purposes. Each party
hereto hereby waives any right to a trial by jury in connection with any such
action, suit or proceeding.
(m) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement. This Agreement shall
not be effective as to any party hereto until such time as this Agreement or
a counterpart thereof has been executed and delivered by each party hereto.
(o) Trust Funds. In the event that any party hereto should receive
any funds that are to be paid to another party pursuant to the terms of this
Agreement, then the receiving party shall hold such funds in trust for the
benefit of the party entitled to receive such funds and shall promptly pay
such funds to the party entitled to receive such funds in accordance with
this Agreement.
9
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on this 23th day of December, 1997.
FAMILY GOLF CENTERS, INC.
By: /s/ Xxxxxxx Xxxxx
----------------------
Name: Xxxxxxx Xxxxx
Title:
FAMILY GOLF ACQUISITIONS, INC.
By: /s/ Xxxxxxx Xxxxx
----------------------
Name: Xxxxxxx Xxxxx
Title:
STOCKHOLDER
/s/ Xxxxxxx Xxxxxxxxxxxx
--------------------------
Name: Xxxxxxx Xxxxxxxxxxxx
Adress:
10
SCHEDULE A
Stockholder No. of Shares
----------- -------------
Xxxxxxx Xxxxxxxxxxxx 685,622
EXHIBIT A
Irrevocable Proxy
The undersigned hereby revokes any previous proxies and irrevocably
appoints Family Golf Acquisition, Inc., a Colorado corporation (the
"Proxyholder") as attorney and proxy of the undersigned to attend any and all
meetings of stockholders of MetroGolf Incorporated, a Colorado corporation
(the "Company"), to vote ____ shares of Common Stock of the Company owned by
the undersigned on the date hereof, and to represent and otherwise to act for
the undersigned in the same manner and with the same effect as if the
undersigned were personally present, for the proposed merger of the
Proxyholder with and into the Company, or, in the Proxyholder's discretion,
against any other proposal for a merger, business combination, sale of
assets, or similar extraordinary corporate transaction with any party other
than the Proxyholder which is submitted to stockholders of the Company for
approval or consent. This proxy is subject to termination as provided in
Paragraph 3 of the Stockholders Agreement dated December 23, 1997 between
Family Golf Centers, Inc. and the stockholders of the Company signatory
thereto.
The undersigned authorizes the Proxyholder to substitute any other person
to act hereunder, to revoke any such substitution and to file this proxy and
any substitution or revocation with the Secretary of the Company.
Date: ______________, 1997
_________________________________
12
