SHAREHOLDER AGREEMENT
EXHIBIT
10.2
This
SHAREHOLDER AGREEMENT (this “Shareholder
Agreement”)
is
made and entered into as of December 29, 2006 by and between GPS Industries,
Inc., a Nevada corporation (the “Company”),
Leisurecorp LLC, a Dubai limited liability company (“Leisurecorp”),
Great
White Shark Enterprises, Inc., a Florida corporation (“GWSE”)(GWSE
and Leisurecorp are herein collectively referred to as the “Investors”),
Xxxxxx X. Xxxxxx, Xx. and Xxxxxxx Xxxx (Xx. Xxxxxx and Xx. Xxxx are herein
collectively referred to as the “Conversion
Shareholders).
WHEREAS,
Leisurecorp, GWSE and the Company have entered into that certain Securities
Purchase Agreement, dated as of November 13, 2006 (the “Securities
Purchase Agreement”),
pursuant to which Leisurecorp and GWSE are acquiring, and may in the future
acquire, shares of the Company’s newly issued Series B Convertible Preferred
Stock (the “Preferred
Stock”),
and
warrants to purchase shares of the Company’s common stock (the “Common
Stock”)
on the
terms and subject to the conditions set forth in the Securities Purchase
Agreement.
WHEREAS,
the Conversion Shareholders have entered into certain Debt Exchange Agreements
with the Company pursuant to which Xxxxxxx Xxxx has acquired shares of Preferred
Stock and warrants to purchase Common Stock, and Xxxxxx X. Xxxxxx, Xx. has
acquired shares of Common Stock and warrants to purchase additional shares
of
Common Stock.
WHEREAS,
the Investors and the Conversion Shareholders, in their capacity as holders
of
shares of Preferred Stock and/or Common Stock, agree that it is desirable to
enter into this Shareholder Agreement.
WHEREAS,
the Company has determined that it is in its best interests to grant the
Investors the rights set forth herein.
NOW,
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the
parties hereby agree as follows:
1. REPRESENTATIONS
AND WARRANTIES. The Company and each of the Investors and the Conversion
Shareholders (each, a “Shareholder”
and
collectively, the “Shareholders”)
hereby
represents and warrants to the other parties to this Agreement as
follows:
(a) Authority;
Binding Obligation.
The
Company and each Shareholder represents and warrants that it has all necessary
power and authority to enter into this Shareholder Agreement and perform all
of
his/its obligations hereunder. This Shareholder Agreement has been duly and
validly executed and delivered by the Shareholder and constitutes a valid and
legally binding obligation of the Company and such Shareholder in accordance
with its terms.
(b) Ownership
of Shares.
Each
Shareholder represents and warrants that it is the record holder of the number
of shares of Preferred Stock, Common Stock and warrants to purchase shares
of
Common Stock listed under such Shareholders’ name on the signature page hereto
(the shares of Preferred Stock and Common Stock listed on the signature page,
together with shares of Preferred Stock the Investor may acquire under the
Securities Purchase Agreement and the shares that the Shareholder may acquire
after the date hereof upon the conversion of the Preferred Stock or the exercise
of the warrants listed on the signature page, are herein referred to as such
Shareholders’ “Shares”).
Each
Shareholder represents and warrants that it currently has, and will throughout
the term of the Agreement have sole voting power and sole power of disposition
over his/its Shares, with no restrictions on the voting rights, rights of
disposition or otherwise, subject to applicable laws and the terms of this
Shareholder Agreement.
(c) No
Conflicts.
The
Company and each Shareholder represents and warrants that the execution,
delivery and performance of this Agreement by it/him will not violate or
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or both could become
a
default) under any agreement to which the Company or Shareholder is party,
which
violation, conflict or breach could prevent such party from fully performing
its
obligations under this Agreement in accordance with its terms or affect the
rights or benefits of any other party to this Agreement.
2. VOTING
AGREEMENT.
(a) General
Agreement.
During
the term of this Agreement, the Investors agree to vote all of their Shares
in
accordance with the provisions of this Agreement. Provided that GWSE receives
notice from Leisurecorp prior to the time any action is required to be taken
as
a shareholder of the Company (at a meeting or by written consent, which notice
may be oral at a meeting that both Investors attend in person), GWSE hereby
agrees to vote all of its Shares or to grant consents or approvals in respect
of
all of its Shares, in connection with any meeting of the shareholders of the
Company or any action by written consent in lieu of a meeting of shareholders
of
the Company, in accordance with such oral or written instructions of Leisurecorp
as required above. Notwithstanding the foregoing, GWSE shall not be obligated
to
vote or cause to be voted any of GWSE’s Shares in a manner instructed by
Leisurecorp in a shareholder action involving the election of directors of
the
Company except as set forth in Section 2.(b).
(b) Election
of Directors.
The
Investors acknowledge and agree that pursuant to the Certificate of Designations
for the Preferred Stock, the holders of shares of the Preferred Stock have
the
right, voting as a separate class, to elect three members of the Company’s Board
of Directors (the “Preferred
Directors”).
During the term of this Agreement, each Investor agrees to vote all of its
shares of Preferred Stock (whether now owned or hereafter acquired under the
Securities Purchase Agreement) in such manner as may be necessary to elect
(and
maintain in office) as Preferred Directors the following individuals (each
a
“Designee):
(i) Two
persons designated in writing by Leisurecorp (the “Leisurecorp Designees”);
and
(ii) One
person designated in writing by GWSE.
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(c) Changes
in Designees.
From
time to time during the term of this Agreement, either Leisurecorp or GWSE,
may
in its sole discretion:
(i) notify
the other Investor in writing of its election to remove from the Company’s Board
of Directors any incumbent Preferred Director who occupies a Board seat for
which such stockholder is entitled to designate the Designee; or
(ii) notify
the other Investor in writing of its election to select a new Designee for
election as a Preferred Director for which such stockholders are entitled to
designate the Designee (whether to replace a prior Designee or to fill a vacancy
in such Board seat);
(iii) In
the
event of such an initiation of a removal or selection of a Designee under this
section, the Investors shall take such reasonable actions as are necessary
to
facilitate such removals or elections, including, without limitation, voting
or
giving consents with respect to all of their shares of Preferred Stock to cause:
(a) the removal from the Company’s Board of Directors of the Designee or
Designees so designated for removal; and (b) the election to the Company’s Board
of Directors of any new Designee or Designees so designated.
(d) Additional
Agreements.
Each of
GWSE and Leisurecorp covenant and agree that it will not abstain or fail to
vote
or give a consent with respect to the Shares to the extent that it has received
direction from the other in accordance with the terms of this Agreement and
for
so long as such Shareholder holds Shares and is subject to this Section 2
Additionally, the parties covenant and agree that the Leisurecorp Designees
shall be the Reviewing Preferred Directors.
3. RESTRICTION
ON TRANSFER.
(a) Except
with the prior written consent of the Investors (or if the proposed transferor
is an Investor, the other Investor), each Shareholder agrees that it shall
not
sell, transfer, assign, convey, gift or otherwise dispose of, whether
voluntarily or involuntarily by operation of law or otherwise (each, a
“transfer”),
any
of its Shares, or to pledge, grant a security interest in or otherwise encumber
any Shares, except in compliance with this Shareholder Agreement. Any purported
transfer, pledge, grant of security interest in or other encumbrance of any
Shares other than in accordance with this Shareholder Agreement shall, in
addition to constituting a breach of this Shareholder Agreement, be null and
void and ineffective to convey any interest in such Shares. Nothing in this
Agreement shall restrict the transfer, pledge, grant of security interest in
or
other encumbrance of any other shares of Common Stock any Shareholder owns
as of
the date of this Agreement.
(b) Notwithstanding
the foregoing, commencing on November 1, 2007, each Shareholder shall have
the
right to transfer in any 90 day period, a number of shares of Common Stock
equal
to 1% of the number of shares Common Stock listed as outstanding in the
Company’s latest Form 10-Q or Form 10-K (whichever is filed more recently) (in
the event of a stock split or other similar event since the filing of the last
Form 10-Q or Form 10-K, the number of shares that may be sold shall be
appropriately adjusted to reflect such event). Any portion of such 1% that
is
not transferred in any 90-day period shall be carried forward and may be
transferred hereunder in subsequent periods. Any transfer of Shares permitted
under this Section 3(b) shall thereafter no longer be subject to
Section 2 and Section 3 and the other provisions of this Shareholder
Agreement.
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(c) The
provisions of the Section 3 shall not apply to any transfer of Shares by any
Shareholder to (a) any constituent partner or member of a Shareholder which
is a
partnership or limited liability company, (b) an affiliate of a Shareholder
which is a corporation, partnership or limited liability company, (c) any
employee of any Shareholder, or in the case of an individual Shareholder, (d)
(i) either during his lifetime or upon his death by inter
vivos trust,
will or intestacy to his ancestors, descendants or spouse, or to any custodian
or trustee for the account or benefit of such individual Shareholder or his
ancestors, descendants or spouse or (ii) to a revocable trust (but not an
irrevocable trust) established by such individual for the benefit of himself,
or
his ancestors, descendants or spouse or (e) with respect to Leisurecorp, to
Island Global Yachting or any affiliate thereof; provided,
however,
that
the permitted transferee pursuant to subsection (a)-(d) shall receive and hold
such Shares subject to all of the terms of this Shareholder Agreement. All
Shares acquired by such affiliated entities or persons from any Shareholder
(other than Shares held by Island Global Yachting or its affiliate) shall be
aggregated with those of such Shareholder for the purpose of determining the
number of shares available for sale under Section 3(b).
(d) Notwithstanding
anything to the contrary in this Shareholder Agreement, no transfer of any
Shares under Section 3(b) or 3(c) may occur (i) unless and until the Company
and
the other Shareholders shall have received written notice of the proposed
transfer setting forth the circumstances and details thereof at least five
days
prior to its effectiveness, or (ii) in violation of any of the provisions of
the
Securities Act of 1933, as amended, or any applicable state securities
laws.
(e) The
restriction imposed on the transfer, pledge, grant of security interest in
or
other encumbrance of Shares under this Section 3 shall terminate on the earlier
of December 31, 2008 and the listing of the Company’s Common Stock on either the
Nasdaq Global Market or the Nasdaq Capital Market.
(f) The
Company shall not be required to and hereby agrees not (i) to reflect on
its books any transfer of Shares that shall have been transferred in violation
of any of the provisions of this Shareholder Agreement or (ii) to treat the
purported transferee as the owner of such Shares or to accord the purported
transferee the right to vote such Shares or to receive dividends
thereon.
4. BOARD
OBSERVER RIGHTS. Leisurecorp may, from time to time, notify the Secretary of
the
Company in writing of two persons that it has designated as its “Board
Observers,” and GWSE may, from time to time, notify the Company in writing of
one person that it has designated as its Board Observer. The foregoing Board
Observers are in addition to the Preferred Directors that the holders of the
Preferred Stock are entitled to elect to the Board of Directors under the
Certificate of Designations. The Company hereby agrees to invite all of the
Board Observers to attend all meetings (including telephonic meetings) of the
Board of Directors in a nonvoting capacity and to provide (at the same time
as
it provides to the directors) each of the Board Observers copies of all notices,
consents, Board of Director review materials, and all other materials it
provides to the directors.
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5. COVENANTS
OF THE COMPANY. The Company agrees to use its best efforts to ensure that the
rights given to the Shareholders hereunder are effective and that the
Shareholders enjoy the benefits thereof. Such actions include, without
limitation, the use of the Company’s reasonable best efforts to enforce the
terms of this Shareholder Agreement and to inform the shareholders of any breach
hereof (to the extent the Company has knowledge thereof). The Company will
not,
by any voluntary action, avoid or seek to avoid the observance or performance
of
any of the terms to be performed hereunder by the Company, but will at all
times
in good faith assist in the carrying out of all of the provisions of this
Shareholder Agreement and assist the Shareholders in the exercise and
enforcement of their rights and the performance of their obligations hereunder.
6. SPECIFIC
PERFORMANCE. The Investors acknowledge that it would be impossible to determine
the amount of damages that would result from any breach of any of their
obligations under Section 2 of this Shareholder Agreement and that the remedy
at
law for any breach, or threatened breach, would likely be inadequate and,
accordingly, agrees that the other Investors shall, in addition to any other
rights or remedies which it may have at law or in equity, be entitled to seek
such equitable and injunctive relief as may be available from any court of
competent jurisdiction to restrain an Investor from violating any of its
obligations under Section 2. In connection with any action or proceeding for
such equitable or injunctive relief, each Investors hereby waives any claim
or
defense that a remedy at law alone is adequate and agrees, to the maximum extent
permitted by law, to have its obligations under Section 2 specifically enforced
against it, without the necessity of posting bond or other security, and
consents to the entry of equitable or injunctive relief against it enjoining
or
restraining any breach or threatened breach of Section 2 of this Shareholder
Agreement.
7. EXPIRATION;
TERMINATION. Except as otherwise set forth in this Agreement, this Shareholder
Agreement shall terminate upon the earliest to occur of the following:
(i) the written agreement of the Investors; (ii) the dissolution,
bankruptcy or insolvency of the Company; (iii) at such time as Leisurecorp
owns less than 25% of the number of shares of Preferred Stock that it purchased
under the Securities Purchase Agreement; (iv) the consummation by the
Company of the sale of all or substantially all of its assets and business;
(v) the consummation of a merger or consolidation of the Company with or
into a third party (other than a reincorporation merger) in which the Preferred
Stock is converted into the right to receive cash, securities or other
consideration; and (vi) December 31,
2009.
8. MISCELLANEOUS.
(a) Legend
on Share Certificates.
Each
certificate representing any Shares (including shares issued after the date
hereof) , and all certificates issued in transfer thereof or substitution
therefor, shall be endorsed by the Company with a legend reading substantially
as follows:
“THE
SHARES EVIDENCED HEREBY ARE SUBJECT TO A SHAREHOLDER AGREEMENT, AS MAY BE
AMENDED FROM TIME TO TIME, (A COPY OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST
FROM THE COMPANY), AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON
ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND
BY
ALL THE PROVISIONS OF THAT SHAREHOLDER AGREEMENT, INCLUDING CERTAIN RESTRICTIONS
ON VOTING, TRANSFER AND OWNERSHIP SET FORTH THEREIN.”
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(b) Entire
Agreement.
This
Shareholder Agreement constitutes the entire agreement of the parties hereto
with reference to the transactions contemplated hereby and supersedes all other
prior agreements, understandings, representations and warranties, both written
and oral, between the parties or their respective representatives, agents or
attorneys, with respect to the subject matter hereof.
(c) Parties
in Interest.
This
Shareholder Agreement shall be binding upon and inure solely to the benefit
of
the Investors and their respective successors, assigns, and other legal
representatives, as the case may be. Nothing in this Shareholder Agreement,
express or implied, is intended to confer upon any other person, other than
the
Investors or their respective successors, assigns, and other legal
representatives, as the case may be, any rights, remedies, obligations or
liabilities under or by reason of this Shareholder Agreement.
(d) Assignment.
This
Shareholder Agreement shall not be assignable by law or otherwise without the
prior written consent of the other parties hereto; provided, however, that
either GWSE or Leisurecorp may assign any of its rights and obligations
hereunder to any entity which may acquire all or substantially all of its
assets, shares or business or to any entity with or into which it may be
consolidated or merged.
(e) Modifications;
Waivers.
This
Shareholder Agreement shall not be amended, altered or modified in any manner
whatsoever, except by a written instrument executed by the Company and by both
Investors. No waiver of any breach or default hereunder shall be considered
valid unless in writing and signed by the party giving such waiver, and no
such
waiver shall be deemed a waiver of any subsequent breach of the same or similar
nature.
(f) Severability.
Any
term or provision of this Shareholder Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity and unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Shareholder
Agreement in any other jurisdiction. If any provision of this Shareholder
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
(g) Governing
Law.
This
Shareholder Agreement shall be deemed to be made in and in all respects shall
be
interpreted, construed and governed by and in accordance with the laws of the
State of New York, without regard to the conflict of law principles
thereof.
(h) Jurisdiction
and Venue.
Each
party hereby irrevocably submits to the exclusive jurisdiction of the state
and
federal courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that
the
venue of such suit, action or proceeding is improper.
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(i) Attorney’s
Fees.
The
prevailing party in any litigation, arbitration, mediation, bankruptcy,
insolvency or other proceeding (“Proceeding”)
relating to the enforcement or interpretation of this Shareholder Agreement
may
recover from the unsuccessful party all fees and disbursements of counsel
(including expert witness and other consultants’ fees and costs) relating to or
arising out of (a) the Proceeding (whether or not the Proceeding results in
a judgment) and (b) any post-judgment or post-award Proceeding including,
without limitation, one to enforce or collect any judgment or award resulting
from any Proceeding. All such judgments and awards shall contain a specific
provision for the recovery of all such subsequently incurred costs, expenses,
fees and disbursements of counsel.
(j) Counterparts.
This
Shareholder Agreement may be executed in one or more counterparts (including
by
facsimile), each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument.
(k) Notices.
All
notices, requests, instructions and other communications to be given hereunder
by any party to the other shall be in writing and shall be deemed given if
personally delivered, telecopied (with confirmation) or mailed by registered
or
certified mail, postage prepaid (return receipt requested), to such party at
its
address set forth below or such other address as such party may specify to
the
other party by notice provided in accordance with this Section
7(k).
If
to the
Company, to:
Xxxxx
000
0000
000xx Xxxxxx
Xxxxxx,
Xxxxxxx Xxxxxxxx
Xxxxxx
X00 X00
Attn:
Chief Executive Officer
Telecopier:
(000) 000-0000
and
If
to
Shareholders, to the addresses specified on the signature page
hereof.
(l) Advice
of Counsel.
Each
Shareholder acknowledges that, in executing this Shareholder Agreement, such
Shareholder has had the opportunity to seek the advice of independent legal
counsel, and has read and understood all of the terms and provisions of this
Shareholder Agreement. The parties acknowledge that the Company’s counsel, Xxxx
Xxxxx Professional Corporation (“Xxxx
& Xxxxx”),
prepared this Shareholder Agreement on behalf of and in the course of its
representation of the Company. Xxxx & Xxxxx represents the Company only, and
does not represent, and owes no duty, to any of the Shareholders. Xxxx &
Xxxxx has therefore advised the Shareholders to seek the advice of independent
counsel with respect to this Shareholder Agreement.
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(m) Actions
as Shareholders.
The
Investors and the Conversion Shareholders are entering into this Shareholder
Agreement in their capacity as the record or beneficial owners of the shares
of
the Company’s securities. Nothing in this Shareholder Agreement shall be deemed
in any manner to limit the discretion of any member of the Company’s Board of
Directors, including either Conversion Shareholders or any affiliate or designee
of either Investors, to take any action, or fail to take any action, in his
or
her capacity as a director or officer of the Company
8
IN
WITNESS WHEREOF, the parties hereto have executed this Shareholder Agreement
as
of the date first above written.
By:
_____________________________
Name:
___________________________
Title:
____________________________
SHAREHOLDERS:
GREAT
WHITE SHARK ENTERPRISES, INC.
_____________________________________
By:
Number
of
shares of Preferred Stock as of the date of this Agreement: 574,089
Number
of
shares underlying warrants as of the date of this Agreement:
18,901,579
Address
for Notices:
Great
White Shark Enterprises, Inc.
000
Xxxxx
X0X, Xxxxxxx, XX 00000
Attn:
Xxxx Xxxxxxx
Telephone:
(000) 000-0000
Telecopy:
(000) 000-0000
LEISURECORP
LLC
_____________________________________
By:
Number
of
shares of Preferred Stock as of the date of this Agreement:
1,000,000
Number
of
shares underlying warrants as of the date of this Agreement:
40,983,607
Address
for Notices:
Xxxxx
Xxxxxxx
Chief
Executive Officer
Xxxxxxxxx
Xxxxxxx
X.X.
Xxx
00000, Xxxxx, XXX
Telephone:
x0000-0000000
Telecopy:
x0000-0000000
9
XXXXXX
X.
XXXXXX, XX.
_____________________________________
By:
Xxxxxx X. Xxxxxx, Xx.
Number
of
shares of Common Stock subject to this Agreement: 12,295,082
Number
of
shares underlying warrants as of the date of this Agreement:
3,073,770
Address
for Notices:
GPS
Industries, Inc., Xxxxx 000
0000
000xx Xxxxxx
Xxxxxx,
Xxxxxxx Xxxxxxxx
Xxxxxx
V35 S59
XXXXXXX
XXXX
_____________________________________
By:
Xxxxxxx Xxxx
Number
of
shares of Preferred Stock as of the date of this Agreement: 300,000
Number
of
shares underlying warrants as of the date of this Agreement:
12,295,082
Address
for Notices:
X.
Xxxx
Holdings LLC
0000
Xxxxxxxxx Xxxxx,
Xxxxxxx,
Xxxxxxxxxxxx 00000
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