<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 8, 1996
REGISTRATION NO.: 333-06151
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
METROGOLF INCORPORATED
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
COLORADO 7200 84-1288480
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of
incorporation or organization) Classification Number) Identification
Number)
</TABLE>
1999 BROADWAY, SUITE 2435
DENVER, COLORADO 80202
(303) 294-9300
(Address and telephone number of principal executive offices)
------------------------------
CHARLES D. TOURTELLOTTE
1999 BROADWAY, SUITE 2435
DENVER, COLORADO 80202
(303) 294-9300
(Name, address and telephone number of agent for service)
------------------------------
COPIES OF ALL COMMUNICATIONS SHOULD BE SENT TO:
<TABLE>
<S> <C>
Jeffrey M. Knetsch Kevin A. Cudney
Brent T. Slosky George A. Hagerty
Brownstein Hyatt Farber & Strickland, Dorsey & Whitney LLP
P.C.
410 17th Street, 22nd Floor 370 17th Street, Suite 4400
Denver, Colorado 80202 Denver, Colorado 80202
telephone: (303) 534-6335 / facsimile: telephone: (303) 629-3400 / facsimile:
(303) 623-1956 (303) 629-3450
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of the Registration Statement.
------------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED (1) PER SHARE (2) OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, no par value..................... 1,904,821 $8.00 $15,238,568 $5,255(3)
</TABLE>
(1) Includes 176,250 shares to cover the Underwriters' Over-allotment Option.
Also includes an indeterminate number of shares that are issuable upon
conversion of the PP Notes (as defined herein), presently estimated to be
553,571 shares.
(2) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(a).
(3) $5,334 previously paid.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
METROGOLF INCORPORATED
CROSS REFERENCE SHEET
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS IN PART I OF FORM S-1
<TABLE>
<CAPTION>
FORM S-1 CAPTION PROSPECTUS CAPTION
- ---------------------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus...................... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus.......................................... Inside Front Cover Page; Outside Back Cover Page
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges........................... Prospectus Summary; Risk Factors
4. Use of Proceeds...................................... Use of Proceeds
5. Determination of Offering Price...................... Outside Front Cover Page; Underwriting
6. Dilution............................................. Dilution
7. Selling Security Holders............................. Not Applicable; Selling Stockholders [Alternate Page]
8. Plan of Distribution................................. Outside Front Cover Page; Underwriting; Plan of
Distribution [Alternate Page]
9. Description of Securities to Be Registered........... Description of Capital Stock
10. Interests of Named Experts and Counsel............... Not Applicable
11. Information with Respect to the Registrant........... Prospectus Summary; Risk Factors; Capitalization;
Selected Consolidated and Pro Forma Financial Data;
Management's Discussion and Analysis of Financial
Condition and Results of Operations; Business;
Management; Description of Capital Stock;
Consolidated and Combined Financial Statements
12. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities...................... Not Applicable
</TABLE>
<PAGE>
EXPLANATORY NOTE
This Registration Statement covers the registration of (i) an offering of
1,351,250 shares of common stock, no par value ("Common Stock"), including
shares of Common Stock to cover over-allotments, of MetroGolf Incorporated (the
"Company"), a Colorado corporation, for sale by the Company in an underwritten
public offering, and (ii) an additional 553,571 shares (the "Conversion Shares")
of Common Stock (or such greater number of shares as may be required) issuable
upon conversion of the Company's 12% Convertible Subordinated Notes due 1997
(the "PP Notes") that were issued in a private placement closed on May 30, 1996
to the holders thereof (the "Selling Shareholders") all for resale from time to
time by the Selling Shareholders subject to the contractual restriction that the
Selling Shareholders may not sell the Conversion Shares for a specific period
after the closing of the underwritten offering without the Underwriters' prior
consent. The PP Notes are convertible at 50% of the price to public in the
public offering (the "IPO") if converted simultaneously with the closing of the
IPO or at 50% of the Market Price of the Common Stock (as defined), if converted
at a later date. The above number of Conversion Shares is determined utilizing a
$7.00 per share price in the IPO (the middle of the expected range).
The complete Prospectus relating to the underwritten offering follows
immediately after this Explanatory Note. Following the Prospectus for the
underwritten offering are pages of the Prospectus relating solely to the
Conversion Shares, including alternative front and back cover pages and sections
entitled "Concurrent Public Offering," "Shares Eligible for Future Sale,"
"Selling Stockholders" and "Plan of Distribution" to be used in lieu of the
sections entitled "Concurrent Offering," "Shares Eligible for Future Sale" and
"Underwriting" in the Prospectus relating to the underwritten offering. Certain
sections of the Prospectus for the underwritten offering will not be used in the
Prospectus relating to the Conversion Shares such as "Use of Proceeds" and
"Dilution." In addition, certain language in the Prospectus for the underwritten
offering relating to the underwritten offering will be changed, with such
changes being submitted to the Securities and Exchange Commission in a
Prospectus pursuant to Rule 424.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The amount of expenses in connection with the issuance and distribution of
the Common Stock registered hereby are set forth in the following table. All the
amounts shown are estimates, except the SEC registration fee and the NASD filing
fee.
<TABLE>
<S> <C>
SEC Registration Fee............................................. $ 5,334
NASD Filing Fee.................................................. 1,932
Accounting Fees and Expenses..................................... 90,000
Legal Fees and Expenses.......................................... 200,000
Printing and Engraving Costs..................................... 160,000
Blue Sky Fees and Expenses....................................... 60,000
Stock Exchange Fees.............................................. 13,250
Expense Allowance................................................ 123,375
Miscellaneous.................................................... 42,859
---------
Total............................................................ 696,750
---------
---------
</TABLE>
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Article 109 of the Colorado Business Corporation Act ("CBCA") authorizes the
Registrant to indemnify its directors and officers under specified
circumstances. The Bylaws of the Registrant provide that the Registrant shall,
subject to approval by a majority of its directors, indemnify, to the extent
permitted by Colorado law, its directors and officers. The CBCA does not limit
an officer's or director's liability for violation of the federal securities
laws.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
In the three year period prior to the filing of this Registration Statement,
the Registrant has sold the following unregistered securities:
COMMON STOCK
On July 29, 1994, the date of incorporation of the Company, the Company
issued 680,782 shares of its Common Stock to the Company's founder, Charles D.
Tourtellotte, in exchange for all of his common stock of the general partners of
ICGP and GCGP.
PREFERRED STOCK UNITS
Between July 29, 1994 and August 28, 1995, the Registrant sold 45,500 Units;
each Unit consists of one share of its Redeemable Preferred Stock and warrants
to purchase 3.58 shares of its Common Stock at an exercise price of $2.23 per
share. The Units were sold for cash at $25 per unit, resulting in gross proceeds
to the issuer of $1,137,500. Rodman & Renshaw, Inc. acted as placement agent for
the offering of Units and received cash compensation equal to 9% of the gross
proceeds raised in the offering ($101,250). In addition, Rodman & Renshaw, Inc.
received warrants to purchase 11,108 shares of Common Stock at an exercise price
of $2.23 per share. None of the warrants have been exercised as of the date of
this Registration Statement.
CONVERTIBLE NOTES
Between May 20, 1996 and May 30, 1996, the Registrant sold $2,025,000
aggregate principal amount of its 12% Convertible Subordinated Notes Due 1997
(the "PP Notes"). The PP Notes were sold for 100% of their principal amount,
resulting in gross proceeds to the issuer of $2,025,000. Laidlaw Equities, Inc.
acted as placement agent for the PP Notes and received cash compensation equal
to 10% of the gross proceeds raised in the offering ($202,500).
II-1
<PAGE>
OFFICERS' AND DIRECTORS' WARRANTS
In 1995, the Registrant issued warrants to purchase 8,152 shares of Common
Stock at an exercise price of $2.23 per share to each of its two non-management
directors, Ernie Banks and Jack F. Lasday. These warrants were issued as
compensation for serving as directors. The Registrant does not otherwise
compensate its directors except for their reasonable expenses in attending
meetings of the board of directors. None of the warrants has been exercised as
of the date of this Registration Statement.
As compensation for their services in 1995, the Registrant issued warrants
to purchase 48,860 shares of Common Stock at an exercise price of $2.23 per
share to each of Charles D. Tourtellotte, its President, and J.D. Finley, its
Executive Vice President and Chief Financial Officer. None of the warrants has
been exercised as of the date of this Registration Statement.
In 1996, the Company issued options to purchase 125,000 shares of Common
Stock at the IPO Price under the Company's Senior Executive Stock Option Plan.
Such options vest over time starting March 31, 1997 based on certain benchmarks
in the price of the Company's Common Stock and are immediately exercisable. The
Common Stock issued upon exercise thereof are subject to a 13-month lock-up
period, subject to waiver by the Representatives.
EXEMPTION FROM REGISTRATION CLAIMED
The Common Stock, Units and PP Notes described above were issued pursuant to
Section 4(2) of the Securities Act of 1933 and in reliance on Rules 505 and 506
of Regulation D under the Securities Act of 1933. The Common Stock, Units and
the PP Notes were offered and sold in separate private offerings not involving
any form of general solicitation and only to persons that the Company reasonably
believed to be "accredited investors" as contemplated by Regulation D or to
fewer than 35 persons that the Company had reason to believe were not
"accredited investors" but that the Company reasonably believed satisfied the
conditions set forth in Rule 506(b)(ii), and in each case who made appropriate
investment representations in their purchase agreements. The Officers' and
Directors' warrants were issued as compensation for services and were not
offered to any other person.
ITEM 16. EXHIBITS AND FINANCIAL SCHEDULES
(a) Exhibits
<TABLE>
<C> <S>
1 Form of Underwriting Agreement
3.1 Articles of Incorporation, as amended, incorporated herein by reference from
the Registrant's Offering Statement on Form 1-A (File No. 24D-3840) with
June 3, 1996 amendment filed herewith.
3.2 Bylaws, incorporated herein by reference from the Registrant's Offering
Statement on Form 1-A (File No. 24D-3840)
4 Specimen Common Stock Certificate of MetroGolf Incorporated
4.2 Form of Note Purchase Agreement dated May 8, 1996 between The Vintage Group
USA, Ltd. and the Purchasers of its 12% Convertible Subordinated Notes due
1997 (the PP Notes)
5 Opinion of Brownstein Hyatt Farber & Strickland, P.C.**
10.1 Employment Agreement between the Company and Charles D. Tourtellotte
effective as of January 1, 1996
10.2 Employment Agreement between the Company and J.D. Finley effective as of
January 1, 1996
10.3 Employment Agreement between the Company and James K. Dignan effective as of
July 1, 1996
10.4(a) Form of outstanding Warrant Certificates, incorporated herein by reference
from the Registrant's Offering Statement on Form 1-A (File No. 24D-3840)
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
10.4(b) Warrant Agreement, incorporated herein by reference from the Registrant's
Offering Statement on Form 1-A (File No. 24D-3840)
10.7 Agreement of Limited Partnership of Illinois Center Golf Partners L.P.,
incorporated herein by reference from the Registrant's Offering Statement on
Form 1-A (File No. 24D-3840)
10.8 Ground Sublease and Sublicense Agreement for Illinois Center Golf Facilities
between Illinois Center Golf Partners L.P. and Illinois Center Plaza
Venture, as amended, incorporated herein by reference from the Registrant's
Offering Statement on Form 1-A (File No. 24D-3840)
10.9 Agreement of Limited Partnership of Goose Creek Golf Partners Limited
Partnership, incorporated herein by reference from the Registrant's Offering
Statement on Form 1-A (File No. 24D-3840)
10.10 Credit Line Deed of Trust for the benefit of Textron Financial Corporation,
incorporated herein by reference from the Registrant's Offering Statement on
Form 1-A (File No. 24D-3840)
10.11 Port Authority Letter Agreement, incorporated herein by reference from the
Registrant's Offering Statement on Form 1-A (File No. 24D-3840)
10.12 Operating Agreement of Vintage New York Golf L.L.C., incorporated herein by
reference from the Registrant's Offering Statement on Form 1-A (File No.
24D-3840)
10.13 Agreement of Purchase and Sale between Robert Selleck and Fremont Golf
Partnership and The Vintage Group USA Ltd. dated as of March 19, 1996
10.14 Letter of Intent relating to Harborside Golf Center from The Vintage Group
USA Ltd. to Shapery Enterprises dated March 18, 1996
10.15 Management Agreement between MetroGolf Management, Inc. and Illinois Center
Golf, incorporated herein by reference from the Registrant's Offering
Statement on Form 1-A (File No. 24D-3840)
10.16 Settlement Agreement relating to 15% interest in Illinois Center Golf and
Goose Creek, incorporated herein by reference from the Registrant's Offering
Statement on Form 1-A (File No. 24D-3840)
10.17 Company's 1996 Stock Option and Stock Bonus Plan
10.18 Management Agreement between MetroGolf Management, Inc. and the Company dated
July 1, 1996 relating to Fremont Golf Center.
10.19 Management Agreement between MetroGolf Management, Inc. and MetroGolf (San
Diego) Incorporated dated July 1, 1996 relating to Harborside Golf Center.
10.20 Form of Note from the Company to the limited partners of ICGP that accept the
Offer to Purchase.
10.21 Form of Warrant from the Company to the limited partners of ICGP that accept
the Offer to Purchase.
10.22 Form of Note from the Company to the limited partners of GCGP that accept the
Offer to Purchase.
10.23 Company's Senior Executive Incentive Stock Option Plan**
10.24 Extension to Letter of Commitment on Central Park Golf Course dated September
19, 1996 from the City of Fremont to the Company relating to the Fremont
Golf Center Golf Course.**
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
10.25 Fifth Amendment to Ground Sublease and Sublease Agreement for Illinois Center
Golf Facilities dated January 31, 1996 amending Exhibit 10.8**.
11 Statement re Computation of per share Earnings
21 Subsidiaries of the Registrant
23.1 Consent of BDO Seidman, LLP
23.2 Consent of Brownstein Hyatt Farber & Strickland, P.C. (included in their
opinion filed as Exhibit 5)
23.3 Consent of Michael S. McGetrick
24 Power of Attorney (appears on the signature page of Form S-1 Registration
Statement)
27.1 Financial Data Schedule
(b) Financial Statement Schedules
(i) MetroGolf Incorporated and Subsidiaries
Report of Independent Certified Public Accountants
Schedule II -- Valuation and Qualifying Accounts
</TABLE>
- ------------------------
** Filed herewith.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Act");
(ii) To reflect in the prospectus any facts or events after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
II-4
<PAGE>
Insofar as indemnification for liabilities arising under the Act may be
permitted to Directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such case.
The undersigned hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 4214(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial BONA FIDE offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company has duly caused this Amendment No. 3 to the Company's Registration
Statement (Form S-1) to be signed on its behalf by the undersigned thereunto
duly authorized on October 8, 1996.
METROGOLF INCORPORATED
By: /s/ CHARLES D. TOURTELLOTTE
-----------------------------------
CHARLES D. TOURTELLOTTE
PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to the Company's Registration Statement (Form S-1) has been signed below
by the following persons in the capacities and on the dates indicated.
<TABLE>
<S> <C>
October 8, 1996 /s/ CHARLES D. TOURTELLOTTE
- -------------------------------------- --------------------------------------------------
Date CHARLES D. TOURTELLOTTE
President and Director
October 8, 1996 /s/ J.D. FINLEY
- -------------------------------------- --------------------------------------------------
Date J. D. FINLEY
Executive Vice President and Chief Financial
Officer
October 8, 1996 /s/ ERNIE BANKS
- -------------------------------------- --------------------------------------------------
Date ERNIE BANKS
Director
October 8, 1996 /s/ JACK F. LASDAY
- -------------------------------------- --------------------------------------------------
Date JACK F. LASDAY
Director
</TABLE>
II-6
<PAGE>
October 7, 1996
MetroGolf Incorporated
1999 Broadway
Suite 2435
Denver, CO 80202
Gentlemen:
MetroGolf Incorporated (the "Company") has filed with the Securities
and Exchange Commission a registration statement (the "Registration Statement")
on Form S-1 (No. 333-06151), as amended through Amendment No. 3 filed on the
date hereof, which relates to the sale of up to 1,904,821 shares of the
Company's Common Stock by the Company, including up to 1,351,250 shares (the
"Underwriter Shares") to be sold to the Underwriters (as defined in the
underwriting agreement filed as Exhibit 1 to the Registration Statement (the
"Underwriting Agreement")) and an indeterminate number of shares (presently
estimated to be 553,571 shares) (the "Conversion Shares") that are issuable upon
conversion of the Company's outstanding 12% Convertible Subordinated Notes due
1997 (the "Notes") to the holders thereof in accordance with the note purchase
agreement filed as Exhibit 4.2 to the Registration Statement (the "Note Purchase
Agreement").
We have examined such corporate records of the Company and such other
documents as we have deemed appropriate to give this opinion.
Based upon the foregoing, we are of the opinion that (i) the
Underwriter Shares, when issued and sold in accordance with the terms of the
Underwriting Agreement and upon receipt by the Company of the consideration
therefor in accordance with the Underwriting Agreement, will be validly issued,
fully paid and nonassessable, and (ii) the Conversion Shares, when issued upon
conversion of the Notes in accordance with the Note Purchase Agreement, and upon
receipt by the Company of the consideration therefor in accordance with the Note
Purchase Agreement, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement as it is proposed to be amended and to the use of our
name in the Prospectus that is a part of the Registration Statement under the
caption "Legal Matters."
<PAGE>
October 7, 1996
Page 2
Very truly yours,
BROWNSTEIN HYATT FARBER
& STRICKLAND, P.C.
<PAGE>
METROGOLF INCORPORATED
SENIOR EXECUTIVE INCENTIVE STOCK OPTION PLAN
PURPOSES OF AND BENEFITS UNDER THE INCENTIVE PLAN. This Senior
Executive Stock Option Plan (the "Incentive Plan") is intended to encourage
stock ownership by senior executives of MetroGolf Incorporated (the
"Corporation"), so that they may acquire or increase their proprietary
interest in the Corporation, and is intended to facilitate the Corporation's
efforts to (i) induce qualified persons to become executives of the
Corporation and (ii) encourage such persons to remain in the employ of or
associated with the Corporation and to put forth maximum efforts for the
success of the Corporation.
1. DEFINITIONS. As used in this Incentive Plan, the following words
and phrases shall have the meanings indicated:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Committee" shall mean the Compensation Committee appointed by
the Board, if one has been appointed. If no Committee has been appointed, the
term "Committee" shall mean the Board. Following the Registration Date, the
Committee shall consist of at least two persons (or such other number as may
be required under Rule 16b-3, each of whom is a Disinterested Director,
appointed by and holding office at the pleasure of the Board).
(c) "Common Stock" shall mean the Corporation's $.01 par value
common stock.
(d) "Disability" shall mean a Recipient's inability to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or that
has lasted or can be expected to last for a continuous period of no less than
12 months. If the Recipient has a disability insurance policy, the term
"Disability" shall be defined therein.
(e) "Disinterested Director" means a member of the Board who is
not, during the one year prior to service as a member of the Committee, or
during such service, granted or awarded equity securities pursuant to the
Incentive or any other plan of the Corporation, except for formula grants or
awards made pursuant to exceptions provided under Rule 16b-3.
(f) "Fair Market Value" per share as of a particular date shall
mean: (i) the last sale price of the Corporation's Common Stock as reported
on a national securities exchange or on the NASDAQ National Market System or
by NASDAQ; or (ii) if the quotation for the last sale reported is not
available for the Corporation's Common Stock as so reported; or (iii) if such
quotations are unavailable, the value determined by the Committee in its
discretion in a bona fide, good faith determination of fair market value.
Fair Market Value shall be determined without
<PAGE>
regard to any restriction other than a restriction which, by its terms, will
never lapse. In the case of Options granted at a time when the Corporation
does not have a registration statement in effect relating to the shares
issuable hereunder, the value at which the Option shares are issued may be
determined by the Committee at a reasonable discount from Fair Market Value
to reflect the restricted nature of the shares to be issued and the inability
of the Recipient to sell those shares promptly.
(g) "Recipient" means any person granted an Option hereunder.
(h) "Rule 16b-3" means Rule 16b-3 which has been adopted by the
Securities and Exchange Commission under the Securities and Exchange Act of
1934, if and as such rule is then in effect.
2. Administration.
(a) The Incentive Plan shall be administered by the Committee. The
Committee shall have the authority in its discretion, subject to and not
inconsistent with the express provisions of the Incentive Plan, to administer
the Incentive Plan and to exercise all the powers and authorities either
specifically conferred under the Incentive Plan or necessary or advisable in
the administration of the Incentive Plan, including the authority: to grant
Options; to determine the vesting schedule and other restrictions, if any,
relating to Options; to determine the purchase price of the shares of Common
Stock covered by each Option (the "Option Price"); to determine the persons
to whom, and the time or times at which, Options shall be granted; to
determine the number of shares to be covered by each Option; to determine
Fair Market Value per share; to interpret the Incentive Plan; to prescribe,
amend and rescind rules and regulations relating to the Incentive Plan; to
determine the terms and provisions of the Option agreements (which need not
be identical) entered into in connection with Options granted under the
Incentive Plan; and to make all other determinations deemed necessary or
advisable for the administration of the Incentive Plan. The Committee may
delegate to one or more of its members or to one or more agents such
administrative duties as it may deem advisable, and the Committee or any
person to whom it has delegated duties as aforesaid may employ one or more
persons to render advice with respect to any responsibility the Committee or
such person may have under the Incentive Plan.
(b) Options granted under the Incentive Plan shall be evidenced by
duly adopted resolutions of the Committee included in the minutes of the
meeting at which they are adopted or in a unanimous written consent.
(c) The Committee shall endeavor to administer the Incentive Plan
and grant Options hereunder in a manner that is compatible with the
obligations of persons subject to Section 16 of the Securities Exchange Act
of 1934 (the "1934 Act"), although compliance with Section 16 is the
obligation of the Recipient, not the Corporation. Neither the Committee, the
Board nor the Corporation can assume any legal responsibility for a
Recipient's compliance with his
2
<PAGE>
obligations under Section 16 of the 1934 Act.
(d) No member of the Committee or the Board shall be liable for any
action taken or determination made in good faith with respect to the
Incentive Plan or any Option or Bonus granted hereunder.
3. ELIGIBILITY.
(a) Subject to certain limitations hereinafter set forth, Options
may be granted to senior executives of the Corporation. In determining the
persons to whom Options shall be granted and the number of shares to be
covered by each Option, the Committee shall take into account the duties of
the respective persons, their present and potential contributions to the
success of the Corporation, and such other factors as the Committee shall
deem relevant to accomplish the purposes of the Incentive Plan.
(b) A Recipient shall be eligible to receive more than one grant of
an Option during the term of the Incentive Plan, on the terms and subject to
the restrictions herein set forth.
4. STOCK RESERVED.
(a) The stock subject to Options hereunder shall be shares of
Common stock, Such shares, in whole or in part, may be authorized but
unissued shares or shares that shall have been or that may be reacquired by
the Corporation. The aggregate number of shares of Common Stock as to which
Options may be granted from time to time under the Incentive Plan shall not
exceed 250,000 subject to adjustment as provided in Section 5(h) hereof.
(b) If any Option outstanding under the Incentive Plan for any
reason expires or is terminated without having been exercised in full, or if
any Option granted is forfeited because of vesting or other restrictions
imposes at the time of grant, the shares of Common Stock allocable to the
unexercised portion of such Option shall become available for subsequent
grants of Options under the Incentive Plan.
5. TERMS AND CONDITIONS OF OPTIONS: OPTION AGREEMENTS. Each Option
granted pursuant to the Incentive Plan shall be evidenced by a written Option
agreement between the Corporation and the Recipient, which agreement shall be
substantially in the form of Exhibit A hereto as modified from time to time
by the Committee in its discretion. Each Option Agreement shall comply with
and be subject to the following terms and conditions:
(a) NUMBER OF SHARES. Each Option agreement shall state the
number of shares of Common Stock covered by the Option.
(b) OPTION PRICE. Each Option agreement shall state the Option
Price, which
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shall be determined by the Committee subject only to the following
restrictions:
(1) The Option Price shall be subject to adjustment as provided
in Section 5(h) hereof.
(2) The date on which the Committee adopts a resolution
expressly granting an Option shall be considered the day on which such
option is granted, unless a future date is specified in the resolution, and
the Fair Market Value of The Common Stock to which such Option relates shall
be determined at the close of the day on which the resolution is adopted,
unless another value and/or another date is specified in the resolution.
(c) TERM AND VESTING OF OPTION. Each Option agreement shall state
the period during and time at which the Option shall vest and be exercisable,
in accordance with the following limitations:
(1) Unless otherwise stated in the granting resolution, the
date on which the Committee adopts a resolution expressly granting an Option
shall be considered the day on which such Option is granted, although such
grant shall not be effective until the Recipient has executed an Option
Agreement with respect to such Option.
(2) The exercise period of any Option shall not exceed ten
years from the date of grant of the Option.
(3) The Committee shall not have the authority to accelerate or
extend the exercisability of any outstanding Option at such time and under
such circumstances as it, in its sole discretion, deems appropriate. No
exercise period may be so extended to increase the term of the Option beyond
ten years from the date of the grant.
(4) The exercise period shall be subject to earlier termination
as provided in Sections 5(e) and 5(f) hereof, and furthermore, shall be
terminated under surrender of the Option by the holder thereof if such
surrender has been authorized in advance by the Committee.
(d) METHOD OF EXERCISE AND MEDIUM AND TIME OF PAYMENT.
(1) An Option may be exercised as to any or all whole shares of
Common Stock as to which it then is exercisable; provided, however, that no
Option may be exercised as to less than 100 shares (or such number of shares
as to which the Option is then exercisable if such number of shares is less
than 100).
(2) Each exercise of an Option granted hereunder, whether in
whole or in part, shall be effected by written notice to the Secretary of the
Corporation designating the number of shares as to which the Option is being
exercised, and shall be accompanied by payment in full
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of the Option Price for the number of shares so designated, together with any
written statements required by, or deemed by the Corporation's counsel to be
advisable pursuant to, any applicable securities laws.
(3) The Option Price shall be paid in cash, or in shares of
Common Stock having a Fair Market Value equal to such Option Price, or in
property or in a combination of cash, shares and property and, subject to
approval of the Committee, may be effected in whole or in part with funds
received from the Corporation at the time of exercise as a compensatory cash
payment.
(4) The Committee shall have the sole and absolute discretion to
determine whether or not property other than cash or Common Stock may be used
to purchase the shares of Common Stock hereunder, and, if so, to determine
the value of the property received.
(5) The Recipient shall make provision for the withholding of
taxes as required by Paragraph 6 hereof.
(e) TERMINATION. Except as provided herein or in the Option
Agreement by and between the Corporation and the Recipient, an Option may not
vest unless the Recipient has been continuously employed by the Corporation
(or a corporation or a Parent or Subsidiary Corporation of such corporation
issuing or assuming the option in a transaction to which Section 424(a) of
the Internal Revenue Code applies) through the corresponding vesting date.
(1) Unless otherwise provided in the Option Agreement by and
between the Corporation and the Recipient, if the Recipient ceases to be an
employee or officer of the Corporation (other than by reason of death,
Disability or retirement) all Options theretofore granted and vested to such
Recipient that are exercisable at the time of such cessation may, unless
earlier terminated in accordance with their terms, be exercised within three
months after such cessation; provided, however, that if the executive shall
be removed, for cause, all Options theretofore granted to such Recipient
shall, to the extent not theretofore exercised, terminate forthwith.
(2) Nothing in the Incentive Plan or in any Option granted
hereunder shall confer upon an individual any right to continue in the employ
of or maintain any other relationship with the Corporation or interfere in
any way with the right of the Corporation to terminate such employment or
other relationship between the individual and the Corporation.
(f) DEATH, DISABILITY OR RETIREMENT OF RECIPIENT. Unless otherwise
provided in the Option Agreement by and between the Corporation and the
Recipient, if a Recipient shall die while an executive of the Corporation, or
if the Recipient's executive status shall terminate by reason of Disability
or retirement, all Options theretofore granted to such Recipient, whether or
not otherwise exercisable, unless terminated in accordance with their terms,
may be exercised
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by the Recipient or by the Recipient's estate or by a person who acquired the
right to exercise such Options by bequest or inheritance or otherwise by
reason of the death or Disability of the Recipient, at any time within one
year after the date of death, Disability or retirement of the Recipient.
(g) TRANSFERABILITY RESTRICTION.
(1) Options granted under the Incentive Plan shall not be
transferable other than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Internal
Revenue Code of Title I of the Employee Retirement Income Security Act of
1974, or the rules thereunder. Options may be exercised, during the lifetime
of the Recipient, only by the Recipient and thereafter only by his legal
representative.
(2) Any attempted sale, pledge, assignment, hypothecation or other
transfer of an Option contrary to the provisions hereof and/or the levy of
any execution, attachment or similar process upon an Option, shall be null and
void and without force or effect and shall result in a termination of the
Option.
(3)(A) As a condition to the transfer of any shares of Common Stock
issued upon exercise of an Option granted under this Incentive Plan, the
Corporation may require an opinion of counsel, satisfactory to the
Corporation, to the effect that such transfer will not be in violation of the
Securities Act of 1933, as amended (the "1933 Act") or any other applicable
securities laws or that such transfer has been registered under federal and
all applicable state securities laws. (B) Further, the Corporation shall be
authorized to refrain from delivering or transferring shares of Common Stock
issued under this Incentive Plan until the Committee determines that such
delivery or transfer will not violate applicable securities laws and the
Recipient has tendered to the Corporation any federal, state or local tax
owed by the Recipient as a result of exercising the Option or disposing of
any Common Stock when the Corporation has a legal liability to satisfy such
tax. (C) The Corporation shall not be liable for damages due to delay in the
delivery or issuance of any stock certificate for any reason whatsoever,
including, but not limited to, a delay caused by listing requirements of any
securities exchange or any registration requirements under the 1933 Act, the
1934 Act, or under any other state, federal or provincial law, rule or
regulation. (D) The Corporation is under no obligation to take any action
or incur any expense in order to register or qualify the delivery or transfer
of shares of Common Stock under applicable securities laws or to perfect any
exemption from such registration or qualification. (E) Furthermore, the
Corporation will not be liable to any Recipient for failure to deliver or
transfer shares of Common Stock if such failure is based upon the provisions
of this paragraph.
(h) EFFECT OF CERTAIN CHANGES.
(1) If there is any change in the number of shares of outstanding
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Common Stock through the declaration of stock dividends, or through a
recapitalization resulting in stock splits or combinations or exchanges of
such shares, the number of shares of Common Stock available for Options and
the number of such shares covered by outstanding Options, and the exercise
price per share of the outstanding Options, shall be proportionately adjusted
by the Committee to reflect any increase or decrease in the number of issued
shares of Common Stock; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated.
(2) In the event of the proposed dissolution or liquidation of the
Corporation, or any corporate separation or division, including, but not
limited to, split-up, split-off or spin-off, or a merger or consolidation of
the Corporation with another corporation, the Committee may provide that the
holder of each Option then exercisable shall have the right to exercise such
Option (at its then current Option Price) solely for the kind and amount of
shares of stock and other securities, property, cash or any combination
thereof receivable upon such dissolution, liquidation, corporate separation or
division, or merger or consolidation by a holder of the number of shares of
Common Stock for which such Option might have been exercised immediately
prior to such dissolution, liquidation, corporate separation or division, or
merger or consolidation; or, in the alternative the Committee may provide
that each Option granted under the Incentive Plan shall terminate as of a
date fixed by the Committee; provided, however, that not less than 30 days'
written notice of the date so fixed shall be given to each Recipient, who
shall have the right, during the period of 30 days preceding such
termination, to exercise the Option as to all or any part of the shares of
Common Stock covered thereby, including shares as to which such Option would
not otherwise be exercisable.
(3) Paragraph (2) of this Section 5(h) shall not apply to a merger
or consolidation in which the Corporation is the surviving corporation and
shares of Common Stock are not converted into or exchanged for stock,
securities of any other corporation, cash or any other thing of value.
Notwithstanding the preceding sentence, in case of any consolidation or
merger of another corporation and in which there is a reclassification or
change (including a change to the right to receive cash or other property) of
the shares of Common Stock (excluding a change in par value, or from no par
value to par value, or any change as a result of a subdivision or
combination, but including any change in such shares into two or more classes
or series of shares), the Committee may provide that the holder of each
Option then exercisable shall have the right to exercise such Option solely
for the kind and amount of shares of stock and other securities (including
those of any new direct or indirect parent of the Corporation), property,
cash, or any combination thereof receivable upon such reclassification,
change, consolidation or merger by the holder of the number of shares of
Common Stock for which such Option might have been exercised.
(4) To the extent that the foregoing adjustments relate to stock
or securities of the Corporation, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding and
conclusive.
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(5) Except as expressly provided in this Section 5(h) the
Recipient shall have no rights by reason of any subdivision or consolidation
of shares of stock of any class, or the payment of any stock dividend or any
other increase or decrease in the number of shares of stock of any class, or
by reason of any dissolution, liquidation, merger, or consolidation or
spinoff of assets or stock of another corporation; and any issue by the
Corporation of shares of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of
Common Stock subject to an Option. The grant of an Option pursuant to the
Incentive Plan shall not affect in any way the right or power of the
Corporation to make adjustments, reclassifications, reorganizations or
changes of its capital or business structures, or to merge or consolidate, or
to dissolve, liquidate, or sell or transfer all or any part of its business
or assets.
(6) To the extent that the foregoing adjustments relate to
stock or securities of the Corporation, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding and
conclusive.
(i) NO RIGHTS AS SHAREHOLDER -- NON-DISTRIBUTIVE INTENT.
(1) Neither a Recipient of an Option nor such Recipient's
legal representative, heir, legatee or distributee, shall be deemed to be the
holder of, or to have any rights of a holder with respect to, any shares
subject to such Option until after the Option is exercised and the shares are
issued.
(2) No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distribution
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 5(h) hereof.
(3) Upon exercise of an Option at a time when there is no
registration statement in effect under the 1933 Act relating to the shares
issuable upon exercise, shares may be issued to the Recipient only if the
Recipient represents and warrants in writing to the Corporation that the
shares purchased are being acquired for investment and not with a view to the
distribution thereof and provides the Corporation with sufficient information
to establish an exemption from the registration requirements of the 1933 Act.
A form of subscription agreement containing representations and warranties
deemed sufficient as of the date of adoption of this Incentive Plan is
attached hereto as Exhibit B.
(4) No shares shall be issued upon the exercise of an Option
unless and until there shall have been compliance with any then applicable
requirements of the Securities and Exchange Commission or any other
regulatory agencies having jurisdiction over the Corporation.
(j) OTHER PROVISIONS. Option Agreements authorized under the
Incentive Plan may contain such other provisions as the Committee shall deem
advisable, including, without
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limitation, the imposition of restrictions upon the vesting and exercise of
an Option.
6. AGREEMENT BY RECIPIENT REGARDING WITHHOLDING TAXES. Each Recipient
agrees that the Corporation, to the extent permitted or required by law,
shall be permitted to deduct a sufficient number of shares due to the
Recipient upon exercise of the Option to allow the Corporation to pay
federal, provincial, state and local taxes of any kind required by law to be
withheld upon the exercise of such Option. The Corporation shall not be
obligated to advise any Recipient of the existence of any tax or the amount
which the Corporation will be so required to withhold.
7. TERM OF INCENTIVE PLAN. Options may be granted under this Incentive
Plan from time to time within a period of ten years from the date the
Incentive Plan is adopted by the Board.
8. AMENDMENT AND TERMINATION OF THE INCENTIVE PLAN. The Committee at
any time and from time to time may suspend, terminate, modify or amend the
Incentive Plan. Except as provided in Section 6 hereof, no suspension,
termination, modification or amendment of the Incentive Plan may adversely
affect any Option previously granted, unless the written consent of the
Recipient is obtained.
9. ASSUMPTION. The terms and conditions of any outstanding Options
granted pursuant to this Incentive Plan shall be assumed by, be binding upon
and shall inure to the benefit of any successor corporation to the
Corporation and shall, to the extent applicable, continue to be governed by
the terms and conditions of this Incentive Plan. Such successor corporation
may, but shall not be obligated to, assume this Incentive Plan.
10. TERMINATION OF RIGHT OF ACTION. Every right of action arising out
of or in connection with the Incentive Plan by or on behalf of the
Corporation, or by any shareholder of the Corporation against any past,
present or future member of the Board or the Committee, or against any
employee, or by an employee (past, present or future) against the
Corporation, irrespective of the place where an action may be brought and of
the place of residence of any such shareholder, director or employee, will
cease and be barred by the expiration of three years from the date of the act
or omission in respect of which such right of action is alleged to have
arisen or such shorter period as may be provided by law.
11. TAX LITIGATION. The Corporation shall have the right, but not the
obligation, to contest, at its expense, any tax ruling or decision,
administrative or judicial, on any issue which is related to the Incentive
Plan and which the Board believes to be important to holders of Options
granted under the Incentive Plan and to conduct any such contest or any
litigation arising therefrom to a final decision.
12. LOANS. The Committee may, in its discretion, authorize the
Corporation to extend one or more loans to holders of Options in connection
with the exercise or receipt of Options.
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The terms and conditions of any such loan shall be set by the Committee and
may include, in the Committee's discretion, loans that are secured,
unsecured, recourse or nonrecourse.
13. ADOPTION BY BOARD; APPROVAL OF SHAREHOLDERS. This Incentive Plan
was approved by the Board of Directors and the Shareholders of the
Corporation effective September 16, 1996.
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EXHIBIT A
FORM OF STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT made as of this __ day of _________, 199_, by and
between MetroGolf Incorporated, a Colorado corporation (the "Corporation"),
and ___________________ (the "Recipient").
In accordance with the Corporation's Senior Executive Incentive Stock
Option Plan (the "Incentive Plan"), a copy of which is attached hereto and is
incorporated herein by reference, the Corporation desires, in connection with
the services of the Recipient, to provide the Recipient with an opportunity
to acquire shares of the Corporation's no par value common stock ("Common
Stock") on favorable terms and thereby increase the Recipient's proprietary
interest in the Corporation and incentive put forth maximum efforts for the
success of the business of the Corporation. Capitalized terms used but not
defined herein are used as defined in the Incentive Plan.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein set forth and other good and valuable consideration, the Corporation
and the Recipient agree as follows:
1. CONFIRMATION OF GRANT OF OPTION. Pursuant to a determination of the
Committee made on ______________, 19__ (the "Date of Grant"), the Corporation,
subject to the terms of the Incentive Plan and of this Agreement, confirms that
the Recipient has been irrevocably granted on the Date of Grant, as a matter of
separate inducement and agreement, and in addition to and not in lieu of salary
or other compensation for services, a Stock Option (the "Option") exercisable
to purchase an aggregate of ____ shares of Common Stock on the terms and
conditions herein set forth, subject to adjustment as provided in Paragraph 8
hereof.
2. OPTION PRICE. The Option Price of shares of Common Stock covered by
the Option will be $____ per share (the "Option Price") subject to adjustment
as provided in Paragraph 8 hereof.
3. EXERCISE OF OPTION. Except as otherwise provided herein or in
Section 5 of the Incentive Plan, the Option shall vest and thereafter be
exercisable as follows:
(i) The first 20% of the shares covered by the Option shall vest and
become exercisable upon ___________________________.
(ii) The second 20% of the shares covered by the Option shall vest and
become
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exercisable upon __________________________.
(iii) The third 20% of the shares covered by the Option shall vest and
become exercisable upon __________________________.
(iv) The fourth 20% of the shares covered by the Option shall vest and
become exercisable upon __________________________.
(v) The fifth 20% of the shares covered by the Option shall vest and
become exercisable upon __________________________.
The Option may not be exercised at any one time as to fewer than 100 shares
(or such number of shares as to which the Option is then exercisable if such
number of shares is less than 100). The Option may be exercised by written
notice to the Secretary of the Corporation accompanied by payment in full of
the Option Price as provided in Section 5(d) of the Incentive Plan.
4. TERM OF OPTION. The term of the Option will through _________,
____, subject to earlier termination or cancellation as provided in this
Agreement. The holder of the Option will not have any rights to dividends or
any other rights of a shareholder with respect to any shares of Common Stock
subject to the Option until such shares shall have been issued (as evidenced
by the appropriate transfer agent of the Corporation) upon purchase of such
shares through exercise of the Option.
5. TRANSFERABILITY RESTRICTION. The Option may not be assigned,
transferred or otherwise disposed of, or pledged or hypothecated in any way
(whether by operation of law or otherwise) except in strict compliance with
Section 5 of the Incentive Plan. Any assignment, transfer, pledge,
hypothecation or other disposition of the Option or any attempt to make any
levy of execution, attachment or other process will cause the Option to
terminate immediately upon the happening of any such event; provided,
however, that any such termination of the Option under the provisions of this
Paragraph 5 will not prejudice any rights or remedies which the Corporation
may have under this Agreement or otherwise.
6. EXERCISE UPON TERMINATION. The Recipient's rights to exercise this
Option upon termination of employment or cessation of service as an officer
or consultant shall be as set forth in Section 5(e) of the Incentive Plan.
7. DEATH, DISABILITY OR RETIREMENT OF RECIPIENT. The exercisability
of this Option upon the death, Disability or retirement of the Recipient
shall be as set forth in Section 5(f) of the Incentive Plan.
8. ADJUSTMENTS. The Option shall be subject to adjustment upon the
occurrence of certain events as set forth in Section 5(h) of the Incentive
Plan.
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9. NO REGISTRATION OBLIGATION. The Recipient understands that the
Option is not registered under the 1933 Act and, unless by separate written
agreement, the Corporation has no obligation to so register the Option or any
of the shares of Common Stock subject to and issuable upon the exercise of
the Option, although it may from time to time register under the 1933 Act the
shares issuable upon exercise of Options granted pursuant to the Incentive
Plan. The Recipient represents that the Option is being acquired for the
Recipient's own account and that unless registered by the Corporation, the
shares of Common Stock issued on exercise of the Option will be acquired by
the Recipient for investment. The recipient understands that the Option is,
and the underlying securities may be, issued to the Recipient in reliance
upon exemptions from the 1933 Act, and acknowledges and agrees that all
certificates for the shares issued upon exercise of the Option will bear the
following legends unless such shares are registered under the 1933 Act prior
to their issuance:
The shares represented by this Certificate have not been registered
under the Securities Act of 1933 (the "1933 Act"), and are "restricted
securities" as that term is defined in Rule 144 under the 1933 Act. The
shares may not be offered for sale, sold or otherwise transferred except
pursuant to an effective registration statement under the 1933 Act or
pursuant to an exemption from registration under the 1933 Act, the
availability of which is to established to the satisfaction of the Company.
The Recipient further understands and agrees that the Option may be
exercised only if at the time of such exercise the underlying shares are
registered and/or the Recipient and the Corporation are able to establish the
existence of an exemption from registration under the 1933 Act and applicable
state or other laws.
10. NOTICES. (INSERT APPROPRIATE LANGUAGE HERE)
------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ----------------------------------------------.
11. APPROVAL OF COUNSEL. The exercise of the Option and the issuance
and delivery of shares of Common Stock pursuant thereto shall be subject to
approval by the Corporation's counsel of all legal matters in connection
therewith, including compliance with the requirements of the 1933 Act, the
1934 Act, applicable state and other securities laws, the rules and
regulations thereunder, and the requirements of any national securities
exchange(s) upon which the Common Stock then may be listed.
12. CONTINUOUS EMPLOYMENT. The holder of the Option must have been
continuously employed by the Corporation (or an affiliate of the Corporation)
through a vesting date in order for the related shares to vest.
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13. LOCK-UP PROVISION. The holder of the Common Stock issued upon
exercise of an option hereby will be subject to a lock-up to refrain from
making any public sale or distribution of the Common Stock issued upon
exercise of an Option granted hereunder (pursuant to Rule 144 or otherwise)
without the prior written consent of Laidlaw Equities, Inc. and Prime Charter
Ltd. for 13 months after the Effective Date of the Registration Statement for
the Corporation's Initial Public Offering of Common Stock.
14. BENEFITS OF AGREEMENT. This Agreement will inure to the benefit of
and be binding upon each successor and assignee of the Corporation. All
obligations imposed upon the Recipient and all rights granted to the
Corporation under this Agreement will be binding upon the Recipient's heirs,
legal representatives and successors.
15. EFFECT OF GOVERNMENTAL AND OTHER REGULATIONS. The exercise of the
Option and the Corporation's obligation to sell and deliver shares upon the
exercise of the Option are subject to all applicable federal and state laws,
rules and regulations, and to such approvals by any regulatory or
governmental agency which may, in the opinion of counsel for the Corporation,
be required.
16. INCORPORATION OF THE INCENTIVE PLAN. The Incentive Plan is
attached hereto and incorporated herein by reference. In the event that any
provision in this Agreement conflict with a provision in the Incentive Plan,
the provisions of the Incentive Plan shall govern.
17. ADMINISTRATION. The Committee shall have the power to interpret
the Incentive Plan and this Agreement consistent with Section 2 of the
Incentive Plan.
Executed in the name and on behalf of the Corporation by one of its duly
authorized officers and by the Recipient all as of the date first above
written.
METROGOLF INCORPORATED
Date , 19 By
------------ -- ----------------------------------
The undersigned Recipient has read and understands the terms of this
Option Agreement and the attached Incentive Plan and hereby agrees to comply
therewith.
Date , 19
------------ -- ------------------------------------
Signature of Recipient
Tax ID Number:
----------------------
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Address:
------------------------------------
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EXHIBIT B
SUBSCRIPTION AGREEMENT
THE SECURITIES BEING ACQUIRED BY THE UNDERSIGNED HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY OTHER LAWS AND ARE OFFERED UNDER
EXEMPTIONS FROM THE REGISTRATION PROVISIONS OF SUCH LAWS. THESE SECURITIES
CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER CONTAINED IN THIS STOCK
SUBSCRIPTION AGREEMENT AND APPLICABLE SECURITIES LAWS.
This Subscription agreement is entered for the purpose of the
undersigned acquiring _________ shares of the no par value common stock (the
"Securities") of MetroGolf Incorporated, a Colorado corporation (the
"Corporation") from the Corporation pursuant to exercise of an Option granted
pursuant to the Corporation's Senior Executive Incentive Stock Option Plan
(the "Incentive Plan"). All capitalized terms not otherwise defined herein
shall be as defined in the Incentive Plan.
It is understood that no exercise of any Option at a time when no
registration statement relating thereto is effective under the 1933 Act can
be completed until the undersigned executes this Subscription Agreement and
delivers it to the Corporation, and that such grant or exercise is effective
only in accordance with the terms of the Incentive Plan and this
Subscription Agreement.
In connection with the undersigned's acquisition of the Securities, the
undersigned represents and warrants to the Corporation as follows:
1. The undersigned has been provided with, and has reviewed the
following reports, if any, filed by the Corporation pursuant to the
Securities Exchange Act of 1934, including (without limitation) the
Corporation's most recent annual report on Form 10-K, all Forms 8-K filed
subsequent to the date of such Form 10-K, and all other reports filed by the
Corporation pursuant to such Act subsequent to the date of the most recent
Form 10-K. The undersigned has also reviewed the Incentive Plan, and such
other information as the undersigned may have requested of the Corporation
regarding its business, operations, management, and financial condition (all
of which is referred to herein as the "Available Information").
2. The Corporation has given the undersigned the opportunity to ask
questions of and to receive answers from persons acting on the Corporation's
behalf concerning the terms and conditions of this transaction and the
opportunity to obtain any additional information regarding
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the Corporation, its business and financial condition or to verify the
accuracy of the Available Information which the Corporation possesses or can
acquire without unreasonable effort or expense.
3. The Securities are being acquired by the undersigned for the
undersigned's own account and not on behalf of any other person or entity.
4. The undersigned understands that the Securities being acquired
hereby have not been registered under the 1933 Act or any state or foreign
securities laws, and are, and unless registered will continue to be,
restricted securities within the meaning of Rule 144 of the General Rules and
Regulations under the 1933 Act and other statutes, and the undersigned
consents to the placement of appropriate restrictive legends on any
certificates evidencing the Securities and any certificates issued in
replacement or exchange therefor and acknowledges that the Corporation will
cause its stock transfer records to note such restrictions.
5. By the undersigned's execution below, it is acknowledged and
understood that the Corporation is relying upon the accuracy and completeness
hereof in complying with certain obligations under applicable securities law.
6. This Agreement binds and inures to the benefit of the
representatives, successors and permitted assigns of the respective parties
hereto.
7. The undersigned acknowledges that the grant of any Option and the
issuance and delivery of shares of Common Stock pursuant thereto shall be
subject to prior approval by the Corporation's counsel of all legal matters
in connection therewith, including compliance with the requirements of the
1933 Act, the 1934 Act, other applicable securities laws, the rules and
regulations thereunder, and the requirements of any national securities
exchange(s) upon which the Common Stock then may be listed.
8. The undersigned acknowledges and agrees that the Corporation has
withheld __________ shares for the payment of taxes as a result of the
exercise of an Option.
9. The Incentive Plan is attached hereto and incorporated herein by
reference. In the event that any provision in this Agreement conflicts with
ANY provision in the Incentive Plan, the provisions of the Incentive shall
govern.
Date: _____________, 19__. ---------------------------------
Signature of Recipient
Tax ID Number:________________
Address:
---------------------------------
---------------------------------
17
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18
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September 19, 1996
MetroGolf Incorporated
Charles D. Tourtellotte
1999 Broadway, Suite 2435
Denver, Colorado 80202
Dear Mr. Tourtellotte:
EXTENSION TO LETTER OF COMMITMENT - CENTRAL PARK GOLF COURSE
On April 11, 1995, the City Council of the City of Fremont formally selected The
Vintage Group USA, Ltd. of Denver, Colorado as developer and operator of the
proposed Central Park Golf Course. The action of the City Council included
authorization for City staff to issue a LETTER OF COMMITMENT. The Letter of
Commitment was scheduled to expire on December 31, 1995. On December 14, 1995,
the Letter of Commitment was extended with an expiration of September 30, 1996.
During the ensuing negotiating period, the Vintage Group USA, Ltd. reformed and
renamed as MetroGolf Incorporated and acquired the leasehold of the Central Park
Golf Driving Range. In recognition of the continuing good faith efforts of
MetroGolf Incorporated, the City of Fremont will extend the Letter of Commitment
for an additional three month period expiring on December 31, 1996.
The City of Fremont hereby certifies that it will continue exclusive
negotiations with MetroGolf Incorporated for the purposes of establishing an
agreement for construction and long term operation of the Central Park Golf
Course. Furthermore, the City of Fremont hereby reiterates that it will
authorize development of this project upon verification that MetroGolf
Incorporated has satisfied the following conditions:
1. MetroGolf Incorporated provides evidence of either loan commitments or cash
reserves sufficient to fund development of the golf course and operation of
the combined golf course and golf driving range.
2. MetroGolf Incorporated provides evidence that all members of the proposed
project team are available for the project duration and are committed to
the project. This team shall consist of at least:
Charles Tourtellotte, MetroGolf Incorporated, Denver, Colorado
Perry Dye, Dye Designs International, Denver, Colorado
Darrell Wilson, CMX Group, Inc., Phoenix, Arizona
3. City staff and MetroGolf Incorporated have negotiated a lease agreement
satisfactory to City Council.
<PAGE>
4. MetroGolf Incorporated provides an acceptable schematic drawing of the
proposed golf course.
5. Staff has validated MetroGolf Incorporated's development budget
assumptions.
The issuance of this extension letter does not relieve MetroGolf Incorporated of
the obligations of complying with all federal, state and local laws. This
commitment by the City of Fremont shall cease at midnight, December 31, 1996
unless extended by mutual agreement between the City of Fremont and MetroGolf
Incorporated.
Sincerely,
Harvey E. Levine
City Attorney
c: City Manager
City Council
<PAGE>
FIFTH AMENDMENT TO
GROUND SUBLEASE AND SUBLICENSE AGREEMENT
THIS FIFTH AMENDMENT to Ground Sublease and Sublicense Agreement (the
"Fifth Amendment") is made this _____ day of January, 1996 by and between
ILLINOIS CENTER GOLF PARTNERS L.P., an Illinois limited partnership ("Tenant")
and ILLINOIS CENTER PLAZA VENTURE, an Illinois limited partnership ("Landlord").
WHEREAS, the parties have heretofore entered into that certain Ground
Sublease and Sublicense Agreement dated July 14, 1993, which Ground Sublease and
Sublicense Agreement was amended by First Amendment to Ground Sublease and
Sublicense Agreement dated May 31, 1994, by Second Amendment to Ground Sublease
and Sublicense Agreement dated August 1, 1994, by Third Amendment to Ground
Sublease and Sublicense Agreement dated September 14, 1994, and by Fourth
Amendment to Ground Sublease and Sublicense dated October 17, 1994 (as amended,
the "Sublease") for certain real property consisting of approximately 23.9 acres
located within an area commonly referred to as Illinois Center in the City of
Chicago, State of Illinois as described on Exhibit A and Exhibit B to the
Sublease; and
WHEREAS, the parties desire to further amend the Sublease as hereinafter
set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. The third sentence of Section 1.02(b) shall be amended in its entirety
to read as follows:
No item shall be paid unless all items having higher priority shall
have been paid in full or reasonable reserves made therefor, except
that the Tenant Contribution shall not be paid below the sum (the
"Coverage Amount") of $500,000 plus the then outstanding Principal
Advances (as hereinafter defined), and upon reduction of the Tenant
Contribution to the Coverage Amount, any excess Operational Proceeds
shall then be distributed to items having lower priority, such excess
Operational Proceeds being hereinafter defined as the "Excess
Proceeds".
2. The definition of "Debt Service" as set forth in Section 1.02(c) is
amended in its entirety to read as follows:
(c) DEBT SERVICE. All payments on Total Indebtedness of up to
$2,250,000 under the Textron Mortgage (as defined in the Fifth
Amendment to this
<PAGE>
Sublease) and all payments of principal and interest on the Permitted
Resun Debt. A copy of the Promissory Note executed with respect to the
Textron Mortgage is attached as Exhibit J hereto. A copy of the
Promissory Note executed with respect to the Permitted Resun Debt is
attached as Exhibit K hereto. "Total Indebtedness" shall mean such
amounts as shall be outstanding from time to time consisting of
principal advances to the Tenant ("Principal Advances") of up to
$1,750,000, plus accrued and unpaid carrying charges of up to $500,000
("Carrying Charges"), if any, consisting of accrued and unpaid interest,
late charges, advances, collection costs and attorneys fees payable
under the Textron Mortgage loan documents.
3. The first sentence of Section 1.02(e) shall be amended in its entirety
to read as follows:
(e) EXPENSES. Expenses shall mean and include all those costs,
expenses and disbursements which Tenant shall pay in connection with
the management, operation, insurance, marketing, maintenance and
repair of the Facilities on the Property and the maintenance,
replacement and repair of the personal property, fixtures, machinery,
equipment, systems and apparatus located in or used in connection with
the Facilities and which are incurred or paid after December 31, 1993.
4. Retroactively to July 14, 1993, the eighth sentence of Section 1.02(e)
is amended in its entirety to read as follows:
The reasonable cost of any required capital equipment or improvements
(not funded from the capital improvement reserve and not incurred
prior to December 31, 1995) shall be amortized over a period
reasonably determined by Tenant as the useful life of such capital
item in accordance with the federal tax code and regulations
thereunder, provided that capital items costing less than Ten Thousand
Dollars ($10,000) in the aggregate in any one year, at Tenant's
option, may be expensed in a single year.
5. The last sentence of Section 1.02(e) is amended in its entirety to
read as follows:
Lease payments for minor equipment leases having annual aggregate
lease payments of not more than $12,500 per annum shall be Expenses.
Expenses shall not include any amounts paid from the initial
$1,750,000 Principal Advance of the Textron Mortgage. The amount of
Tax Contribution payable for 1995, if any, shall be due and payable on
July 1, 1996. In the event of foreclosure by
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<PAGE>
the Mortgagee and transfer of the Tenant's interest under this Sublease
to any person or entity other than Mortgagee and provided Landlord has
not affirmatively accepted in writing the transferee and its management
pursuant to Sections 9.01(iv) and (v) hereof by written instrument
expressly providing for such acceptance on or before the first day of
June following the first year anniversary of the transfer, then Expenses
shall include sixty percent (60%) of the monthly Tax Contribution
accruing from and after such June 1, and such amount shall be payable
commencing on the following August 1, and on the first day of each month
thereafter.
6. Subsection (viii) of Section 1.02(m) is deleted.
7. The following is added to Section 1.02(q):
In the event of foreclosure by the Mortgagee and transfer of the
Tenant's interest under this Sublease to any person other than the
Mortgagee and provided Landlord has not affirmatively accepted the
transferee and its management pursuant to Sections 9.01(iv) and (v)
hereof by written instrument expressly providing for such acceptance
on or before the first day of June following the first year
anniversary of the transfer, then the Tax Contribution to be paid as
the third priority under the Application of Funds shall consist of:
(i) the amount of the Tax Contribution accrued prior to such June 1;
plus (ii) forty percent (40%) of the amount of the Tax Contribution
accruing subsequent to such June 1.
8. Section 1.02(r) is amended in its entirety as follows:
(r) TENANT PREFERRED RETURN. An amount equal to (i) 5% per
annum, cumulative and compounded annually multiplied by the amount of
the Tenant Contribution as the same may be reduced from time to time
by payment of Operational Proceeds, that is equal to the lesser of:
(A) the aggregate amount of the Excess Proceeds or (B) the Tenant
Contribution as the same may be reduced from time to time, plus (ii)
15% per annum, cumulative and compounded annually, multiplied by the
amount, if any, of the Tenant Contribution, as the same may be reduced
from time to time by payment of Operational Proceeds, that exceeds the
amount of the Excess Proceeds. Upon transfer of the Tenant's interest
in this Sublease to the Mortgagee or its assignee or transferee by
foreclosure or otherwise, or purchase of the Tenant's interest in this
Sublease by a third party at the foreclosure sale: (iii) any accrued
but unpaid Tenant Preferred Return prior to the date of transfer shall
be cancelled; and (iv) the New Tenant Contribution (as
3
<PAGE>
hereinafter defined) shall be substituted for the Tenant Contribution in
(ii) above. The Tenant Preferred Return shall be paid not more
frequently than monthly to the extent Operational Proceeds are available
after payment of items 1 through 4 in accordance with the Application of
Funds. For the purposes of calculation under this Sublease, Tenant
Preferred Return shall be calculated on the Tenant Contribution as and
when such amounts are expended for the development of the Facilities
(and not the entire amount of the Tenant Contribution from the day of
first expenditure) and assuming expenditure as of the last day of the
month in which funds were expended.
9. Section 1.02(t) is amended in its entirety to read as follows:
(t) TENANT CONTRIBUTION. The amount of $3,500,000 reduced upon
funding of the Textron Mortgage by the sum of $225,000 (which relates
to excess construction costs paid pursuant to paragraph 17(iii) of the
Fifth Amendment to this Sublease and subject to adjustment as provided
therein) and further reduced by $40,000 (as additional consideration).
In the event of a transfer of the Tenant's interest in this Sublease
to the Mortgagee or its assignee or transferee, by foreclosure or
otherwise, or purchase of the Tenant's interest in this Sublease by a
third party at the foreclosure sale, the Tenant Contribution shall be
(the "New Tenant Contribution") the least of: (i) the Tenant
Contribution immediately prior to the transfer; (ii) the total
consideration paid to the Mortgagee by the assignee or transferee of
the Tenant's interest in this Sublease; or (iii) the Total
Indebtedness, which Total Indebtedness shall not exceed $2,250,000.
The New Tenant Contribution shall be increased by the cost of capital
improvements to the Property incurred by Mortgagee or its assignee or
transferee reasonably necessary to operate the Facilities which costs
are reasonably approved in advance in writing by Landlord and which
shall not exceed $500,000 in the aggregate. All references to "Tenant
Contribution" in this Sublease shall be deemed to include a reference
to the "New Tenant Contribution" when such latter term is applicable.
The amount of the New Tenant Contribution shall be reduced by the
amount of the Total Indebtedness immediately after the transfer, if
any, but not less than zero. The Tenant Contribution shall be reduced
by payment not more frequently than monthly to the extent Operational
Proceeds are available after payment of items 1 through 5 in
accordance with the Application of Funds provided that the Tenant
Contribution shall not be paid below the Coverage Amount. In the
event the Coverage Amount exceeds the Tenant Contribution by reason
4
<PAGE>
of additional Principal Advances or otherwise, the Tenant Contribution
shall not thereafter be increased by payment or retention of funds to
meet such standard.
10. Section 1.02(u) is amended in its entirety to read as follows:
(u) PERMITTED RESUN DEBT. The amount of $386,529.91 of the
$584,000 Promissory Note dated January 31, 1996 payable by the Tenant
to Resun Leasing Incorporated. Tenant represents to Landlord that
$386,529.91 of such indebtedness represents a refinance of items
leased which were includable as Expenses prior to the execution of the
Fifth Amendment to this Sublease.
11. The following shall be added immediately before the last sentence of
Section 4.01:
Such monthly statements shall (i) show in reasonable detail the
amounts within each category of Operational Proceeds and within each
category of items 1 through 8 of the Application of Funds and (ii)
have an individual column for every previous month in that fiscal year
as well as a cumulative year to date total. In addition, as
supplemental information with each such report, there shall be
included monthly and year to date results as compared to budget. It
is acknowledged that this latter supplemental information may be on an
accrual basis of accounting which is different from the basis which is
otherwise used for monthly reporting and the Reconciliation Statement
required under this Sublease.
12. Section 6.05 shall be amended in its entirety to read as follows:
6.05 TERMINATION BY LANDLORD. At any time, upon not more than
sixty (60) nor less than forty-five (45) days prior written notice,
Landlord may terminate this Sublease in its entirety provided Landlord
does not operate the Property as a golf facility for a period of nine
(9) months after the giving of such notice.
13. The third and fourth sentences of Section 6.06(a) are amended in their
entirety to read as follows:
The Termination Guaranty shall be an amount equal to the sum of: (I)
15.14% (the "Guaranty Percentage") ($265,000, which consists of
$225,000 for excess construction costs paid pursuant to paragraph
17(iii) of the Fifth Amendment to this Sublease plus $40,000 for
additional consideration, divided by $1,750,000) of the outstanding
Principal Advances of the Textron Mortgage as
5
<PAGE>
of the Termination Date (such Guaranty Percentage to be adjusted to the
extent the final accounting for the excess construction costs paid
pursuant to paragraph 16 of the Fifth Amendment to this Sublease varies
from the $225,000 used for this calculation; furthermore, in the event
of any additional Principal Advances, the Guaranty Percentage shall be
the quotient of (v) the product of the principal balance outstanding
immediately before the advance multiplied by the Guaranty Percentage
immediately before the advance, divided by (w) the principal balance
outstanding immediately after the advance, (II) the Tenant Contribution
outstanding as of the Termination Date and (III) an amount equal to the
Tenant Preferred Return accrued during the period ending on the earlier
of (x) the Termination Date or (y) last day of the 24th month after the
Opening Date, not theretofore paid. Anything herein to the contrary
notwithstanding, the Termination Guaranty cannot exceed an amount equal
to $4,430,375. In the event of a transfer of the Tenant's interest in
this Sublease to the Mortgagee or its assignee or transferee, by
foreclosure or otherwise, or purchase of the Tenant's interest in this
Sublease by a third party at the foreclosure sale, the Termination
Guaranty shall be an amount equal to the sum of: (IV) the amount of the
New Tenant Contribution; plus (V) the outstanding Total Indebtedness of
the Permitted Mortgage on the Termination Date. Notwithstanding the
foregoing, the sum of (IV) and (V) shall not in any event exceed the
amount of $2,750,000 and the amount of the Termination Guaranty
immediately prior to such transfer in excess of such sum shall be
cancelled as of the date of transfer.
14. The following is added after the last sentence of Section 9.02:
The amount of any replacement mortgage shall never exceed the amount
of the Total Indebtedness on the date such replacement mortgage is
funded. Except with respect to the provisions of paragraph 18 of the
Fifth Amendment to this Sublease, which shall be personal to the
holder of the Textron Mortgage, all provisions for the benefit of and
references to the Textron Mortgage and Permitted Mortgage in this
Sublease shall inure to the benefit of and refer to any permitted
replacement mortgage.
15. The following is added to Section 9.02 of the Sublease:
In the event of a Permitted Mortgage of Tenant's interest in the
Sublease:
6
<PAGE>
(a) Copies of all written notices under the Sublease including
notices of default shall be delivered in the manner specified in
Section 25 to the Mortgagee at the following address:
Textron Financial Corporation
5901-A Peachtree Dunwoody Road
Suite 300
Atlanta, Georgia 30328
Attention: Legal Department
or such other address as such Mortgagee may give to Landlord by
written notice delivered in accordance with the notice requirements
provided under the Sublease.
(b) The Mortgagee shall have a thirty (30) day option to cure
defaults under the Sublease (which period may be contemporaneous with
any right of Tenant to cure) or such greater time as is reasonably
necessary to cure a default which cannot be cured within such time if
Mortgagee is diligently pursuing a cure therefor. Notwithstanding the
foregoing grace period, if the nature of the default is such that
Landlord could forfeit rights or benefits or result in the
acceleration of obligations under PD70 or other governmental ordinance
or regulation, Mortgagee's grace period shall be the lesser of (i) the
time period provided in the prior sentence or (ii) the period which
expires ten (10) business days prior to the date (as it may be
extended in writing prior to expiration of this period) upon which the
applicable governmental authority may effect a forfeiture of rights or
benefits or acceleration of obligations.
(c) Prior to receipt of written notice executed by the Mortgagee of
termination of the Permitted Mortgage the Tenant shall not be entitled
to surrender, cancel, terminate, modify or amend the Sublease, or
exercise any option to accomplish the foregoing, without the prior
written consent of the Mortgagee which shall not be unreasonably
withheld, provided, however, that Mortgagee will have the sole and
absolute discretion to withhold or deny its consent for any proposed
(i) surrender, cancellation or termination of the Sublease by Tenant
or (ii) amendment or modification of the Sublease which would (A)
affect the rights of the Mortgagee under Section 9 of the Sublease or
(B) amend or modify the provisions of Section 6.06 of the Sublease.
(d) Prior to receipt of written notice executed by the Mortgagee of
termination of the Permitted Mortgage, all payments of the Termination
Guaranty pursuant to Section 6.06 hereof shall be paid to the
Mortgagee.
7
<PAGE>
(e) In the event the Mortgagee shall acquire the Tenant's interest in
the Sublease by foreclosure or otherwise, and the Mortgagee shall
receive a bona fide offer for the purchase or assignment of the
Tenant's interest in this Sublease which the Mortgagee desires to
accept, the Mortgagee shall give written notice (the "Offering
Notice") thereof to the Landlord in accordance with the notice
provisions of the Sublease. The Offering Notice shall contain the
name and address of the proposed purchaser or assignee, a credit
report (i.e., Dun & Bradstreet or similar report) for the proposed
purchaser or assignee and its primary owners unless the
purchaser/assignee files reports under the Securities Exchange Act of
1934, a description of experience in the golf industry, a true and
complete copy of the terms and conditions of the offer, and an offer
to sell the Tenant's interest in this Sublease to Landlord in
preference to the proposed purchaser or assignee upon the same terms
and conditions as set forth in the Offering Notice. Landlord shall
have a period of fifteen (15) business days after receipt of the
Offering Notice within which to agree in writing to purchase the
Tenant's interest in this Sublease in accordance with the terms of the
Offering Notice. If Landlord fails to agree to purchase the Tenant's
interest in this Sublease within such fifteen (15) business day time
period, the Mortgagee shall have the right to complete the sale to the
proposed purchaser for a period of one hundred eighty (180) days after
waiver or lapse of Landlord's option to purchase. In the event of any
change in the identity of the proposed purchaser or in the material
terms and conditions of the offer or failure to close within said one
hundred eighty (180) day period, written notice thereof shall be given
by the Mortgagee to Landlord and the Tenant's interest in this
Sublease may not be sold or assigned without first being offered to
Landlord in accordance with this paragraph.
16. The fourth sentence of Section 21.01 is amended in its entirety to
read as follows:
Tenant shall pay to Landlord (the "Tax Contribution") the sum of
$10,417 per month ("Base Tax Rate") commencing with the first day of
the first month following the Opening Date as partial reimbursement of
Real Estate Taxes payable by Landlord solely out of Operational
Proceeds, after payment of items 1 and 2 in accordance with the
Application of Funds except that Tenant shall pay as Expenses the
portion of the Tax Contribution as required by Section 1.02(e).
8
<PAGE>
17. The parties contemplate the initial Principal Advance by Textron
Financial Corporation of $1,750,000 of a $2,000,000 mortgage (the "Textron
Mortgage") on or about the date of this Amendment and acknowledge that the
Textron Mortgage shall be a Permitted Mortgage, as defined in the Sublease
provided such acknowledgement does not constitute an approval or disapproval of
the terms of such mortgage nor does such acknowledgement waive or modify any
term of the Sublease except as expressly provided herein, such encumbrance being
subject to the terms of the Sublease. Tenant shall not obtain Principal
Advances under the Textron Mortgage which would cause the outstanding Principal
Advances on the Textron Note to exceed $1,750,000. The initial Principal
Advance of $1,750,000 shall not be deemed Operational Proceeds nor disbursed in
accordance with the Application of Funds. The proceeds of such funding shall be
generally applied as follows:
(i) $850,000 to Resun Leasing Inc.;
(ii) $200,000 to Associated Bank;
(iii) $225,000 for excess construction costs payable; and
(iv) $475,000 for operations.
To the best of Tenant's knowledge, the expenditures under item (iii) will
constitute payment in full of all construction vendors from the construction of
the Facilities. The amount applied pursuant to item (iv) shall cause a
corresponding reduction in Expenses in 1996. Tenant agrees to include a
detailed accounting of the application of such proceeds with the January or
February, 1996 (as applicable) operating statements for the Facility. To the
extent the final accounting for items (iii) and (iv) vary from the amounts
stated above, the parties shall make appropriate adjustment to the Tenant
Contribution, Termination Guaranty and to the reduction in Expenses in 1996.
The parties acknowledge and agree that any Principal Advances to the Tenant from
the Textron Mortgage in excess of the initial Principal Advance of $1,750,000
shall be treated as Operational Proceeds.
18. In the event of a foreclosure of the Textron Mortgage of the Tenant's
interest under the Sublease, Landlord agrees that the conditions of
Sections 9.01(iv) and (v) will be satisfied if the provisions of Section 9.02(e)
are satisfied and the proposed assignee is an individual or entity which has at
least two (2) years experience in and is currently managing at least one 18-hole
golf course having a United States Golf Association course and slope rating.
19. Upon submission of invoice, Tenant agrees to pay Landlord's reasonable
attorneys fees incurred in connection with the review of this Fifth Amendment in
an amount not to exceed $5,000.
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20. Tenant agrees to provide an annual budget for the operation of the
Property for each calendar year within thirty (30) days after approval by the
general partner of Tenant but not later than March 31 of such year.
21. This Fifth Amendment may be executed in counterparts, which together
shall be one original document, or in multiple copies, each of which shall be
deemed to be an original.
22. The liability of the partners of Landlord shall be limited to, and
collected solely from, the net assets of Landlord and no partner of Landlord nor
any such partner's separate property shall have any liability hereunder. A
deficit capital account of any partner in Landlord shall not be deemed to be an
asset of the Landlord. The foregoing exculpation shall not limit the rights of
the Tenant against the Owners as specified under Section 6.06(b) of the
Sublease.
23. The Sublease, as amended hereby, is hereby ratified and confirmed
between the parties. Except as modified herein, the Sublease shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties have executed this Fifth Amendment as of
the day and year first above written.
"LANDLORD"
ILLINOIS CENTER PLAZA VENTURE, an
Illinois limited partnership
By: Metropolitan Structures, an Illinois general
partnership, general partner
By: Metco Properties, an Illinois limited
partnership, a general partner
By: /s/ BENJAMIN A. SEVIS
-------------------------
a General Partner
By: Illinois Center Corporation, a Delaware
corporation
By: /s/ ILLEGIBLE
------------------------------
Its: Vice President
-----------------------------
10
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"TENANT"
ILLINOIS CENTER GOLF PARTNERS L.P.,
an Illinois limited partnership
By: TVG (Illinois Center) Inc., a Colorado corporation
By: /s/ J.D. FINLEY
------------------------------
J.D. Finley
Its: Vice President
Acknowledged and approved:
TEXTRON FINANCIAL CORPORATION
By: /s/ ILLEGIBLE
-----------------------------
Its: Vice President
----------------------------
11
